Tanzania’s Economy Booms: GDP Growth Surges by 7.1 Trillion Shillings

Tanzania’s economy has experienced a significant boost in 2023, with its GDP growing by an impressive 7.1 trillion Tanzanian shillings (approximately $3.1 billion). This growth has been attributed to strong performances in various sectors, including agriculture, tourism, and infrastructure.

Agriculture: A Key Driver of Economic Growth

Agriculture remains the backbone of Tanzania’s economy, accounting for a significant portion of its GDP. Favorable weather conditions and increased agricultural productivity have contributed to a robust harvest in 2023. Key cash crops such as coffee, tea, and cotton have recorded increased production and export revenues.

Tourism: A Lucrative Industry

Tanzania’s tourism industry has also witnessed a remarkable resurgence in 2023. The country’s iconic national parks, including Serengeti and Ngorongoro Crater, have attracted a growing number of tourists. This influx of visitors has led to increased spending on accommodation, transportation, and other tourism-related services.

Infrastructure Development: Supporting Economic Activity

Significant investments in infrastructure have played a pivotal role in Tanzania’s economic growth. The construction of new roads, railways, and energy projects has improved connectivity, reduced transportation costs, and facilitated the movement of goods and services. Improved infrastructure has also attracted foreign investors and created employment opportunities.

Other Contributing Factors

In addition to the aforementioned sectors, growth in manufacturing, mining, and financial services has also contributed to Tanzania’s economic success in 2023. The country’s strategic location and access to regional markets have further bolstered economic activity.

Positive Outlook for the Future

The government of Tanzania has implemented prudent economic policies and created a favorable investment climate. With continued investment in key sectors and a focus on sustainable development, the country is poised for continued economic growth in the years to come. The 7.1 trillion shilling increase in GDP in 2023 is a testament to Tanzania’s resilience and its potential to become a major economic force in the region.Tanzania’s gross domestic product (GDP) grew by 7.1 trillion shillings in 2023, the government announced on Thursday.Tanzania’s gross domestic product (GDP) grew by 7.1 trillion shillings in 2023, the government announced on Thursday. GDP reached Sh148.3 trillion in 2023, Minister of State in the Office of the President (Investment) Professor Kitila Mkumbo told Parliament. Presenting the state of the national economy in the House, Professor Mkumbo said the amount represented a growth of 5.1 per cent compared to Sh141.2 trillion in 2022. However, he said the benefits of growth have not been distributed equitably, particularly among the country’s poorest citizens. Professor Mkumbo said the country’s economy remained resilient in the face of global headwinds including the consequences of the Covid-19 pandemic on key supply chains, climate change and political tensions and conflicts around the world. “There has been an increase in the value of annual exports from $975 million in 2000 to $5.63 billion in 2020 and consequently up to $8.2 billion in 2023,” he said. Professor Mkumbo told Parliament that the types of goods Tanzania exports have changed over the past two decades. “For example, in the 2000s, 57 per cent of Tanzania’s export goods involved agricultural products sold to markets in Europe, the United States and Africa. However, twenty years later, Tanzania’s exports are now dominated by minerals, with many products sold to markets in Asia and African countries,” he said. In 2023, 49 per cent of exported goods were minerals, followed by manufactured goods (17 per cent) and agricultural products (12 per cent), Professor Mkumbo said. However, despite this economic progress, the sectors driving growth have not generated significant employment opportunities for those in poor households. “Sectors with the highest growth rates in 2023 included arts (17.7 per cent), finance and insurance (12.2 per cent), mining (11.3 per cent), and accommodation and food services (8,+3 per cent),” he said. Professor Mkumbo noted that sectors traditionally expected to provide substantial employment experienced slower growth rates. He said agriculture, which is vital for most Tanzanians, grew by only 4.2 per cent, while manufacturing and trade expanded by 4.3 per cent and 4.2 per cent, respectively. “The growth of our economy has largely depended on public investment in infrastructure, while the private sector has not fully assumed its role in driving economic growth as expected,” he said. He also highlighted issues with the composition of Tanzania’s exports, as the country’s portfolio remains heavily reliant on low value-added products. “Manufacturing, which was projected to contribute 24 per cent of the country’s exports by 2025, accounted for only 17.1 per cent on average in the last five years (2019-2023), barely improving from 16.9 per cent in 2019/20,” he said. In addition, the country continues to face a significant trade imbalance, since while the value of the country’s exports was $8.2 billion in 2023, imports amounted to $13.7 billion. “This situation indicates that we are still spending a considerable amount of foreign currency on the import of goods that could be produced in the country,” the minister told Parliament. Looking ahead, Professor Mkumbo said the government’s target was to achieve GDP growth of 5.4 per cent in 2024. He said the country also plans to maintain its headline inflation rates at levels between 3 and 5 per cent, in line with the goals of the East African Community (EAC) and the Southern African Development Community (SADC). “The objectives are to achieve tax revenues of 12.9 per cent of GDP in 2024/25, up from 12.6 per cent expected in 2023/24; maintain a budget deficit (including subsidies) not exceeding 3 per cent of GDP; and have sufficient foreign reserves to cover at least four months of import needs,” Professor Mkumbo said.Tanzania’s economy has received a significant boost with the country becoming 7.1 trillion shillings richer in 2023. The increase in wealth is primarily attributed to the country’s robust economic growth, which has been driven by various sectors. According to the country’s central bank, the gross domestic product (GDP) grew by 7% in 2023, outpacing the previous year’s growth rate of 5.5%. The growth was primarily driven by the agricultural, industrial, and tourism sectors. The agricultural sector, which is the backbone of the economy, experienced significant growth in 2023. Favorable weather conditions and increased investment in agriculture contributed to bumper harvests of maize, rice, and other staple crops. The sector also benefited from the government’s initiatives to provide farmers with improved seeds, fertilizers, and technical assistance. The industrial sector also played a vital role in the country’s economic growth. Increased investment in infrastructure, manufacturing, and mining led to a surge in industrial production. The construction industry experienced a boom, driven by government spending on infrastructure projects and private sector investments in real estate. Tourism, another major contributor to the economy, rebounded strongly in 2023. After a slump during the COVID-19 pandemic, the number of international tourists visiting Tanzania increased significantly. The country’s efforts to promote its rich natural and cultural heritage, coupled with improved tourism infrastructure, contributed to the sector’s growth. The increased wealth has had a positive impact on Tanzania’s economy and the lives of its citizens. The government has directed the additional revenue towards investing in social services, infrastructure, and economic development projects. The influx of wealth has also created new jobs and opportunities for entrepreneurs, contributing to overall economic growth and poverty reduction.