Tanzania

Mining activity, export of minerals and heavy investment in infrastructure will propel Tanzania’s economy to a +5.6% growth rate in 2023. Due to El Niño's potential for crop losses, agricultural expansion and related exports will remain muted. Violent and frequent rains earlier this year damaged crops and infrastructure, aggravated health conditions and doubled the price of maize (the main staple crop) during the first quarter compared to the average of the last three years. The government responded to inflationary pressures by temporarily subsidizing fuel and fertilizer prices and limiting financial system liquidity. This strategy has stayed consistent with what was agreed on with the International Monetary Fund, which praised the fiscal prudence at play and the legislature's proactiveness in pushing forward the reforms targeted at balancing economic and budgetary imbalances in April 2023. Modest increases in government spending are expected between 2023 and 2027 due to rising debt-service costs and projected increases in social spending, which are likely to rise as the 2025 election year approaches.

In 2024–2027, growth is projected to return to the historical average of +6% per year, also thanks to critical foreign investment into the East African Crude Oil Pipeline Project that is expected to move more than 200,000 barrels per day from oil-rich Uganda to the port of Tanga in northern Tanzania. The infrastructure is sponsored by French and Chinese firms. Phased development of cross-border trains with Rwanda, power projects and road network expansion will also support growth over the next few years. A diversified basket of goods exports, including agricultural products and gold from the North Mara and Bulyanhulu gold mines, and the rise of tourism in what is perceived as a more stable environment than that of peers, will complement the economic push.

The slow but relentless build-up of external debt and investment-related costs have also come with strengthened commercial relationships with a plurality of partners that are targeting Tanzania as a hub with potential in southeastern Africa. Tanzania's economic ties have expanded to include the United Arab Emirates, China and India, which is now the main destination market. Tanzania's duty-free access to the Indian market, as well as a new arrangement to conduct bilateral trade in Indian rupees, will strengthen business ties with India. At the same time, long-standing bilateral relations between Tanzania and the US will be bolstered through an agreement signed with the Export-Import Bank of the US in March 2023. Inefficiencies, corruption and general lags in cargo-clearing processes at the port of Dar-Es-Salaam are likely to bring it under the management of a UAE group under a government concession aiming at tripling revenues from the facility to USD11bn over the next decade and double cargo traffic to more than 48mn metric tons by 2032.

However, in recent years, the state has lost several international arbitrations against foreign companies for canceling licenses for mining activities (nickel and rare earths) and terminating the lease contract of a construction company in the real estate sector in Zanzibar. At the moment, other similar cases are pending and this could lead the government to terminate or renegotiate bilateral investment treaties as unfavorable and costly to the host country.

Despite the resurgence of riots and security crises in the area (Democratic Republic of Congo, Mozambique, as well as South Sudan and the Horn of Africa), only isolated events of violence have been recorded in the northern regions around the main mining hubs, mostly by individuals or small groups of common criminals, and along the border with Mozambique by terrorists trespassing in the Tanzanian regions of Rovuma and Mtwara.

In March 2021, Samia Suluhu Hassan, who had served as vice-president since 2015, became Tanzania's sixth president (and the first female president) after the death of President John Magufuli, who had been re-elected in 2020. Known as Mama Samia, she started to bridge the partisan divide and lifted press restrictions imposed by her predecessor along with reissuing licenses to opposition publications. She is expected to complete her term, which runs until 2025, and then to be re-elected for another five-year term, backed by her ruling party, Chama Cha Mapinduzi (CCM), that has won all elections since 1995. With an average life expectancy at birth of 66 (seven years more than in Mozambique and five more than in Kenya), nearly half of the country's 55mn residents under the age of 15, the literacy rate at more than 80% and long-lasting poverty, the next decade may see a huge shift in politics and grassroots demands. In this context, the reconciliation initiated by Mama Samia may bring forward a smooth transition.