Overview

  • Tanzania has sustained relatively high economic growth over the last decade, averaging 6–7% a year. But while the poverty rate in the country has declined, the absolute number of poor has not because of the high population growth rate. The country's overall population is about 55 million (2016).  

    Political Context

    In October 2015, John Pombe Magufuli was elected the fifth President of the United Republic of Tanzania. The 5th Phase Government, as it is called, has prioritized efforts to clampdown on corruption, improve public administration and manage public resources for improved social outcomes. Seventy-two percent of Tanzanians say corruption has decreased “somewhat” or “a lot” over the preceding year, compared to 13% in 2014. Similarly, 71% say the government is fighting corruption “fairly well” or “very well,” compared to 37% in 2014.

    Economic Overview

    Tanzania’s real gross domestic product (GDP) growth rate slowed in 2017. According to government data, growth for the first three quarters of 2017 stood at 6.8%, down from 7.3% during the same period in 2016. The decline is mainly due slower growth of services from the supply side and slower expansion of consumption and investment from demand side. Although Tanzania’s real GDP growth rate is estimated to have slowed, it was the highest in the East African Community (EAC) for 2017.

    The inflation rate has remained stable, aided by low food prices. The current account deficit narrowed to 2.5% of GDP in 2017, down from 4.2% in 2016, with the decline in imports more than offsetting the decline in exports. The narrowing current account deficit was financed by foreign direct investment (FDI) and long-term loans. Gross official reserves were nearly US$6 billion by end 2017, equivalent to more than five months of import cover (excluding FDI-related imports).

    The economic outlook is favorable, with downside risks that are largely under government control. The three most significant challenges facing the government to ensure growth momentum include:

    • Continuing to implement measures to ensure macroeconomic stability;
    • Intensifying efforts to implement its development-oriented budget, and
    • Urgently implementing measures to enable and encourage the private sector to play a more significant role in Tanzania’s development. 

    Private sector involvement in the country’s development can help finance the government’s ambitious investment plans, be a source of finance and innovation, and create jobs for new entrants into the job market. This will require addressing key impediments to higher private investment including low credit growth, high and persistent payment arrears, and the high cost of regulatory compliance and deficiencies in infrastructure services and skills.

    Social Context

    Poverty has declined since 2007 and continues at a modest pace, with a fall in the poverty rate from 28.2% in 2012 to 26.9% in 2016. This decline has been accompanied by improvements in human development outcomes and living conditions. Tanzania has recorded improved ratings according to the Human Development Index since the beginning of the new millennium, until a recent slowdown in 2010. Improved health outcomes have driven this progress, along with robust gains in education and incomes.

    In primary education, levels of access, completion and equity improved during this period, as did levels of secondary educational attainment for both women and men. In 2016, 23.4% of women and 28.2% of men had completed secondary education, a significant increase from the figures of 16.2% and 22.8% recorded in 2010. There was also progress in the areas of housing conditions, the ownership of assets, and access to clean drinking water and sanitation, including for the poor and rural populations. Despite progress, significant geographical disparities remain; more than 13 million people remained below the poverty line in 2016.

    Development Challenges

    Tanzania embarked on its second Five-Year Development Plan, 2016/17 to 2020/21 (FYDP II), which picks up on interventions which fell short under MKUKUTA II and FYDP I. Many of the gains made over the past decade were unevenly distributed along rural-urban lines and across income quintiles. The modest poverty reduction was driven primarily by gains in income in Dar es Salaam and other large urban centers.

    The quality and strength of Tanzania’s human capital needs to go hand-in-hand with infrastructure investments so that farmers in rural areas are linked to markets and people to services, and the resultant fruits of growth are shared with rural communities across Tanzania.

    Last Updated: Apr 19, 2018

  • World Bank (WB) Group Engagement in Tanzania

    The current active WB portfolio in Tanzania comprises of 24 national International Development Association-funded projects for a net commitment amount of US$4.2 billion. Key sectors supported by World Bank projects in Tanzania include Transport/ICT (28%), Social, Urban, Rural development (22%), Energy (9%), Education (8%), Social protection (9%), Water/sanitation (5%), Health/nutrition (5 percent) and Agriculture, Finance/markets, Trade & Competitiveness, Governance, and Environment/natural resources (about 1-2% of the portfolio for each area). Tanzania also participate in five regional projects with a total commitment amount of US$393 million supporting the Transport, Energy, Environment, Health and Education sectors.

    In March 2018, the World Bank’s Board of Executive Directors endorsed the new Tanzania Country Partnership Framework (CPF) for the period of 2018-2022

    The CPF is informed by extensive consultations with a wide range of stakeholders as well as a country opinion survey. Aligned with the priorities identified in Tanzania’s Second Five-Year Development Plan and Zanzibar’s Third Strategy for Growth and Reduction of Poverty, and CPF has three focus areas: (1) enhance productivity and accelerate equitable and sustainable growth; (2) boost human capital and social inclusion; and (3) modernize and improve the efficiency of public institutions.

    The CPF2018-2022 represents both continuity with and enhancement of the current program and more intensive engagement in priority areas. It will deepen investments in transport, information and communication technology, and energy to support spatial transformation and inclusive growth, and will significantly scale up human capital development. These interventions will address the rural-urban divide and boost the enablers for poverty reduction that affect access to infrastructure, social services and productive jobs. Given the key role of the private sector, the new framework will innovate to maximize access to finance and generate jobs for Tanzania’s development.

    International Finance Corporation (IFC)

    IFC’s current portfolio in Tanzania is US$220 million and is based on a strategy to proactively develop infrastructure projects through investment and advisory (Public-Private Partnerships) interventions; the projects focus on power, oil, and transportation. IFC will also work closely with IDA to identify actions to promote the more rapid commercialization of agriculture. IFC’s strategy places an emphasis on strengthening financial markets, particularly in terms of access to finance for MSMEs.

    IFC is looking to forge partnerships with local banks that are aimed at supporting its initiatives in the financial sector with local currency financing, as well as developing products to support the microfinance, SME, and housing sectors in Tanzania. IFC seeks to provide advisory services to improve the investment climate through reform programs that cover licensing, regulatory reform and other areas tracked in the Doing Business indicators.

    Knowledge Products

    High-quality, consolidated knowledge products facilitated and deepened policy dialogue, and informed design and realization of government programs. These products were used to inform plans for, e.g., tourism-led growth and initiatives related to energy, governance, education, and natural resources.

    The Tanzania economic updates have focused on select topics: productive jobs, unlocking the potential of the tourism industry, improving tax performance, and leveraging public private partnerships to finance development.

    Under the current Country Partnership Framework, the World Bank will continue to use analytics to guide operations. The analytical products will be prepared in close collaboration with the client, taking into consideration counterpart capacity.

    Under the new Country Partnership Framework, the World Bank’s knowledge products will use a combination of hands-on technical assistance, impact evaluations, policy notes and broader reports to inform the lending programs and the policy dialogue. The Systematic Country Diagnostic, completed in March 2017, has been recognized by a broad range of stakeholders as an important source of knowledge.

    Last Updated: Apr 19, 2018

  • The World Bank has been providing support to Tanzania for over 50 years and is currently among the lead partners to work closely with the Government of Tanzania (GoT) in its efforts to reduce poverty and promote economic growth.

    Improving health outcomes

    Between 1999 and 2015, under five mortality declined from 147 to 67 per 1,000 live births, and stunting among children under five from 48% to 34%. This has been mainly thanks to the higher coverage of bed nets, as well as vaccinations and vitamin A supplements for among children, and increased access to health facilities. Progress in reducing maternal mortality and neonatal mortality has been slow, however, something that is likely to be due to the low coverage of skilled deliveries and family planning. Worryingly, the use of insecticide-treated nets among children under five has decreased from 72% (2011/12) to 55% (2015/16), a trend that poses a threat to achievements made in the reduction of under-five mortality overall, given the fact that malaria is key contributor to infant mortality. Total fertility rates have also remained high at 5.2 children per woman in 2015 (only a little lower than 5.6 in 1999). The Universal Health Coverage by 2025, noted in the Government’s Health Sector Strategic Plan IV, has been anchored in the recently developed Health Financing Strategy, with a focus on smart, reliable, and sustainable health financing.

    The World Bank continues to support Tanzania to achieve its health sector objectives with several programs, including the Strengthening Primary Health Care for Results Program ($306m), the first Program for Results (PforR) in the health sector aiming to improve the quality of primary health care services nationwide with a focus on maternal, neonatal, and child health services. Progress made so far includes achieving Disbursement Linked Indicators, which incentivize performance at all levels of government. Early evidence shows that the government is placing a strong focus on improving the quality of services and on data-driven delivery and results. 

    The Bank is adopting a life cycle approach to its human development investments, entitled “Investing in Early Years”, by supporting nutrition and early childhood stimulation interventions in view of the large returns at the individual level and for economic development at large. Evidence shows that children who received these effective interventions and were not stunted had a 10% lower risk of living in poverty. The cost of not reducing childhood stunting to a 15% prevalence rate is estimated at about 11% of the country’s GDP.

    Increasing local government capacities

    Tanzania is rapidly urbanizing—over half of its population of about 55 million will live in urban areas as soon as 2030. The share of the country’s urban population increased from 18% to 27% from 1990—2012; 32% of the population lives within 100 km of the four largest cities (Dar es Salaam, Arusha, Mwanza, and Mbeya). Half of the population is expected to live in major and secondary cities by 2030. As with most developing countries, Tanzania has a dominant primary city—Dar es Salaam, which has about 40% percent of the country’s urban population, 17% of GDP, and 70% of taxes. Dar is the third fastest growing city in Africa, with growth of an average 5.8% annually in the decade from 2002 to 2012.

    Through a series of projects and programs, the World Bank has been expanding the capacities of local government in 29 Tanzania’s cities and towns to deliver improved services. These include the Dar es Salaam Metropolitan Development Project, the Tanzania Strategic Cities Project (TSCP), the Urban Local Government Strengthening Program, the Zanzibar Urban Services Project, and the Tanzania Urban Resilience Program. These programs encompass not only critical investment in urban infrastructure, including roads, drainage canals, street lighting, community parks, and the upgrading of low-income areas, but they also target strengthening institutional capacity through improving urban management systems.

    Under the TSCP, 143 km of urban roads, 26 km of major drains, eight bus stations, 231 solid waste collection points and five sanitary landfills have been completed, benefitting almost 1.5 million people to date. The design and quality of work (e.g. road investments with enhanced safety features and provisions for non-motorized transport) are setting a higher standard for infrastructure across all Tanzanian cities. The sanitary landfills the project built were Tanzania’s very first, and included developing a community of practice for landfill operators.

    TSCP piloted an innovative GIS-based Local Government Revenue Collection and Information System (LGRCIS), which has seen great initial success; estimates put the own-source revenue increase of cities at an average of 30% in the first three years. LGRCIS has been scaled up nationally and is also planned for Zanzibar. Under the GoT’s own initiative it is now in more than 160 local government authorities. This has great potential in helping address the central government’s fiscal pressures, and to help local government be less reliant on central transfers for service delivery.

    The Urban Local Government Strengthening Program (USGLP) has financed the rehabilitation of 93 kilometers of road (of which 46 kilometers were constructed to bitumen standard), 41 solid waste skips, 7 solid waste collection trucks, 6 bus stands, 3 markets and 2 abattoirs. At the start of the program, none of the Urban Local Government Authorities had General Planning Schemes; now nine of them have completed their final draft and are soon expected to be approved. The ULGAs made excellent progress at increasing their Property Tax Collection, utilizing transparent and efficient e-governance systems.

    Key results achieved to date on the Zanzibar Urban Services Project (ZUSP) include: the completion of about 7km of 19.5km drainage networks; of 11km of street lighting; the near completion of 340m of sea wall and a promenade in the UNESCO-registered Stone Town; the restoration of 3 municipal office buildings and completion of small-scale community infrastructure projects, such as footpaths, drainage, a marketplace and bus park. Zanzibar’s first sanitary landfill and transfer station is in the final stage of design.

    ZUSP-supported urban planning analytical work provided solid ground for the upgrading and redevelopment of critical urban areas that have great potential to contribute to Zanzibar’s social and economic development, based on the growing tourism sector. ZUSP also supports the introduction of a property tax collection system in a pilot area, and a new GIS-based revenue collection system integrating the new property tax administration.

    Last Updated: Oct 05, 2017

  • For the 2017/18 National Budget, the Government anticipated that development partners would contribute $1.7 billion, of which the International Development Association would contribute about $880 billion (equivalent to 46% of the total donor contribution). Other financing is also expected from AFDB (10%), DFID (9%), Sweden (4.3%), and the European Union (3.8%).

    The World Bank Group is an active player in the Development Partners Group, established in 2004 to strengthen development partnership and effectiveness of development cooperation. It also co-chairs the Public Expenditure Review, a joint Government-development partner platform for dialogue around fiscal policy and expenditure management.    

    Last Updated: Oct 05, 2017

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LENDING

Tanzania: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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In Depth

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Doing Business in Tanzania

The Doing Business report provides objective measures of business regulations and their enforcement. See where your country ranks.

Additional Resources

Country Office Contacts

Main Office Contact
50 Mirambo Street
P. O. Box 2054
Dar es Salaam, Tanzania
+255-22-216-3200
For general information and inquiries
Loy Nabeta
Communications Officer
+255-22-216-3246
lnabeta@worldbank.org
For project-related issues and complaints
tanzaniaalert@worldbank.org