Tanzania’s growth over the last decade has been propelled largely by public investment and domestic markets, rather than private investment and the country’s export growth.
According to the World Bank Statistics however, this is unviable in the long term, as evidenced by the drop in foreign direct investment (FDI) from 5.6 to 2.1 percent of Gross Domestic Product between 2010 and 2023.
Gains in labour productivity have also been set backs in Tanzania with exports falling from 20.9 percent of Gross Domestic Product (GDP) in 2012 to 14.3 percent in 2021.
Growth has been driven by sectors that employ relatively few low-income (or poor) workers.
Between 2014 and 2021, wage employment as shared total jobs remained stagnant, at around 14 percent.
The World Bank’s country report indicates that the share of people working in agriculture in Tanzania, fell from 76 to 67 percent between 2006 and 2014, to 65.5 percent in 2022, while wage employment was stuck at 14.4 percent in 2022.
With Foreign Direct Investments on decline, formal employment suffers the consequences leaving Agriculture to be the country’s only economic bedrock.
This exposure stems from its reliance on agriculture, which provides nearly 24 percent of the country’s Gross Domestic Product (GDP) and 20 percent of exports as well as around 95 percent of its food security.
The Ministry of Agriculture states that the sector comprised 65.5 percent of total employment by the year 2023.
The largely informal nature of labour and microenterprises limits their contribution to growth, especially for the women-led enterprises.
At the country’s current growth rate, Tanzania’s population of 62 million people is expected to double in 23 years.
Estimations by both the World Bank in 2024 and the National Bureau of Statistics (NBS) in 2020, project that Tanzania’s urban population will be reaching 49 percent by 2040. But Tanzania’s economy remains vulnerable to risks, including climate risks.
Impressive economic growth in the United Republic of Tanzania since 2000 propelled it into lower middle-income country (LMIC) status in 2020.
The country’s gross domestic product (GDP) is composed of near-equal shares of agriculture, industry, including construction, and services.
More recently, the services sector remained the main driving force behind Tanzania’s overall economic growth, expanding by 7.3 percent in 2023, supported by growing economic activities in the financial and insurance, tourism, transportation, and accommodation subsectors.
Agriculture has been growing at a relatively steady pace of between 3 and 4 percent since 2018, while growth in industry has been at a more modest 2.5 to 4.3 percent between 2020 and 2023, compared to 8.3 percent between 2015 and 2020.