Connect with us


Country Focus: The United Republic of Tanzania



Jakaye Kikwete – President

Tanzania, officially the United Republic of Tanzania, is a country in East Africa within the African Great Lakes region. It is bordered by Kenya and Uganda to the north; Rwanda, Burundi, and the Democratic Republic of the Congo to the west; Zambia, Malawi, and Mozambique to the south; and the Indian Ocean to the east. Kilimanjaro, Africa’s highest mountain, is found in the northeastern Tanzania.

Tanzania’s population of 47.4 million (2014) is highly diverse, composed of numerous ethnic, linguistic, and religious groups.


Tanzania is a presidential constitutional republic, and since 1996, its official capital has been Dodoma, where the President’s Office, the National Assembly, and some government ministries are located. Dar-es-Salaam, the former capital, retains most government offices and is the country’s largest city, principal port, and leading commercial center.

Unlike many African countries, whose potential wealth contrasted with their actual poverty, Tanzania had few exportable minerals and a primitive agricultural system. In an attempt to remedy this, its first President, Julius Nyerere, issued the 1967 Arusha Declaration, which called for self-reliance through the creation of cooperative farm villages and the nationalization of factories, plantations, banks and private companies.

But a decade later, despite financial and technical aid from the World Bank and sympathetic countries, this program had completely failed due to inefficiency, corruption, resistance from peasants and the rise in the price of imported petroleum.


The United Republic of Tanzania is the second largest economy in the East African Community and the twelfth largest in Africa. The country is largely dependent on agriculture for employment, accounting for about half of the employed workforce.

An estimated 34 percent of Tanzanians currently live in poverty. The economy has been transitioning from a command economy to a market economy since 1985. Although total GDP has increased since these reforms began. GDP per capita dropped sharply at first and only exceeded the pre-transition figure in around 2007.

The Tanzanian economy has continued to perform strongly, recording growth of 7.3% in 2013, up from 6.9% in 2012, driven by information and communications, construction, manufacturing and other services. Medium-term prospects are favorable, with growth projected to remain above 7%, supported by public investments in infrastructure, particularly in the transport and energy sectors.

Agriculture remains the mainstay of the economy, employing the majority of the workforce, but the sector is plagued by infrastructure gaps and low productivity. Despite Tanzania’s impressive macroeconomic achievements, growth is not sufficiently broad based, and poverty levels remain high.

A recent household budget survey indicates that 28.2% of Tanzanians are poor, and poverty remains more prevalent in rural than in urban areas.

Inflation has stabilized at single digits over the past year, declining to an annual average of 6.8% in 2014 due to prudent monetary policy, a favorable food situation and declining fuel prices. Export performance remains strong, driven by gold and tourism/travel receipts.

But the import bill has grown, mainly due to imports of capital and intermediate goods, particularly oil, keeping the current account deficit wide at around 11% of GDP. The foreign reserves position has remained healthy, with 4.1 months of import cover.

Tanzania has continued to maintain a healthy fiscal position, keeping the deficit at sustainable levels and managing expenditure growth in line with the broad objective of sustaining macroeconomic stability. In the medium term, the fiscal deficit is projected to be maintained at around 5-6% of GDP, while expenditures and government net lending are projected at around 25% of GDP, in line with targets of the Policy Support Instrument Program.

Financing uncertainties emerged in the first half of fiscal year 2014/15 due to delayed disbursements of budget support funds by development partners, partly resulting in the frontloading of government domestic borrowing to finance development projects.

Spatial inclusion remains problematic in Tanzania, mainly due to regional disparities. The poorer regions are predominantly rural and their economies are much less diversified. Agriculture is the main economic sector in these areas, with low productivity and low-paying employment.

As a result, per capita incomes in these regions are less than half that of Dar-es-Salaam, the wealthiest area. And the poverty rate is eight times higher than in Dar-esSalaam. To increase spatial inclusion, Tanzania needs to boost earning opportunities for the rural population, mainly through improved productivity in agriculture supported by rural infrastructure investments, particularly rural roads, and improved overall connectivity between rural and urban areas.

Significant measures have been taken to liberalize the Tanzanian economy along market lines and encourage both foreign and domestic private investment. Beginning in 1986, the Government of Tanzania embarked on an adjustment program to dismantle the socialist (Ujamaa) economic controls and encourage more active participation of the private sector in the economy.

The program included a comprehensive package of policies which reduced the budget deficit and improved monetary control, substantially depreciated the overvalued exchange rate, liberalized the trade regime, removed most price controls, eased restrictions on the marketing of food crops, freed interest rates, and initiated a restructuring of the financial sector.


The Tanzanian economy is heavily based on agriculture, which accounts for 24.5% of gross domestic product,provides 85% of exports, and accounts for half of the employed workforce. The agricultural sector grew 4.3% in 2012, less than half of the Millennium Development Goal target of 10.8%. 16.4% of the land is arable, with 2.4% of the land planted with permanent crops.

Tea fields in Tukuyu

Maize was the largest food crop on the Tanzania mainland in 2013 (5.17 million tons), followed by cassava (1.94 million tons), sweet potatoes (1.88 million tons), beans (1.64 million tons), bananas (1.31 million tons), rice (1.31 million tons), and millet (1.04 million tons).

Sugar was the largest cash crop on the mainland in 2013 (296,679 tons), followed by cotton (241,198 tons), cashew nuts (126,000 tons), tobacco (86,877 tons), coffee (48,000 tons), sisal (37,368 tons), and tea (32,422 tons). Beef was the largest meat product on the mainland in 2013 (299,581 tons), followed by lamb/mutton (115,652 tons), chicken (87,408 tons), and pork (50,814 tons).

According to the 2002 National Irrigation Master Plan, 29.4 million hectares in Tanzania are suitable for irrigation farming; however, only 310,745 hectares in June 2011 were actually being irrigated.

Industry and Construction

Industry and construction is a major and growing component of the Tanzanian economy, contributing 22.2% of GDP in 2013. This component includes mining and quarrying, manufacturing, electricity and natural gas, water supply, and construction.

Mining and Quarrying

Quarrying site

Mining contributed 3.3% of GDP in 2013. The vast majority of the country’s mineral export revenue comes from gold, accounting for 89% of the value of those exports in 2013. It also exports sizable quantities of gemstones, including diamonds and tanzanite.

All of Tanzania’s coal production, which totalled 106,000 short tons in 2012, is used domestically. Other minerals exploited in Tanzania include pozzolana, salt, gypsum, kaolinite, silver ore, copper, phosphate, tin, graphite, and bauxite.

Electricity and Natural Gas

The government-owned Tanzania Electric Supply Company Limited (TANESCO) dominates the electric supply industry in Tanzania. The country generated 6.013 billion kilowatt hours (kWh) of electricity in 2013, a 4.2 percent increase over the 5.771 billion kWh generated in 2012.

Generation increased by 63 percent between 2005 and 2012; however, only 15 percent of Tanzanians had access to electric power in 2011. Almost 18 percent of the electricity generated in 2012 was lost because of theft and transmission and distribution problems. The electrical supply varies, particularly when droughts disrupt hydropower electric generation; rolling blackouts are implemented as necessary.

The unreliability of the electricity supply has hindered the development of Tanzanian industry. In 2013, 49.7 percent of Tanzania’s electricity generation came from natural gas, 28.9 percent from hydroelectric sources, 20.4 percent from thermal sources, and 1.0 percent from outside the country. The government is building a 532 kilometres (331  miles) gas pipeline from Mnazi Bay to Dar-es-Salaam, with a scheduled completion in 2015.

This pipeline is expected to allow the country to double its electricity generation capacity to 3,000 megawatts by 2016. The government’s goal is to increase capacity to at least 10,000 megawatts by 2025.

According to PFC Energy, 25 to 30 trillion cubic feet of recoverable natural gas resources have been discovered in Tanzania since 2010 bringing the total reserves to over 43 trillion cubic feet by the end of 2013. The value of natural gas actually produced in 2013 was US $52.2 million, a 42.7% increase over 2012.


The Tanzania construction and real estate sectors continue to be two very exciting and developing sectors in the Tanzanian economy.  The construction sector is currently experiencing a period of growth that has primarily been driven by the recent developments in roadwork, housing and mining.

Management of the construction sector falls under the Ministry of Infrastructure Development and is seen by the government as an important link to both economic and social development. While the Tanzania real estate sector is not currently as highly developed as the construction sector, the developments within the construction sector have positively influenced and benefited the real estate sector through the creation of additional real estate space.

The Tanzanian real estate sector has not made significant contributions to the GDP over the last few years, but the government remains optimistic that the recent and planned developments will contribute to the continued growth of this sector. The current real estate development projects that are under way, as well as those that are being developed, have created various opportunities for interested local and foreign investors.


Tanzania’s manufacturing industry has been growing at a pace of 9 percent annually in real terms (Source: The industrial sector has evolved through various stages since independence in 1961, from nascent and undiversified to state-led import substitution industrialization, and subsequently to de-industrialization under the structural adjustment programs and policy reforms. The current development agenda, however, has brought industrial development back to be one of the policy priorities.
The growth in manufacturing, notwithstanding, remains largely undiversified, and vulnerable to variations in agricultural production and commodity prices. The most dynamic subsectors in terms of output growth, export growth, production innovation and product diversity are food products, plastic and rubber, chemicals, basic metal work, and non-metallic mineral products.



Central Bank of Tanzania

Tanzania’s banking sector embarked on a plan for financial liberalization in 1992 in order to sustain its economic growth. This has been accomplished through the mobilization of financial resources as well as by increasing the competition in the financial market and by enhancing the quality and efficiency of credit allocation.

As a result of the liberalization, the banking sector in Tanzania has been booming particularly over the last few years. There are four categories of banks oriented towards different markets and clientele operating in Tanzania: local primitive banks, regional banks, international banks and multinational banks.

Overall, the outlook for the banking industry in Tanzania is very positive and there are appealing opportunities for new comers to the sector. Currently, there is a positive trend in lending to SMEs that is producing greater confidence in their growth potential among financial institutions and more generally, in the economy as well, which is generating a positive spiral.


While Tanzania’s famous Northern Circuit National Parks, Mt. Kilimanjaro, the Selous Game Reserve, and of course the Zanzibar, comprising of the islands of Unguja and Pemba, are well known abroad and need little explanation, this more distant location has always been a specialty destination for tourists.

Mt. Kilimanjaro

Those who ever made their way by air or by boat to Mafia Island, have tall tales to tell. Excellent diving grounds along the reefs surrounding the island, rewarding snorkeling trips, endless empty beaches with no beach boy pests bothering the visitors, good fishing and an intact nature rarely found today make up some of the attractions tourists enjoy and come back for. Ruins of ancient settlements dating back to the 11th Century give an insight into the history of Mafia.

Travel and tourism contributed 12.7% of Tanzania’s gross domestic product and employed 11.0% of the country’s labor force (1,189,300 jobs) in 2013.The sector is growing rapidly, with overall receipts rising from US $1.74 billion in 2004 to US $4.48 billion in 2013, and receipts from international tourists rising from US $1.255 billion in 2010 to US $1.880 billion in 2013.

In 2012, 1,043,000 tourists arrived at Tanzania’s borders compared to 590,000 in 2005. The vast majority of tourists visit Zanzibar or a “Northern Circuit” of Serengeti National Park, the Ngorongoro Conservation Area (NCA), Tarangire National Park, Lake Manyara National Park, and Mount Kilimanjaro. In 2013, the most visited national park was Serengeti (452,485 tourists), followed by Manyara (187,773) and Tarangire (165,949).

According to a 2013 published report, around 600,000 people visit the NCA annually, earning 56 billion Tanzanian shillings in 2012.

Serengeti National Park

Tanzania as a brand is acquiring wide and respected recognition in the past few years, so it comes as no surprise that America is now the leading source of visitors to Tanzania Game Parks. In October 2006, Serengeti National Park was named the Seventh New Wonder of the World by ABC-TVs Goodmorning America and USA today; Zanzibar was on the New York Times Travel Sections ‘Places to go in 2007’.

Kilimanjaro made the same list for 2008 as well as the USA Today 2008 list of ‘Must See’ destinations. Even the popular American movie, The Bucket List, starring Jack Nicholson and Morgan Freeman included a safari in Tanzania as one of the 10 “must do’s before one kicks the bucket”.

In recent developments where tourism has taken a new dimension especially in Sub-aquatic tourism, Tanzania becomes the first African country to also establish a hotel in the middle of the sea to attract tourists to enjoy the splendid moments of aquatic life.

This newly opened ‘Manta Underwater Room’ is 13 feet under the India Ocean off Zanzibar and Tanzania. It gives the phrase ‘sleeping with the fishes’ a whole new meaning.

The Manta Resort

The three floor little piece of luxury is situated 820ft from the little-known island of Pemba, off the mainland of Tanzania and Zanzibar. Guests of the Manta Underwater Room sleep in a glass-walled underwater chamber surrounded only by the sea while, above sea level, two additional levels are provided for leisure and recreation and also the roof doubles as a sunbathing terrace during the day and a stargazing spot at night.

Wildlife and conservation

Approximately 38% of Tanzania’s land area is set aside in protected areas for conservation.Tanzania has 16 national parks, plus a variety of game and forest reserves, including the Ngorongoro Conservation Area. In western Tanzania, Gombe Stream National Park is the site of Jane Goodall’s ongoing study of chimpanzee behaviour, which started in 1960.

Gombe National Park

Tanzania is highly biodiverse and contains a wide variety of animal habitats. On Tanzania’s Serengeti Plain, white-bearded wildebeest (Connochaetes taurinus mearnsi) and other bovids participate in a largescale annual migration.

Tanzania is also home to about 130 amphibian and over 275 reptile species, many of them strictly endemic and included in the International Union for Conservation of Nature’s Red Lists of different countries. Tanzania has developed a Biodiversity Action Plan to address species conservation.


Most transport in Tanzania is by road; road transport constitutes over 75% of the country’s freight traffic and 80% of its passenger traffic. The 86,500-kilometer road system is in generally poor condition. Tanzania has two railway companies: TAZARA, which provides service between Dar-es-Salaam and Kapiri Mposhi (in a copper-mining district in Zambia), and Tanzania Railways Limited, which connects Dar-es-Salaam with central and northern Tanzania.

Rail travel in Tanzania often entails slow journeys with frequent cancellations or delays; the railways also have a deficient safety record. Tanzania has four international airports, along with over 100 small airports or landing strips; airport infrastructure tends to be in poor condition.

Airlines in Tanzania include Air Tanzania, Precision Air, Fastjet, Coastal Aviation, and ZanAir. Several modern hydrofoil boats provide transportation across the Indian Ocean between Dar-es-Salaam and Zanzibar.


The communications sector is the fastest growing sector in Tanzania, expanding 22.8% in 2013; however, the sector accounted for only 2.4% of gross domestic product that year. As of 2011, Tanzania had 56 mobile telephone subscribers per 100 inhabitants, a rate slightly above the sub-Saharan average.

Very few Tanzanians have fixed-line telephones. Approximately 12% of Tanzanians used the internet as of 2011, though this number is rapidly growing. The country has a fiber-optic cable network that recently replaced unreliable satellite service, but internet bandwidth remains very low.

Culture and social activities


Zanzibar Paradise

One of Tanzania’s, and other parts of eastern Africa’s, most common dishes is Ugali. It is usually composed of corn and is similar in consistency to a stiff paste or porridge, giving it its second name of corn meal porridge. Mixtures of cassava and millet flours are locally used for ugali. Rice and cooked green bananas are also important staples. Beef, goat meat, beans, yoghurt, and a wide range of fish and green leafy vegetables all add nutrients to the dishes.

Continue Reading
Click to comment


Shilling Fluctuation, a seasonal phenomenon?  



The debates about the depreciation of shilling against the US dollar are unprofessional, as the fluctuating dollar exchange rates are global and seasonal.

Contrary to what analysts and a section of the media argue or wish the public to believe, experts in economics and financial matters hint that there are well balanced reasons to that.

Having analyzed such baseless debates, I argue that this situation needs to be explained scientifically and economically rather than being blown up unnecessarily.

It should be noted that not only the Tanzanian shilling has slightly depreciated against the US dollar but also other currencies in the world.

Why? Did they fail to export cashew nut as some would argue here? Why the US dollar outperforms other currencies?

According to the ET Markets (2018), in this year (2019), the US dollar was forecasted to outperform many other currencies because of the interest hike.

The ET Markets report which is also supported by the Bank of Tanzania (BOT), states that last year, the US economy continued to strengthen.

This strength caused the US Federal Reserve to increase interest rate in December 2018. The US Fed increased 25 basis point hikes in December, so interest rate differential widened further to 2.65-2.90 per cent.

Euro and US inflation stabilized nearly 2 per cent, but there was a difference in GDP growth and unemployment rate.

GDP growth is higher in the US and unemployment rate is lower compared with the euro, which naturally makes the dollar stronger against the euro and other currencies in the world, including Tanzania.

Economically and financially, this development has contributed to rise in demand for the US dollar from investment side, consequently causing the US dollar to appreciate against most currencies, including the Tanzanian shilling.

The US Dollar is the benchmark pricing mechanism for most commodities which are global assets.

Base Metals that trade on the LME and precious metals such as gold, silver and energy including oil and natural gas use the dollar to price.

The rising dollar has significant consequences on commodities, as higher dollar tends to weigh on commodity prices.

Production cost of raw material in other countries, including Tanzania rise because of a strong dollar and weighs negative on demand.

In the stock market, a higher US dollar weighs on US multinational companies, as they have to compete globally with strong currency.

According to the latest forecasts from Barclays (2019), the dollar will remain the dominant force in the currency market this year and the pound sterling will succumb to another dose of ‘Brexit uncertainty’ while the euro will reach new lows.

Barclays says in its 2019 outlook that as the Fed drives the dollar to new levels of overvaluation and political factors keep Sterling and the Euro on the proverbial back foot, the Fed will go on raising its interest rate in a sustained manner this year, contrary to what other forecasters have begun to anticipate.

The strength of the US dollar against others as said above, the interest hike by FED has depreciated other currencies in the world, including the Tanzanian shilling.

The Bank of Tanzania (BoT) report indicates that from 22nd February 2018 to 21st February 2019 (one year period), the value of the shilling against the US dollar declined by 3.8 percent.

The BOT reports that the value of the US dollar on Developed Market currencies was also put in pressure in the same period.

The British Pound against the US dollar declined by 6.7 percent, the euro by 8.1 percent, the Australian dollar by 9.6 percent and the Chinese Yuan by 6.4 percent.

Moreover, the emerging markets (EM) have been badly affected by the strength of the US dollar. the Brazilian Real is down 18.4 percent, the Russian Ruble is down 14.75 percent, the Pakistan Rupee is 9.7 percent and the Indian Rupee by 8.9 percent year-to-date (YTD) against the dollar.

The Turkish Lira and Argentinian Peso have been the biggest losers, both down close to 40 percent since the beginning of the year.

Comparative analysis in the African region also provides a gloomy picture. Are measures taken by BOT commendable?

Despite the FED factor, I agree with BoT report (2019) indicating that the current movement in the exchange rate in Tanzania is a seasonal phenomenon related to low foreign exchange earnings from tourism and export crops.

This is true because currency hike may be mitigated by a number of facts. “Customarily, from January to May each year, it is a low tourist season and export crops where the country receives low exchange earnings. This is a common trend that usually normalizes in the second half of the year when earnings from tourism and exports pick-up,” states the report.

I commend BOT, for among other things, implementing monetary policy aimed at maintaining price stability and ensures that inflation remains within the target of single digit intended at stabilizing the value of the shilling.

This can be achieved through maintaining the appropriate level of liquidity in the economy. I understand that BOT is also participating in the interbank foreign exchange market (IFEM), in order to smoothen excessive volatility of the exchange rate.

In doing that, the Bank of Tanzania sold USD 528.6 million in 2018, which is more than double the amount sold in 2017.

In 2019, the Bank of Tanzania continued to sell the foreign exchange in order to reduce its shortage in the economy.

Moreover, the BOT must monitor foreign exchange business in order to ensure that rules and regulations are adhered to, including maintaining foreign currency Net Open Position of commercial banks equivalent to 7.5 percent of core capital.

Factors that could lead the dollar to collapse/depreciate more so to what BoT is mitigating, two conditions must be in place before the dollar could collapse.

First, there must be an underlying weakness. Between 2002 and 2018, the dollar has declined 6 percent according to the U.S. Dollar Index.

This is because the U.S. debt almost more than tripled during that period, from $6 trillion to $22 trillion.

The debt-to-GDP ratio is now more than 100 percent. That increases the chance the United States will let the dollar’s value slide as it would be easier to repay its debt with cheaper money.

Second, there must be a currency alternative for everyone to buy. The dollar’s strength is based on its use as the world’s reserve currency.

The dollar became the reserve currency in 1973 when President Nixon abandoned the gold standard.

As a global currency, the dollar is used for half of all cross-border transactions. That means central banks must hold the dollar in their reserves to pay for these transactions.

As a result, 61 percent of these foreign currency reserves are in dollars. The two situations above make a collapse possible.

But, it won’t occur without a third condition. That’s a huge economic triggering event that destroys confidence in the dollar.

Altogether, foreign countries own more than $6 trillion in U.S. debt. If China, Japan or other major holders started dumping these holdings of Treasury notes on the secondary market, this could cause a panic leading to collapse.

China owns $1 trillion in U.S. Treasury’s. That’s because China pegs the Yuan to the dollar.

This keeps the prices of its exports to the United States relatively cheap. Japan also owns more than $1 trillion in Treasury’s.

It also wants to keep the yen low to stimulate exports to the United States. These facts considered, I reiterate the possibility of a conspiracy theory on the dollar-shilling debate in Tanzania.

The hikes are normal and seasonal, but you still find some people raising unnecessary alarm into markets.


Continue Reading