Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
This section relied on the following key resources:
World Bank - Country Overview
World Bank Publication – Tanzania Economic Update – Raising the Bar
The United Republic Tanzania is an attractive market for U.S. exporters due to its relatively large population estimated to be 62 million people. This makes Tanzania the 24th largest country by population, larger than South Africa and slightly smaller than Italy (source CIA World Fact Book). In addition to its large population, Tanzania reached an important milestone in July 2020, when it formally graduated from low-income country (LIC) to lower-middle-income country (LMIC) status. Tanzania’s achievement reflects sustained macroeconomic stability that have supported growth as well as the country’ s rich natural endowments and strategic geographic position.
Tanzania has benefited from a relatively stable political environment and reasonable macroeconomic policies that has allowed it to maintain sustained 6 to 7% growth rates since 2000. The COVID-19 novel coronavirus crisis of 2020/21 did not spare Tanzania, but economically it fared better than many of its neighbors. The growth rate fell from 5.8 percent in 2019 to an estimated 2.0 percent in 2020, and per capita growth turned negative for the first time in over 25 years, according to the World Bank. Although, Tanzania has witnessed strong nominal economic growth, its fast-growing population (2.8% per year, world’s 12th fastest) has kept average income levels relatively low. The annual GDP growth rate is projected to rise to 4.5% in 2021, but this forecast hinges on a strong and consistent recovery in global economic activity.
The COVID-19 pandemic has hit global travel and tourism especially hard, which is particularly problematic for Tanzania with the sector contributing at least 17 percent of GDP in 2019 and attracted about 25 percent of FDI inflows in 2017 (US$247 million). The economic damage from tourism was partially offset by growth in the price of gold, a key export commodity for Tanzania.
Tanzania has an ambitious industrialization plan to transform into a middle-income economy by 2030. Energy and transportation infrastructure sectors must become more reliable and efficient if Tanzania is to reach this goal. The Government of Tanzania (GoT) is focusing on developing local industries and investing in large infrastructure, energy, and agricultural sector development, which present opportunities for U.S. exports. The private sector is also investing heavily in the mining industry after years of underinvestment.
Growth has been driven primarily by transportation, infrastructure projects, communications, agriculture, manufacturing, electricity (especially renewable sources), wholesale and retail trade, travel and tourism, real estate, and business services. U.S. exporters will find many opportunities in these sectors and products and services that will help Tanzanian industry move up the value chain in agriculture (processing and packaging equipment), mining (refining and smelting), and other key sectors.
Public and private sector participants are concerned about GoT policies that have raised questions about long-term prospects for foreign direct investment (FDI) and has fostered a more challenging business environment. Aggressive revenue collection (taxation and audit) practices and difficulties in obtaining work permits for expat workers to manage their investments have been particularly challenging.
Tanzania’s main trading partner is China ($4,960 million total trade), India ($2,313 million), the European Union (EU) ($1,542 million) followed by Kenya, South Africa and the U.S. in 6th position with $367 million. Neighboring countries of the Southern African Development Community (SADC) and East African Community (EAC) countries make up a smaller, but still significant part of Tanzania trading relationship.
The United States had a $124 million positive trade balance with Tanzania with a total trading relationship (exports plus imports) of $367 million. U.S. key exports to Tanzania are Liquid Propane Gas ($100 million), Aircraft parts ($33 million), Automotive and Agricultural Machinery and Parts ($25 million) and Chemicals and Fertilizers ($13 million).
Tanzania exported $121 million of products to the U.S. Tanzanian exports can be broken down into three main areas: Precious/Semi-Precious Stones; Apparel; and Raw agricultural products.
Basic Economic Statistics: (2020)
- Real GDP growth: 6.98% (2019 - World Fact Book)
2% (2020 - World Bank)
- GDP (official exchange rate): $60.63 billion (2019 – World Fact Book)
- Gross National Income per capita: 1,080 (2019 - World Bank)
- Consumer price inflation: 3.5% (2020 – Bank of Tanzania)
- Total Exports: $8,809 million (2020 – Bank of Tanzania
- Goods Exports: 6,429 (2020)
- Service Export: $2,381 (2020)
- Total Imports: $8,908 million (2020 - Bank of Tanzania)
- Goods Imports: $7,657 million (2020)
- Services Imports:$1,252 million (2020)
Ease of Doing Business Index:
- Tanzania is expected to rank 138 among 190 economies in the ease of doing business by the end of year 2021. This will be an improvement from the 141-position held since 2019. The improvement comes after the new administration under President Samia Suluhu Hassan promised a favorable business environment for investor and the business community.
- Currency - Tanzanian Shilling (TZS): $1 = 2,309 TZS
- The Tanzanian Shilling has remained stable in value verses the U.S. Dollar since a large devaluation in an eighteen-month period from Dec 2014 to June 2015 where the Shilling lost approximately 30% of its value.
- Average short-term (up to 1 year) lending rate: 15.76 percent (Feb 2021 – Bank of Tanzania)
- Population Projection: 62 million by mid-2021.
- This makes Tanzania the 24th largest country by population, larger than South Africa and slightly smaller than Italy (source CIA World Fact Book).