Africa Asia Europe North America South America Oceania
You are here: Home > Africa > Tanzania

Economics and business in Tanzania

Since 2000, Tanzania has seen an economic growth of an average of 6.7 percent each year. This is well above average for the region and one of the highest in Africa. National poverty statistics show a decline of about 17 per cent from 2007 to 2013. However, around 22 per cent of the population lives below the national poverty line (2015). Gross domestic product (GDP) per capita is US $ 3,200 (2017).

Business of Tanzania

According to COUNTRYAAH, Tanzania today has a mixed economy with an active private business sector. The state, on the other hand, maintains presence in some sectors such as telecommunications, banking, energy and mining.

Although Tanzania is on its way to the goal of becoming a middle-income country, there is some distance left. Most Tanzanians have made little sense of economic progress. High unemployment among young people, poor quality of public schools and low income in agriculture, as well as maternal health are key challenges.

Tanzania has a broadly composed resource base. Agriculture, tourism and mining are the most important industries. The country has deposits of a number of minerals, without particularly large reserves other than of gemstones. Tanzania is, above all, an agricultural country, and the economy has remained highly dependent on agriculture. Most of the agriculture takes place on a self-sufficiency level, but the country produces more agricultural products for export, traditionally especially coffee, in recent years also cashew nuts.

Tanzania has a number of scenic areas and wildlife reserves that provide the basis for increased tourism; a sector that has experienced significant growth since the 1980s. Particular attention is paid to the Serengeti, Ngorongoro and Kilimanjaro areas in the north, as well as Zanzibar. About a third of the country's land is national parks, reserves or otherwise protected.

Economic development

After independence in 1964, the country tried to find its own development model, partly based on the development of public services to promote social development by expanding public services such as health and education. This was linked to the so-called ujamaa policy, which among other things meant that the village population was moved together to villages. The African socialism that Tanzania sought to develop further entailed a leveling policy in which the state was given a central role in economic development.

In the 1960s and 1970s, Tanzania was among the countries in the south that could show the greatest progress in the social field, while failing in the economy. After modest economic growth in the 1970s, there was a setback in the 1980s, when the Ujamaa policy was abandoned, and the Social Democratic redistribution policy was largely abandoned in favor of a land-liberalized economy. This was done, among other things, according to demands from the international credit institutions and key aid providers, including Norway. The reforms included the privatization of business enterprises and smaller public subsidies for social services.

In the 1990s, Tanzania was one of the countries in Africa that was most successful in its economic restructuring, albeit with setbacks in the social sectors as a result. Growth from the 1990s continued in the 2000s, but to a somewhat lower extent than necessary to achieve financial goals and secure jobs for a rapidly growing number of job seekers.

Assistance and financial cooperation

Tanzania has been one of the priority cooperation countries for Norwegian assistance since 1966, and is the country Norway has had the longest, continuous development cooperation with at bilateral, state level. Since the late 1990s, development assistance has concentrated not least on strengthening the political and economic development of the country through reforms and mobilization of own resources, among other things to reduce the strong dependence on foreign aid.

Tanzania is a member of the regional economic cooperation organizations COMESA and SADC, as well as from 2000 the revitalized East African Community (EAC). Until its collapse in 1977, the EAC was an important economic factor in the region, where, among other things, important infrastructure was coordinated. The new EAC extends cooperation to the Customs Union and the Common Market.

Agriculture and fishing

Tanzania's economy still largely depends on agriculture, which in 2017 accounted for 23.4 per cent of GDP and employed about 67 per cent of the working population. The topography and climatic conditions limit the opportunities for agriculture, and only about 8 percent of the land area is cultivated, of which only about 3 percent is artificial water. Tanzania has irregular rainfall and is often haunted by periods of drought.

Most of the farming is done on a self-sufficient level, and the most important foods grown are maize, rice, millet, sorghum, cassava, cooking bananas, potatoes and beans. The most important agricultural products are coffee and cashews, spices, tobacco, tea, cotton, sisal, pyrethrum, coconuts, sugar and cardamom. Other sales items include sugar cane, copra, peanuts, palm oil, cocoa, sesame seeds, sunflower seeds and soybeans. Coffee was traditionally the most important export product from agriculture, but was bypassed in the 1990s by cashews. Rehabilitation of plantations has led to increased tea production, but the revenues from all these products fluctuate sharply, in line with prices in the international markets. Tanzania was previously one of the world's largest producers of sisal, but demand has declined as artificial materials have taken over. Spice liqueur is Zanzibar's most important export item; production takes place substantially at Pemba.

Animal husbandry is also important, especially of cattle, but also of goat and sheep. Tanzania is one of the largest cattle producers in Africa.

Tanzania has a number of forest areas that are exploited commercially, both with precious and planted species for cellulose and fuel.

There is some fishing, mainly inland, but also in the Indian Ocean. Some shellfish is exported.

Mining and energy

Tanzania has deposits of a number of minerals, but few of significant economic value. Increased production of gold and gemstones led to strong growth in the sector from the late 1990s. While gold production almost ceased in the 1970s, it was revitalized, with new discoveries and investments, including at Geita, in the 1990s. Around 2000, gold became the country's most important export item. In the 1960s and 1970s, much of the sector's value creation consisted of diamond mining, substantially north of Shinyanga south of Lake Victoria, but this fell sharply in the 1980s, also due to illegal extraction and smuggling, to increase again throughout the 1990s..

Tanzania has large deposits of gemstones, and the Longino ruby mine is the largest in the world. Sapphire is another valuable stone of which there are large reserves, and Tanzania is the only producer of tanzanite gemstone. Phosphate, coal, iron ore, plaster, graphite, limestone, kaolin, tin and salt are also extracted. Furthermore, deposits of lead, silver, tungsten, magnesite, nickel,copper, cobalt, uranium, titanium and vanadium. There are large deposits of coal and pewter, but the recovery takes place only on a smaller scale.

Inadequate electricity supply is a major obstacle to economic development in Tanzania, which does not produce enough power to meet the country's needs. Production takes place essentially from hydropower, and subsequently from thermal power plants and generators. High oil prices have resulted in large additional costs and reduced power production. Natural gas has been found at Songo Songo and Mnazi Bay, off Dar es Salaam. Songo gas Songo has been transported ashore since 2004 for production of electric power. Oil exploration has not shown any viable deposits.

Industry

Tanzania is relatively little industrialized, and the sector is essentially based on the processing of local raw materials for local consumption, with a goal of production for export. After focusing on industrial travel in the years following independence, a number of production facilities were closed in the 1980s due to increased energy costs and currency shortages for imports of machinery and inputs. From the 1990s, there has been growth in the industry again. In 2017, industry accounted for 28.6 per cent of GDP. Main products are food, textiles, paper, cement, petroleum products, fertilizers and iron. The majority of the industry is located in the area of Dar es Salaam.

Foreign Trade

Tanzania exports significant commodities, in particular gold and jewelery, cashew nuts and coffee, all of which are subject to price fluctuations in the international markets. In the 1990s, further focus was placed on the production of new export goods, especially vegetables, fruits and flowers. At the same time, the country relies heavily on oil imports to meet some of its energy needs, which has contributed to the trade deficit and a considerable foreign debt.

At the same time, Tanzania has long been one of the countries that has been most dependent on foreign aid. For decades, Norway and other Nordic countries have been among the country's most important partners. From the 1990s, regional cooperation with neighboring Kenya and Uganda, through the East Africa Community, has been resumed - with the establishment of a Customs Union and increased intra-regional trade as a result.

Transport and Communications

Tanzania is a vast and partially sparsely populated country, and parts of the country - especially the central inland areas - have poor communications. The road network of around 88,000 kilometers is of relatively poor condition. Only a small part has a fixed deck. The main port cities of the Indian Ocean are Dar-es-Salaam, Mtwara and Tanga. There is a boat connection to neighboring countries on Lake Victoria, Tanganyika and Lake Malawi. Dar-es-Salaam and Tanga have inland railways and are linked to Kenya's railway network.

The Tanzanian Railway also serves several states, Burundi, Rwanda, Congo and Uganda, as well as Zambia. With Chinese assistance, in the first half of the 1970s an 1860 kilometer long rail link (the Tanzam or Tazara line) was built between the copper fields in Zambia and the shipping port of Dar-es-Salaam. There are a number of airports and landing strips. Major international airports are located in Dar es Salaam and Arusha.

Other Countries in Africa

Business Carriers Copyright 2007 - 2020 All Rights Reserved