Economy of Tanzania
|Economy of Tanzania|
|Currency||Tanzanian shilling (TZS)|
|Fiscal year||1 July – 30 June|
|Trade organisations||African Union
World Trade Organisation
|GDP||$73.5 billion (2012[update])
Rank: 85th (2012[update])1
|GDP growth||6.5% (2012[update])|
|GDP per capita||$1,700 (2012[update])|
|GDP by sector||Services (50.8%) (2009[update])|
|Inflation (CPI)||10.3% (2009[update])|
below poverty line
|Labour force||24.7 million (2012[update])|
|Agriculture (65%), Industry and Services (35%) (2012[update])|
|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|
|Ease of doing business rank||127th2|
|Export goods||gold, coffee, cashew nuts, manufactures, cotton|
|Main export partners|| India 14.1%
United Arab Emirates 4.9% (2012 est.)3
|Imports||$11 billion (2012[update])|
|Import goods||consumer goods, machinery and transportation equipment, industrial raw materials, crude oil|
|Main import partners|| China 21.1%
South Africa 5.6%
United Arab Emirates 4.8% (2012 est.)4
|Public debt||23.6% of GDP (2009[update])|
|Revenues||$3.78 billion (2009[update])|
|Expenses||$4.657 billion (2010[update])|
|Economic aid||$1.2 billion (2001[update])|
||This article has no lead section. (August 2013)|
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. 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.
|Year||Gross Domestic Product||US Dollar Exchange|
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.
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.5
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 2009.67
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.8 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.8
Nickel reserves amounting to 290,000 tonnes were discovered in October 2012 by Ngwena Company Limited, a subsidiary of the Australian miner 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 2015.9
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.10
Tanzania's history of political stability has encouraged Foreign Direct Investment. 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.
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.
- Paul Collier: Labour and Poverty in Rural Tanzania. Ujamaa and Rural Development in the United Republic of Tanzania. Oxford University Press, New York 1991, ISBN 0-19-828315-6.
- "Doing Business in Tanzania 2012". World Bank. Retrieved 21 November 2011.
- "Export Partners of Tanzania". CIA World Factbook. 2012. Retrieved 2013-07-27.
- "Import Partners of Tanzania". CIA World Factbook. 2012. Retrieved 2013-07-27.
- Tanzania: Mining At 4.6 Percent of GDP, Africa: AllAfrica.com, 2012, retrieved 26 September 2012
- Tanzania Mining History tanzaniagold.com, accessed: 24 July 2010
- •Mineral Sector Overview Ministry of Energy and Minerals website, accessed: 27 July 2010
- Business Week Reporter, "China seeks to venture into gold mining in Tanzania", The Citizen (23 August 2012)
- Tanzania: Nickel Exploration Bears Fruit, Africa: AllAfrica.com, 2012, retrieved 18 October 2012
- Tanzania: Govt Vows to Probe Mining Investors' Brutality, Africa: Allafrica.com, 2012, retrieved 30 November 2012
- World Bank
- Economy of Tanzania at the Open Directory Project
- Tanzania Economic Forum
- Confederation of Tanzanian Industries
- CIA World Factbook Tanzania economy
- Tanzania latest trade data on ITC Trade Map
Government ministries, agencies and sites
- Ministry of Finance and Economic Affairs
- Ministry of Industry, Trade and Marketing
- Ministry of Infrastructure Development
- Bank of Tanzania
- Economic and Social Research Foundation
- Tanzania Socioeconomic Database