GlobePrep

Economic Overview: Tanzania

13th Jan, 2021

AFRICA: TANZANIA

The Tanzanian economy is heavily based on agriculture, which accounts for 28.7% of gross domestic product (GDP), provides 85% of exports, and accounts for half of the employed workforce despite only 14% of the land being arable. The country also has one of the widest crop variety in Africa, comprising of tobacco, coffee, cashew nuts, tea, cloves, cotton and sisal plant.

Industry also plays an important role in the Tanzanian economy. This component includes mining and quarrying, manufacturing, electricity and natural gas, water supply, and construction. Manufacturing makes up more than half of the secondary sector, followed by processing (around 40%) and assembling industries (less than 5%). Services account for 37.9% of GDP and employs 27% of the total workforce. Tourism is another important component of the tertiary sector as Tanzania has one of the richest and most diverse wildlife in Africa.

Below is a break down of major economic indicators (2018 - 2020)

Economic Parameters 2018 2019 2020 (f)
GDP (billion) 179 194 199
GDP Growth (%) 7 6 2
GNI (Per Capita) 1,020 1,080 -
FDI Net (USD billion) -1.06 -1.11 -
Inflation Rate (%) 3.5 3.5 3.9
Unemployment Rate (%) 1.99 1.98 1.98
Balance of Trade (USD million) -4.1 -3.9 -
Exchange Rate USD/LC 2,263 2,288 2,313
Lending Interest Rate (%) 17.4 17.0 13.5
National Debt (USD Billion) 21 24 27
National Debt as % of GDP 17.3 37.7 38.2

 

GDP – Billion

Tanzania's economy is still growing thus there's more room for more economic activities to be performed in the country. Tanzania's GDP is based on agriculture which makes up majority of the employed workforce and about 85% of exports. GDP in 2020 has also increased but not to a greater extent as compared to previous years due to Covid-19

GDP Growth (%)

Tanzania's economy is still growing thus there's more room for more economic activities to be performed in the country, however for 2020 has GDP has increased at a lower rate due to Covid-19 factor

GNI (Per Capita)

Tanzania's national income has increased and is classified as lower-Middle income country as it passed the threshold of USD 1030 billion, people have higher spending capacity thereby creating an increased higher market  for businesses

FDI Net (USD Billion)

Tanzania's FDI inflows exceeds the FDI outflows for many years, and the FDI inflow has increased from 2018 to 2019 due to Tanzania's improved infrastructures, return from natural resources attracting more FDI into the country

Inflation (%)

There was a slightly decrease inflation by 0.6% from 2018 to 2019. The significant increase in inflation of 2020 is due to covid-19 which that made the economy to shake, less money supply in the economy thereby making consumer good expensive due their higher prices

Unemployment Rate (%)

Unemployment appears to be slightly the same however an increase is yet to be seen by end of 2020 due to covid-19 impact. 

Balance of Trade (USD Million)

Tanzania imports more than it exports due to low technology for its goods to compete with global traders .Most of its imports are made of manufactured goods while most of its exports are made up of raw materials agricultural products, minerals- Gold

Exchange Rate USD/LC

The Tanzanian shilling (TZS) continues to depreciate against USD due to higher demand of dollar and lower exports comparing with previous years thus resulting higher exchange rate risk caused by losses on exchange rate differences

Lending Interest Rate (%)

The lending rate has maintained at 17% however in 2020 has lowered due to Covid-19 so as businesses and individuals are able to afford loans from financial banks to support their decreased performances​

National Debt

Comparing with other countries in EMEIA, Tanzania is among those with lower debt however its debt is 38% of its GDP. Tanzania has low risk distress to external debt thus there's opportunity to continue borrowing to undertake mega infrastructure projects to boosts up its economy. Tanzania continues to increase its national debts so as to implement such projects. IMF suggests a Debt to GDP ratio of 50% for a developing country like Tanzania especially after the impact of COVID-19.​

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