Economic situation Untapped potential

    Tanzania has seen robust economic growth in the last 20 years and even successfully mitigated the consequences of the COVID-19 pandemic. Nevertheless, there is a risk that growth could stagnate unless the country focuses more on private-sector growth to harness its full potential.

    Street vendor in Tanzania

    Street vendor in Tanzania

    In the period from 2015 to 2019, Tanzania’s economy grew by an average of more than six per cent. Following a slump to two per cent in 2020 in the wake of the COVID-19 pandemic, the economy recovered in the years that followed. For 2025, the International Monetary Fund (IMF) predicts real economic growth of 5.5 per cent, with growth continuing at five to seven per cent in the next few years.

    Tourism as a key economic factor

    The services sector accounts for roughly a quarter of gross domestic product (GDP). That includes tourism, which is an important foreign exchange earner and source of employment for the country. The COVID-19 pandemic hit the industry especially hard. Revenues slumped, countless jobs were lost in the tourism sector and in other related sectors. After travel restrictions were lifted, however, tourists returned to the country. In 2023, the country saw a significant increase in tourist numbers.

    The industrial sector contributes roughly 29 per cent of gross domestic product, but accounts for less than ten per cent of jobs. Engines of growth are primarily the construction, mining, transport and logistics sectors.

    Two thirds of employed workers make their living from agriculture. Corn, rice, soybeans and cashew nuts, in particular, are grown for export. The agricultural sector generates almost 25 per cent of GDP.

    Private investors are hesitant

    Under President Samia Suluhu Hassan the government of Tanzania is pursuing a business-friendly approach. However, bureaucratic hurdles, limited access to finance and poor transport infrastructure are hampering entrepreneurial activities. Investment comes mainly from the public sector. Currently, the government’s focus is on large-scale infrastructure programmes, for example in the area of power supply and transport networks.

    Potential for economic development

    The diversity of Tanzania’s landscape and its rich biodiversity are already very important economic factors for the country. Tourism is one of the country’s key economic sectors, which still holds a lot of untapped economic potential, especially as regards income creation, poverty reduction and economic empowerment for women, who make up 72 per cent of all workers in this sector.

    So far, a large part of the protected areas is not developed for tourism and the local population receives little benefit from the country’s wealth of natural resources. A sustainably managed tourism sector could increase public revenues, would create new jobs and at the same time make a decisive contribution towards protecting the climate and conserving the country’s biodiversity.

    Tanzania also has enormous untapped potential in the agricultural sector. Expanding and diversifying production could reduce Tanzania’s dependence on a few single export products and their fluctuating global market prices. In addition, increasing food exports could open up opportunities to make an important contribution to regional food security. This would require improving the productivity and resilience of the agricultural sector by explicitly addressing the root causes of low harvest yields – such as limited access to technology, finance and expertise.

    As at: 17/11/2025