DAR ES SALAAM: AS Tanzania celebrates 63 years of independence, it reflects on a journey marked by significant achievements and transformative milestones.
From its early years under the leadership of Mwalimu Julius Nyerere to its contemporary efforts to strengthen the economy and society, the country has made significant strides in key areas such as economic growth, political stability and social development.
After gaining independence in 1961, the country faced significant economic challenges, including heavy reliance on agriculture and a lack of industrial development.
The country’s economy was dependent on a few primary exports like coffee and sisal, which made it vulnerable to global market fluctuations.
Despite challenges like inequality and unemployment, the country continues to evolve, making strides in tourism, infrastructure and regional cooperation.
These efforts are shaping the country’s future as a prominent and influential player in East Africa and beyond.
The economy is expected to grow by 5.4 per cent this year, according to Minister for Finance, building on a resilient growth rate of 5.2 per cent in 2023, up from 4.6 per cent in 2022, according to the latest World Bank estimates.
The primary driver of overall growth is the service sector, which expanded by 7.3 per cent, fuelled by robust economic activities in the financial and insurance, transport and storage, and trade and repair subsectors.
The World Bank estimates correspond with government’s projections of stronger growth in 2023 as tourism recovers to pre-Covid-19 levels and the global supply chain continues to stabilise.
Presenting the 2024/25 national budget in the National Assembly in June, Minister for Finance Mwigulu Nchemba stated that the economy was expected to grow by 5.4 per cent this year, following an expansion of about 5.1 per cent in 2023, up from 4.7 per cent the previous year.
This growth was driven by a sustained recovery in tourism and gradual stability in supply and value chains.
Growth had slowed to 4.7 per cent in 2022 from 4.9 per cent in 2021 due in part to the impact of the war in Ukraine that sent commodity prices, notably on food and energy, soaring.
Tourism has recovered to regain its pre-pandemic mojo and brighten prospects for growth in Tanzania where it accounts for 25 per cent of foreign currency, 17 per cent of the GDP and provides 10 per cent of all employment in the public sector.
According to fresh data from the Bank of Tanzania (BoT), as of August, the country welcomed over two million international tourists, generating an unprecedented 3.5 billion US dollars in revenue.
This economic boon has significantly contributed to the country’s GDP, with tourism now accounting for 17.2 per cent of the national GDP and 29 per of Zanzibar’s GDP.
Other key macroeconomic indicators point to bright prospects of the country with annual inflation having maintained around 3.0 per cent since December last year down from 4.9 per cent in January 2023 thanks to prudent monetary measures, eased global commodity prices and moderate and timely fiscal subsidies.
Notably, the Central Bank adopted an interest-rate-targeting monetary policy regime this January to improve the effectiveness of monetary policy in maintaining low and stable inflation.
Revenue collections are reaching record highs. The Tanzania Revenue Authority (TRA) announced that it has set a new record in tax collection for the first quarter (July-September) of the 2024/25 fiscal year, surpassing all previous figures
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During the period under review, the taxman collected revenue amounting to 7.79tri/, an increase of 18.4 per cent, when compared to the 6.57 tri/- collected in the corresponding period in the previous fiscal year.
The amount collected shows a good indicator that TRA will meet the revenue target by the end of this fiscal year.
According to BoT, Foreign Direct Investments (FDI) increased to 1,338.82 million US dollars in 2023 up from 1,264.67 million US dollars in 2022.
Tanzania is one of the most preferred destinations for foreign investment in Africa, ranking among the 10 biggest recipients of FDI on the continent, thanks to robust economic growth and continuing reforms to improve business and investment climate.
Dr Nchemba told the House, while outlining the macroeconomic policy targets for the 2024/25 budget, that the government’s six-phase plan is committed to sustaining the country’s economic growth by setting ambitious yet achievable goals for the coming year.
The government aims to accelerate the GDP growth rate to 5.4 per cent in this year, up from 5.1 per cent last year while highlighting the importance of controlling inflation, targeting a stable range of 3.0-5.0 per cent over the medium term, to maintain economic stability.
Additionally, the government plans to increase domestic revenue to 15.8 per cent of GDP in 2024/25, a slight rise from 15.4 per cent in the previous fiscal year.
As part of fiscal efforts, tax revenue is projected to grow to 12.9 per cent of GDP, compared to 12.6 per cent in 2023/24.
Dr Nchemba also addressed the government’s fiscal discipline, ensuring that the budget deficit remains below 3.0 per cent of GDP, while foreign exchange reserves are to be maintained at levels that can cover at least four months of imports.
“These targets are set to ensure the economy’s resilience and stability as it continues its path toward sustainable growth,” he said.
In addition to the targets, the Minister outlined several key assumptions that underpin the budget planning.
These include increased private sector participation in investment and business, ongoing efforts to build resilience against disasters such as droughts, floods and pandemics, as well as the assumption of a strengthened global economy with stable prices in financial and commodity markets.
The government also aims to enhance food security and ensure that peace, security, and stability remain strong both within the country and in its neighbouring regions.
“These comprehensive targets and assumptions reflect Tanzania’s commitment to economic growth, fiscal prudence and resilience in facing both domestic and global challenges,” the Minister said.
The government, in celebrating 63 years of independence, has continued to make significant strides in transforming key productive sectors, including agriculture, livestock, fisheries and mining.
Key infrastructure developments, such as the implementation of railway networks, roads, airports, air transportation and communications projects, have also played a crucial role in this transformation.
Additionally, social services such as water, health and education have received attention and investment to enhance the well-being of citizens.
Over the past three years, the agricultural sector has experienced notable advancements. Since independence, the country had only 726,000 hectares under irrigation schemes.
However, today, new projects have expanded coverage to 543,366 hectares, with a combined value of 1.18 trillion shillings.
Furthermore, 14 large dams are currently under construction and 22 feasibility studies for new irrigation schemes have been completed, further boosting agricultural productivity.
In the seed sub-sector, the country has seen a remarkable improvement in the availability of certified seeds.
While only 22 per cent of seeds were certified three years ago, this figure has now reached 78 per cent, with a goal of achieving 100 per cent certification by 2026/27.
These efforts reflect the government’s commitment to advancing the agricultural sector and ensuring long-term food security and economic growth.
