THE ECONOMY

Tanzania today is a land of countless business opportunities.  Over the past two decades, it has been transformed from a centrally planned economy to a market oriented system through successful implementation of legal, regulatory and institutional reforms. 

The Government has encouraged private sector led growth through restoration of market forces and less interference in commercial activities.  Overall, the reforms have resulted into positive growth trends and impressive macro-economic indicators with inflation rates falling from 27.4% in 1995 to about 5.6% in 2005/06. 

Real GDP growth has averaged more than 6% during the last six years. Growth is based on solid macroeconomic foundations that strengthen the country’s economy and rule out the possibility of a crisis in the medium term.

In its recently published World Economic Outlook (April 2010), IMF predicts that the economies of East African countries of Kenya, Uganda and Tanzania to be among the fastest growing economies in the world next year. Growth rates predicted for Tanzania is 6.7%, Uganda 6.4% and for Kenya 5.8%

Main Sectors

Agriculture

The share of agriculture is 46.4% of the total GDP.  Crops account for almost 34.6% and livestock almost 6.0%.  However, the share of agriculture has been declining since the 1990s as a result of considerable growth in other sectors such as mining.  Major cash crops include coffee, cotton, tea, tobacco and cashew nuts as well as horticultural and floricultural products.  Main food crops are maize, rice, pulses and wheat.

Mining

Major minerals included gold, diamonds, and base metal such as nickel, cobalt and copper.  Gem-stones (ruby, sapphire and tanzanite), iron ore and coal.  It is the continent’s third largest gold producer after South Africa and Ghana.  Mining is the fastest-growing sector in Tanzania in terms of its share in Tanzania in terms of its share of exports which stands at around 40 percent.

Manufacturing

Main industries include those for cement, beverages, corrugated iron sheets, iron and steel products, cigarette, plastic and textile products.  There is increasing evidence that the manufacturing sector is recovering with its contribution to real GDP growing by 9.0 percent in 2005 compared to 8.8 percent in 2004.

Tourism

Tanzania is the only country in the world to allocate more than 25% of its total area to wildlife parks and game reserve.  It has 14 national parks, 17 game reserves, 50 game controlled areas, a conservation area, two marine parks and two marine reserves.

ICT

In little more than 6 years, the four private operators for mobile telecommunications have about 6mn subscribers in 25 cities.  Several foreign companies, such as CelTel, Vodacom, Etisalat and Millicom have already invested in Tanzania and attest to the enormous growth potential of the sector.  However, Tanzania’s teledensity is still low, with the number of fixed and mobile cellular lines currently standing at 12 telephone lines per 1000 people.

Business Environment and Reforms

Tanzania embarked on a wide ranging reform program since the mid-1990s in order to provide an enabling business environment that would facilitate the development of the private sector.  Among other initiatives is the Business Environment Strengthening for Tanzania (BEST) program that was initiated as a result of public private dialogue.

Business Environment Strengthening for Tanzania (BEST)

Currently, the Government is implementing a multi-sectoral, 5 years BEST program to reduce the administrative and regulatory burden of doing business in Tanzania and to improve government and judicial services to the private sector.  The program, which was launched in December 2003, is co-financed by 5 development partners; Denmark, UK, Netherlands, Sweden as well as the World Bank.

Specific areas targeted by BEST include business licensing, land regulations and labour law is at an advanced stage.  Enhancing access to the commercial court, including establishing more branches upcountry and reforming civil procedures are among further key activities being undertaken by BEST.  Work is going on to amend existing land laws, to reform provisions on mortgages as well as enabling efficient operation of a land market and the practice of estate agency.

As a result, according to the World Bank report – Doing Business in 2007, Tanzania has been named among the 10 top reformers.

MAIN EXPORT COMMODITIES

Sisal, Coffee, tea, cashew nuts, minerals (gold and diamonds), tobacco, cotton and cut flowers.

NATURAL RESOURCES

Natural gas, gold, diamonds, nickel, cobalt, copper and base metal, gemstones (apatite, niobium, tanzanite), iron ore, coal, fisheries and forests.

FOREIGN DIRECT INVESTMENT

Tanzania is the leading FDI destination in the East Africa region.  In the last decade the total FDI stock in Tanzania exceeded US $6 bn USD.  Tanzania has improved the overall legal framework for investment activities in the country for over the last several years.  A number of practical regulations liberalizing conduct of business and reducing red tape have been introduced.