Tanzania’s economic freedom score is 60.0 in 2023, making it the 83rd freest economy in the world and the 6th in Africa.
The ranking is included in the “Index of Economic Freedom 2023” report by The Heritage Foundation, a comprehensive analysis of the economic freedom and policies of 184 sovereign countries worldwide.
The report assesses factors such as trade, investment, property rights, and government intervention in the economy, evaluating their impact on economic growth and prosperity.
Tanzania’s score is 0.5 points higher than in 2022. Tanzania is ranked 6th out of 47 countries in the Sub-Saharan Africa region, and its overall score is slightly higher than the world average.
“Despite a decade of progress in achieving income growth and reducing poverty, the Tanzanian government seems to lack the strong commitment to further institutional reform needed for long-term economic development,” the report reads.
Also, long-standing structural problems include poor management of public finance and an underdeveloped legal framework that interferes with regulatory efficiency.
Rule of Law
The overall rule of law is weak in Tanzania. The country’s property rights score is below the world average; its judicial effectiveness score is below the world average; and its government integrity score is below the world average.
The top individual and corporate tax rates are 30%. The tax burden equals 11.7% of GDP. Three-year government spending and budget balance averages are, respectively, 17.1% and –2.5% of GDP. Public debt equals 40.7% of GDP.
The business environment remains hampered by problems in the regulatory framework, although requirements for launching a business are not time-consuming. Labour regulations are not modern and flexible enough to support a vibrant labour market. The lack of market competition hurts monetary stability.
The trade-weighted average tariff rate is 9.7%, and costly nontariff barriers further inhibit trade. Investment regulations are outmoded, and burdensome bureaucracy is an ongoing deterrent to investment growth. A range of commercial credit instruments is available to the private sector.