Tanzania

Tanzania’s geo-strategic location, diverse natural resources, including fertile land and significant mineral deposits, and its demographic, market, and connectivity advantages offer substantial opportunities for sustainable and inclusive growth. Following the economic liberalization in the mid-1990s, Tanzania experienced notable structural transformation and productivity gains, while delivery of public services expanded significantly. These gains helped lay the foundation for decades of steady growth and macroeconomic stability, culminating in the country’s attainment of lower-middle-income status in 2020.

The drivers of growth and broader economic outcomes have shifted in recent years. Structural transformation and formalization have slowed, and the pace at which economic growth translates into poverty reduction and improved livelihoods has been reduced. The government recently launched Vision 2050, a long-term strategy that builds on the achievements and lessons of Vision 2025 and aims to guide Tanzania toward upper-middle-income status through more inclusive, resilient, and sustainable development.

Tanzania is a lower-middle-income country with a GDP per capita of about $1,400. The economy is diversified, with agriculture, industry, and services all making significant contributions to economic output. Agriculture remains the largest source of employment, accounting for more than half of all jobs, while rapid urbanization has resulted in nearly 40% of Tanzanians living in urban areas. The country’s young and growing population presents significant opportunities for economic transformation, productivity growth, and job creation.

Tanzania has maintained a strong record of macroeconomic stability and resilience, even amid global and regional shocks. Economic growth accelerated to 5.9% in 2025 and is projected to exceed 6% in 2026, supported by infrastructure investment, expanding services, and a gradual recovery in private sector activity, including foreign direct investment. Inflation has remained within the Bank of Tanzania’s target range, public debt is sustainable—helped by fiscal prudence—and ongoing business environment reforms are helping to attract investment. While poverty has continued to decline, progress has been slow, highlighting the need to accelerate the reforms toward creating a conducive business environment and investing in human capital, thereby ensuring that economic growth translates more effectively into improved living standards for all Tanzanians through more productive private sector jobs.

The World Bank's active IDA portfolio in Tanzania totals $8.4 billion across 33 operations (as of 8/31/26), supporting job creation through investments in human capital and people-centered service delivery, private sector growth, and resilience to shocks, emphasizing regional integration and risk management. The portfolio combines Investment Project Financing for physical and social infrastructure, Development Policy Financing supporting policy reform and institutional actions​, and Program-for-Results financing supporting strengthening institutions, systems, and building capacity.

IFC delivered $1.64 billion in commitments in FY26, including both own-account and mobilized financing, marking a record year for its program in Tanzania. In FY27, IFC’s active investment portfolio stands at $407 million. IFC has committed $453 million as of 8/31/26, with a further investment pipeline of approximately $646 million. FY27 commitments to date are concentrated in the financial sector, supporting access to finance and trade.

As well, IFC manages a $17.1 million advisory portfolio that, together with investments, support the mobilization of private capital, stronger businesses and value chains, and more productive and inclusive employment, contributing to Tanzania's private sector-led growth and economic transformation.

The WBG Guarantee Platform, housed at the Multilateral Investment Guarantee Agency (MIGA), has an active guarantee exposure of $122.19 million in Tanzania (MIGA: $111.45 million, IFC: $10.74 million) across 5 projects, supporting investments across the finance sector. MIGA has also supported the Trade and Development Bank through guarantees mobilizing $747 million in commercial financing to expand trade finance across member countries, including Tanzania. Going forward, MIGA will deepen collaboration across the WBG to de-risk foreign investment and focus on projects that align with the platform’s objectives of mobilizing private capital and driving economic growth and job creation.

The World Bank Group Country Partnership Framework (CPF) for FY2025-2029 aims to tackle Tanzania’s binding constraints and support the achievement of the country’s national development goals. The CPF focuses on three mutually reinforcing high-level outcomes: (i) enhancing human capital to boost labor productivity, (ii) catalyzing private sector-led growth, and (iii) enhanced resilience to shocks and climate impacts. Progress in these areas is underpinned by two cross-cutting priorities: increased empowerment of women and youth and improved government effectiveness with more efficient, transparent, and accountable institutions. The CPF is aligned with the Development Visions of the Government and Tanzania and Zanzibar.

Partnering with other development organizations is a key aspect of the CPF implementation. Several large lending programs, such as the Productive Social Safety Net Project, the BOOST Primary Student Learning Program-for-Results, the Msimbazi Basin Development Project, the Tanzania Food Systems Resilience Program, and the Dar es Salaam Maritime Gateway Project, are co-financed by bilateral donors, including Ireland, Netherlands, Japan, Spain, Sweden, and the United Kingdom. The Development Partners Group in Tanzania serves as an important forum for discussing development issues and for engaging jointly with the government on development effectiveness. The WBG leads and participates in several sector development partners’ groups in order to harmonize and align partner programs with the country’s Vision 2050.

The Productive Social Safety Net (PSSN II) ($650 million IDA) ranks among the largest cash transfer programs in Sub-Saharan Africa. Operating across all districts in mainland Tanzania and Zanzibar, it combined cash transfers, public works, productive inclusion interventions, and digital payments to strengthen the resilience and human capital of poor and vulnerable households, reaching more than 1.3 million households.

Increased coverage: Cash transfers reached approximately 5.2 million of the poorest people—7% of the population—exceeding project targets, with women accounting for 52% of beneficiaries.

Economic inclusion and jobs: Enhanced livelihoods support increased household incomes by 24–37% beyond the impact of cash transfers alone, largely through higher-paying self-employment and business expansion.

Consumption and food security: Beneficiary households recorded a 5% increase in consumption expenditure and improved food security.

Business growth: Monthly business profits increased by 55–73%, while business capital and investment grew by 83% and 53%, respectively.

Public works: More than 814,000 households participated in labor-intensive public works that created or rehabilitated community infrastructure and productive assets.

Financial inclusion: Nearly 75,000 savings groups with close to 1 million members mobilized more than $6 million in savings, while digital payments helped increase beneficiary household bank account ownership from 14% to 23%.

Value for money: Every additional $1 invested in productive inclusion activities generated approximately $3 in household benefits, making it the most cost-effective intervention under PSSN II.

The recently approved third phase of PSSN places productive inclusion at the center of the program, scaling up livelihoods’ enhancement, coaching and mentoring, and savings promotion to help beneficiary households move toward more resilient livelihoods and better jobs outcomes.