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Overview

Following two decades of sustained growth, Tanzania reached an important milestone in July 2020, when it formally graduated from low-income country to lower-middle-income country status. Tanzania’s achievement reflects sustained macroeconomic stability that has supported growth, in addition to the country’s rich natural endowments and strategic geographic position.

Political Context

President Samia Suluhu Hassan was sworn in on March 19, 2021, as the United Republic of Tanzania’s sixth, and first woman, president, following the death of President John Magufuli on March 17, 2021. President Hassan was the Vice President of the Fifth-Phase Government from October 2015. The new Sixth Phase administration has adjusted its policies and programs to reflect an evolving social and economic context, but the broad policy objectives remain guided by the Tanzania Development Vision 2025 and its supporting five-year development plans. The government is prioritizing implementation of a new strategy to contain the COVID-19 pandemic, and in July 2021 it started implementing the COVID-19 National Vaccine Deployment Plan. Since the launch of the vaccination program in August 2021, through December 27, 2021, only 2,431,769 vaccine doses had been administered—a slow pace by global standards. The government also resumed reporting COVID-19 data to the World Health Organization. Enhancing accountability within the civil service continues to be a focus. The government is also proactively engaging with multilateral and bilateral partners in the region and worldwide; and it has reaffirmed the private sector as the engine of economic growth by addressing major constraints on private investment.

 

Economic Overview

Economic activity in Tanzania gradually recovering in the third quarter of 2021, with the surge mainly driven by the hospitality, mining, and electricity sectors. Leading indicators such as cement production, electricity generation, private-sector credit, goods and services exports, nonfuel goods imports, telecommunications, mobility, and tourist arrivals all improved in 2021, though activity in most sectors remains below pre-pandemic levels. Based on preliminary findings from recent telephone surveys, there are positive signs with employment among heads of households returning to its January 2020 levels in mid-2021. The World Bank estimates a real GDP growth rate of 4.3 percent and a GDP per capita growth rate of 1.3 percent in 2021, following a 1.0 percent per capita GDP contraction in 2020. Meanwhile, the national poverty rate is estimated to have declined marginally from 27.1 percent in 2020 to 27.0 percent in 2021, driven by the recovery of employment and nonfarm business revenue.

Official GDP data for Zanzibar shows expansion during the first half of 2021 but with uneven growth rates across sectors. The services sector, accounting for nearly 50 percent of Zanzibar’s GDP, expanded by 9.4 percent in the first half of 2021, while the agriculture sector expanded more slowly at 7.1 percent, and the industrial sector contracted by 8.7 percent. An estimated 60,000 jobs are directly or indirectly linked to Zanzibar’s tourism sector. Between January and September 2021, the number of tourist arrivals increased to 252,937, albeit still well below the 376,732 recorded during the same period in 2019. Nevertheless, rising tourist arrivals supported the growth of accommodation and food service, while public administration also contributed to the expansion of services.

Although exports have increased, Tanzania’s current-account deficit widened slightly, reaching 2.0 percent of GDP at end-September 2021, as import growth more than offset export growth. Services and manufacturing exports to East African Community member states significantly, but the implementation of capital projects spurred a sharp rise in imports of oil and capital goods. The current-account deficit was funded largely by external loans and foreign direct investment. The Tanzanian shilling (TZS) remained relatively stable against the currencies of major trading partners in 2021. The authorities have continued to implement an expansionary monetary policy, but the growth rate of credit to the private sector remained relatively low at 5.6 percent in October 2021. Tanzania’s inflation rate rose to 4.1 percent in November 2021, its highest level in the past three years, but it remains among the lowest and least volatile in the EAC.

The latest joint IMF-World Bank Debt Sustainability Analysis, conducted in September 2021, concluded that Tanzania’s risk of external debt distress had increased from low to moderate. The downgrade primarily reflected the collapse of tourism exports during the COVID-19 pandemic in a context of increased non-concessional borrowing and rising debt service.

Growth is expected to strengthen over the next two years, assuming pandemic conditions ease and the external environment improves. The real GDP growth rate is projected to reach 4.5–5.5 percent in 2022 and average about 6 percent over the medium term as exports and domestic demand recover. Risks to Tanzania’s economic outlook have moderated, but the recovery continues to hinge on external developments and domestic health policies, as well as continued support to the private sector. The evolution of the pandemic and the pace of vaccination, both globally and domestically, will be the most crucial factors driving Tanzania’s outlook. An accelerated domestic vaccination program; increased regional trade and cooperation; and policy reforms designed to improve the business environment and support the growth of the private sector have somewhat mitigated downside risks.

Social Context

In 2021, the national poverty rate is estimated to have declined marginally from 27.1 percent in 2020 to 27.0 percent in 2021, driven by the recovery of employment and nonfarm business revenue.

Tanzania has experienced over 20 years of sustained economic growth, culminating in its transition from low-income to lower-middle-income status in July 2020. Between 2007 and 2018, the national poverty rate fell from 34.4 to 26.4 percent, while the extreme poverty rate dropped from 12 to 8 percent.

Tanzania’s sustained progress in expanding women’s economic opportunities has contributed to its recent success in growth and poverty reduction. The female labor-force participation rate rose from 67 percent in 2000 to 80 percent in 2019, well above the average of 63 percent for Sub-Saharan Africa, and among the highest on the continent. Moreover, a large share of Tanzanian women are now salaried workers, and the ratio of women to men in jobs paying wages and salaries rose from 0.35 in 2000 to 0.64 in 2019. Meanwhile, the share of women engaged in unpaid agricultural work fell from 78 percent in 2004-05 to 64 percent in 2015-16.

Despite these impressive gains, several factors continue to hinder the ability of Tanzanian women to realize their full economic potential and the country stands to make strong economic gains by addressing them urgently.

Urban poverty rates are significantly higher among female-headed households (20.3 percent) than among male-headed households (14 percent), and the share of employed women dropped from 79 percent in 2004-05 to 72 percent in 2015-16. Women are much more likely than men to be engaged in unpaid labor, and women with wage jobs tend to earn less than their male counterparts. Tanzania’s average fertility rate is high at 4.8 children per adult woman, and elevated fertility rates—including high rates of adolescent pregnancy—are correlated with decreased economic activity, lower levels of education, poverty, and diminished female agency.

Tanzania’s large and persistent gender gaps in agricultural productivity, wage rates, the business environment, access to land, home ownership and financial services continue to slow economic growth. About 25 percent of men are sole owners of land, versus just 8 percent of women, while about 7 percent of women are sole homeowners, compared to 26 percent of men. Tanzania’s rates of both landownership and homeownership are below the average for Sub-Saharan Africa, due largely to low rates among women. The gender gap in agricultural productivity is estimated at 20-30 percent, and a full 97 percent of the gap is explained by women’s diminished access to male family labor, while the remaining percent reflects lower levels of access to agricultural implements and pesticides. In 2017, 44 percent of men had a mobile-money account, versus just 33 percent of women. This is complicated by slowly improving women’s health and education outcomes and exacerbated by persistently high levels of fertility, more specifically adolescent fertility, which significantly limits women’s productivity and their contribution towards economic growth.

Bridging the gender gap in agricultural productivity in Tanzania could lift approximately 80,000 citizens out of poverty every year while increasing annual agricultural output by 2.7 percent and boosting annual gross domestic product growth by 0.86 percent. Eliminating the gender wage gap could have significant effects on household welfare.

Amid the COVID-19 pandemic, female businesses were hurt more than male-owned businesses, with preliminary data from June-July of 2021, suggesting that 58 percent of male household members were working, compared to 42 percent of female household members.

In November 2021, the Government of Tanzania announced the removal of barriers to access to education, including those that have prevented pregnant girls or young mothers from attending formal school. This important decision underscores the country’s commitment to support girls and young women and improve their chances at receiving a better education. More than 120,000 girls drop out of school every year in Tanzania. 6,500 of them because they are pregnant or have children.

Last Updated: Apr 07, 2022

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

*Amounts include IBRD and IDA commitments
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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
External Affairs Officer
+255-22-216-3246
For project-related issues and complaints