Overview

  • Tanzania has sustained relatively high economic growth over the last decade, averaging 6–7% a year. 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. Magufuli’s Fifth-Phase Government, 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) grew by 7.1% in 2017 according to official statistics. Official release of quarterly 2018 growth data is pending due to an on-going GDP rebasing exercise. Growth in 2017 was supported by expansion in both the industrial and agriculture sectors. Improvement in infrastructure and relatively stable power supply facilitated the expansion in the industrial sector while favorable weather conditions supported increased crop production. Growth in the services sector slowed, for example in public administration as public recurrent spending was held in check. 

    Supported by lower food prices, the inflation rate has continued to decline, reaching 3.3% by the end of July 2018. The external balance has strengthened, with a lower current account deficit caused by a decline in imports outstripping the decline in exports. Gross foreign reserves remain high at $5.5 billion in June 2018, sufficient to cover 5.6 months of imports. Monetary policy has been accommodative, however credit growth to the private sector has remained below 5% since June 2017. The financial sector remains broadly stable with adequate capitalization and liquidity ratios.

    The fiscal deficit remained low in 2017/18 at 2.1% of GDP, slightly higher than the 1.5% of GDP recorded in 2016/17. Total expenditures increased from 18.3% of GDP to 18.6% of GDP during the fiscal year, however execution of the development budget continued to be low at about 65% in 2017/18. Behind the low headline deficit, fiscal policy implementation has been challenged by a high level of central government payment arrears, topping 5% of GDP in June 2018.

    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.

    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.

    Last Updated: Oct 12, 2018

  • World Bank Group (WBG) Engagement in Tanzania

    The current World Bank (WB) portfolio in Tanzania includes 24 projects funded by the International Development Association (IDA)for a net commitment of $4.2 billion. Key sectors supported by WB projects include transport/ICT (28%), social, urban, rural development (22%), energy (9%), education (8%), social protection (9%), water/sanitation (5%), health/nutrition (5%) and agriculture, finance/markets, trade, governance, and environment/natural resources, which make up about 1-2% of the portfolio for each area. Tanzania also participates in five regional projects supporting transport, energy, environment, health and education, with a total commitment amount of $393 million.

    In March 2018, the WB Board of Executive Directors endorsed the new Tanzania Country Partnership Framework 2018-2022 (CPF). 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, the 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 strategy in Tanzania involves proactively developing infrastructure projects through investment and advisory (Public-Private Partnerships) interventions, focusing on power, oil, and transportation. IFC will also work closely with the International Development Association to identify actions to promote more rapid commercialization of agriculture. IFC’s strategy places emphasis on strengthening financial markets, particularly in terms of access to finance for micro and small-medium enterprises. IFC is looking to forge partnerships with local banks aimed at supporting its initiatives in the financial sector with local currency financing, as well as developing products to support the microfinance, small-medium enterprises and housing sectors. 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 CPF, the 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, and knowledge products will use a combination of hands-on technical assistance, impact evaluations, policy notes and broader reports to inform the lending programs and 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: Oct 12, 2018

  • Education: Tanzania has shown progress in primary education, where levels of access, completion and equity have improved, 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.

    Financial Inclusion: The financially-included population increased to 62% in 2017 from 45% in 2009. This has been primarily driven by growth of mobile money services. Tanzania ranks second globally in mobile money use with mobile money transactions value-to-GDP ratio of 53%. The World Bank Group also engages in financial inclusion policy development and implementation, as well as technical assistance and financing investments by the private sector. For example, the International Finance Corporation (IFC) works with financial institutions to provide long-term funds for MSMEs. IFC facilitated the negotiations of an interoperability agreement between mobile financial services providers, making Tanzania one of the first countries in the world with an industry-agreed interoperable market for mobile financial services. IFC is also supporting the Bank of Tanzania (BoT) and industry stakeholders to develop an efficient credit bureau reference system, including the support for the development of the credit reporting system regulatory and oversight framework for the supervision of credit bureaus and data providers in order to build confidence in the system and improve upon data quality. IFC also supports capacity building for key stakeholders and consumer awareness and literacy of the system and its benefits for lenders and borrowers.

    The World Bank Group (WBG) engagements in Financial Sector: The World Bank and International Monetary Fund (IMF) recently conducted the Financial Sector Assessment Program (FSAP) to review the current financial sector landscape in Tanzania, including financial sector stability and development aspect (diversification and financial inclusion). The FSAP results will support the government and regulators to strengthen and develop a well-diversified financial sector.

    The World Bank (WB) has also been actively supporting development of the long-term finance market, especially the capital market and housing finance. The Bank supported the Dar es Salaam Stock Exchange (DSE) to move from a manual trading system to an automated trading system and provide options / recommendations for new product development. This also led to the establishment of the Tanzania Mercantile Exchange. On housing finance, the WB has supported the development of the mortgage finance and affordable housing markets through a sustainable private sector-driven approach. The Tanzania Mortgage Refinance Company (TMRC) was established to provide medium and long-term liquidity to financial institutions. Between 2011 and 2017, the mortgage portfolio significantly increased and financial institutions offering mortgage products increased 11 times while maturity of mortgage loans is now 3-5 times longer. TMRC has also started to raise capital from the bond market and the project is now a strong model of maximizing finance for development. 

    Last Updated: Oct 12, 2018

  • For the 2017/18 National Budget, the government estimates that development partners have contributed $1.3 billion, of which the International Development Association contributed about $687 million (equivalent to 51% of the total donor contribution).

    Tanzania is establishing a new overarching framework for coordinating the development partnership with the previous framework driven by the General Budget Support (GBS) system having ended in 2015. There has been an effort between development partners (DPs) and the government to re-establish the policy dialogue, based on a study commissioned to an international team led by Donald Kaberuka, former president of the African Development Bank, integrating joint analytical programs such as the public expenditure review (PER) process, Technical Assistance, and budget support.

    Donor coordination has been strong at the sector level, and sector working groups have been effective. The Bank has been actively engaged in and has often led coordination in, for example, fiscal management and PER, governance, statistics and poverty monitoring, energy, transport, agriculture, private sector development, health and education, and ICT. Leveraging its unique global expertise and knowledge in individual sectors, the Bank has been playing a catalytic role in informing the sector-level dialogues and supports by the donors in the country.

    Partnering with other development organizations for lending and analytical work has been at the core of the WBG’s country strategy in Tanzania. Several large lending programs, such as the Productive Social Safety Net Project, the Education Program-for-Results, the Health Program-for-Results, and more recently the Dar es Salaam Maritime Gateway Project, are co-financed by bilateral donors, including the US, UK, and Sweden. Partnerships through trust funds, such as sub-sovereign public-private partnerships (PPPs) (Department for International Department) and investment climate advisory services (Canadian International Development Assistance), provide important complementary support to government’s capacity building. Collaboration is equally strong through advisory services and analytics such as the programmatic PER work, anti-corruption work, and domestic enterprise development (e.g., local content).

    Last Updated: Oct 12, 2018

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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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Nov 07, 2017

Looking After Its Water

In 25 years, Tanzania’s population and economy has doubled and its renewable freshwater supply has halved.

Apr 19, 2018

Africa's Pulse, No. 17, April 2018

A new analysis of African economies shows the region’s growth is projected to reach 3.1% in 2018, and average 3.6% in 2019–20.

Oct 30, 2017

Monitoring Progress in Policy

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

Oct 30, 2017

International Development Association (IDA) in Africa

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

Oct 30, 2017

World Bank Africa Multimedia

Watch, listen and click through the latest videos, podcasts and slideshows highlighting the World Bank’s work in Sub-Saharan Africa.

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