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

Vincent Joguet

Working Paper from Agence française de développement

Abstract: Since gaining independence, Tanzania has maintained political stability and avoidedmajor conflicts, despite recurring periods of authoritarian rule. This stability has fostered strong economicgrowth, 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 alarge 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 thesevere impacts experienced by other sub-Saharan African nations that are more vulnerable to externalshocks. In the short to medium term, growth is expected to exceed 6%, supported by moderate and controlledinflation, an accommodative monetary policy, robust exports (mainly gold and tourism), and significantinvestment in large-scale infrastructure projects.In 2022, the Tanzanian authorities, recognizing the need to improve public finances, sought IMFsupport to advance reforms. Among other objectives, these were designed to boost tax revenues, whichwere particularly low and strained by a growing debt burden. However, fiscal discipline is one of thecountry’s strengths. Ongoing consolidation efforts—combined with an improving current account deficitdriven by higher gold prices, a surge in tourism, and declining global commodity prices—are expectedto contribute to a gradual reduction in the debt ratio.However, the country’s economic growth has not been very inclusive, which has hindered progressin human development, both in pace and scope. Tanzania remains among the lowest-ranked countriesin this area. This, in turn, constrains productivity and long-term growth potential. The country’s rapidlyexpanding population, one of the fastest-growing in the world, is putting pressure on per capita incomeand undermining the still-modest progress that has been made in poverty reduction and social-sectorinvestment. Beyond demographic challenges, environmental risks linked to climate vulnerability andbiodiversity threats further complicate Tanzania’s development trajectory.

Keywords: Afrique; Tanzanie (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Pages: 20
Date: 2025-03-19
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Published in Macrodev

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