The overall performance of the Tanzanian economy remains strong with a high rate of growth, and a low rate of inflation over the past five years.
Today, agriculture is the main contributor to the value of Tanzania’s economy, while tourism is the leading sector in terms of foreign exchange earnings.
Tanzania’s economic potential comes from the mining & energy sector which draws increasing amounts of global investments due to the country’s position as a net exporter of gold and its recent discoveries of natural gas reserves.
Tanzania’s GDP (at current market prices) was USD 44.5bn in 2015 versus USD 31.4bn in 2010.
Tanzania’s annual GDP growth rate averaged 7% over the past 5 years, making it one of the 20 fastest growing economies in the world and beating the Sub-Saharan Africa average GDP growth rate of 4.4% during the same period.
According to the International Monetary Fund (IMF) the economy of Tanzania will grow by 7.2% in 2016 and by 7.1% in 2017, while the World Bank (WB) estimates for the same period are 6.8% and 7%.
During the same period the WB estimates that the Sub-Saharan region’s GDP is projected to grow by 4% in 2016, and 5.1% in 2017.
The Bank of Tanzania’s (BOT) 2015 Financial Stability Report indicates that drivers of GDP growth include the continuous investment in infrastructure, expansion in private and public sector construction activities and improvement in external sector.
The WB classifies Tanzania as a low-income economy according to its GNI per capita which was USD 920 in 2014, while average GNI per capita in Sub-Saharan Africa was USD 1,709.
However, GNI per capita in Tanzania rose by 44% during the five-year period 2009–2014, from USD 640 to USD 920.
According to the Ministry of Finance and Planning’s 2025 Vision, Tanzania aims to become a middle-income country by that year, which means that its GNI per capita should be between USD 1,045 and USD 12,736, as per the WB’s criteria.
Over the past five years, Tanzania’s headline inflation has been brought down to a single digit of 5.4% in March 2016 from an average of 12.6% during 2011.
The BOT has a single-policy objective of maintaining price stability through regulating the quantity of money in circulation and the credit supplied to the economy.
After a historical low inflation rate of 4% in January 2015, the country has experienced inflationary pressure with a peak of 6.8% in December 2015.
In January 2016, BOT’s Governor Benno Ndulu announced that inflation is a challenge in East Africa now, and is mainly food driven, but it is expected to remain below 10%.
From January 2016, Tanzania has been experiencing deflationary pressure, decreasing its inflation rate to 5.4% in March 2016.
On 21st April 2016, average non-cash spot exchange rates for the Tanzanian shilling (TZS)provided by Ecobank Tanzania were: USD/TZS 2,188, GBP/TZS 3,143, EUR/TZS 2,486.5, KSH/TZS 22.59, ZAR/TZS 145.04, JPY (per 100)/TZS 1,846.8, and CNY/TZS 353.2.
The TZS weakened by more than 40% against the USD over the past five years, from an average annual exchange rate of 1,396 in 2010 to 1,985 in 2015.
Still, the shilling remained stable during the first quarter of 2016, depreciating by only 1.3% compared to 6.4% in the corresponding quarter of 2015.
The balance of trade of Tanzania resulted in a trade deficit of USD 3bn in 2015. However, the trade gap shrank by 35% over the past five years, from USD 5bn in 2010.
During the same period export of goods increased by 85%, from USD 5bn to USD 9.5bn. Imports grew by 27%, from USD 9.8bn to USD 12.5bn.
Tanzania’s national debt amounted to USD 19bn in September 2015, with a national debt to GDP ratio of 39.5%. External debt accounted for 81% of the Tanzanian national debt and domestic debt for only 19%.
National debt to GDP ratio increased by 4.1% during the period 2010–2015, however it decreased by 28% over the past 10 years.
FDI net inflows in Tanzania rose by 13% from USD 1.8bn in 2010 to USD 2.04bn in 2014, making the country the first FDI destination in East Africa.
Investments in Tanzania increased largely thanks to the recent discoveries of 45 trillion cubic feet of natural gas reserves, the 2015 World Investment Report of the United Nations Conference on Trade and Development (UNCTAD) indicates.
According to the Foreign Service Institute of the US Department of State, the top five providers of FDI into Tanzania are South Africa, UK, Kenya, Canada, and China.
The main contributors to the growing Tanzanian economy are agriculture, tourism, and mining. Other key industries include construction, transport and oil & gas.
Tanzania’s agriculture output was USD 13.9bn in 2014, accounting for 29% of the country’s GDP.
The BOT’s February 2016 Monthly Economic Review indicates that the Tanzanian agricultural exports (including fish and horticultural products) reached USD 1bn, accounting for 20% of the total value of Tanzania’s exports in 2014.
The most exported crops include tobacco, cashew nuts, and coffee. Raw tobacco accounted for 28% of the total agricultural exports or USD 302m in 2014 compared to USD 112m in 2009.
The tourism sector is Tanzania’s number one foreign currency earner. Visitor exports generated USD 2bn in 2014 (i.e. 21% of total exports).
The total contribution of tourism to Tanzania’s GDP in 2014 equaled 9.3% with USD 4.5bn, the 2015 Economic Impact Report for Tanzania of the World Travel and Tourism Council (WTTC) indicates.
International tourist arrivals increased by 90%, from 622,000 to 1.1m during the period 2006–2014, making Tanzania the 7th destination in the Sub-Saharan region after South Africa, Zimbabwe, Mozambique, Uganda, Kenya, and Namibia.
The WTTC projects that the Tanzanian tourism sector will rise by 4.9% (to 7.7% of GDP) in 2015–2025.
Tanzanian mining output totaled USD 1.8bn in 2014 or 3.7% of the country’s GDP.
The BOT’s February 2016 Monthly Economic Review shows that mineral exports accounted for USD 1.4bn of the total value of Tanzania’s exports in 2014 (i.e. 27%), with gold representing more than 90% of the country’s mineral exports.
According to the Tanzania Chamber of Minerals and Energy, gold production in Tanzania stands at 40 tons per year which makes it the 4th largest gold producer in Africa after South Africa, Ghana, and Mali.
While Tanzania’s gold production increased by more than 700% over the past 25 years, from 5 to 40–50 tons per year, South Africa’s production of gold decreased from over 500 tons in 1990 to 140 tons in 2015, as reported by the US Geological Survey’s website.
The latest Bank of Tanzania (BOT) Monthly Economic Review of April 2019 indicates that the value of goods and services exported in the year ending March 2019 increased to USD 8,544.5 million from USD 8,488.2 million in the corresponding period of 2018, owing to increase in non-traditional goods exports and services receipt. (more…)
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