Last modified on 17 November 2014, at 14:26

Economy of Tanzania

Economy of Tanzania
Bank of Tanzania golden hour.jpg
Currency Tanzanian shilling (TZS)
1 July – 30 June
Trade organisations
African Union
World Trade Organisation
GDP $86 billion PPP (2014)[1]
Rank: 85th (2012)[2]
GDP growth
6.5% (2012)
GDP per capita
$1,812 PPP (2014)[1]
GDP by sector

Agriculture (26.6%), Industry (22.6%)

Services (50.8%) (2009)
10.3% (2009)
Population below poverty line
30% (2010)
Labour force
24.7 million (2012)
Labour force by occupation
Agriculture (65%), Industry and Services (35%) (2012)
Unemployment N/A (2009)
Main industries
Agricultural processing (sugar, beer, cigarettes, sisal twine), diamond, gold and iron mining, soda ash, oil refining, shoes, cement, apparel, wood products, fertilizer, salt
Exports $9 billion(2012)
Export goods
gold, coffee, cashew nuts, manufactures, cotton
Main export partners
 India 14.1%
 China 11.0%
 Japan 6.1%
 Germany 5.0%
 United Arab Emirates 4.9% (2012 est.)[4]
Imports $11 billion (2012)
Import goods
consumer goods, machinery and transportation equipment, industrial raw materials, crude oil
Main import partners
 China 21.1%
 India 16.1%
 Kenya 6.6%
 South Africa 5.6%
 United Arab Emirates 4.8% (2012 est.)[5]
Public finances
23.6% of GDP (2009)
Revenues $3.78 billion (2009)
Expenses $4.657 billion (2010)
Economic aid $1.2 billion (2001)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

Tanzania's economy is largely dependent on agriculture, which employs about 75% of its population. An estimated 34% of Tanzanians currently live in poverty.[6] 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.[7]


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.

Current GDP per capita of Tanzania grew more than 40% between 1998 and 2007. In May 2009, the International Monetary Fund approved an Exogenous Shock Facility (ESF) for Tanzania to help the country cope with the global economic crisis[8] Tanzania is also engaged in a Policy Support Instrument (PSI) with the International Monetary Fund, which commenced in February 2007 after Tanzania completed its second 3-year Poverty Reduction and Growth Facility (PRGF), the first having been completed in August 2003. The PRGF was the successor program to the Enhanced Structural Adjustment Facility (ESAF), which Tanzania also participated in from 1996-1999. The IMF's PSI program provides policy support and signaling to participating low-income countries and is intended for countries that have usually achieved a reasonable growth performance, low underlying inflation, an adequate level of official international reserves, and have begun to establish external and net domestic debt sustainability.

Tanzania also embarked on a major restructuring of state-owned enterprises. The program has so far divested 335 out of some 425 parastatal entities. Overall, real economic growth has averaged about 4% a year, much better than the previous .20 years, but not enough to improve the lives of average Tanzanians. Also, the economy remains overwhelmingly donor-dependent. Moreover, Tanzania has an external debt of $7.9 billion. The servicing of this debt absorbs about 40% of total government expenditures. Tanzania has qualified for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) initiative. Debts worth over $6 billion were canceled following implementation of the Paris Club 7 Agreement.

Macro-economic trendEdit

This is a chart of trend of gross domestic product of Tanzania at market prices estimated by the International Monetary Fund with figures in millions of Tanzanian Shillings. See [1]

Year Gross Domestic Product US Dollar Exchange
1980 45,749 8.21 Shillings
1985 115,006 17.87 Shillings
1990 830,693 195.04 Shillings
1995 3,020,501 536.40 Shillings
2000 7,267,133 800.43 Shillings
2005 13,713,477 1,127.10 Shillings
2010 - 1,515.10 Shillings

Mean wages were $0.52 per manhour in 2009.


The Tanzanian economy depends heavily on agriculture, which accounts for more than 25% of GDP, provides 85% of exports, and employs 80% of the work force. Topography and climatic conditions, however, limit cultivated crops to only 4% of the land area. Cash crops, including coffee (its largest export), tea, cotton, cashews, sisal, cloves, and pyrethrum, account for the vast majority of export earnings. The volume of all major crops—both cash and goods, which have been marketed through official channels—have increased over the past few years, but large amounts of produce never reach the market. Poor pricing and unreliable cash flow to farmers continue to frustrate the agricultural sector.


Songo Songo Gas Plant

Accounting for 22.6% of GDP, Tanzania's industrial sector is one of the fastest growing in Africa (2010 rankings). Though it has been hit hard recently by persistent power shortages caused by low rainfall in the hydroelectric dams catchment areas, a condition compounded by years of neglect and bad management at the state-controlled electric company. Management of the electric company was contracted to the private sector in 2003. And power production countrywide is currently undergoing various diversification projects. The main industrial activities include agricultural processing (sugar, beer, cigarettes, sisal twine), diamond-, gold-, and iron mining, oil refining, wood products, salt, soda ash, cement, shoes, apparel and fertilizer productions. Foreign exchange shortages, bureaucracy and corruption continue to deprive factories of much-needed spare parts and reduces industrial capacities.


The Ministry of Energy and Minerals is responsible for the management and governing the mining and energy industry in Tanzania. As of September 2012, the mining sector of Tanzania contributes 4.6% to the national economy.[9]


Modern gold mining in Tanzania started in the German colonial period, beginning with gold discoveries near Lake Victoria in 1894. The first gold mine in what was then Tanganyika, the Sekenke Gold Mine, began operation in 1909, and gold mining in Tanzania experienced a boom between 1930 and World War II. By 1967, gold production in the country had dropped to insignificance but was revived in the mid-1970s, when the gold price rose once more. In the late 1990s, foreign mining companies started investing in the exploration and development of gold deposits in Tanzania, leading to the opening of a number of new mines, like the Golden Pride mine, which opened in 1999 as the first modern gold mine in the country, or the Buzwagi mine, which opened in 2009.[10][11]


Nickel reserves amounting to 290,000 tonnes were discovered in October 2012 by Ngwena Company Limited, a subsidiary of the Australian mining company IMX Resources. An initial investment of around USD38 millions has been made since exploration began in 2006, and nickel should start being mined at the end of 2015.[12]

Chinese InvestmentEdit

Chinese firms have been showing major interest in Tanzania’s mineral deposits; an announcement was made in late 2011 of a plan by the Sichuan Hongda Group, to invest about USD3 billion to develop the Mchuchuma coal and Liganga iron ore projects in the south of the country.[13] It was also announced in August 2012 that China National Gold Corp are in talks to purchase mining assets in Tanzania from African Barrick Gold, in a deal that could be worth more than £2 billion.[13]


In November 2012, the Tanzanian government announced investigations into allegations that mining investors in the country were harassing and on some occasions, killing residents around mining sites.[14]

External trade and investmentEdit

Tanzanian exports in 2006

Tanzania's history of political stability has encouraged foreign direct investment. The government has committed itself to improve the investment climate including redrawing tax codes, floating the exchange rate, licensing foreign banks, and creating an investment promotion center to cut red tape. Tanzania has mineral resources and a largely untapped tourism sector, which might make it a viable market for foreign investment.

The stock market capitalisation of listed companies in Tanzania was valued at $588 million in 2005 by the World Bank.[15]


Zanzibar's economy is based primarily on the production of cloves (90% grown on the island of Pemba), the principal foreign exchange earner. Exports have suffered from the downturn in the clove market. Tourism is an increasingly promising sector, and a number of new hotels and resorts have been built in recent years.

The Government of Zanzibar has been more aggressive than its mainland counterpart in instituting economic reforms and has legalized foreign exchange bureaus on the islands. This has loosened up the economy and dramatically increased the availability of consumer commodities. Furthermore, with external funding, the government plans to make the port of Zanzibar a free port. Rehabilitation of current port facilities and plans to extend these facilities will be the precursor to the free port. The island's manufacturing sector is limited mainly to import substitution industries, such as cigarettes, shoes, and process agricultural products. In 1992, the government designated two export-producing zones and encouraged the development of offshore financial services. Zanzibar still imports much of its staple requirements, petroleum products, and manufactured articles.


See alsoEdit


  1. ^ a b "Tanzania". International Monetary Fund. Retrieved 1 October 2014. 
  2. ^
  3. ^ "Doing Business in Tanzania 2012". World Bank. Retrieved 21 November 2011. 
  4. ^ "Export Partners of Tanzania". CIA World Factbook. 2012. Retrieved 2013-07-27. 
  5. ^ "Import Partners of Tanzania". CIA World Factbook. 2012. Retrieved 2013-07-27. 
  6. ^ "Economic Growth and Trade". USAID. February 11, 2014. 
  7. ^ "Tanzania: The Story of an African Transition". International Monetary Fund. 2009. 
  8. ^ IMF press release 2009
  9. ^ Tanzania: Mining At 4.6 Percent of GDP, Africa:, 2012, retrieved 26 September 2012 
  10. ^ Tanzania Mining History, accessed: 24 July 2010
  11. ^ •Mineral Sector Overview Ministry of Energy and Minerals website, accessed: 27 July 2010
  12. ^ Tanzania: Nickel Exploration Bears Fruit, Africa:, 2012, retrieved 18 October 2012 
  13. ^ a b Business Week Reporter, "China seeks to venture into gold mining in Tanzania", The Citizen (23 August 2012)
  14. ^ Tanzania: Govt Vows to Probe Mining Investors' Brutality, Africa:, 2012, retrieved 30 November 2012 
  15. ^ World Bank

External linksEdit

Government ministries, agencies and sites