The World Bank in Tanzania

Tanzania has enjoyed a strong post-pandemic recovery despite a challenging external environment. The GDP growth rate reached 4.6% in 2022 and is expected to rise to 5.1% in 2023, supported by the implementation of structural reforms to strengthen the competitiveness of the economy, improve the business and investment environment, and reduce the cost of regulatory compliance. Growth is projected to reach the long-run potential of about 6 percent in 2025. Tanzania’s headline inflation was substantially lower than many regional economies and kept declining since the beginning of 2023. The inflation rate fell from 4.4% in June 2022 to 3.3% in July 2023, driven by the easing of global commodity prices, the government subsidies on fuel and fertilizer products, as well as the stability of the Tanzania shilling vis-à-vis the US dollar.

The growth has been largely concentrated in sectors that employ relatively fewer workers from low-income households, which has resulted in a weak impact of economic growth on poverty reduction. While no significant change in the poverty rate is anticipated in 2023, the prospects for poverty reduction in Tanzania are modestly optimistic as economic recovery continues.

Despite broadly stable public revenue collection, an increase in overall expenditures widened the fiscal deficit from 3.6% of GDP in FY2021/22 to 4.4% in FY2022/23. The government has continued to effectively manage its debt levels amid external challenges, such as stricter financing conditions. The latest joint IMF-World Bank Debt Sustainability Analysis, published in April 2023, maintained Tanzania's risk of debt distress at a moderate level, which is consistent with the previous assessment. To safeguard medium-term debt sustainability, it is advisable for the government to maintain access to concessional financing to the extent possible while concurrently enhancing revenue mobilization and strengthening public investment management.

Despite the recent strong growth in exports, largely driven by tourism rebound, the stronger growth of imports pushed up by domestic demand compounded with rising international commodity prices widened the current-account deficit (CAD) to 5.6% of GDP in 2022. The CAD was a largely funded drawdown of official gross reserves, which fell to $5.3 billion (covering 4.8 months of imports) by end-June 2023 from $6.4 billion (6.6 months of imports) at the end of 2021. Although the Tanzanian shilling remained relatively stable against the US dollar in 2022, in 2023, pressure on the shilling has increased.

Last Updated: Sep 14, 2023

As of August 2023, the World Bank portfolio in Tanzania amounts to $8.3 billion, comprised of 23 national projects ($7.26 billion commitments) and 6 regional projects ($1.05 billion commitments). Key sectors in the national portfolio are transport (22.3%), education (20.3%), water (12.1%); urban resilience (10.7%), energy (9.0%), and social protection (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 to be developed this year in partnership with the Government of Tanzania and is currently anticipated to be completed in May 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)

IFC 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 of $644.5 million. IFC management has approved a $10 million gender program as a follow-on to the successfully completed Finance2equal gender program and CIDA-funded Business Enabling Environment Support Program. The IFC advisory portfolio is over $10 million. IFC has also worked with the Gates Foundation-funded livestock sector development program, which is now completed.

Multilateral Investment Guarantee Agency (MIGA)
A MIGA guarantee of $22.6 million 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 the 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 end-January 2023.

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. MIGA is also looking to support potential investment in Rift Valley Energy and Airtel Mobile Money Tanzania.

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 for this fiscal year.

Last Updated: Sep 14, 2023

Tanzania embarked on reforms in the Technical and Vocational Education and Training (TVET) sector as an integral part of the Government’s Five-Year Education Sector Plan (2016–2021) and the National Skills Development Strategy (2016-2025). Since 2016, the World Bank has been supporting these reforms through two programs – the Education and Skills for Productive Jobs (ESPJ) – concluded in December 2022, and the regional East Africa Skills for Transformation and Regional Integration (EASTRIP). Employing a combination of results-based and traditional project financing instruments, the World Bank’s technical and financial assistance has been focused on the system and service delivery level, especially in priority sectors, which include agriculture, tourism and hospitality, energy, transport and logistics, construction, and Information and Communications Technology.

With IDA support over the last five years, access to TVET in Tanzania expanded significantly, with annual enrollment growing by more than 10% per year. To date, there are more than 500,000 students enrolled in the country’s 1,324 public and private TVET institutions, including 440 technical institutions, 830 vocational institutions and centers, and 54 Folk Development Colleges, pursuing formal certificate, diploma, and degree programs as well as short term demand-driven programs. Though still small relative to the population, the size of the TVET skills sector is almost three times that of the higher education sector in Tanzania. The government’s new Five-Year Development Plan is intensifying reforms to improve Tanzania’s competitiveness and industrialization.

The Education and Skills for Productive Jobs Project (ESPJ): The objective of the national IDA-financed ESPJ Program for Results was to strengthen the institutional capacity of Tanzania’s skills development system and to promote the expansion and quality of labor market-driven skills development opportunities in select economic sectors. ESPJ supported capacity building for the entire national TVET system, with broad coverage of beneficiaries ranging from informal to formal providers at different levels. The program established and operationalized the Skills Development Fund, which enabled 45,700 trainees (49% female) to access short-term training, apprenticeships, and internships. It also established Sector Skills Councils and initiated quality assurance measures in TVET. The employability rate of the sample of 47,500 graduates for the short training programs was estimated at 80.9%.

East Africa Skills for Transformation and Regional Integration Project (EASTRIP): This is a five-year regional integration project (2019-2024) being implemented in Ethiopia ($150m), Kenya ($60m), and Tanzania ($75m) among 16 competitively selected Regional Flagship TVET Institutes (RFTIs). The objective is to increase access and improve the relevance and quality of training programs in agriculture, ICT, manufacturing, transport, and energy at the diploma technician level and support regional integration. EASTRIP adopts a results-based approach to incentivize outputs and outcomes in student enrollment, collaboration with industry, staff industry attachment, staff and student exchanges and mobility, development of industry-certified programs and income generation, and community outreach. In Tanzania, it supports four technical colleges: Arusha Technical College, Dar es Salaam Institute of Technology, Mwanza Institute of Technology, and the National Institute of Transport.

Now in its fourth year of implementation, EASTRIP has registered an increase from 6,971 students at baseline in the allied colleges to 25,694 students (165%), surpassing the overall project target to enroll 20,000 students annually in both long-term and short-term training programs. For example, at the ATC, enrollment rose by 133% from 2,017 students in the 2015/2016 academic year to 4,693 students in 2021/2022. During this period, the number of female students rose from 389 to 769 students, a 98% increase.

With female students traditionally under-represented in Science, Technology, Engineering, and Mathematics (STEM) - related TVET fields, EASTRIP has supported colleges to conduct roadshows visiting secondary schools across different regions of Tanzania, targeting those with low enrollment rates for girls in STEM. This initiative is meant to motivate and inspire girls to pursue careers in STEM. As a result of these efforts, the program has successfully expanded female enrolment from 1,191 students at baseline to 6,025. To attract the participation of more women and girls. As an example, at the Dar es Salaam Institute of Technology, enrolment rose from 629 (14% of total enrollment) in the 2016/2017 academic year to 1,338 (23% of total enrollment) in 2022/2023 – a 112% increase.

Over the past few years, EASTRIP has helped make 238 courses more demand-driven and competency-based, and student enrollment has more than tripled. Tracer studies conducted by the EASTRIP-allied colleges have so far shown a 65% average employment rate six months after graduation, with an enrollment rate of 64% for women.  

Last Updated: Sep 14, 2023

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: Sep 14, 2023