Tanzania’s Economy: A Look into Africa’s Emerging MarketsMarch 9, 2023
Tanzania is a country located in East Africa, bordered by Kenya to the north, Uganda to the west, Rwanda, Burundi, and the Democratic Republic of Congo to the west, and Zambia, Malawi, and Mozambique to the south. With a population of over 59 million people, Tanzania is one of the largest economies in Africa and has seen a steady growth in its economy over the past few years.
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Tanzania’s economy is mainly based on agriculture, which accounts for about 30% of the country’s gross domestic product (GDP). The country is known for its exports of crops such as coffee, cotton, tea, and tobacco, which are grown by smallholder farmers. In addition to agriculture, Tanzania’s economy is also supported by mining, tourism, and manufacturing.
The mining sector in Tanzania has been growing rapidly in recent years, thanks to the country’s rich mineral deposits. Tanzania is the fourth-largest gold producer in Africa and also produces other minerals such as diamonds, tanzanite, and nickel. The government has been working to improve the regulatory framework in the mining sector to attract more investment and generate more revenue for the country.
Tourism is also a key sector in Tanzania’s economy, with the country being home to some of the world’s most iconic natural landmarks such as Mount Kilimanjaro, the Serengeti National Park, and the Ngorongoro Crater. In 2019, the tourism sector contributed about 17% of Tanzania’s GDP and employed over 1.5 million people. The government has been investing in the sector by upgrading infrastructure and promoting the country’s tourism potential.
The manufacturing sector in Tanzania is still relatively small, but the government has been making efforts to promote industrialization and increase the country’s manufacturing base. In 2016, the government launched the Tanzania Industrialization Strategy and Roadmap, which aims to increase the share of manufacturing in the country’s GDP from 7% to 40% by 2025. The government has also been promoting special economic zones and offering incentives to investors to set up manufacturing plants in the country.
Despite the progress made in recent years, Tanzania still faces several challenges in its economic development. One of the main challenges is poverty, with over 25% of the population living below the poverty line. The government has been implementing various poverty reduction programs, but progress has been slow. In addition, Tanzania also faces a significant infrastructure gap, particularly in the transport and energy sectors. The government has been investing in infrastructure projects, but there is still a long way to go to close the gap.
Another challenge facing Tanzania’s economy is the high level of debt. The country’s external debt stands at over $23 billion, which is about 33% of the country’s GDP. The government has been borrowing heavily to finance infrastructure projects and other development initiatives, but there are concerns about the sustainability of the debt.
Despite these challenges, Tanzania’s economy has been growing at a steady rate in recent years. The country’s GDP grew by 6.3% in 2019, and the World Bank expects the economy to grow by 5.5% in 2021. In addition, Tanzania has made progress in improving its business environment, with the country ranking 141st out of 190 countries in the World Bank’s Doing Business report for 2020.
Tanzania’s government has also been working to attract more foreign investment to the country. In 2018, the government passed the Public-Private Partnership Act, which aims to promote private sector participation in infrastructure development. The government has also been promoting investment in the country’s special economic zones, which offer tax incentives and other benefits to investors.