The World Bank in Tanzania

Tanzania’s economy has been resilient, growing by 5.2% in 2023 compared to 4.6% in 2022. The services sector remained the main driving force behind Tanzania’s overall economic growth, expanding by 7.3%, supported by buoyant economic activities in financial and insurance, transport and storage, and trade and repair subsectors. Despite recurrent droughts and floods, the agriculture sector grew at 3.4% in 2023.

Inflationary pressures continued to be moderate in Tanzania. Headline CPI inflation receded from 4.9% in January 2023 to 3.0% in January 2024 due to eased global commodity prices, moderate and timely fiscal subsidies, and tightening monetary policies. Notably, the Bank of Tanzania adopted an interest-rate-targeting monetary policy regime in January 2024 to strengthen inflation controls and anchor inflation expectations.

The government has demonstrated commitment to narrowing the fiscal deficit through enhanced tax revenue collection and restrained spending. The fiscal deficit fell from 4.6% of GDP to 3.0%, aligning well with the fiscal consolidation target of 3% for FY2023/24.

Tanzania has also narrowed its current account deficit to 3.9% in 2023, helped by an uptick in tourism receipts, declining prices of commodities Tanzania imports, and an exchange rate policy aimed at accumulating foreign exchange reserves. In this context, between June and December 2023, Tanzania's shilling depreciated by 7.8% against the US dollar, while gross reserves rose from $5.2 billion (4.8 months of imports) to $5.5 billion (4.5 months of imports). A flexible exchange rate regime and adequate external buffers, including foreign exchange reserves, will alleviate the recent forex pressures that the country has been experiencing.

Going forward, GDP is projected to grow 5.6% in 2024, with the long-run potential of around 6%, supported by an improving business environment and ongoing structural reforms. Supported by a promising macroeconomic outlook and an increased budget to unlock sectoral productivity in the agriculture sector, which employs three-quarters of people experiencing poverty, the poverty rate could decline in the medium term.

Despite this positive outlook, there are some external and domestic risks. The possibility of a global recession is the main external risk, while partial implementation of structural reforms, particularly those related to boosting the private sector, is the main domestic risk. There is also the continuing risk of growth not translating into poverty reduction, which must be mitigated by implementing reforms toward inclusive growth, with a special focus on investing in agriculture productivity and human capital.

The current administration has continued to support private-sector development, and in 2023, the legislature passed a new Tanzania Investment Act along with its implementing regulations. While an

important step forward, it fell short of addressing several critical gaps. The government is reviewing several amendments to further strengthen the Investment Act. The proposed amendments, if approved in 2024, will significantly strengthen the investor protection guarantees. In September 2023, Tanzania officially launched the Tanzania Electronic Investment Window (TeIW), a platform designed to seamlessly integrate facilitation services under the One Stop Facilitation Centre for all investors.

While net FDI inflows in Tanzania are quite volatile and have been on a downward trend over the past few years, there are signs of partial recovery in investment activity, including an increase in the share of FDI in GDP from 1.1% in 2020 to 1.5% in 2022. Tanzania Investment Center has also reported a nearly 70% increase in number of registered investment projects between February and September of 2023 (344 projects) compared to the same period in 2022 (203 projects).

Last Updated: Apr 02, 2024

As of April 1, 2024, the World Bank financing for operations in Tanzania amounts to $9.58 billion, comprised of 26 national projects ($8.54 billion commitments) and six regional projects ($1.04 billion commitments). Key sectors in the national portfolio are transport (21%), education (17%), urban resilience (14%), water (10%), energy (9%), macroeconomic, trade and investment (9%) and social protection and sustainability (9.0%). Other projects cover governance, digital development, human development, and poverty. Tanzania's regional projects are focused on agriculture, energy, education, and poverty and equity.

A new Country Partnership Framework (CPF) is being developed in partnership with the Government of Tanzania and is expected to be completed in July 2024. The completed 2018-2022 CPF  aligned with the priorities identified in Tanzania’s Second Five-Year Development Plan and Zanzibar’s Third Strategy for Growth and Reduction of Poverty, supporting three focus areas: (1) enhancing productivity and accelerating equitable and sustainable growth, (2) boosting human capital and social inclusion, and (3) modernizing and improving the efficiency of public institutions.

After two decades of sustained growth, Tanzania reached an important milestone in July 2020, when it formally graduated from low-income to lower-middle-income country status. This achievement reflects sustained macroeconomic stability–in addition to the country’s rich natural endowments and strategic geographic position−that has supported growth. The World Bank has been a key development partner for Tanzania during this time, supporting outcomes in a number of critical areas, including transport, education, health, social protection, energy, water, urban resilience, housing, ICT, and governance. Aiming for a growth path that is more inclusive and sustainable, a key focus has been on addressing the rural-urban divide and boosting the enablers of poverty reduction. Tanzania’s larger development agenda remains unfinished, however, and as the country looks to transition to middle-income country status, the focus will remain on the quality of its growth and ensuring that Tanzania is a country with well-developed human capital, an ample supply of high-quality livelihood opportunities, and broad-based gains in living standards.

International Finance Corporation (IFC)

The IFC’s operation in Tanzania is guided by the WBG CPF, the Government of Tanzania’s Vision 2025, and IFC’s Tanzania repositioning strategy approved in February 2022, which focuses on developing the agricultural sector (with a focus on improving aggregation, warehousing, and logistics infrastructure to boost agriculture), deepening financial services, supporting infrastructure development in power and telecommunications and, on a merit basis, investing in sustainable mining. Additionally, IFC investment is gender-inclusive and climate-sustainable.

IFC's committed portfolio in the country is well-diversified, covering all major sectors with a total exposure of $406 million in long-term funding as of January 2024. We have committed $245 million so far in FY24, and we expect to commit at least an additional $28 million by the end of June. IFC’s advisory portfolio is over $11.7 million, with an additional $6.3 million recently approved for gender. IFC is building its financial institutions and manufacturing, agribusiness, and services advisory programs in Tanzania, with an initial $8.76 million budgeted for FY24-26; this excludes ongoing projects and client fees. The World Bank is working on a new CPF for Tanzania, and IFC will continue to focus on developing the agricultural sector (improving aggregation, warehousing, and logistics infrastructure to boost agriculture), deepening financial services, supporting infrastructure development in power and telecommunications, and, on a merit basis, investing in sustainable mining. IFC has also sought to leverage partnerships, working with international partners (CIDA, EU, GIZ, DIFD, Japan Trust Fund, and USAID) to support and implement private sector development initiatives.

Multilateral Investment Guarantee Agency (MIGA)

Until January 2023, MIGA’s exposure in the country consisted of a political risk insurance guarantee of $22.6 million, which supported agricultural sustainability in Tanzania. The guarantee covered a reinsurance contract to the Overseas Private Investment Corporation in support of private investments (up to $60 million) in Silverlands Tanzania Limited to purchase the assets and expand two existing agribusinesses. This project expanded Tanzanian land under cultivation through development of further irrigation capacity and improvement of management processes and skills while increasing livestock production through more efficient processes and technology. The guarantee expired at the end of January 2023.

MIGA has recently approved a political risk insurance guarantee for TPG’s investment in Airtel Mobile Money Tanzania (the contract of guarantee has not yet been issued). MIGA is currently working with ABSA Bank of South Africa to add its two subsidiaries in Tanzania to an existing capital optimization guarantee. MIGA is also working with an investor to support a distributed energy project (including hydro and wind power) in rural southern Tanzania. MIGA will aim to use its new Trade Finance Guarantee (TFG) to facilitate trade and economic activities in the country as progress is made on the African Continental Free Trade Agreement. The TFG would cover the risk of non-payment by SOE Banks to IFC with respect to IFC guarantees issued under the Global Trade Finance Program. In addition, MIGA will leverage deeper collaboration across the WBG to de-risk foreign investment, paying close attention to projects that support climate finance and boost job creation.

Analytics and Knowledge Products

The Bank continues to use analytics to guide project operations, along with hands-on technical assistance, impact evaluations, policy notes, and broader reports to inform lending and policy dialogue. The longstanding Tanzania Economic Update (TEU) series has focused on a range of topics, including the impact of investing in water supply, sanitation, and hygiene; the importance of investing in girls and human capital development; financial inclusion; agriculture for inclusive growth and poverty reduction; transforming tourism; addressing the impacts of COVID-19, and expanding women’s access to assets and economic opportunities. A Country Climate and Development Report is among the analytical works currently under preparation with its completion planned for later this year.

Last Updated: Apr 07, 2024

The World Bank has supported the improvement of health outcomes in Tanzania through several operations. The IDA-financed Strengthening Primary Health Care for Results program in Tanzania (SPHCforR), which concluded in 2022, aimed to improve the quality of primary health care services across the country, with a focus on maternal, neonatal, and child health and Nutrition (MNCH -N) services. The program also aimed to improve health and nutrition outcomes and, at the same time, reduce inequalities across the districts. Among the achievements registered were:

·       Expanded access to Comprehensive Emergency Obstetric and Newborn Care (CEmONC): Over 100 new health centers were constructed and equipped to provide critical CEmONC services.

·       Improved maternal and newborn health outcomes: Nearly 300,000 women received life-saving caesarian sections at these facilities.

The program also supported the delivery of essential primary health services through the Health Basket Fund, with the following achievements:

·       Improved safe delivery: Over 4.7 million pregnant women received antenatal care, and half a million delivered safely with skilled attendants.

·       Increased immunization rates: The project exceeded its target by immunizing around 11 million children.

·       Improved postnatal care: The age of newborns receiving postnatal care within 48 hours of delivery, including those born at home, surged from 40% to 72% between 2015 and 2020.

The World Bank is building on these achievements through the Tanzania Maternal and Child Health Investment Program (TMCHIP), a five-year program worth $275 million that aims to improve the quality and scale up essential healthcare services in Tanzania. The program includes a $250 million Program for Results (PforR). With only seven months of implementation, these initial results have started to emerge:

·       Strengthened capacities for the health facilities: 73% of dispensaries nationwide now have at least two qualified health providers (nurse/midwife and clinician). An additional 300 staff were recruited and deployed to primary healthcare facilities.

Improved delivery of quality health services: Healthcare workers in four regions have undergone mentorship and attachment programs, which equipped staff with the skills and hands-on experience needed to improve service delivery capabilities.

Last Updated: Apr 02, 2024

Partnering with other development organizations has been a key emphasis of WBG's Country Partnership Framework in Tanzania. The Development Partners Group, chaired by the UN and co-chaired by a bilateral partner, serves as an important forum to discuss development issues as well as engage with the government on strengthening partnerships between the government and its development partners. Several large lending programs, such as the Productive Social Safety Net Project, the BOOST Primary Student Learning Program-for-Results, and the Dar es Salaam Maritime Gateway Project, are co-financed by bilateral donors, including Sweden and the United Kingdom. The Msimbazi Basin Development Project has been co-financed by the Netherlands Ministry of Foreign Affairs and the Spanish Agency for International Development Cooperation.

Last Updated: Apr 02, 2024