Tanzania— Faced with rapid population growth, a thriving economy is vital

Since gaining independence, Tanzania has maintained political stability and avoided
major conflicts, despite recurring periods of authoritarian rule. This stability has fostered strong economic
growth, backed by international donors. In 2020, Tanzania achieved lower-middle-income country (LMIC)
status, five years ahead of its target of 2025.
The country’s growth trajectory is primarily driven by domestic demand. Tanzania benefits from a
large domestic market of nearly seventy million people and an investment rate unmatched in the region.
This economic structure has acted as a buffer against recent global crises, shielding Tanzania from the
severe impacts experienced by other sub-Saharan African nations that are more vulnerable to external
shocks. In the short to medium term, growth is expected to exceed 6%, supported by moderate and controlled
inflation, an accommodative monetary policy, robust exports (mainly gold and tourism), and significant
investment in large-scale infrastructure projects.
In 2022, the Tanzanian authorities, recognizing the need to improve public finances, sought IMF
support to advance reforms. Among other objectives, these were designed to boost tax revenues, which
were particularly low and strained by a growing debt burden. However, fiscal discipline is one of the
country’s strengths. Ongoing consolidation efforts—combined with an improving current account deficit
driven by higher gold prices, a surge in tourism, and declining global commodity prices—are expected
to contribute to a gradual reduction in the debt ratio.
However, the country’s economic growth has not been very inclusive, which has hindered progress
in human development, both in pace and scope. Tanzania remains among the lowest-ranked countries
in this area. This, in turn, constrains productivity and long-term growth potential. The country’s rapidly
expanding population, one of the fastest-growing in the world, is putting pressure on per capita income
and undermining the still-modest progress that has been made in poverty reduction and social-sector
investment. Beyond demographic challenges, environmental risks linked to climate vulnerability and
biodiversity threats further complicate Tanzania’s development trajectory.