Tanzania

Following the growth acceleration of the mid-1990s, Tanzania experienced notable structural transformation, productivity gains, and reductions in poverty, supported by economic liberalization, private-sector dynamism, and improvements in public service delivery. 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.

Tanzania’s geo-strategic location, diverse natural resources, including fertile land and significant mineral deposits, and its demographic and market advantages continue to offer substantial opportunities for sustainable and inclusive growth.

However, since the mid-2010s, the drivers of growth and broader economic outcomes have shifted, slowing structural transformation and formalization and weakening the responsiveness of poverty reduction to economic growth. As the country navigates persisting development challenges, 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.

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Tanzania is a lower-middle income country with a per capita GDP of around $1,400. The economy is relatively diversified: agriculture accounts for about a quarter of total value addition, industry for a third, and services for the remainder. Agriculture remains the largest source of employment, with more than half of Tanzanians working in the sector. Thirty-eight percent of Tanzanians now live in cities due to rapid urbanization in recent decades.

The country has built a track record of macroeconomic stability, even amid serious external shocks. Economic development has been robust, fiscal balances manageable, and inflation has remained in the target range. Vast natural endowments, favorable demographics, and ambitious public investments have supported strong growth. The country has also seen some improvements in the business environment which have led to growing Foreign Direct Investment (FDI) in recent years. Despite growth, poverty reduction has been relatively weak – estimated at 48% in 2025 using the International Poverty Line of $3 (2021 PPP) per person day - highlighting the need for stepped-up investments in human capital and business environment reforms to increase private sector job creation.

Tanzania runs a sustainable current account deficit, estimated at 3.3% of GDP in 2025, mostly financed by increased levels of FDI and concessional finance. In recent years, Tanzania has experienced positive terms of trade because of strong prices for gold, while also benefiting from strong exports of agricultural commodities and buoyant tourism. The fiscal deficit has been close to the regional benchmark of 3% of GDP recently and public debt levels remain contained at around half of GDP.  Tax revenues of 13.8% of GDP (2025) are low compared to peers and need. An ambitious infrastructure agenda continues to limit available funds for public services for human development.

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IDA commitments (as of 4/26):

$9.0 billion, financing 34 operations in support of job creation by boosting human capital, stimulating private sector growth, and enhancing resilience to shocks. 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 program design and implementation with emphasis on strengthening institutions, systems, and building capacity.

IFC commitments (in FY25)

$360 million and the FY26-27 investment pipeline stands at $864 million, with an outstanding portfolio of $307 million. IFC is diversifying into agribusiness, light manufacturing, and tourism–enablers of job creation. IFC also manages a $13.2 million advisory portfolio focused on gender inclusion, digital financial services, and agribusiness, financial management, and affordable housing. IFC’s work focuses on strengthening agricultural value chains, improving financial access for SMEs, and advancing power and telecom infrastructure.

WBG Guarantee Platform (MIGA) (as of 2/28/26)

Active exposure of $151.1 million in MIGA-issued guarantees, covering three projects across financial and fintech sectors. MIGA has also supported the Trade and Development Bank, of which Tanzania is a member, through guarantees that have enabled the mobilization of $747 million in commercial financing to expand trade finance activities across member countries. Under the Platform, MIGA will deepen collaboration across the Group to de-risk foreign investment and focus on projects that reflect the core objectives to scale impact, mobilize private capital, support climate-aligned investments, and drive economic growth and job creation.

Key publications: Country Climate and Development Report (CCDR)and the Tanzania Economic Update, a World Bank series that provides policy-relevant analysis on the economy and special topical issues.

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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 Dodoma Integrated and Sustainable Transport, 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 national priorities.

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The Sustainable Rural Water Supply and Sanitation Program ($650 million IDA), ranks as a top World Bank project in water access and sanitation. It operated in all 137 rural districts of mainland Tanzania, achieving:

• Systems strengthening: Creation of the Rural Water Supply and Sanitation Agency and Community-Based Water Supply Organizations improved service delivery.
• Increased access: 7.9 million people gained access to improved water supply; 10.1 million gained access to better sanitation.
• WASH in facilities: Improved water, sanitation, and hygiene (WASH) services to 1,828 healthcare facilities and 1,387 primary schools.
• Community-wide sanitation: Nearly 1,500 villages achieved and sustained community-wide sanitation.
• Private sector: The program has supported the government’s efforts to crowd in PPPs to the rural sector.

The World Bank is the largest external financier of the education sector, with a $1.5 billion IDA portfolio, achieving improved enrollment at all levels. Pre-primary enrollment in mainland Tanzania increased from 37% to 89%, and lower secondary from 46% to 53%.

The Secondary Education for Quality Improvement Project (SEQUIP), has enhanced access and retention of students, reducing distance to schools, providing safe environments, and improving teacher quality. It has a special emphasis on adolescent girls. Around 6 million students are benefiting from learning enhancement interventions. Achievements:

• Transition/completion: 60% increase in students completing lower secondary education.
• Girls’ education: The number of adolescent girls transitioning from Form 4 to Form 5 more than doubled. Gender parity in senior secondary enrollment improved from 0.76 in 2019 to 0.95 in 2023.
• Reintegration: 68% of adolescent girls who dropped out of school have reintegrated through alternative education pathways.
• Safe schools: A Safe School Program, implemented in all public schools to create secure, inclusive, and gender-responsive learning environment.

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