Across Africa, instability has a price; Tanzania should not pay it

DAR ES SALAAM: AS Tanzania prepares to receive the Commission’s report, the country must recognise a simple but often overlooked truth: peace, national cohesion and reconciliation are not only civic values. They are economic necessities.

Across Africa, where social stability has weakened, countries have paid in lost growth, weaker investment, disrupted tourism, rising fiscal pressure, delayed projects, and diminished public confidence. Tanzania should, therefore, approach this moment not merely as a political event, but as a test of economic maturity.

This is not a symbolic issue. Instability is expensive. Confidence can be damaged faster than it is rebuilt. When the national atmosphere becomes tense, uncertain, or fractured, the effects do not remain in speeches and headlines.

They move into the real economy. Businesses delay decisions. Investors become cautious. Banks price risk more carefully. Tourists hesitate. Consumers cut back. Supply chains slow. Public discourse becomes less about production, exports, employment, and investment, and more about fear, suspicion, and reaction. That shift has a cost.

Tanzania has too much to lose. The Bank of Tanzania kept the Central Bank Rate unchanged at 5.75 per cent in April 2026, while reporting that inflation averaged 3.3 per cent in the first quarter of 2026 and that growth in Mainland Tanzania was projected at 6.1 per cent in the second quarter.

The IMF’s Tanzania profile similarly projects 5.9 per cent real GDP growth and 4.0 per cent inflation for 2026. These are not the numbers of an economy in crisis. They are the numbers of an economy with momentum worth protecting.

That macroeconomic backdrop matters because Tanzania is trying to defend something real. The country is not navigating this moment from a position of collapse. It is managing inflation within the target range, maintaining positive growth, and trying to preserve confidence in a difficult global environment.

The Bank of Tanzania’s latest Monthly Economic Review says gross official reserves stood at USD 6.244 billion, enough to cover 4.8 months of projected imports of goods and services, above both Tanzania’s own 4-month benchmark and the East African Community convergence benchmark of 4.5 months.

The current account deficit narrowed to 2.108 billion US dollars in the year ending February 2026, from 2.156 billion US dollars a year earlier. These are signs of an economy that has built some buffers. Those buffers should not be tested by unnecessary domestic friction.

The external sector tells the same story. In the year ending February 2026, exports of goods and services rose 12.4 per cent to 18.393 billion US dollars, while service receipts increased 8.8 per cent to 7.520 billion US dollars.

Tourism remained a major support, and that is important because tourism is among the first sectors to react to uncertainty. In the year ending February 2026, travel receipts reached 4.352 billion US dollars.

This is income linked not only to Tanzania’s attractions, but also to the perception that the country is stable, welcoming, and predictable. Where public confidence weakens, visitor confidence can weaken too.

The fiscal side is equally important. Tanzania’s proposed 2026/27 budget is 62.3tri/-, with projected domestic revenue of about 46.8tri/-, accounting for 74.2 per cent of the total. The same budget framework targets 6.3 per cent growth and inflation within 3 to 5 per cent.

This is a development budget built around greater domestic effort and greater self-reliance. But domestic effort depends on stability.

A country cannot ask more from taxpayers, local capital, entrepreneurs, and ordinary households while allowing mistrust and social heat to define the public environment. National calm is part of fiscal credibility.

This is why peace should be understood not as soft language, but as economic infrastructure. Roads move goods, ports move cargo, power drives factories, financial systems move money, and peace allows all of them to function with confidence. While social calm lowers risk perception, institutional maturity reassures lenders and investors.

Public trust makes households and firms more willing to commit beyond the short term. Reconciliation reduces the chance that a difficult national moment hardens into prolonged uncertainty. In economic terms, these are not abstract virtues. They are conditions that shape whether an economy keeps moving or begins to hesitate.

Tanzania does not need to guess what happens when countries fail to protect these conditions. Across Africa, the pattern is unmistakable. In Sudan, the collapse of peace destroyed output, drove inflation to extreme levels, and shattered macroeconomic stability.

The World Bank’s 2025 Sudan Economic Update says the economy was projected to contract by 3.5 per cent in 2024 and a further 0.7 per cent in 2025, while inflation was projected around 180 per cent in 2024. It also estimated that the current account deficit would widen sharply, from 3.2 per cent of GDP in 2024 to 17.5 per cent of GDP in 2025.

Sudan is the clearest warning of what happens when institutional breakdown and conflict overwhelm the economy: production collapses, prices surge, and even basic macroeconomic management becomes almost impossible.

In Ethiopia, the lesson is different but still severe. The economy did not collapse in the same way as Sudan’s, but conflict and macro-financial strain damaged sovereign credibility and debt sustainability.

IMF and World Bank debt documents say Ethiopia is in debt distress, and its debt is assessed as unsustainable, following a missed Eurobond interest payment in December 2023. The lesson is that even if a country preserves some growth and some institutional continuity, unresolved tension and weakened cohesion can still leave lasting financial scars. Conflict does not need to destroy the whole economy to weaken financing access, damage external credibility, and constrain fiscal choices.

In Mozambique, insecurity did not only produce a humanitarian crisis. It also disrupted one of the country’s biggest investment stories. The World Bank has noted that the Cabo Delgado insurgency cost more than 2,000 lives and displaced around 950,000 people, while continued humanitarian reporting shows deep and persistent needs in the north.

The economic lesson is direct: where insecurity takes root, large-scale investment becomes more fragile, project timelines slip, expected export revenues are delayed, and fiscal assumptions built on future growth become less reliable. In investmentdriven economies, social stability is not a public-relations issue. It is part of the investment case itself.

In the Democratic Republic of the Congo (DRC), insecurity in the east has shown how conflict can quietly tax the economy even when national growth remains positive. The World Bank’s March 2026 DRC Economic Update says the fiscal deficit widened because defence spending tripled amid heightened insecurity, and another World Bank text notes defence spending reached 3.4 per cent of GDP in 2025.

That matters because every additional shilling, franc, or dollar redirected toward emergency security is money not spent on infrastructure, health, education, or productivity-enhancing investment. Conflict crowds out development. It narrows fiscal space. It makes growth less inclusive even when headline GDP remains positive.

Kenya offers a lesson closer to home and perhaps more relevant to Tanzania because it shows that a country does not need a full-scale civil war to suffer major economic consequences. After the 2007–08 post-election violence, World Bank assessments found severe disruption to tourism, transport, commerce, agriculture, and tax revenues.

One World Bank document noted that tourism revenues for the first quarter of 2008 were expected to be 60 per cent below pre-election projections and 52 per cent below first-quarter 2007 receipts. Occupancy rates in key destinations fell dramatically.

This is the economic cost of even a relatively short breakdown in civic discipline: the country remains functioning, but confidence weakens, flows are interrupted, and momentum is lost.

South Africa’s July 2021 unrest reinforces the same lesson from a different angle. Reuters reported that South Africa’s National Treasury estimated the riots could shave 0.7 to 0.9 percentage point off 2021 growth. Reuters also reported extensive damage to commerce, with more than 200 malls looted or destroyed and over 600 stores burnt or damaged, while another Reuters report cited warnings that unrest would force a sharp third-quarter contraction.

This was not civil war. It was a relatively short episode of breakdown in social order. Yet even that was enough to hit retail, logistics, food supply chains, and growth expectations. Instability does not need to be prolonged to become costly.

Taken together, these examples reveal a pattern that Tanzania should study carefully. Across Africa, instability has repeatedly transmitted into the economy through at least five channels. First, it weakens or destroys growth. Second, it raises fiscal pressure, either by collapsing revenues or forcing higher security spending.

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Third, it delays or deters investment, especially in sectors that require long horizons and policy confidence. Fourth, it damages tourism and trade, two sectors that rely heavily on perception as well as performance. Fifth, it erodes public trust, and that trust is one of the most valuable but least visible assets in any economy.

Sub-Saharan Africa remains especially vulnerable to these dynamics: the World Bank says growth for the region is holding at 4.1 per cent in 2026, but downside risks are mounting, while the IMF says the region is home to nearly half of the world’s fragile and conflict-affected states.

For Tanzania, the implications are immediate and practical. The country does not need to descend into violence to pay an economic price. Even limited instability can weaken tourism receipts, delay foreign and domestic investment, affect port and logistics confidence, complicate lending decisions, and reduce the willingness of businesses to expand.

It can also make domestic tax mobilisation harder at the very moment the government is trying to finance a 62.3tri/- budget and raise 46.8tri/- in domestic revenue.

In sectors such as banking, retail, hospitality, real estate, transport, and trade, uncertainty itself becomes a cost. Firms become more defensive. Households postpone major decisions. The national mood turns from planning to waiting.

That cost is not borne only by the state or large investors. It reaches ordinary Tanzanians. It appears through weaker job creation, delayed payments along supply chains, slower business turnover, softer tourism-linked incomes, more cautious lending, and less certainty for households trying to manage rent, school fees, stock, transport, and savings. Preserving calm is therefore not only about macroeconomic image. It is also about protecting household welfare. When confidence weakens, the burden ultimately travels downward.

This is why leadership matters so much in a sensitive period. Political leaders, religious leaders, editors, business voices, and digital commentators all shape the national atmosphere. Their language can either reduce uncertainty or deepen it. In moments like this, rhetoric itself becomes an economic variable.

Careless words can magnify fear. Sensationalism can pollute the information environment on which commerce depends. Rumour can make firms and households more defensive than the facts justify. Responsible leadership, by contrast, helps preserve one of the economy’s most important assets: confidence.

The media deserves special attention here. In moments of national sensitivity, information itself becomes part of the economy. If public discourse is driven by speculation, outrage, and emotional escalation, markets and businesses lose clarity.

Decision-making becomes more cautious. The national atmosphere shifts from productive focus to nervous reaction. Responsible media can do the opposite. It can preserve proportion. It can separate fact from rumor. It can inform the public without inflaming the public. That is not only good journalism. It is good economic stewardship.

Tanzania has worked too hard to build growth, stabilise prices, improve external-sector performance, and strengthen domestic financing to allow unnecessary division to put that progress at risk. Across Africa, the evidence is already clear: where peace weakens, economies pay. Where cohesion fractures, confidence falls. Where reconciliation fails, development slows or becomes more expensive.

As Tanzania awaits the Commission’s report, its smartest response is therefore not panic, provocation, or polarisation. It is discipline. It is institutional maturity. It is national unity anchored in economic common sense. Peace protects growth. Cohesion protects confidence. Reconciliation protects the future. Our Future. Mine, Yours, Our children and their grandchildren.