P17961019db2eb013193781c2280fd79237

TANZANIA
Public Disclosure Authorized
ECONOMIC UPDATE
Harnessing the Opportunity
for a Climate-Smart and Competitive
Livestock Sector in Tanzania

Issue 21
2024
Tanzania Economic
Update
Harnessing the Opportunity for a Climate-Smart
and Competitive Livestock Sector in Tanzania
Issue 21
2024
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TABLE OF CONTENTS
Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
1. Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Economic Activity and Poverty Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Monetary Policy and Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fiscal and Debt Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Balance-of-Payments Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Zanzibar Macroeconomic Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
2. Macroeconomic Outlook and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
3. Special Focus: Harnessing A Climate-Smart and Competitive Livestock Sector . . . . . . . . . . . . 25

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Recent Trends and Developments in Tanzania’s Livestock Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Climate Change and Other Drivers of Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Barriers to Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Emerging Strengths and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Tackling Methane: Tanzania’s Livestock Sector – A Solution in Climate Change Mitigation . . . . . . . . . . . . . 37
Policy Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Annex 1: Core Macroeconomic Data Sources for the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Annex 2: Summary of Special Focuses from the Latest Tanzania Economic Updates . . . . . . . . . . . .45
Annex 3: References for the Special Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
iii
List of Boxes
Box 1 The State of Tanzania’s Economy in Six Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv
Box 2 Tanzania’s Government Spending Multiplier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Box 3 En Route to ‘Privatize’ Tanzania’s Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Box 4 Broad Monetary Condition Index for Tanzania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Box 5 The Livestock Sector’s Contribution to Key National Objectives . . . . . . . . . . . . . . . . . . . . . . . 28
Box 6 The One Health Approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Box 7 Boosting Private Investment in Tanzania’s Livestock Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Box 8 Methane Intensity Reduction and Carbon Finance Incentives. . . . . . . . . . . . . . . . . . . . . . . . . 37
List of Figures
Figure 1 Annual GDP Growth, Demand Side. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Figure 2 Long-Term Growth Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Figure 3 Electricity Generation and Cement Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Figure 4 Poverty Incidence, 2011–2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Figure 5 Inflation in Tanzania and SSA Peers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 6 CPI Inflation, January 2021–April 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 7 Food and Non-Alcoholic Beverages Inflation, January 2021–April 2024. . . . . . . . . . . . . . . . . 6
Figure 8 Cumulative Energy, Fuel, and Utilities Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 9 Contribution to PPI Inflation, 2020–2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 10 Growth of the Money Supply, January 2020–March 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 11 Private Credit Growth and Its Drivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Figure 12 Overall and Primary Fiscal Balance, FY17–FY24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 13 8M Fiscal Revenues, 2019–2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 14 Actual vs. Budget Revenue, 8M-2023/24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 15 Public Expenditure by Component, 8M-FY2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 16 External Debt Stock by Share of Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 17 Current Account Balance by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 18 Merchandise Exports, by Component. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 19 Tourism Receipts and Arrivals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 20 Merchandise Imports by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 21 Trend of Financial Account Net Inflows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 22 FDI, Tanzania and Regional Neighbors, 1990–2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 23 Gross Official Reserves and Exchange Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 24 Real GDP Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 25 Inflation, January 2021–February 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 26 Fiscal Developments, FY2020/21–FY2023/24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 27 Current-Account Balance, 2019–2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Figure 28 Livestock Density in Tanzania. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Figure 29 Livestock Population, 2010–2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Figure 30 Contributions of Livestock to GDP and AgGDP in Tanzania and Neighboring
Countries, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Figure 31 Rural Household Income from Livestock Sales by Income Quintile. . . . . . . . . . . . . . . . . . . . . 28
Figure 32 Livestock, Crop, and Overall Agricultural Production, 2010–2021. . . . . . . . . . . . . . . . . . . . . . 29
Figure 33 Total and Per Capita Livestock Production in Tanzania and Neighboring Countries,
2010–2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
iv TANZANIA ECONOMIC UPDATE – HARNESSING THE OPPORTUNITY FOR A CLIMATE-SMART AND COMPETITIVE LIVESTOCK SECTOR IN TANZANIA
Figure 34 Yields of Major Livestock Products in Tanzania, 2010–2022 . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Figure 35 Consumption of Livestock Products, 2010–2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Figure 36 Comparative Trends in Livestock Production and Consumption. . . . . . . . . . . . . . . . . . . . . . . 31
Figure 37 Imports of Selected Livestock Products, 2010–2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Figure 38 Key Components of Sustainable and Climate-Smart Livestock Systems . . . . . . . . . . . . . . . . 37
Figure 39 GHG and Methane Emissions by Sector, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Figure 40 Farmgate GHG Emissions and Emissions Intensity from Selected Agricultural
Products, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
List of Tables
Table 1 Central Government Fiscal Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 2 Medium-Term Outlook, 2021–2026. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 3 Livestock Population by Species, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Table 4 Key Features of Livestock Exports, Tanzania and Ethiopia. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Table 5 Impact of Climate Change on Tanzania’s Livestock Systems. . . . . . . . . . . . . . . . . . . . . . . . . . 33
v
ACRONYMS AND
ABBREVIATIONS
AE Advanced Economy IMF International Monetary Fund
AgGDP Agricultural GDP LGAs Local Government Authorities
ARDL Autoregressive Distributed Lag LHS Left-hand Side
BoT Bank of Tanzania MoF Ministry of Finance
CAD Current Account Deficit M0 Reserve Money
CBR Central Bank Policy Rate M3 Extended Broad Money Supply
COVID-19 Coronavirus Disease of 2019 MCI Monetary Condition Index
CO2 Carbon Dioxide MW Megawatt
CPI Consumer Price Index NBS National Bureau of Statistics
CY Calendar Year NDA Net Domestic Assets
DSA Debt Sustainability Analysis NPL Non-Performing Loan
DVS Directorate of Veterinary Services OCGS Office of the Chief Government
EAC East African Community Statistician
EMDEs Emerging Markets and Developing PPI Producer Price Index
Economies PPG Publicly Guaranteed Debt
FAO Food and Agriculture Organization ppts percentage points
FAOSTAT Food and Agriculture Organization Q1/3/4 The First/Third/Fourth Quarter
(Database) RHS Right-hand Side
FDI Foreign Direct Investment SADC Southern African Development
Forex Foreign Exchange Community
FY Fiscal Year SGR Standard Gauge Railway
GDP Gross Domestic Product SMEs Small and Medium Enterprises
GHG Greenhouse Gas SSA Sub-Sharan Africa
GoT Government of Tanzania SVAR Structural Vector Autoregressive
H1 The First Half TEU Tanzania Economic Update
IFC International Finance Corporation TIC Tanzania Investment Center
IFEM Interbank Foreign Exchange Market TMB Tanzania Meat Board
vii
Tsh Tanzania Shilling WHO World Health Organization
URT United Republic of Tanzania y/y Year-over-Year or Year-on-Year
US ($) United States (Dollars) 2/3/4/8M The First Two/Three/Four/Eight
VAT Value Added Tax Months
WB The World Bank
viii TANZANIA ECONOMIC UPDATE – HARNESSING THE OPPORTUNITY FOR A CLIMATE-SMART AND COMPETITIVE LIVESTOCK SECTOR IN TANZANIA
PREFACE
T
he Tanzania Economic Update (TEU) is a Singh (Consultant, EAEM1) and Hayaan Diriye Abdi
biannual report describing the recent evolu- Nur (ET Consultant, EAEM1) prepared the fiscal
tion of Tanzania’s economy, and each edition and debt dynamics section, Pedro Olinto (Senior
highlights a subject of critical interest to policymakers. Economist, EAEPV) and Revocatus Washington Paul
The TEU series is also designed to reach a broader (ET Consultant, EAEPV) provided input on poverty
audience of stakeholders that includes the private trends, and Randa Akeel (Senior Financial Sector
sector, the government’s development partners, and Specialist, EAEM1) provided input on financial sector
the public. To ensure that the TEU is accessible to development. Box 1 (The State of Tanzania’s Econ-
as wide a readership as possible, each edition is omy in Six Charts), Box 2 (Tanzania’s Government
presented in a relatively nontechnical style. Expenditure Multiplier), and Box 4 (Broad Monetary
This twenty-first edition of the TEU was Condition Index for Tanzania) were prepared by Xu
prepared by a team from the World Bank’s Mac- Dong (Consultant, EAEM1), while Box 3 (En Route to
roeconomics, Trade and Investment (MTI) Global ‘Privatize’ Tanzania’s Growth) was prepared by Sophia
Practice, with contributions from several other Global Muradyan (Senior Private Sector Specialist, EAEF1).
Practices. The overall effort was led by Emmanuel The special focus section of the report is on
Mungunasi (Senior Economist, EAEM1) and Xu Dong harnessing a climate-smart and competitive livestock
(Consultant, EAEM1). The analysis benefitted from sector, which was developed by Steven Were (Consul-
advice provided by Aghassi Mkrtchyan (Program tant, SAWA4) and coordinated by Ernest Ruzindaza
Leader, EAEDR), Ana Cristina Gomez Canales (Senior (Senior Agriculture Economist, SAEA3) and Emma
Livestock Specialist), and Amos Omore (Country Isinika Modamba (Senior Agriculture Economist,
Representative, ILRI). SAEA3). The chapter is an extraction from World
Emmanuel Mungunasi (Senior Country Bank-supported analytical work presented in the
Economist, EAEM1) prepared the macroeconomic ‘Roadmap for Responsible Investments Towards
outlook and risks section. Xu Dong (Consultant, Sustainable Livestock in Tanzania’ and ‘Opportunities
EAEM1) authored the sections on recent economic for Livestock Sector Mitigation by Accessing Carbon
activity, balance of payments developments, and Markets’.
Zanzibar macroeconomic assessment, while the Nathan M. Belete (Country Director, AECE1),
sections on monetary policy and inflation was crafted Hassan Zaman (Regional Director, EAEDR), Abha
by Kaushiki Singh (Consultant, EAEM1). Kaushiki Prasad, (Practice Manager for MTI, EAEM1), Preeti
ix
Arora (Operations Manager, AECE1), Francisco Oscar Parlback was responsible for the overall editing
Obreque (Senior Agriculture Economist and Acting of the report. The pictures used were procured for this
Practice Manager, SEAE3), and Holger Kray (Practice report, unless otherwise acknowledged.
Manager, SEAE3) provided guidance and leadership The findings, interpretations, and conclusions
throughout the preparation of the report. Catherine expressed in this publication do not necessarily reflect
Audax Mutagwa (Program Assistant, AECE1), Karima the views of the World Bank’s Executive Directors or
Ladjo (Senior Program Assistant, EAEM1), Faith-Lucy the countries they represent. The report is based on
Matumbo (Program Assistant, AECE1), and Juma information current as of early May 2024.
Bruno Ngomuo (Consultant, EAEM1) supported the The World Bank team welcomes stakeholder
preparation of this edition of the TEU, with assistance feedback on the content of the TEU. Please direct all
from Loy Nabeta (Senior External Affairs Officer, correspondence to Emmanuel Mungunasi (emungu-
ECRAE), who assisted with external communications. nasi@worldbank.org).
x TANZANIA ECONOMIC UPDATE – HARNESSING THE OPPORTUNITY FOR A CLIMATE-SMART AND COMPETITIVE LIVESTOCK SECTOR IN TANZANIA
EXECUTIVE SUMMARY
Recent Economic Developments Tanzania has managed a steady and

strong growth path relative to regional peers,
Tanzania has managed a steadily robust growth but the economy’s poverty-reduction potential
path amid multiple external shocks, with low remains underutilized. Boosted by a buoyant
and stable inflation by regional standards. While services sector and more favorable terms of trade,
poverty reduction has progressed slowly, the govern- Tanzania’s real GDP growth rose from 4.6 percent
ment increased public spending on goods, services, in 2022 to 5.2 percent in 2023, despite prolonged
and transfers during the first eight months (8M) of droughts and frequent flooding. While the coun-
FY2023/24 to enhance the provision of priority social try’s economic performance has been strong,
services. Domestic revenue observed double-digit poverty reduction has been slower than expected.
growth, indicating the government’s commitment A combination of factors, including slow structural
to revenue mobilization and fiscal consolidation. transformation, stagnant agricultural productivity,
The current-account deficit narrowed, driven by limited social safety net coverage (e.g., to mitigate
reduced import bills and a surge in foreign exchange shocks), and high population growth, has limited the
earnings from the tourism sector. However, foreign impact of economic growth on poverty reduction.
exchange challenges persist, which has motivated The country’s poor households are heavily depen-
the Bank of Tanzania (BoT) to raise the policy rate dent on the agriculture (incl. livestock) sector, which
and implement other prudent monetary policies. employs about two thirds of Tanzanian workers, but
Over the medium term, the economy is set to grow which is particularly exposed to climate change-
at around 6 percent, supported by escalated private related shocks and faces stagnant productivity
investments resulting from a strengthened business growth. This underscores the importance of priori-
environment. A positive macroeconomic outlook tizing productivity-enhancing public investment and
and an enhanced agricultural productivity have con- adopting climate-smart strategies to improve the
tributed to the estimated decline in poverty. Major agriculture and livestock sectors (see the Special
risks to the outlook include incomplete implementa- Section).
tion of reforms, climate change, and a deterioration The Government of Tanzania has made
of the global economy. efforts to improve the country’s fiscal health.
xi
Between 8M-FY2022/23 and 8M-FY2023/24, govern- cent. The ongoing implementation of mega projects
ment revenues increased by 27.4 percent, supported such as the Standard Gauge Railway project required
by the promotion of IT systems to ensure accurate tax transport, building, and construction equipment-
monitoring, an expansion of taxpayer and VAT reg- related imports and increased the demand for capital
istration through targeted campaigns, and efforts to imports by a 7.9 percent during 3M-2024. Neverthe-
combat tax evasion and smuggling. Public spending less, the reduced value of imported oil and fertilizer,
increased by 34.4 percent during this period, reduc- combined with a decline in insurance and freight
ing the fiscal deficit from 4.1 percent to 3.2 percent services, prevented an escalation of the country’s
of GDP. Almost 70 percent of the deficit is financed overall import bill.
by foreign sources, while the remaining is financed Supported by increased export earnings
domestically. The most recent IMF/WB Debt Sustain- and a reduced import bill, Tanzania’s trade
ability Analysis (June 2024) determined that Tanzania balance and current-account deficit have
continues to face only a moderate risk of external and improved. The balance-of-trade deficit narrowed from
public debt distress. US$770.9 million (3.9 percent of GDP) in 3M-2023 to
The government has ramped up spend- US$425.7 million (2.2 percent of GDP) in 3M-2024.
ing on goods, services, and transfers. Public This sharp reduction resulted in an improved current-
spending on goods, services, and transfers totaled account position, despite a constant level of net
5.8 percent of GDP during 8M-FY2023/24, 0.5 per- income outflows at 0.8 percent of GDP over the same
centage points (ppts) higher than the budget target period. The country’s current-account deficit declined
and nearly 2 ppts above the actual spending during from US$926.0 million, or 4.7 percent of GDP, during
8M-FY2022/23. Other recurrent expenditure also rose 3M-2023 to US$576.4 million, or 2.9 percent of GDP,
in 8M-FY2023/24, with interest payments increasing during 3M-2024.
by 0.4 ppts and payments for wages and salaries A gradual increase in foreign direct invest-
rising by nearly 1 ppt of GDP. Ongoing large public ment (FDI), foreign loans, and official reserves
investment projects, including a modern railway financed the narrowing current-account deficit.
system, hydroelectric plants, and roads, remained a Tanzania’s FDI inflows are low compared to those
large component of the public spending and totaled of regional neighbors, but a favorable business
9.1 percent of GDP in the same period. environment, plateauing interest rates in advanced
Consistent with subdued global trade economies, and positive ratings from Fitch and
in 2023, the country’s merchandise exports Moody’s have helped the country attract FDI. Gross
increased at a slower pace. Merchandise export foreign exchange reserves remained adequate
growth decelerated from 9.7 percent during the first and rose from US$5.0 billion by end-March 2023 to
three months (3M) of 2023 to 2.7 percent in the same US$5.3 billion by end-March 2024. However, the cov-
period in 2024. While gold and other traditional exports erage of foreign reserves declined from 4.5 months to
(e.g., cotton, tobacco, and cashew) contributed most 4.4 months over the period.
of the increase, lower external demand for minerals Still, ongoing tensions in the foreign
caused a contraction in mineral exports (excluding exchange market persists, which has required the
gold) and dragged growth. Meanwhile, increased BoT to keep tightening its monetary policy stance.
tourism activity has stimulated services export The Tanzanian shilling depreciated by 10.6 percent
earnings. Travel receipts, the largest component of in one year, from an average of Tsh 2322.9/US$ in
the country’s services exports, have soared by 27.2 March 2023 to Tsh 2569.7/US$ in March 2024.
percent, reaching US$970.7 million in 3M-2024. This However, this appears to be inadequate to mitigate
increase was bolstered by a surge in inbound tourist domestic demand pressures on foreign exchange. In
arrivals—registered at 0.52 million during 3M-2024. early April, the BoT decided to raise the policy rate by
Goods and services imports growth was 50 basis points to 6 percent. In tandem, the growth
virtually flat in 3M-2024, contracting by 0.7 per- rate of extended broad money (M3) dropped sharply
xii TANZANIA ECONOMIC UPDATE – HARNESSING THE OPPORTUNITY FOR A CLIMATE-SMART AND COMPETITIVE LIVESTOCK SECTOR IN TANZANIA
from 21.3 percent in July 2023 to 13.8 percent in of structural reforms, damaging effects of climate
March 2024, while private credit growth has deceler- change on the agriculture and tourism sectors, a
ated to 16.6 percent in March 2024. worsening external global environment that lowers
Benefiting from prudent monetary and fis- demand for the country’s exports, and continued
cal policies, inflationary pressures have eased global inflationary pressures. To mitigate these risks,
in Tanzania. Headline inflation remained subdued policymakers can continue to improve the business
during 4M-2024, averaging 3 percent, y/y, a level not and investment environment, reduce the cost of
seen since 2019. Cumulative food price inflation fell regulatory compliance, strengthen Tanzania’s export
from 7.3 percent in 2022 to 6.8 percent in 2023, before competitiveness, and implement other structural
settling at 1.5 percent during 4M-2024. This was reforms to attract greater private investment and spur
helped by various short-term fiscal support measures resilient and inclusive private sector-led growth.
to ensure an adequate food supply to meet national
and regional needs, as well as by the BoT’s financing
support to the agriculture sector. However, a recent Harnessing a Climate-Smart and
pick-up in domestic energy, fuel, and utility prices due Competitive Livestock Sector
to increased global oil prices may undermine domes-
tic consumption among Tanzanian households. Tanzania possesses considerable potential in
Tanzania’s GDP projection for 2024 has livestock production and trade. While the country
been revised downward from 5.6 percent in boasts a large livestock population, climate-related
the last TEU to 5.4 percent. This is due to the risks and inadequate investment from the public and
slower-than-expected implementation of ongoing private sectors impede sectoral growth and interna-
transformative structural reforms to facilitate private tional competitiveness. Nevertheless, with increasing
sector investment, persistent barriers that hinder domestic demand and a burgeoning need for live-
private sector development, and insufficient reforms stock products, there is an opportunity to capitalize
to rebalance the demand and supply in the foreign on this internal market while simultaneously exploring
exchange (forex) market. Over the medium term, avenues for expanding exports. To realize its livestock
growth is expected to average around its long-run potential, Tanzania must prioritize climate-smart
potential of about 6 percent, as improvements to the measures and innovations that enhance resilience
business environment and the complete implementa- and boost productivity and incomes in the face
tion of structural reforms are likely to attract more of climate change. Public investment projected at
investment, including FDI. Headline inflation is pro- US$546 million over five years (US$109 million/
jected to remain low and stable over the medium term year) is necessary to effectively address the livestock
as the newly adopted interest rate-based framework sector’s multifaceted challenges and significantly
anchors inflation expectations. The current-account enhance its contribution to Tanzania’s economy. In
deficit is expected to narrow further, driven by an addition to climate change adaptation and mitigation
improved trade balance. Meanwhile, a combination measures, an enabling environment for private invest-
of increased revenue collection and controlled expen- ment is critical to ensure sustained innovation and
ditures is expected to narrow the fiscal deficit over efficiency gains in the livestock sector.
the medium term. The poverty rate, measured by the
international poverty line, is also projected to decline Recent Trends and Developments
from 43.0 percent in 2024 to 41.7 percent in 2026,
supported by a promising macroeconomic outlook Tanzania’s expansive livestock sector is vital to
and increased agriculture budget allocations. the livelihoods of many households, with one of
Despite the robust and stable outlook, the largest and fastest growing livestock popula-
several risks threaten economic growth. Key tions in Africa and the world. Its cattle population
risks include delayed or incomplete implementation is immense at 36.6 million—second largest in Africa
Executive Summary xiii

BOX 1: THE STATE OF TANZANIA’S ECONOMY IN SIX CHARTS
FIGURE B1.A • Tanzania has Weathered the FIGURE B1.B • Inflationary Pressures have
Impact of Overlapping Shocks and Gradually Eased on Both the
Managed a Steady and Strong Mainland and in Zanzibar since
Growth Path by Regional Standards the Start of 2023…
Trend in Real GDP Regional Inflation Comparison
Index, Q4-2019 = 100, Seasonal Adjusted Horizontal axis (2023 inflation*); vertical axis (2022 inflation)
125 9 Inflation Target Band
8
120
7
115 6
110 5
4
105 3
100 2
1
95
0
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Nov-23
Jan-24
90
Q4-19 Q2-20 Q4-20 Q2-21 Q4-21 Q2-22 Q4-22 Q2-23 Q4-23
Ghana Kenya Mozambique Headline inflation, Mainland Core inflation, Mainland

Tanzania Uganda Zambia Headline inflation, Zanzibar
Source: Haver Analytics, WB staff estimates. Source: NBS, BoT, WB staff estimates.
FIGURE B1.C • …Driven by the Bank of Tanzania’s FIGURE B1.D • …the Implementation of
Tightening Monetary Policy Stance, Well-coordinated Short-term
as Indicated by Decelerated Growth Fiscal Measures, such as Recent
of Monetary Aggregates and… Subsidies on Sugar
Moentary Aggregates Tanzania's Fiscal Balance
% y/y change % of GDP
32 1
24
–1
16
8
–3
0
–8
Jan-20
Apr-20
Jul- 20
Oct-20
Jan-21
Apr-21
Jul- 21
Oct-21
Jan-22
Apr-22
Jul- 22
Oct-22
Jan-23
Apr-23
Jul- 23
Oct-23
Jan-24
–5
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24e
Reserve money (M0) Extended broad money (M3) Overall fiscal balance Primary fiscal balance
Source: Bank of Tanzania, WB staff estimates. Source: NBS, WB staff estimates.
(continued on next page)
xiv TANZANIA ECONOMIC UPDATE – HARNESSING THE OPPORTUNITY FOR A CLIMATE-SMART AND COMPETITIVE LIVESTOCK SECTOR IN TANZANIA
BOX 1: THE STATE OF TANZANIA’S ECONOMY IN SIX CHARTS (continued)
FIGURE B1.E • Tanzania’s Terms-of-trade Position FIGURE B1.F • …and Shore Up Official Reserves.
has Become Favorable for its However, Tensions in the Foreign
International Trade, Helping Exchange Market Persist Following
Improve the Trade Deficit… the Currency Depreciation.
Tanzania's External Sector Foreign Reserves and Exchange Rate
Index (LHS);% of GDP (RHS) US$ billion, months (LHS); Tsh/US$ (RHS)
110 2 8 2600
7 2550
108 0
6 2500
106 2450
–2 5
104 2400
–4 4
2350
102 3
–6 2300
100 2 2250
–8 1 2200
98
0 2150
–10 Jan-21
Mar-21
May-21
Jul- 21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul- 22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul- 23
Sep-23
Nov-23
Jan-24
Mar-24
96
Q1
Q1
Q1
Q1
Q1
Q1
Q2
Q2
Q2
Q2
Q2
Q2
Q4
Q4
Q4
Q4
Q4
Q4
Q3
Q3
Q3
Q3
Q3
Q3
2018 2019 2020 2021 2022 2023

Official foreign reserves (US$ billion) Months of imports
Terms of trade Balance of trade (RHS) Nominal exchange rate (RHS)
Source: Bank of Tanzania, NBS, WB staff estimates. Source: Bank of Tanzania, NBS, WB staff estimates.
(behind Ethiopia)—and represents 1.4 percent and able growth in livestock production, outpacing crop
11.0 percent of the global and African total cattle production. However, this growth has been driven
population, respectively. Tanzania’s population of mainly by an expansion of the livestock population
sheep, goats, chicken, and pigs is also large, with rather than improvements in yield. Urbanization,
most ranking in the top ten on the continent in terms income growth, and changing lifestyles and diets are
of size. Per capita, Tanzania’s total livestock popula- driving up the demand for livestock products, lead-
tion is also among the largest in Africa. Between 2010 ing to a surge in consumption. However, domestic
and 2022, Tanzania’s cattle, goat, sheep, and poultry production struggles to meet rising demand, result-
population surged by an average of 83 percent, with ing in increased imports of key livestock products,
the number of cattle more than doubling. especially processed and value-added items. The
Tanzania’s livestock sector holds signifi- country’s livestock exports are lower than potential
cant growth potential that has not yet been fully exports, pointing to challenges in capitalizing on the
realized. Currently, it contributes less to the GDP sector’s full economic potential.
and agricultural GDP than neighboring countries
like Ethiopia and Kenya. This disparity underscores Drivers of Vulnerability
substantial opportunities for development and invest-
ment. Despite this, the sector is crucial for income The livestock sector faces major challenges
generation, especially among the poorest households, related to climate change such as erratic rainfall
and plays a vital role in employment, food security, and higher temperatures. These climate-driven
nutrition, and the inclusion of women and youth. Over challenges lead to fluctuating water and feed avail-
the past decade, Tanzania has experienced remark- ability and intensify resource competition and land
Executive Summary xv
degradation, especially in arid and semi-arid regions. internationally while enabling exports of livestock
They also interact with multiple socioeconomic fac- genetics and biotechnology products. Moreover,
tors and institutional constraints in rural areas, limiting increasing demand for processed and value-added
access to essential resources like land, water, and livestock products offers avenues for investment and
fodder. Endemic livestock diseases further strain the job creation in processing facilities, enhancing market
sector, impacting animal health, productivity, and mar- competitiveness. Leveraging Tanzania’s vast land
ket access. Inadequate infrastructure and technical resources and traditional knowledge in livestock man-
capacity for water supply services, veterinary services, agement, along with emerging digital technological
and market access hinder disease management and advancements, can further enhance the resilience,
market integration, exposing livestock producers and productivity, and efficiency of the sector. The high
traders to multiple intertwined risks. absorption capacity of the Ministry of Livestock and
Fisheries signals the potential for increased public
Barriers to Competitiveness investment, with livestock projects demonstrating
substantial viability, paving the way for transformative
There are also various structural, institutional, and growth in the sector.
systemic challenges facing Tanzania’s livestock
sector that intersect with climate risks, hamper- Tackling Methane: Tanzania’s Livestock
ing productivity and impeding competitiveness. Sector. A Solution in Climate Change
Despite its significant contribution to GDP, the livestock Mitigation.
sector receives disproportionately low public funding,
constraining investment in essential areas such as The livestock sector globally and in Tanzania is
research, extension services, and infrastructure. Live- a large emitter of greenhouse gases, particularly
stock producers encounter difficulties in accessing methane, which contributes significantly to
inputs, technical assistance, and credit, with women climate change. Despite its importance, finance for
and youth especially impacted. Inadequate infrastruc- methane abatement is minimal, and the sector’s emis-
ture further compounds these challenges, leading to sions pose challenges to efforts aimed at achieving
inefficiencies in transportation, market access, and climate goals while ensuring food security. Tanzania,
processing, while land tenure insecurity exacerbates with its large livestock population, is exploring strate-
resource degradation. Additionally, limited skills and gies to mitigate emissions and access carbon finance,
capacity among stakeholders, coupled with complex focusing on interventions such as improving breed
and inconsistent policies and regulations, undermine quality, water management, and pasture utilization.
efforts to drive growth and attract private investment Analysis suggests that implementing these measures
in the sector. could significantly reduce emissions while increasing
production and generating carbon revenues. Embrac-
Emerging Strengths and Opportunities ing climate-smart practices in the livestock sector
is crucial for Tanzania to mitigate climate change,
Despite the myriad of vulnerabilities and impedi- enhance resilience, and support livelihoods.
ments to competitiveness, Tanzania’s livestock
sector holds potent advantages and opportuni- Policy Recommendations
ties for growth. The country’s strategic geographical
location—boasting sea access and bordering seven Between 2023/24 and 2028/29, sustainable
neighboring countries—positions it to capitalize on livestock development in Tanzania would require
regional and global demand for meat, dairy, and other US$546 million (about US$109 million annually)
livestock products. Its rich diversity of indigenous in public investment. This level of investment repre-
livestock breeds presents an opportunity to cater to sents a fivefold increase over previous budgets and
diverse consumer preferences both domestically and is 50 percent higher than the 2023/24 budget, and it
xvi TANZANIA ECONOMIC UPDATE – HARNESSING THE OPPORTUNITY FOR A CLIMATE-SMART AND COMPETITIVE LIVESTOCK SECTOR IN TANZANIA
is deemed feasible given the underfunding and high infrastructure, and implementing effective food safety
absorption capacity of the livestock sector. With such regulations through One Health Approach. Prioritizing
resources, the national authorities could pursue a climate-smart practices—such as the implementation
series of policies and investments targeting productiv- of climate change adaptation and mitigation strate-
ity, trade and value addition, climate adaptation and gies and renewable energy solutions—is essential to
mitigation, and sector governance. These measures mitigate climate risks and reduce the sector’s carbon
would involve sustainably improving the productivity footprint. Strengthening sector governance, improv-
of the sector through improved access to veterinary ing institutional capacity, and adopting enabling
services, vaccinations, and disease control mea- policy reforms are also crucial to ensure the effective
sures, animal feeding as well as by expanding breed implementation of climate-smart livestock practices
improvement programs and increasing public funding and foster competitiveness. Finally, an effective
for research and development. Enhancing trade and governance framework and appropriate incentive
value addition entails diversifying market opportuni- mechanisms are critical to ensure sustainable prac-
ties, improving market linkages and transportation tices and greater private sector participation.
Executive Summary xvii

1
RECENT ECONOMIC
DEVELOPMENTS
Economic Activity and Poverty livestock sectors and weighed on final consumption.
Trends Apart from building a sound social security system,
unleashing the full potential of Tanzania’s rapidly grow-
Tanzania’s economy has maintained a strong ing livestock sector, which employs around 33 percent
growth momentum amid multiple overlapping of the population and generates almost one-fifth of the
shocks. Real GDP grew by an estimated 5.2 percent, income for the poorest rural households through live-
year-on-year (y/y), in 2023, up from 4.6 percent in stock sales alone, could create more jobs, increase
2022. Despite the severe impact of droughts and farmers’ incomes, and contribute positively to climate
floods on agricultural output and households’ real change mitigation (see the Special Section).
income, consumption remained one of the three An improved trade balance and increased
solid pillars of economic growth, following gross fixed gross fixed investment contributed positively
investment and net exports (Figure 1). Still, economic to aggregate output. Lower domestic demand for
growth is below its pre-pandemic average, and the imported non-food consumer goods, reduced global
economy is expected to grow at a pace parallel to the oil and fertilizer prices, and increased transportation
pre-pandemic potential output, revealing the lingering and travel receipts (bolstered by the sustainable
effects of the COVID-19 crisis (Figure 2).1 growth of the tourism industry) helped improve Tan-
Climate-related shocks to household zania’s net exports. As a result, the contribution of net
income and future uncertainties dampened exports turned positive in 2023, accounting for nearly
consumer demand in 2023. Following pent-up 40 percent of real GDP growth. This marked the first
consumer demand in 2022, household consumption positive contribution from net exports since 2019.
growth decelerated in 2023, with its growth contribu-
tion falling to half its 2022 level. A prolonged drought 1
The World Bank’s utilization of its GDP estimates since
and frequent flooding had a severe effect on the 2018 partly explains parallel growth between the pre-
income sources of households in the agriculture and pandemic output trend and post-pandemic actual output.
1
FIGURE 1 • Annual GDP Growth, Demand Side FIGURE 2 • Long-Term Growth Trends
(% y/y change, contribution in ppt.) (Tsh trillion)

8 160
6.2 150
6 5.2
4.3
4.6
140
4
2.0 130
2
120
0
110
–2
100
–4 90
2015–2019 2020 2021 2022 2023
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Household consumption Government consumption
Gross fixed investment Net export Pre- covid output trend Actual output
Statistical discrepency Real GDP WB staff forecast (Apr-2024)
Source: WB staff estimates. Source: NBS, WB staff estimates.
Gross fixed investment, a usual driver of domestic nian shilling spent by the government could increase
demand, increased to an estimated 4.0 percent in the output by around Tsh 0.41Tanzania shilling, under-
2023, mainly driven by public investment. According scoring the medium stimulative effect of fixed public
to the latest World Bank estimate, an additional Tanza- investment (Box 2).
BOX 2: TANZANIA’S GOVERNMENT SPENDING MULTIPLIER
Expansionary fiscal policies are frequently employed to bolster aggregate demand and invigorate economic activities, particularly amid
recessions characterized by anemic economic growth and elevated unemployment. It is therefore important for policymakers to identify the
effectiveness of fiscal policy and quantify the effects of government spending on real GDP to determine public policy. This is especially the case
for Tanzania, whose growth after the early 2010s was largely driven by public infrastructure investment (Figure B2.A).a Existing literature,
however, has mainly focused on advanced economies, and few researchers have investigated the government spending multiplier, an index
measuring the effects of public spending and real GDP, in lower middle-income countries such as Tanzania.
This box presents the results of an assessment of short-run output effects of government spending in Tanzania,b using World Bank estimated
quarterly data between 2000 and 2023. The assessment used a structural vector autoregressive (SVAR) model with 7 variables—real GDP,
real government expenditure, real government revenue, extended broad money (M3), GDP deflator, real private consumption, and real private
investmentc—and 4 shocks—business cycle shock, monetary policy shock, government spending shock, and government revenue shock.
As many researchers have pointed out, government spending multiplier estimates vary according to the status of the economy and the
monetary policy stance. Therefore, the assessment followed a widely used approach developed by Mountford & Uhlig (2009) that identified
an independent government spending shock unrelated to the business cycle shock and monetary policy shock by imposing sign restrictions.d
The findings show that Tanzania’s government spending multiplier is estimated at around 0.42 between 2000 and 2023.e This indicates that
every Tsh 1 spent by the government could increase real output by Tsh 0.42. This number is similar to a reasonably precise estimate of 0.4 in a
large sample covering 102 developing countries between 1970 and 2010 done by Kraay (2014).f A comparison of the estimated government
spending multiplier for periods before and during/after the pandemic reveals that the estimate for 2000–2019 (pre-pandemic period) is much
higher than that of 2000–2023 (Figure B2.B). The large difference in the effectiveness of government spending may be attributed to a lower
spending multiplier during the pandemic (Kinda et al. 2022) when a higher level of uncertainty dampened consumer and investor confidence.
The results also show that the spending multiplier crowds in real private consumption while crowding out real private investment, which is
consistent with existing literature.
2 TANZANIA ECONOMIC UPDATE – HARNESSING THE OPPORTUNITY FOR A CLIMATE-SMART AND COMPETITIVE LIVESTOCK SECTOR IN TANZANIA
BOX 2: TANZANIA’S GOVERNMENT SPENDING MULTIPLIER (continued)
FIGURE B2.A • Gross Fixed Capital Formation FIGURE B2.B • Fiscal Spending Multiplier
(% of GDP) (Level)
45 0.9
0.82
40 0.8
35
0.7
30
0.6
25
20 0.5
0.42
15 0.4
10
0.3
5
0.2
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 0.1
Private Sector Public Sector Total 0.0

2000–2019 2000–2023
Source: MFMod, and WB staff estimates. Source: WB staff estimates.
a
World Bank. 2023. Privatizing Growth: A Country Economic Memorandum for the United Republic of Tanzania. https://documents.worldbank.org/en/publication/documents-
reports/documentdetail/099120523172572316/p177386065705608a0894401f03243fd2c6
b
While recent studies have explored different values for the capital expenditure and revenue expenditure multipliers, this assessment focused only on the overall expenditure
multiplier due to data limitations.
c
GDP used in this Box is estimated by WB. All variables are seasonally adjusted by applying the X-13 approach developed by the US Census Bureau. Apart from M3 and GDP
deflator, other variables are interpolated from annual data using the quadratic sum method and calculated in per capita terms. The lag order of 6 is selected based on information
criteria.
d
Like Mountford & Uhlig (2009), this assessment identified a business cycle shock if real GDP, real government revenue, real private consumption, and investment moved in the
same direction in the following year after the shock, while a monetary policy shock was identified if M3 and GDP deflator moved in the opposite direction. Government revenue
and spending shocks are orthogonal to the previous two shocks.
e
The spending multiplier is the one-year impact multiplier, defined as
(GDP response in the fourth quarter) .
(Initial spending shock * average government spending share of GDP)
The findings are quite robust. The fiscal multiplier is estimated at around 0.45 when using a subsample (2003Q4–2023Q4), and at around 0.31 when adding 3-months T-bill rate
into the model using quarterly data between 2000 and 2023.
f
Kraay, A. 2014. “Government spending multipliers in developing countries: evidence from lending by official creditors.” American Economic Journal: Macroeconomics, 6(4),
170–208.
Leading indicators suggest a vibrant services However, the expansion of the industry
sector in the first quarter (Q1) of 2024. According sector has been relatively subdued. The industrial
to the NBS, the number of international tourist arrivals production index averaged 101.7 in Q1-2024, signifi-
on Tanzania’s mainland soared by 27 percent, y/y, cantly below 106.3 recorded in the same period last
to 0.52 million in Q1-2024. Burundi (representing year. While Tanzania’s frequent power blackouts have
10.4 percent of total arrivals during 3M-2022), Kenya ended, as an excess of electricity was generated by
(8.9 percent), Italy (6.4 percent), France (5.9 percent), the Tanzania Electric Supply Company Limited, there
and the United States (5.3 percent) are the top 5 has been no double-digit increase in electricity pro-
source countries and account for one-third of total duction. The growth of electricity in Q1-2024 remained
tourist arrivals. Total voice traffic minutes, a proxy of consistent with the same period last year, at 9.6 per-
the telecommunication subsector, also grew by almost cent. Cement consumption contracted by 9.5 percent
10 percent in Q1-2024, building on an already high in Q1-2024, against a contraction of merely 1 percent
growth of 24.3 percent, y/y, during Q1-2023. in Q1-2023 (Figure 3). A similar downward trend
Recent Economic Developments 3

FIGURE 3 • E
lectricity Generation and Cement FIGURE 4 • Poverty Incidence, 2011–2024
Consumption
(Poverty rate, % )
(000' tones; % y/y growth (RHS)) 60
3.0 28
55
24
2.5 50 47.7 47.9
20 44.6 44.0
45 43.0
2.0 16 44.3 44.3 43.5
40
1.5 12
35
8 28.2
30 27.1 26.8 26.2
1.0 26.4
4
25 26.1 26.9 26.5
0.0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 20
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2021 2022 2023 2024
Domestic cement consumption Electricity generation National poverty line - Tsh 49,320
International poverty line – US $2.15 a day (2017 PPP)
Source: NBS, and WB staff estimates.
Note: Only positive electricity generation growth were represented in the red dots. Source: 2011, 2018 Household Budget Survey and WB staff estimates.
was observed in domestic cement manufacturing, erty, from 44.0 percent in 2022 to 43.5 percent in
an indication of slower growth in manufacturing and 2023, largely attributed to high population growth,
construction subsectors, which usually constitute limited social protection, and low productivity in the
70 percent of value-added in the industry sector. agriculture and livestock sectors (which together
The irregular release of national account employ almost 70 percent of Tanzanians). Tanzani-
statistics and high frequency data impedes the ans are highly vulnerable to shocks, highlighted by
comprehensive analysis of recent developments recent flooding events and data showing an inverse
in real sectors. There are often significant delays in relationship between exposure to climate-related
the publication of GDP and high frequency indicators. shocks and ability to cope. For example, the district
For example, new data on these statistics were not of Longido in northern Tanzania ranks as the most
disclosed between early January and early May this impoverished and has one of the highest exposures
year. The latest available data as of end of April are to drought. Poverty-reduction strategies should
9M-2023 for GDP and October 2023 for high fre- focus on enhancing agricultural productivity and
quency indicators. This highlights the importance of commercialization among smallholder farmers,
enhancing the timely publication of both ad hoc and improving market access, building the population’s
routine statistics. productive capacities, fostering private sector
Tanzania continues to witness slow growth through an enabling business environment
progress in poverty reduction. In the absence with less regulatory barriers (Box 3), and expand-
of updated official poverty data post-2018, find- ing social protection coverage. Equally important
ings from the 2020/2021 National Panel Survey is ensuring that women have access to economic
indicate a notable decline in household consump- opportunities and assets, including land, enabling
tion, primarily attributed to the adverse effects of them to maximize their economic contributions, and
the COVID-19 pandemic (Figure 4). Subsequent invest in girls’ education, which will likely lower fertil-
estimates based on the effects of GDP growth on ity rates and further reduce poverty (see the special
poverty indicate a slight reduction in extreme pov- topic of the last TEU).
BOX 3: EN ROUTE TO ‘PRIVATIZE’ TANZANIA’S GROWTH
Tanzania’s private sector is poised to play an important role in the FIGURE B3.A • T
op Ten Business Environment
country’s development trajectory. As presented by the Ministry of Constraintsa for Firms in
Finance (MoF) in the Plans and Budget priorities for 2024/25,a the Tanzania
Government of Tanzania (GoT) recognizes the importance of the
private sector as the engine of economic growth. The authorities (% of firms)
plan to prioritize the facilitation of an inclusive and competitive 45
economy, deepening industrialization, and service provision as well 40
as investment and trade promotion. 35
30
However, regulatory burdens remain among the most critical 25
barriers to private sector growth. While there are ongoing efforts by 20
the GoT to improve private sector development, the implementation 15
of genuinely transformative reforms has been slow, and significant 10
barriers to doing business remain when comparing Tanzania with 5
averages for SSA and all economies in the World Bank 2023 0
Acces s to finance
Electricity
Tax rates
Tax administration
Business licences
and permits
Crime, theft and
disorder
Practi ces of the
informal sector
Cus toms and
trade regulation s
Acces s to land
Transportation
Enterprise Survey (Table B3.A and Figure B3.A).
Survey datab confirm that domestic conditions for business
entry and operation remain difficult in Tanzania. The country’s
excessive regulatory burden creates a significant opportunity cost
to formalization for firms, which incentivizes informal business
practices. Moreover, Tanzania was ranked 105th out of 132 Tanzania Sub- Saharan Africa
countries on business sophistication in the Global Innovation Source: Bank of Tanzania, WB staff estimates.
Index 2023.c To leverage the potential of private sector-led growth, a
The percentage of firms that consider a specific business environment obstacle
there is an urgent need to accelerate the overhaul of the business- as the most important one.
enabling environment and strengthen firms’ productivity and
competitiveness. As part of ongoing reforms to improve the country’s
investment climate, amendments to the Tanzania Investment Act 2023 were approved by the president in March 2024. These amendments
aim to enhance investor protection guarantees, ensure alignment with international good practices, and significantly strengthen the investor
protection framework. In Q4-2023, the Tanzania Investment Center (TIC) reported a year-on-year increase of 178 percent in the number of
approved registered projects (from 58 to 161 projects), with an increase in their total capital from around US$770 million to US$1400 million.d
TABLE B3.A • Regulations and Taxes in Tanzania and SSA, 2023
Indicator Tanzania SSA All Economies

Senior management time spent dealing with the requirements of government regulation (%) 13.6 7.8 8.5
Percent of firms visited or required to meet with tax officials 92.5 64.4 44.1
If there were visits, average number of visits or required meetings with tax officials 2.6 2.9 2.3
Days to obtain an operating license 11.8 18.4 32.3
Days to obtain a construction-related permit 15.8 38.5 65.6
Days to obtain an import license 14.3 16.9 17.7
Percent of firms identifying tax rates as a major constraint 48.1 32.1 27.9
Percent of firms identifying tax administration as a major constraint 38.1 24.6 18.5
Percent of firms identifying business licensing and permits as a major constraint 25.4 14.4 12.8
Source: World Bank Enterprise Survey (2023).
a
MoF. 2023. Plan and Budget Guideline for 2024/25. December 2023. https://www.mof.go.tz/uploads/documents/en-1707721385-PLAN%20AND%20BUDGET%20
GUIDELINE%20FOR%202024-25.pdf.
b
World Bank. “Enterprise Surveys.” www.enterprisesurveys.org.
c
World Intellectual Property Organization. 2023. “Global Innovation Index 2023: Innovation in the face of uncertainty.” Geneva: WIPO. DOI:10.34667/tind.48220.
d
Tanzania Investment Center. “Quarterly Investment Bulletin October-December 2023.” https://www.tic.go.tz/uploads/documents/en-1709730086-BULLETIN%202nd%20
QUARTER-4.pdf.

Monetary Policy and Inflation Tanzania was below the projected world average of
6.8 percent2 and lower than that of peer countries such
Tanzania’s inflation has remained well below as Ghana and Ethiopia, which experienced double-digit
the SSA average. Tanzania’s monthly inflation read- cumulative inflation. Moreover, Tanzania’s inflation rate
ings remain consistent with the country’s inflation was the least volatile among regional peers, largely
target band of 3 to 5 percent, despite the effects of the due to government interventions (Figure 5).
COVID-19 pandemic, rate hikes in advanced econo- In the first four months (4M) of 2024, head-
mies, and other external shocks. In 2023, inflation in line inflation averaged 3 percent y/y, a low level
not seen since 2019 (Figure 6). Food and energy
FIGURE 5 • Inflation in Tanzania and SSA Peers prices continued to drive the moderation in inflation.
Cumulative food-price inflation fell from an average
(% y/y change) of 9.6 percent in 4M-2023 to 1.5 percent in 4M-2024
Ethiopia (Figure 7), while inflation for energy, fuel and utilities
Ghana picked up by 2.8 percentage points over the period.
Zambia The stability of the country’s inflation has been due
Lesotho to prudent monetary policy, declining global prices for
Kenya some critical imports helped by pro-active government
Mauritius measures to ensure adequate domestic food supply.3
Botswana
Uganda FIGURE 7 • F
ood and Non-Alcoholic Beverages
Tanzania Inflation, January 2021–April 2024
Rwanda (% y/y change)
Seychelles 12
–5 5 15 25 35 45 55
10
Average for 4M-2024* Inflation range since 2020
8
Source: NBS, WB staff estimates.
* Data for Lesotho is 3M-2024. 6
FIGURE 6 • CPI Inflation, January 2021–April 2024 4
(% y/y change) 2
14
0
12
Jan-21
Mar-21
May-21
Jul- 21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul- 22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul- 23
Sep-23
Nov-23
Jan-24
Mar-24
10
Food and non-alcoholic beverages inflation
8
6
3.9
4 2
Source: World Economic outlook, April 2024.
3.0 3
To counteract rising inflationary pressures, the government
2
has taken steps to ensure an adequate food supply to
0.9 meet national and regional needs. The national food
0
Jan-21
Mar-21
May-21
Jul- 21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul- 22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul- 23
Sep-23
Nov-23
Jan-24
Mar-24
supply increased by 124 percent in 2023/24, up from 114

percent in 2022/23. The government has also ensured the
Core index Non-core index availability of fertilizers, with 418,942 tons of fertilizer sold
All items (headline inflation) to farmers at subsidized prices in 26 regions in 2023 to
reduce farmers’ production costs (imported inflation) and
Source: NBS, WB staff estimates. increase the production of quality seeds and crops.
FIGURE 8 • C
umulative Energy, Fuel, and FIGURE 9 • C
ontribution to PPI Inflation,
Utilities Inflation 2020–2023
(% y/y change) (% y/y change, contribution in ppt.)

10 6
9.1
9 5
8 7.4 4
7 3
6 2
5 1
4 0
3.1
3 –1
2.3
Q1-2020
Q2-2020
Q3-2020
Q4-2020
Q1-2021
Q2-2021
Q3-2021
Q4-2021
Q1-2022
Q2-2022
Q3-2022
Q4-2022
Q1-2023
Q2-2023
Q3-2023
Q4-2023
2
1
Utility Manufacturing
0 Mining and quarrying Overall index
2021 2022 2023 4M-2024
Source: NBS, WB staff estimates. Source: NBS, WB staff estimates.
FIGURE 10 • G
rowth of the Money Supply, accounts for around one-fifth of core inflation—up
January 2020–March 2024 from 2.8 percent in 2023 to 3.9 percent in 4M-2024.
% y/y change As a result, the core inflation index rose from an aver-
32 age of 2.3 percent in 2023 to 3.7 percent in 4M-2024.
Non-core inflation, which fell slightly from 8.2 percent
24 in 2022 to 8.0 percent in 2023, declined dramatically
to 1.5 percent during 4M-2024.
16 The decline in the produce price index
(PPI) has closely followed movements in the CPI.
8
It fell from a peak of 4.9 percent y/y, in Q3-2022 to
0
2.1 percent in Q1-2023, before sliding even further to
0.4 percent in Q4-2023, driven by the waning contri-
–8 bution of manufacturing to inflation (Figure 9). While
Jan-20
Apr-20
Jul- 20
Oct-20
Jan-21
Apr-21
Jul- 21
Oct-21
Jan-22
Apr-22
Jul- 22
Oct-22
Jan-23
Apr-23
Jul- 23
Oct-23
Jan-24
input costs for manufacturers of food, beverage, and

tobacco products increased, costs for manufacturers
Reserve money (M0) Extended broad money (M3) of chemicals, basic metals, and related products fell.
Source: Bank of Tanzania, WB staff estimates. The growth in monetary aggregates has
moderated. The annual growth of the extended
broad money supply (M3) reached a high of 21.3 per-
The slump in global oil prices passed cent in mid-2023, before settling at 13.8 percent in
through to domestic energy, fuel, and utility March 2024. Further, the growth rate of reserve
prices, but a recent reversal may increase infla- money (M0), the most liquid measure of the money
tionary pressures. The cumulative energy-related supply, decelerated from 17.0 percent in June 2023
inflation fell from an average of 9.1 percent in 2022 to to 3.7 percent in December 2023, before increasing
2.3 percent in 2023, before increasing to 7.4 percent to 10.3 percent in March 2024 (Figure 10). The broad
in 4M-2024 (Figure 8). This recent uptick in domes- monetary condition index also indicates a tightening of
tic fuel prices pushed transport inflation—which Tanzania’s monetary conditions and BoT’s monetary

FIGURE 11 • P
rivate Credit Growth and Its remain elevated, partly because of the forex interven-
Drivers tions. The rate remains within the band of ±200 basis
(% y/ychange, contribution in ppt.) points and is expected to have a minimal effect on the
30 7-day interbank lending rate, which currently stands
at 7.28 percent. Pressure on lending rates from the
25
higher CBR will invariably materialize, although the
20 decrease in bank lending rates and improved asset
quality over the last year will cushion the impact.
15
Lending rates charged by banks averaged 15.51 per-
10 cent in March 2024, down from 15.83 percent in
5 the corresponding month of 2023, and short-term
lending rates (loans up to 1 year, which are more
0
prevalent for small and medium enterprises [SMEs])
–5 decreased from 16.67 percent to 16.17 percent in
Jan-21
May-21
Sep-21
Jan-22
May-22
Sep-22
Jan-20
May-20
Sep-20
Jan-24
Mar-24
Jan-23
May-23
Sep-23 the same period. The overall deposit rates remained
relatively stable, averaging 7.55 percent, although
Others Agriculture Manufacturing Trade
Transport and communication Personal Total the negotiated deposit rates increased slightly from
9.31 percent in March 2023 to 9.59 percent in March
Source: Bank of Tanzania, WB staff estimates. 2024. Notably, the short-term interest rate spread5 nar-
rowed further, from 8.73 percentage points in March
2023 to 7.23 percentage points in March 2024.
policy stance since mid-2023 (Box 4). These trends The financial sector remains stable and
are consistent with the BoT’s policies that aim to slow resilient to short-term shocks. The banking sector
the growth of monetary aggregates against the back- is liquid, profitable, and adequately capitalized. Com-
ground of the pressures on the exchange rate. mensurate with the increase in economic activity and
Net domestic financial assets (NDA) use of financial services, capital adequacy—the ratio
expanded by 8.1 percent in March 2024 and of liquid assets to demand liabilities—remains well
remained the primary source of Tanzania’s liquid- above regulatory requirements. Moreover, the loans/
ity, supported by a broad-based expansion in customer deposit ratio is robust and stable. Notably,
private credit offtake. Credit to the private sector asset quality is sound, with a non-performing loan
reached an average annual growth rate of 22.9 per- (NPL) ratio of 4.4 percent—below the regulatory ratio
cent in March 2023, before gradually declining to a of 5 percent. The BoT is closely monitoring the rise
still robust 16.6 percent in March 2024 (Figure 11). in dollarization in the financial system resulting from
Like in the previous year, credit growth continues to increased demand for foreign exchange. The increase
be led by the agriculture sector, which benefits from in foreign currency deposits is indicative of banks’
government-supported programs.4 Moreover, credit preference to hold and transact in foreign currency,
growth in manufacturing jumped from 2.3 percent in especially the US dollar.
August 2023 to 24 percent in March 2024, and tour-
ism appears to be recovering, with credit growth more
than doubling for hotels and restaurants in the same 4
The government has a Tsh 1 trillion fund lent by the
period. BOT at 3 percent to banks for lending to the agriculture
The Bank of Tanzania (BoT) has increased sector. Another program coordinated by the National
the rate to reduce supply-demand mismatch in Economic Empowerment Agency and managed by the
Small Industries Development Organization offers loans
the forex market while keeping inflation low. On
to SMEs in the agriculture sector through AZANIA bank.
April 3, 2024, the BoT announced an increase in the 5
The difference between the lending rate charged to
central bank rate (CBR) from 5.5 percent to 6 percent. customers and the interest rate banks pay on deposits
With limited depreciation of the Shilling, interest rates and borrowings. It is an indicator of a bank’s profitability.
BOX 4: BROAD MONETARY CONDITION INDEX FOR TANZANIA
Tanzania’s monetary policy framework is under transition. The authorities started in January 2024 to gradually replace the reserve money
targeting regime, which had been used for almost three decades, with an interest-rate-based monetary policy regime.a While the interest
rate becomes an important intermediate target to help government achieve inflation and output objectives, the growth rates of monetary
aggregates and private credit will still be used to indicate Tanzania’s monetary conditions and the central bank’s monetary policy stance during
the transition period.
A modified popular, simple, and single monetary condition index (MCI) can be used to assess Tanzania’s monetary conditions and the central
bank’s monetary policy stance. The MCI is used by various central banks, international organizations, and financial firms to evaluate monetary
policies and environments in countries. The traditional MCI is defined as a weighted sum of changes in real interest rates and real exchange
rates from their values in a selected base period.b This, however, is not suitable for Tanzania because: (i) the traditional MCI puts too much
emphasis on the interest rate and exchange rate channels of the monetary policy transmission mechanism but ignores the monetary and credit
channels currently present in Tanzania (as researched by the IMF);c and (ii) it works well for small open economies with fully flexible exchange
rate regimes, such as Canada and New Zealand, but is less effective for countries such as Tanzania with a managed floating exchange rate
regime. While a depreciation of the Canadian dollar contributes to loosening monetary conditions in Canada, a depreciation of the Tanzanian
shilling is usually followed by a tightened monetary policy stance, as the central bank manages a relatively stable exchange rate. As a result,
the following broad MCI that excludes the real exchange rate and introduces real extended broad money (M3) and real private credit (cr) may
be more suitable for Tanzania:
b
Broad MCI = rt – rb + g (crt – crb) * 100,
where rt, rb are the real interest rate at period t and base period b, crt, crb are the log of real private credit at period Broad
t and base b is
MCI period
= rt – rbb,+ g (cr t
– crb) * 100,
the relative effect of cr and r on aggregate demand. d
FIGURE B4.A • Traditional MCI and Broad MCI FIGURE B4.B • B

road MCI and Contribution of
Its Components
(Index, base period: Jan 2020)
2 (Index, base period: Jan 2020)
4
1
3
0 2
–1 1
0
–2
–1
Tightening
–3 –2
–4 –3
–4
–5 –5
–6 –6
2020M1
2020M3
2020M5
2020M7
2020M9
2020M11
2021M1
2021M3
2021M5
2021M7
2021M9
2021M11
2022M1
2022M3
2022M5
2022M7
2022M9
2022M11
2023M1
2023M3
2023M5
2023M7
2023M9
2023M11
2024M1
2024M2
2020M1
2020M3
2020M5
2020M7
2020M9
2020M11
2021M1
2021M3
2021M5
2021M7
2021M9
2021M11
2022M1
2022M3
2022M5
2022M7
2022M9
2022M11
2023M1
2023M3
2023M5
2023M7
2023M9
2023M11
2024M1
2024M2
Traditional MCI Broad MCI Interest Rate Credit Broad MCI
Source: WB staff estimates. Source: WB staff estimates.
Results show that the suggested broad MCI works better for Tanzania than the traditional MCI and indicate tighter monetary conditions since
2023. Derived from the empirical results estimated by Autoregressive Distributed Lag (ARDL) methodology,e the formulas of the two MCIs are:
Traditional MCI = rt – rb + 1.7 (rert – rerb) * 100, and

Broad MCI = rt – rb – 0.28 (crt – crb) * 100.
A rise in the interest rate reduces aggregate output and increases the MCI, as do an appreciation in the Tanzanian shilling (an increase in
real exchange rate [rer]) and a decrease in private credit. Therefore, a rising MCI indicates tightening monetary conditions, and vice versa.

BOX 4: BROAD MONETARY CONDITION INDEX FOR TANZANIA
While the traditional and broad MCI indicate a similar trend between May 2020 and May 2021, the traditional MCI has failed to capture the
movement of monetary conditions since mid-2021. Instead, it suggested a contradictory conclusion against the broad MCI (Figure B3.A),
reflecting Tanzania’s managed floating exchange rate regime, under which an appreciation of the Tanzanian shilling is usually followed by
loosening monetary conditions to stabilize the exchange rate. By contrast, the broad MCI can better depict the central bank’s monetary
policy stance. It reflects tightened monetary conditions between January and March 2020 due to increased government borrowing to fund
development projects, as well as more accommodative monetary policies (e.g., a credit window was introduced for the agriculture sector)
during the pandemic and post-pandemic recovery. However, the general trend of loosening monetary conditions started to reverse rapidly
since early 2023, when the regional US$ drought exerted continuing pressures on the country’s official reserve and forex market (Figure B3.B).
a
The BoT set the policy rate at 5.5 percent for the first quarter on January 19 and raised it by 50 basis points to 6.0 percent for the second quarter on April 4. Under this regime,
the BoT will align the 7-day interbank cash market interest rate along the policy rate.
b
The definition of the traditional MCI=(rt – rb) + ag (rert – rerb), where rt, rb bare real interest rate at period t and base period b, rert, rerb are log of real exchange rate at period t and
base period b, and ag is the relative effects of r and rer on aggregate output.
c
International Monetary Fund. 2023. “Reexamining the Monetary Policy Transmission Mechanism in Tanzania.” https://www.elibrary.imf.org/view/journals/002/2023/154/
article-A004-en.xml.
d
As real extended broad money (M3) usually follows the same pattern as credit, only credit is kept in the equation. However, adding M3 in the index calculation does not alter the
general trend and results.
e
The ARDL model estimated real GDP growth rate as the dependent variable and the real interest rate and 12-month changes in the logarithms of real exchange rate as
independent variables, using monthly data from May 2015 to February 2024 to get the relative effects for the traditional MCI. Similarly, the model excluded 12-month changes
in the logarithms of real exchange rate and added 12-month changes in the logarithms of M3 and private credit in the set of independent variables, using the same sample to
calculate the relative effects for the broad MCI.
Fiscal and Debt Developments total government revenue grew by 27.4 percent, y/y,
and reached Tsh 22.1 trillion, equivalent to 95.0 percent
While fiscal consolidation has progressed slowly of the 8M target of Tsh 23.3 trillion. The government
over the past few years, the government is remains committed to enhancing internal revenue col-
expected to adopt measures to improve the coun- lection, which is vital for ensuring budget stability and
try’s fiscal health. Supported by increased revenue sustainability. More than one-third of Tanzania’s financ-
collection, the overall fiscal deficit narrowed from ing for the budget deficit is from foreign sources, with
3.2 percent of GDP during FY2018/19 to 1.9 percent the remaining from domestic sources, which is in line
during FY2019/20. However, as widespread fiscal with budget projections.
support was implemented in response to multiple Revenue collections surged by an impres-
external shocks such as the COVID-19 pandemic, sive 27.4 percent, y/y, during 8M-FY2023/24.
government public expenditure has soared since The increase was driven by the strong performance of
FY2020/21, deteriorating the fiscal deficit while rev- income taxes, which witnessed a y/y increase of 36.3
enue remained stable as a share of GDP (Figure 12). percent, followed by the sales tax/value-added tax (VAT)
The government’s FY2023/24 budget envisions a nar- and excise taxes (Figure 13). Import taxes increased
rowing of the fiscal deficit through enhanced revenue by around 23.2 percent y/y in 8M-FY2023/24, while
mobilization, which is already reflected in published non-tax revenue rose by 24.3 percent y/y during the
data for the first eight months (8M) of FY2023/24. same period (Figure 14). The Government of Tanzania
Tanzania’s primary fiscal deficit was an esti- is implementing a range of measures to bolster rev-
mated 1.0 percent of GDP in 8M-FY2023/24, lower enue collection, including the promotion of IT systems
than 2.3 percent of GDP in the same period in for accurate tax monitoring, expanding taxpayer and
FY2022/23, reflecting an improvement in the coun- VAT registration through targeted campaigns, and
try’s fiscal health (Table 1). This was well below the refining tax collection systems to make them more
budget estimate of the fiscal deficit. In 8M-FY2023/24, user-friendly. The authorities have also prioritized
tax revenue stood at 14.2 percent, surpassing 12 per- efforts to enhance withholding tax management for
cent of GDP in the same period last fiscal year, and total government institutions and combat tax evasion and
expenditure stood at 22.9 percent. In the same period, smuggling through strengthened border security.
FIGURE 12 • Overall and Primary Fiscal Balance FIGURE 13 • 8M Fiscal Revenues, 2019–2024
% of GDP (% contribution in ppt.)

1 30
25
20
–1 15
10
5
0
–3
–5
–10
–15
–5 2019 2020 2021 2022 2023 2024
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24e Non-tax revenue Other taxes (mainly Income taxes
(Inc. LGAs) inland revenue)
Overall fiscal balance Primary fiscal balance
Sales/VAT and excise Taxes on imports
on local goods
Source: Bank of Tanzania, WB staff estimates.
FIGURE 14 • A
ctual vs. Budget Revenue, FIGURE 15 • P
ublic Expenditure by Component,
8M-FY2023/24 8M-FY2023/24
(% of GDP) (% share)
20 18.1
17.2
15
25.6
10
39.5
5
9.7
0
8M-FY2023/24 Actual 8M-FY2023/24 Budget
25.2
Taxes on imports Sales/VAT and excise Income taxes
on local goods
Other taxes (mainly Non-tax revenue Total revenue
inland revenue) (Inc. LGAs)
Source: Bank of Tanzania, WB staff estimates. Source: Bank of Tanzania, WB staff estimates.
These initiatives reflect the government’s commitment on wages and salaries. Interest payments increased
to optimize revenue while ensuring transparency and marginally from 1.8 percent of GDP in 8M-FY2022/23
compliance within the tax framework. to 2.2 percent of GDP during 8M-FY2023/24, while
Expenditure in 8M-FY2023/24 closely spending on goods, services, and transfers increased
mirrored the budget estimates driven by the from 4.0 percent to 5.8 percent of GDP in the same
performance of development expenditure and period. At Tsh 7.4 trillion, actual spending on goods,
predominance of recurrent expenditure. Recur- services, and transfers during 8M-FY2023/24
rent expenditure rose because of increased spending was higher than the budgeted level (Figure 15).

TABLE 1 • Central Government Fiscal Operations (% of GDP)
Fiscal Year (July to June) Jul–Feb (8M)

2018/19 2019/20 2020/21 2021/22 2022/23 2022/23 2023/24
Total Revenues 13.9 14.5 13.1 14.5 14.4 14.6 17.2
Tax revenu 11.5 12.0 11.0 11.9 11.8 12.0 14.2
Taxes on imports 4.2 4.1 4.2 4.7 4.6 4.7 5.4
Sales/VAT and excise on local goods 2.8 2.6 2.4 2.0 2.3 2.4 2.9
Income taxes 3.8 4.5 3.8 4.5 4.2 4.0 5.1
Other taxes (mainly Inland Revenue) 0.7 0.8 0.7 0.7 0.8 0.8 0.9
Non-tax revenue 2.3 2.4 2.1 2.6 2.6 2.6 3.0
Total expenditure and net lending 16.7 16.6 16.9 18.5 18.2 18.5 22.9
Recurrent expenditure 10.3 9.8 9.5 9.5 10.9 10.8 13.9
Wages and salaries 5.0 4.8 4.7 4.8 5.0 5.0 5.9
Interest payments 1.8 1.6 1.6 1.7 2.0 1.8 2.2
Domestic 1.2 1.0 1.2 1.2 1.5 1.3 1.5
Foreign 0.6 0.6 0.5 0.5 0.6 0.5 0.8
Other goods, services, and transfers 3.5 3.4 3.2 3.0 3.9 4.0 5.8
Development expenditure and net lending 6.4 6.8 7.4 9.0 7.3 7.7 9.1
Overall balance before grants –2.9 –2.1 –3.8 –4.0 –3.8 –3.8 –5.7
Grants 0.7 0.6 0.4 0.4 0.4 0.4 0.3
Adjustments to cash and other items (net) –0.9 –0.4 –0.5 0.0 –1.0 –0.6 2.2
Overall balance (cash basis) –3.2 –1.9 –3.8 –3.5 –4.4 –4.1 –3.2
Primary Fiscal Deficit –1.4 –0.3 –2.2 –1.9 –2.4 –2.3 –1.0
Financing 3.2 1.9 3.8 3.5 4.4 4.1 3.2
Foreign (net) 0.9 1.6 1.7 1.8 1.9 1.4 2.3
Domestic (net) 2.3 0.3 2.1 1.7 2.5 2.7 0.9
Source: Ministry of Finance and Planning and Bank of Tanzania.
Note: Calendar year GDP for 2018/19 onwards is based on World Bank staff estimates which is converted to quarterly GDP using seasonal factors, from which fiscal year GDP is
estimated.
Strengthening infrastructure for the provision of social During FY2024/25, the government’s
services, especially water, health, and education, was strategy is grounded in the principles of economic
a crucial priority for the government during the previ- prudence. This involves enhancing private sector
ous year. The country is actively financing strategic engagement in investment and business activities by bol-
projects, notably the construction of a modern railway stering infrastructure. Additionally, the authorities plan to
(Tanzania Standard Gauge Railway project) and the continue to mitigate the impacts of both natural and man-
Julius Nyerere hydroelectric dam.6 The allocation of
development funds has focused on ongoing strategic 6
Notes of Minister of Finance presenting in the Full
projects as well as public-private partnership projects Parliamentary Committee. The System and Limitations
that aim to reduce the government’s burden of financ- Proposals of the Government Budget for the year 2024–
ing development projects. 25, March 2024.
made disasters, foster stability in the global economy FIGURE 16 • E
xternal Debt Stock by Share of
and market prices, improve food security, and maintain Creditors
peace, security, unity, and stability within the country (% of share)
and in neighboring nations. The government plans to
finance development projects through funds like the Mar-24
Road Fund, Railway Fund, Rural Electricity Fund, Rural
Water Fund, and Rural Water Agency, while also enhanc- Dec-23
ing the public procurement system for better efficiency.7
The government aims to take various Dec-22
measures to increase revenue collection in
FY2024/25. This will involve improving the business Dec-21
environment, broadening the tax base, and strength-

Dec-20
ening tax law enforcement, alongside promoting the
efficiency of the tax IT system, especially related to Dec-19
property. Additionally, the government aims to invest
in productive sectors, formalize the informal sector, 0% 20% 40% 60% 80% 100%
and improve tax evasion controls while enhancing Multilateral Bilateral Commercial Export credit
service delivery at border centers.8
The most recent International Monetary Source: Bank of Tanzania.
Fund/World Bank Debt Sustainability Analysis

(June 2024) maintained Tanzania’s moderate risk
rating of external and public debt distress. Tanzania external debt component of total public sector debt
is assessed as having some space to absorb shocks. increased from 28.9 percent to 39.6 percent of GDP
While indicators for external debt solvency and liquid- in FY2022/23. As a result, the central government
ity remained below the policy-defined thresholds in continues to dominate Tanzania’s external borrow-
the baseline scenario, the debt service-to-export and ing, constituting 71.7 percent of all internationally
debt stock-to-exports ratios surpassed their respective outstanding debt as of end-March 2024. Borrowing
thresholds in the export-shock stress test. Nonethe- from multilaterals, such as the World Bank and the
less, the present value of the public debt-to-GDP ratio IMF, now constitutes slightly more than half of external
is projected to remain comfortably below Tanzania’s borrowing, while the role of bilateral creditors has
debt carrying capacity benchmark of 55 percent. By declined since 2020. A buildup of export credit during
end-FY2023/24, total debt held by the public sector the same period has been reversed and replaced with
is expected to reach 47.6 percent of GDP (of which other commercial and concessional sources of credit
45.7 percentage points are central government debt (Figure 16).
and 1 percentage point domestic arrears), up from Meanwhile, domestic public debt stood
46.7 percent of GDP in FY2022/23. The FY2022/23 at Tsh 30,754 billion at end-March 2024, which
public sector debt stock equates to Tsh 84.0 trillion represented a y/y increase of 14.5 percent.
(approximately US$36.1 billion) in nominal terms and Domestic debt rose marginally from 36.5 percent of
increased to an estimated Tsh 96.5 trillion (approxi- public sector debt at end-June 2022 to 36.7 percent
mately US$36.5 billion) at end-FY2023/24. While both at end-June 2023. The shares of various instruments
external and domestic debt grew, the share of domestic remained broadly stable between March 2023 and
debt increased by 26 basis points in FY2022/23 before March 2024, with government securities accounting
being expected to drop in FY2023/24, reflecting the for approximately 86 percent of total domestic debt,
financing trends observed in the fiscal accounts.
External debt maintains its dominance 7
Ibid.
in the central government debt portfolio. The 8
Ibid.

of which around 9 percent was made up of short-term a recovery in tourism receipts improved Tanzania’s
Treasury Bills. Overdrafts continue to stand at about current-account position in 2023, with the CAD nar-
14 percent of total domestic debt. The government’s rowing to 4 percent of GDP.
dependence on overdraft financing highlights contin- This positive momentum continued in
ued scope to improve cash management practices. the first three months (3M) of 2024. The cur-
Moreover, elevated costs associated with overdrafts rent account deficit declined to US$576.4 million
exacerbate pressure on the budget. One-third of (equivalent to 2.9 percent of GDP) during 3M-2024,
domestic debt is now held by commercial banks, up from US$926.0 million (equivalent to 4.7 percent of
from 26.8 percent a year ago. The share of pension GDP) during 3M-2023. Despite net income outflows
funds in total domestic borrowings fell by 2.9 percent- remaining at 0.8 percent of GDP over the period,
age points to 26.7 percent between March 2023 and an improved trade balance helped narrow the CAD
March 2024. Tanzania’s central bank also reduced (Figure 17). Driven by increased earnings from gold
its share from 21.4 percent of total domestic debt to exports and tourism sectors, as well as reduced
20.2 percent between March 2023 and March 2024. imports bills, Tanzania’s trade balance shrank
from US$770.9 million (3.9 percent of GDP) during
3M-2023 to US$425.7 million (2.2 percent of GDP)
Balance-of-Payments Position during 3M-2024. This trend also mirrored an improved
terms-of-trade position.9
Tanzania’s current-account deficit (CAD) has Bolstered by traditional and gold exports,
improved gradually since 2022. It deteriorated Tanzania’s merchandise exports increased by
sharply in 2022 amid escalating food and energy
prices, spillovers from Russia’s invasion of Ukraine, 9
Terms of trade in Q3-2023 were 7.2 percent higher than
and supply chain disruptions that pushed up the
in Q3-2022, suggesting that Tanzania’s exports were
import bill. As a result, the CAD more than doubled able to buy 7.2 percent more in imports than a year
to around 7.7 percent of GDP, the highest level since ago. Terms of trade data for Q4-2023 and Q1-2024 are
2014. However, lower global commodity prices and unavailable at the time when preparing the section.
FIGURE 17 • C
urrent Account Balance by FIGURE 18 • M
erchandise Exports, by
Component Component
(% of GDP) (% y/y change, contribution in ppt.)

25 25
20 21.1
20
15
10 15
5
0 10 9.7
–5 6.8 6.6
–2.1 –2.9 5 5.4
–3.4 –4.0 –4.7
–10 2.7
–7.7
–15 0
–20
–5
–25
2020 2021 2022 2023 3M-2023 3M-2024
–10
Goods exports Goods imports 2020 2021 2022 2023 3M-2023 3M-2024
Services exports Services imports Traditional goods Manufactured goods
Income inflow Income outflow Gold Other minerals
Curren t account balance Other export goods Goods exports
FIGURE 19 • Tourism Receipts and Arrivals FIGURE 20 • Merchandise Imports by Component
(Levels) (% y/y change, contribution in ppt.)

400 50
42.0
350
40
300
27.7
30
250
200 20
11.7
150 10
1.2
100
0
50
–9.1
–10 –3.4
0 2020 2021 2022 2023 3M-2023 3M-2024
Jan-21
Mar-21
May-21
Jul- 21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul- 22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul- 23
Sep-23
Nov-23
Jan-24
Mar-24
Capital goods Oil
Fertilizers Industrial raw materials
Tourism arrivals (000') Travel receipts (US$ million) Consumer goods Goods exports
2.7 percent during 3M-2024, slower than 9.7 per- Imports of goods and services in Tanzania
cent during 3M-2023 (Figure 18). Led by a surge in was virtually flat in 3M-2024, decreasing by
tobacco, cashew, and cotton exports—all attributed 0.7 percent over the period. Growth of goods
largely to volume effects, Tanzania’s traditional exports imports decelerated from 11.7 percent in 3M-2023 to
drastically rebounded to US$233.6 million by nearly merely 1.2 percent in 3M-2024, on the back of reduced
50 percent during 3M-2024, from a contraction of oil and fertilizers imports (Figure 20). As a result of
4.9 percent during the same period last year. Gold the moderation of the global commodity prices,11
exports rose by 7.2 percent during 3M-2024, building the import value of oil and fertilizer dropped by a
on a 7.8 percent increase in 2023, due primarily to the combined 16.1 percent during 3M-2024, compared
escalating price traded in the global market.10 In con- to a 35.7 percent surge during 3M-2023. Capital
trast to gold, exports of other minerals experienced a imports, however, increased at 7.9 percent, reflecting
43.3 percent contraction during 3M-2024, which partly the increasing demand for transport, building and
reflects waning external demand for coal and tanzanite. construction equipment, and machinery from the
While growth of merchandise exports decel- ongoing mega projects. Meanwhile, services imports
erated, the tourism industry stimulated export reduced by nearly 11 percent, resulting from a decline
earnings. Tanzania earned US$1768.3 million foreign in insurance and freight services that illustrated the
exchange from services exports during 3M-2024, which stagnant growth of merchandise imports as well as
is 18.6 percent higher than the same period last year. dropped freight prices.
Travel receipts, the largest component of Tanzania’s
services exports, soared by 27.2 percent over the
period, reaching US$970.7 million. This increase was 10
Global gold prices increased by 9.7 percent from an
bolstered by the surging number of inbound tourist average price of US$1888.3/oz during 3M-2023 to
US$2071.8/oz during 3M-2024, according to the World
arrivals—registered at 0.52 million during 3M-2024
Bank “Pink Sheet” Data.
(Figure 19). Receipts from freight services also rose 11
The oil prices dipped by 2 percent during 3M-2024,
by around 6 percent and attracted US$579.9 million while fertilizer price index declined by nearly 30 percent,
foreign income during 3M-2024. according to the World Bank “Pink Sheet” Data.

FIGURE 21 • T
rend of Financial Account Net FIGURE 22 • F
DI, Tanzania and Regional
Inflows Neighbors, 1990–2022
(% of GDP) (% of GDP)
10 8
8 7
6
6
5
4
4
2 3
0 2
1
–2
0
–4
–1
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2017 2018 2019 2020 2021 2022 2023
Direct investment Portfolio investment Rwanda Ethiopia Kenya

Other investment Electricity generation Mauritius Uganda Tanzania
Source: Bank of Tanzania, WB staff estimates. Source: World Bank; World Bank staff estimates.
The capital and financial account surplus ment, comprising of portfolio investment and other
declined to 3.8 percent of GDP in 9M-2023, investment, maintained at a combined total of 1.9 per-
from 4.1 percent during the same period last cent, the same level as 9M-2022.
year. This reduction is mainly caused by slumped Tanzania’s improved balance-of-trade and
inbound capital transfers to the government, while current-account position partly relieved pressure
foreign and non-foreign direct investment hovered on foreign-exchange reserves held by the Bank
at a constant level. Tanzania’s general government of Tanzania (BoT). Gross foreign exchange reserves
received US$88.5 million for development projects remain adequate and rose from US$5.0 billion by end-
during 9M-2023, which is around one-third of the March 2023 to US$5.3 billion by end-March 2024,
receipts during the same period a year ago, resulting while the coverage of official reserves declined from
in a declined capital account surplus of 0.2 percent 4.5 months to 4.4 months in the same period.14 How-
of GDP. By contrast, financial account (excl. reserves) ever, the shortage of foreign exchange (especially
surplus amounted to 3.6 percent of GDP, at par with US dollars) has led to a further depreciation of the
the surplus in 9M-2023 (Figure 21). Tanzania’s foreign
direct investment (FDI), as a percentage of GDP, is
relatively low compared to regional neighbors, and
12
The government has approved many investment-related
bills to improve business environment, such as Tanzania
experienced a downward trend over the past decade
Investment Act (2022), Public Investment Bill (2023),
(Figure 22). Recently, a favorable environment led by amendments to Public–Private Partnership Act (2023),
pro-business policies,12 gradually improved global and newly approved amendments to Investment Act
financing conditions, along with positive ratings from (2024).
Fitch and Moody’s have helped Tanzania attract 13
On March 22, Moody’s upgraded Tanzania’s sovereign
investments from the international financial market.13 credit rating from B2 to B1 with stable outlook, surpassing
its regional peers (including Kenya, Rwanda, Uganda).
FDI picked up slightly from 1.6 percent of GDP in 14
While the imports coverage decreased slightly, as
9M-2022 to 1.7 percent in 9M-2023 while an increase disclosed by the BoT, World Bank data suggest a
of 178 percent in the number of approved registered constant level at 4 months of imports in both March
projects was observed in Q4-2023. Non-FDI invest- 2023 and March 2024.
FIGURE 23 • G
ross Official Reserves and FIGURE 24 • Real GDP Growth
Exchange Rate
(% y/y change, contribution in ppt.)
(Levels) 9 8.4
8 2600
8
7 2550
7 6.1
6 2500 5.8
6 5.3 5.2
2450
5
5
2400
4 4
2350
3 3
2300 2.3
2 2250 2
1 2200 1
0 2150 0
Jan-21
Mar-21
May-21
Jul- 21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul- 22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul- 23
Sep-23
Nov-23
Jan-24
Mar-24 9M-2018 9M-2019 9M-2020 9M-2021 9M-2022 9M-2023
Net taxes Services Industry

Official foreign reserves (US$ billion) Months of imports Agriculture GDP
Nominal exchange rate (RHS)
Source: National Bureau of Statistics (NBS); World Bank staff estimates.
Source: Bank of Tanzania, NBS, WB staff estimates.
Tanzanian shilling since July 2023 when the govern- (1.9 million people) in 2022.15 Unlike the mainland,
ment advocated for higher exchange rate flexibility. where over two-thirds of the population lives in rural
The shilling has depreciated by 10.6 percent, from areas, only half Zanzibar’s population is in rural
an average trading rate of Tsh 2322.9/US$ in March areas. Having around 880 km length cost lines, the
2023 to Tsh 2569.7/US$ in March 2024 (Figure 23). island is abundant in diverse marine resources. Since
The BoT aims to ensure that the exchange rate aligns 2020, the Revolutionary Government of the Zanzibar
with economic fundamentals and is determined by has been implementing a blue economy agenda,16
the market. In Q1-2024, the BoT sold US$133.6 mil- which envisions a sea-based economy with a climate-
lion in the interbank foreign exchange market (IFEM) resilient, carbon-friendly, and sustainable growth
to inject forex liquidity in banks. Additionally, the BoT path. The largest source of income generation in the
mopped up excess liquidity in financial markets, facili- archipelago is tourism, followed by fisheries.17
tated the resolution of letters of credit, and increased Zanzibar’s economy expanded steadily dur-
the value of transactions conducted outside the IFEM. ing the first nine months (9M) of 2023, supported
The continued flexibility of the exchange rate will be by tourism and fisheries. Real GDP growth acceler-
crucial to restore the balance between demand and ated from 5.2 percent, year-on-year (y/y), in 9M-2022
supply in the forex market and eliminate the distortive to 6.1 percent in the same period in 2023 (Figure 24).
parallel foreign exchange market. The services sector is the largest sector on the island
15
Population and Housing Census 2022.
Zanzibar Macroeconomic Assessment 16
For more details, see the Zanzibar Blue Economy Policy
(Revolutionary Government of Zanzibar 2020, https://
Zanzibar is a semi-autonomous island in the faolex.fao.org/docs/pdf/tan208265.pdf).
17
According to the Zanzibar Investment Promotion
United Republic of Tanzania (URT). The URT
Authority, the fisheries sector provides a source of income
consists of the mainland of Tanzania (Tanganyika) to about 20 percent of Zanzibar’s population. (Zanzibar
and the island of Zanzibar, with the latter representing Investment Promotion Authority, “Blue Economy,”
around 3.1 percent of the country’s total population https://www.zipa.go.tz/sectors/blue-economy/).

FIGURE 25 • Inflation, January 2021–February FIGURE 26 • F
iscal Developments, FY2020/21–
2024 FY2023/24
(% y/y change, contribution in ppt.) (% y/y change, contribution in ppt.)

10 1,000
8
6 500
4
0
2
0
–500
–2
Jun- 21
Jun- 22
Jun- 23
Jan-21
Mar-21
Dec-21
Mar-22
Dec-22
Mar-23
Dec-23
Sep-21
Sep-22
Sep-23
Feb-24
–1,000
Others
Clothing and footwear
Transport –1,500
FY2020/21 FY2021/22 FY2022/23 FY2023/24
Housing, water, electricity, gas, and other fuels
Food and non-alcoholic beverages Domestic revenue Total expenditure Grants
Headline inflation Cash adjustments Overall deficit
Source: NBS; World Bank staff estimates. Source: Bank of Tanzania; WB staff estimates.
and remains the strongest economic growth driver. cent over the same period, partly due to a recovery in
The island’s stunning coastal scenery, ivory white crop production. Government measures18 to control
sand beaches, and clear turquoise sea attracted sugar prices during a recent sugar shortage in the
around 0.64 million international visitors in 2023, up URT also helped combat food inflation. A slowdown
from 0.55 million in 2022. The resumption of tourism in food inflation, combined with falling prices related
had a direct impact on the expansion of the accom- to transport as well as housing, water, electricity, gas,
modation & food services subsector (6.6 percent, y/y, and other fuels, drove the declining trend in prices
in 2023) and stimulated buoyant activities in other (Figure 25).
related subsectors such as wholesale & retail trade The fiscal deficit in Zanzibar widened from Tsh
(9.9 percent, y/y) and real estate (6.0 percent, y/y). 78.9 billion during the first half (H1) of FY2022/23
Overall, services sector grew by 6 percent. Supported to Tsh 542 billion during H1-FY2023/24, as the
by the construction, mining, and quarrying subsec- increase in total expenditure outweighed that
tors, the industry sector expanded by 10.2 percent in total revenue. Domestic revenue increased by
in 9M-2023, building on the 11.3 percent expansion 22 percent during H1-FY2023/24, primarily supported
recorded in 9M-2022. The agriculture sector, which by revenue from import, income, and value-added
contributes the least to economic growth, rebounded taxes and excise duties. However, the government
from contracting by 6.2 percent in 9M-2022 to expand- ramped up public expenditure by over 50 percent,
ing by 6.9 percent in 9M-2023, supported by resumed from Tsh 687.7 billion during H1-FY2022/23 to Tsh
growth in crops and double-digit growth in fisheries 1034 billion H1-FY2023/24 (Figure 26). Recurrent
due to the government’s blue economy policy. expenditure surged by 17.2 percent over the period,
Inflationary pressures eased in Zanzibar in while development expenditures, especially those
2023 and early 2024 as food and non-alcoholic
beverage prices declined. Headline consumer price 18
For example, Zanzibar’s fair competition commission
index (CPI) inflation fell from a record 8.4 percent at shut down over 100 shops that hoarded and sold sugar
the beginning of 2023 to 5.1 percent in February 2024. at a higher price than the government-set indicative
Food inflation declined from 11.6 percent to 8.7 per- price.
related to local capital projects aligned with Zanzibar’s FIGURE 27 • Current-Account Balance, 2019–2023
five-year development plan 2021–2026,19 increased
(US$ million)
by more than 150 percent, y-y. Over 90 percent of the
400
fiscal deficit during H1-FY2023/24 was financed by
domestic banks, with the remaining sourced from for- 200
eign loans (e.g., commercial loans and concessional
0
loans from international partners).
–80.6 –82.6 –235.7
Zanzibar’s current-account position also –200
–363.7 –413.6
deteriorated in 2023. The current-account deficit
–400
(CAD) rose from US$358.8 million in 2022 to US$388.8
million in 2023 (Figure 27). Diminishing merchandise –600
exports and increased imports of goods and services
–800
contributed to the overall deterioration. The produc- 2019 2020 2021 2022 2023
tion of cloves, Zanzibar’s most important cash crop, Goods exports Goods imports
was more than halved between 2022 and 2023, Services exports Services imports
Income inflow Income outflow
owing to falling prices due to fierce international com- Curren t accout balance
petition as well as erratic weather conditions triggered
by climate change.20 This slowdown in clove foreign Source: Bank of Tanzania, WB staff estimates.
earnings caused the value of goods exports to plum-
met by 34.7 percent (y/y) to US$50 million, despite
an increase in non-traditional exports, including sea- trend was consistent with government-fueled expen-
weeds, manufactured goods, and fish products. Total diture on local capital projects. Nevertheless, the CAD
merchandise imports observed a double-digit rise in narrowed to US$23.8 million during 2M-2024, from
2023, with capital goods imports (transport equip- US$53.0 million during 2M-2023, mainly driven by a
ment and machinery) surging by 64 percent. This 330 percent increase in merchandise exports.
19
The strategic projects for FY2023/24 are implemented (iv) renovation of the Mnazi Referral Hospital and
in 5 areas: (1) blue economy; (2) environment and construction of a referral hospital in Binguni.
infrastructure; (3) economic reform; (4) human resources 20
While clove production depends heavily on a growth
and social services; and (5) governance strengthening. environment of moderate rainfall and temperatures, more
Planned projects include but is not limited to: frequent floods and droughts arising from the climate
(i) construction of the Mangapwani fishing port and the change can adversely impact production (Kabote and
modern fish market; (ii) a clean and safe water distribution Tunguhole 2022). Source: Kabote, S. J., & Tunguhole,
project and the Zanzibar Energy Sector Transformation J. (2022). Determinants of clove exports in Zanzibar:
and Access Project; (iii) construction of Nungwi Airport, Implications for policy. International Journal of Business
upgrade of Pemba Airport, and improvement of 103 km and Economic Studies, 4(2), 127–147.
of roads across the Pemba and Unguja Islands; and

2
MACROECONOMIC
OUTLOOK AND RISKS
T
anzania’s real GDP is projected to grow at accompanying regulations. Additionally, the govern-
5.4 percent in 2024 and average around ment needs to pursue measures to increase access
its long-run potential of about 6 percent to finance by small and medium-sized enterprises
over the medium term (Table 2). The projection (SMEs), improve the tax policy and administration,
has been revised downward slightly from the 5.6 per- and reduce the cost of regulatory compliance and
cent published in the twentieth edition of the Tanzania trading across the border.
Economic Update. This is due to the slower-than- Headline inflation is projected to remain
expected implementation of ongoing transformative low and stable over the medium term. It is set to
structural reforms to facilitate private sector invest- decline to 3.3 percent in 2024 and remain around
ment, persistent barriers that hinder private sector 3 percent over the medium term. Ongoing efforts
development, and insufficient reforms to rebalance to increase the productivity of agriculture and the
the demand and supply in the foreign exchange food supply, together with tight monetary policy, are
(forex) market. Over the medium term, growth will be expected to support low and stable inflation over the
supported by an improved business environment and medium term. To improve monetary policy imple-
the complete implementation of structural reforms, mentation and control inflation, the Bank of Tanzania
which are expected to crowd in both public and private (BoT) transitioned from a monetary targeting to an
investment, including foreign direct investment (FDI). interest-rate-based framework in January 2024.
Increased investment is expected to boost domestic Over the medium term, the current-account
demand and exports while helping to generate addi- deficit (CAD) is anticipated to narrow further. It is
tional foreign currency. Still, the authorities should projected at 3.3 percent of GDP in 2024 due to an
accelerate the implementation of capital projects improved trade balance, bolstered by rapid growth of
and approved legislation such as amendments to the gold, services, and manufactured exports. Supported
Public-Private Partnerships Act (2023) and Tanzania by increased tourism, service exports are expected
Investment Act (2023), especially through issuing of to continue its growth momentum, while an improved
21
business environment, including better administration Projections suggest a continued decrease
of value-added tax (VAT) refunds, is likely to drive an in the poverty rate from 43.0 percent in 2024 to
increase in manufactured exports, especially to East 41.7 percent in 2026. This downward trajectory is
African Community member states and other neigh- supported by a promising macroeconomic outlook
boring countries. Over the medium term, the CAD is and increased agriculture budget allocations aimed
projected to narrow further to about 3 percent of GDP at unlocking productivity by promoting the intensifi-
as transformative reforms to improve the business cli- cation of agriculture, including livestock (see Special
mate are completed and help attract private investment Focus). Given that a significant number of the poor
(including FDI) and enhance export competitiveness. are farmers in the drought-prone North-Western and
Import growth is expected to slow as major capital Central regions, it is crucial to build the resilience
investment projects are completed and global com- of vulnerable populations before the onset of unan-
modity prices continue to moderate. An expected ticipated shocks. Efforts should be directed to ensure
increase in FDI inflows will largely fund the CAD and access to adequate social protection. Despite the
help keep official gross reserves at an adequate level. country’s safety net program, which reaches over
A combination of improved revenue collec- 1.3 million households, well beyond the target set in
tion and fiscal prudence is expected to narrow the national development plan, its coverage is insuf-
the fiscal deficit over the medium term. The fiscal ficient given the scale of vulnerability. It is also critical
deficit is projected to decline to 3.7 percent of GDP in to make climate-smart investments in agricultural
2024 and average near 3 percent in the medium term inputs and irrigation infrastructure, especially in
on account of expected higher tax revenue collection drought-prone and impoverished regions like Tabora,
and controlled expenditures. Domestic revenues are Shinyanga, Mara, and Simiyu. Equally important is
projected to increase to 15.7 of GDP in 2024, before funding research into improved seed varieties and
reaching 16.2 percent in 2026, while total expendi- livestock breeds. These proposed investments are
tures are projected to stabilize at about 19 percent likely to create resilient and productive agricultural
over the medium term. Official grants are projected to and livestock systems, which will sustain livelihoods
remain at 0.5 percent of GDP over the medium term, and accelerate poverty reduction.
in line with the government’s objective of reducing the Downside risks from both the domestic and
country’s aid dependency. The expected increase in external environment cloud the macroeconomic
domestic revenue will come from increased tax and outlook. Risks include delayed and incomplete
non-tax collection generated from improvements in implementation of transformative structural reforms
the business climate, private investments, and tax to support private sector development and women
compliance and administration (including through the empowerment, as well as the impact of climate
use of electronic devices). Public expenditures are change on tourism and agriculture productivity
projected to stabilize at around 19 percent of GDP, as and resilience, including livestock (see the Special
an expected increase in recurrent expenditures dur- Section). Despite the government’s commitment to
ing the upcoming elections will offset the decline in pursue structural reforms, including the implementa-
capital expenditures resulting from the completion of tion of major infrastructure projects and adoption of
major capital projects. The fiscal deficit is expected to amendments to regulations related to private sector
be financed by both foreign and domestic loans, with development, progress has somewhat slowed while
the latter continuing to play a significant role as global significant barriers remain. According to the World
commercial financing costs remain high. According Bank Enterprise Survey (2023),21 Tanzania lags the
to the latest joint International Monetary Fund-World Sub-Saharan African (SSA) region on good economic
Bank Debt Sustainability Analysis (June 2024), Tanza- governance in areas such as regulation, business
nia’s risk of external debt distress remains moderate, licensing, and taxation, which are fundamental pillars
and the public debt-to-GDP ratio is projected to gradu-
ally decline over the medium term. 21
World Bank, “Enterprise Surveys,” www.enterprisesurveys.org.
of a favorable business environment. Survey data con- weak global trade and investment, the continuing fall-
firm that domestic conditions for business entry and out from external conflicts. To mitigate these risks, the
operation, including in the agriculture and livestock government must continue to implement policies that
sectors, remain inadequate, and an excessive regula- reinforce macroeconomic stability, improve the busi-
tory burden creates a significant barrier for firms to ness environment, enhance productivity (including
formalize. External risks include a potential slowdown in the agriculture and livestock sectors), strengthen
in global growth due to lagged and ongoing effects of climate resilience, and build human capital and work-
tight monetary policy, restrictive financial conditions, force skills, especially among women.
TABLE 2 • Medium-Term Outlook, 2021–2026
2021 2022 2023 2024 2025 2026

(Annual % change unless otherwise indicated) Est. Est. Est. Fcst. Fcst. Fcst.
Real GDP Growth (at constant market prices) 4.3 4.6 5.2 5.4 5.8 6.2
Private Consumption 2.3 4.6 2.2 3.4 3.8 3.5
Government Consumption 9.0 8.4 3.1 7.7 10.3 5.2
Gross Fixed Capital Investment 7.8 9.6 3.8 5.1 5.9 8.5
Exports, Goods and Services 5.2 10.2 17.4 9.3 6.3 9.1
Imports, Goods and Services 9.6 23.7 2.3 4.2 4.1 6.5
Inflation (consumer price index) 3.7 4.3 3.8 3.4 3.2 3.0
Current Account Balance (% of GDP) –3.2 –5.6 –3.8 –3.3 –3.1 –2.9
Net Foreign Direct Investment (% of GDP) 1.6 1.7 1.8 2.3 2.6 2.8
Fiscal Balance (% of GDP in FY) –3.8 –3.9 –3.8 –3.7 –3.8 –3.3
Gross Nominal Debt (% of GDP in FY) a
42.6 45.4 46.7 47.6 46.9 45.7
Source: World Bank Staff Estimates.
Note: Est. stands for Estimates and Fcst. stands for Forecasts. All variables are based on calendar year unless otherwise specified. Fiscal Year (FY) runs from 1st July to 30th June
a
As is the same in the published WB-IMF Joint Debt Sustainability Analysis in June 2024.
Macroeconomic Outlook and Risks 23

3
SPECIAL FOCUS:
HARNESSING A
CLIMATE-SMART
AND COMPETITIVE
LIVESTOCK SECTOR
Introduction tions that not only mitigate environmental degradation

but also boost productivity and enhance the livestock
There is potential for Tanzania to leverage its sector’s resilience and competitiveness. These initia-
strengths in livestock production and trade. tives could also contribute to climate change mitigation.
Despite robust production due to a large livestock Tanzania could grow its livestock sector if it
population, low productivity and stagnant yields pursues appropriate policy reforms, institutional
persist in the country’s livestock sector, reflecting low innovations, and investments that overcome the
levels of public investment and insufficient private complex set of biophysical, organizational, and
investment, hindering the realization of the sector’s financial challenges facing livestock producers
full potential. Despite the high number of livestock, and traders. Adequate public investment is essen-
exports of livestock products are low, an indication tial. While budget allocations to the livestock sector
of low regional and international market integration. are rising, an estimated US$546 million in public
Meanwhile, domestic consumption is surging, driven investment is needed to ensure sustainable livestock
by population growth and rising demand in urban development in Tanzania over the next 5 years
areas, and imports of key livestock products are (2023/24–2028/29). At about US$109 million a year,
increasing to fill production shortfalls. this level of public investment represents a five-fold
The livestock sector is susceptible to the increase over the budgets allocated to the livestock
adverse impacts of climate change and challenges sector prior to 2021, and it is 50 percent more than
that increase its vulnerability and blunt its competi- the 2023/24 budget. This high level of investment
tiveness. Still, there is an opportunity for Tanzania to could be efficiently utilized by the sector given its
embrace climate-smart measures and other innova- current underfunding and high absorption capacity.
25
FIGURE 28 • Livestock Density in Tanzania TABLE 3 • Livestock Population by Species, 2022
Uganda
Total livestock Per capita livestock
population population
Kenya
Livestock Heads Rank in Heads/ Rank in
Rwanda species (million) Africa person Africa
Lake Zone
Burundi Cattle 36.6 2 0.56 5
Central Zone
Sheep 9.1 11 0.14 11
DRC Tanzania Coast Zone
Goats 26.6 7 0.41 7
Chicken 98 7 1.50 8
Zambia Pigs 3.7 3 0.06 2

Source: FAOSTAT.
Mozambique
Tanzania’s total livestock population is also among the

largest in Africa. Between 2010 and 2022, Tanzania’s
Source: Gilbert et al. 2018. cattle, goat, sheep, and poultry population surged by
an average of 83 percent, with the number of cattle
more than doubling (Figure 29).
Recent Trends and Developments in Compared to other countries in the region
Tanzania’s Livestock Sector with large livestock populations, Tanzania’s large
and growing livestock holdings make a relatively
Tanzania’s livestock holdings are expansive, small contribution to GDP and agricultural GDP
diverse, and multifunctional. Livestock are held (AgGDP). In 2022, the country’s livestock sector
across the entire country but are concentrated in the accounted for 7.4 percent of GDP and 26.1 percent
Central, Coast, and Lake zones (Figure 28). The main of AgGDP, lower than Ethiopia’s 19 percent and
livestock species reared are cattle, goats, sheep, poul- 45 percent, respectively, and Kenya’s 12 percent
try, and pigs, many of which serve multiple purposes and 40 percent, respectively (Figure 30).
such as providing their owners with food, draft power, The livestock sector is an important source
transport, income, and savings and contributing to of employment and income in Tanzania, espe-
cultural and traditional practices. Production systems cially for the poorest rural households. The sector
span arid, semi-arid, sub-humid, and humid agro- is an important source of income, offering opportuni-
ecologies, and 80 percent of the country’s livestock ties throughout the value chain, from production to
population is raised in agropastoral systems, 14 per- processing and marketing. It employs 33 percent of
cent in pastoral systems, and the remaining 6 percent the population, or 4.6 million households (NBS 2021).
on commercial ranches (Banda and Tanganyika Livestock sales account for 13.8 percent of household
2021; Mottet et al. 2018). income in rural areas, with the poorest rural house-
Tanzania’s livestock population is one of holds deriving almost one-fifth of their income from
the largest in Africa and globally, and it is growing such sales (Figure 31). In addition to its important
rapidly. Its cattle population is immense at 36.6 mil- role in employment and income generation (and thus
lion—second largest in Africa (behind Ethiopia)—and poverty reduction), the livestock sector makes signifi-
represents 1.4 percent and 11.0 percent of the global cant contributions to other major national objectives
and African total cattle population, respectively. such as food and nutrition security as well as gender
Tanzania’s population of sheep, goats, chicken, and equality (Box 5).
pigs is also large, with most ranking in the top ten on Between 2010 and 2021, livestock produc-
the continent in terms of size (Table 3). Per capita, tion grew faster than crop production, driving an
FIGURE 29 • Livestock Population, 2010–2022
A.Tanzania's livestock population (million) - 2010, 2022, and percent change B. Percentage change in livestock populations - 2010–2022
120
98 Cattle 109%
100
80
Goats 80%
60 54.3
40 36.6
Sheep 73%
26.6
20 17.5 15.7
9.1
5.25
0 Poultry 69%
Cattle Goats Sheep Poultry
2010 2022 0% 20% 40% 60% 80% 100% 120%
Source: FAOSTAT.
FIGURE 30 • Contributions of Livestock to GDP and AgGDP in Tanzania and Neighboring Countries, 2022
A. Livestock shares of GDP in Tanzania and neighboring countries, 2022 B. Livestock shares (%) of Ag GDP in Tanzania and neighboring
countries, 2022
Ethiopia 19 Ethiopia 45
Kenya 12 Kenya 40
Tanzania 7.4 Tanzania 26.1
Uganda 4.3 Uganda 17
0 2 4 6 8 10 12 14 16 18 20 0 5 10 15 20 25 30 35 40 45 50
Source: FAOSTAT.
overall increase in agricultural production. Over (Panel A in Figure 33). Among these countries,
this period, livestock production growth averaged only Tanzania registered sustained growth in per
4.9 percent per year, much higher than an average of capita livestock production over the period (Panel B
2.4 percent for crops and 3.0 percent for the agricul- in Figure 33).
ture sector as a whole (Figure 32). However, livestock production growth
From 2010 to 2021, the growth perfor- in Tanzania has been driven by expansion of
mance of Tanzania’s livestock sector dwarfed the livestock population rather than sustained
that of neighboring Ethiopia, Kenya, and Uganda yield increases. In recent years, livestock yields in
Special Focus: Harnessing A Climate-Smart and Competitive Livestock Sector 27

FIGURE 31 • R
ural Household Income from and chicken, yields only increased for cattle meat and
Livestock Sales by Income Quintile milk and goat meat between 2010 and 2022, growing
Share (%) of rural household income from livestock sales by an annual average of 3.5 percent, 6.4 percent,
25 and 1.7 percent, respectively (Figure 34). Yields of
goat and sheep meat generally exceeded global and
19.53 regional averages, but only goat meat yields showed
20
a clear upward trend. Yields of cattle meat and milk
and chicken meat were well below global and regional
15 13.81 averages.
13.08 12.96 12.89
The consumption of livestock products
has been surging in Tanzania, driven by popula-
10
tion growth, rising incomes, changing diets,
and urbanization. While the country’s population
5 increased by an average of 3 percent per year between
2018 and 2022, its urban population expanded by an
0 annual average of 5.8 percent—higher than Tanza-
1 2 3 4 Total nia’s average per capita GDP growth of 4.2 percent
Income quintile
per year. As more Tanzanians move to cities and
Source: Ntwalle 2019. adopt urban lifestyles, demand grows for convenient,
processed, and value-added livestock products such
Tanzania have registered mixed performance, with as packaged meats, dairy products, and ready-to-
most being well below global and regional averages. eat meals. For example, per capita consumption of
Among cattle meat and milk, goat meat, sheep meat, meat, milk, and eggs has been rising steadily (Baker
BOX 5: THE LIVESTOCK SECTOR’S CONTRIBUTION TO KEY NATIONAL OBJECTIVES
Food and nutrition security. A total of 14.9 million Tanzanians are undernourished, representing 23.5 percent of the population (higher than
the African and global average of 19.3 percent and 9.3 percent, respectively) (FAOSTAT). Boosting food and nutrition security is therefore a
major national objective. The livestock sector plays a vital role in enhancing nutrition and food security in Tanzania by: (i) contributing to dietary
diversification through improved access to protein and essential nutrients such as iron, zinc, and vitamin B12, all of which are crucial to human
health and can be attained through the consumption of meat, dairy products, and eggs; and (ii) expanding livelihoods and income generation
through the sale of livestock and livestock products, thereby improving access to nutritious food. For instance, in Tanzania’s semi-arid Singida
region, households with more livestock integrated into production systems have higher levels of food and nutrition security (Mdoe et al. 2022).
Gender equality and women’s empowerment. Tanzania’s National Development Vision 2025 prioritizes the attainment of gender equality
and women’s socioeconomic and political empowerment. Women in Tanzania are avid adopters of livestock-based livelihood activities when
gender-based obstacles are removed or overcome. Conversely, low adoption rates among women are linked to norm-based socialization
and limitations on women’s rights in male-dominated power hierarchies and resource ownership and control arrangements in households
and communities. Livestock-derived livelihood activities in Tanzania provide opportunities for many women to generate income, become
empowered, and actively participate in decision-making processes within their communities. Livestock are often the only collateral owned by
women. In agro-pastoral communities in Dodoma and Morogoro, women with access to milk have greater financial independence within their
households, allowing them to reduce their needs for costly loans (Galie and Kantor 2016; World Bank 2023).
Youth employment. With half of its population aged 15 and younger, youth employment is a national priority in Tanzania. Three-quarters of
youth are employed in the agriculture sector under largely informal and highly vulnerable conditions, and engaging this segment of the
population is a major policy objective. While more data are needed to understand which type of livestock offers pathways to more formal and
stable employment for youth in rural and urban areas, there is an opportunity to leverage the livestock sector to raise the youth employment
rate. For example, young people own significantly more cattle than adults in Tanzania’s dairy system. The ability of youth to leverage these
assets to increase their earnings and achieve more stable livelihoods depends on their access to education, adoption of improved production
technologies and practices, and use of information and communication technologies tools (Bullock et al. 2023; MALF 2016; Nchanji
et al. 2023).
FIGURE 32 • L
ivestock, Crop, and Overall consumption of milk and poultry grew by 82 percent
Agricultural Production, 2010–2021 and 26 percent, respectively (Figure 35). Following
Gross Production Indexes Agriculture, Crops, Livestock a dip between 2016 and 2019, the consumption of
in Tanzania, 2010-2021 poultry doubled over the next two years, with the level
160 recorded in 2021 being 28 percent higher than that
140 recorded in 2010.
The consumption of livestock products
120
in Tanzania is projected to continue to increase
100
rapidly, with consumption continuing to outstrip
80 production across key livestock products (Panel
60 A in Figure 36). Projections indicate a steady increase
in livestock production due to improved productivity.
40
Productivity will benefit from the adoption of modern
20
practices, better genetics, and enhanced manage-
0 ment techniques, all of which will contribute to higher
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021 output levels across key livestock species such as
Agriculture Crops Livestock cattle, goats, sheep, and poultry (Dalberg 2019;
Engida et al. 2015). However, despite these supply-
Source: FAOSTAT. side improvements, the consumption of meat and milk
Note: The production index is a measure of agricultural output changes in a given year
relative to a base year. Production refers to the quantity produced and harvested for a is expected to exceed production by 2,050 million MT
particular product during the reference period. The livestock production index includes
and 5,400 million liters, respectively, by 2031 (Panel
meat and milk from all sources, dairy products such as cheese and eggs, honey, raw
silk, wool, and hides and skins. B in Figure 33).
Tanzania’s livestock exports are low
compared to those of other countries with large
et al. 2016; Reardon et al. 2022; Wang et al. 2022). livestock populations. A comparison with Ethiopia
Between 2010 and 2022, the consumption of eggs, is illustrative of Tanzania’s underperformance as a
cattle, sheep, and goats more than doubled, while the livestock exporter. Ethiopia and Tanzania have almost
FIGURE 33 • Total and per Capita Livestock Production in Tanzania and Neighboring Countries, 2010–2021
A. Gross Livestock Production Index (2014–16 = 100) B. Gross Per Capita Livestock Production Iindex (2014–16 = 100)
160 140
140 120
120
100
100
80
80
60
60
40
40
20 20
0 0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Ethiopia Kenya Uganda Tanzania
Source: FAOSTAT.

FIGURE 34 • Yields of Major Livestock Products in Tanzania, 2010–2022
A. Cattle meat yields, Tanzania, World, Africa, East Afrifca - 2010–2022 B. Cattle milk yields, Tanzania, World, Africa, East Afrifca - 2010–2022
2,500 30,000
25,000
2,000
Yield (100g/animal)
Yield (100g/animal)
20,000
1,500
15,000
1,000
10,000
500
5000
0 0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
C. Goat meat yields, Tanzania, World, Africa, East Afrifca - 2010-2022 D. Sheep meat yields, Tanzania, World, Africa, East Afrifca - 2010-2022
250 300
250
200
Yield (100g/animal)
Yield (100g/animal)
200
150
150
100
100
50
50
0 0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
E. Chicken meat yields, Tanzania, World, Africa, East Afrifca - 2010-2022
18,000
16,000
14,000
Yield (100g/animal)
12,000
10,000
8,000
6,000
4,000
2,000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Tanzania World Africa E Africa
Source: FAOSTAT.
FIGURE 35 • Consumption of Livestock Products, 2010–2021
A. Index of Consumption of Livestock Products (2014–16=100) B. Percentage increase in consumption of livestoc products
in Tanzania - 2010–2021
250
200 Eggs 140%
150 Cattle 108%
100
Sheep & Goat 102%
50
Milk 82%
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Poultry 26%
Cattle Sheep & goat Poultry Eggs Milk 0% 20% 40% 60% 80% 100% 120% 140% 160%
Source: FAOSTAT.
FIGURE 36 • Comparative Trends in Livestock Production and Consumption
A. Livestock production and consumption indexes, B. Domestic Consumption-Production Gaps for Meat and
2010–2021 (2014–16 = 100) Milk (mmt) in 2021, 2026, and 2031
160 6,000
140
5,000
120
100 4,000
80
3,000
60
40 2,000
20
1,000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
2021 2026 2031
Livestock production index Cattle meat consumption index
Sheep & goat consumption index Milk consumption index Milk Meat
Source: FAOSTAT. Source: URT 2017.
equal per capita livestock populations—0.55 head/ Tanzania’s livestock exports are also low
person in Ethiopia compared to 0.56 head/person relative to its crop exports. Between 2016 and
in Tanzania (FAOSTAT). However, Ethiopia’s average 2020, the combined value of Tanzania’s exports of
annual value of total intra-African exports of live ani- cattle meat, goat meat, and sheep meat averaged just
mals and meat between 2010 and 2019 was US$150 US$70,000, US$1.98 million, US$3.22 million, respec-
million, much higher than Tanzania’s US$15 million tively, compared to US$346 million over the same
(Table 4). period for cashew nuts alone (FAOSTAT). In 2021 and

TABLE 4 • Key Features of Livestock Exports, Tanzania and Ethiopia
Key Feature of Livestock Exports Unit Tanzania Ethiopia

Average annual value of total intra-African exports of live animals and meat (2010–2019) $US million 15 150
Average annual value of exports of live animals and meat to rest of world (2010–2019) $US million 5 75
Average share of intra-African exports of live cattle and other bovines (2015–2019) percent 4.2 12.5
Average share of intra-African exports of live goats (2015–2019) percent 0.5 2.4
Average share of intra-African exports of bovine meat carcasses and cuts (2015–2019) percent <0.6 2.1
Average share of intra-African exports of non-bovine meat carcasses and cuts (2015–2019) percent 2.6 36
Source: Kurtz et al. 2021.
FIGURE 37 • Imports of Selected Livestock and 658 percent, respectively, above their 2010 levels
Products, 2010–2022 (Figure 37).
Whole chicken, chicken meat, and milk powder
imports in Tanzania, 2010–2022 ($000s)
7,000 Climate Change and Other Drivers of
6,000 Vulnerability22
5,000
Vulnerability in Tanzania’s livestock sector involves
4,000 complex interactions among environmental pres-
3,000 sures linked to climate change, socioeconomic
conditions, and institutional constraints.
2,000
1,000 Climate change is exerting significant pressure

0 on Tanzania’s largely pasture-based livestock
2010–12
2011–13
2012–14
2013–15
2014–16
2015–17
2016–18
2017–19
2018–20
2019–21
2020–22
sector, with major negative impacts on produc-

tion systems. Along with the rest of Eastern Africa,
Whole chickens Chicken meat Milk powder Tanzania is experiencing sharp changes in rainfall
and temperature patterns, with huge variations in
Source: FAOSTAT. the overall level, intensity, and spatial and temporal
distribution of annual rainfall (World Bank 2024).
Changes in temperature and rainfall patterns are
2022, the combined value of exports of cattle, goat, leading to physiological strain and discomfort for
and sheep meat was historically high at US$75 mil- livestock due to heat stress, reduced feed intake,
lion due to a surge in sheep meat exports. Still, even decreased milk production, impaired reproduction,
this record level of exports of these three products and increased susceptibility to diseases and meta-
corresponded to only 17.5 percent, 11.1 percent, bolic disorders. The resource constraint and disease
and 18.4 percent of Tanzania’s exports of cashews, issues are all expected to be exacerbated by climate
horticultural products, and coffee, respectively, over change. These changes in climate are also leading
the same period (FAOSTAT). to alterations in pasture availability, affecting the
Under stagnant productivity growth and nutritional quality and quantity of forage resources
surging domestic demand, Tanzania’s imports of
livestock products are trending sharply upward. 22
This section draws from Baltussen et al. (2019), IMF
In 2022, imports of whole chickens, chicken meat, (2023), Maziku et al. (2017), Mweya et al. (2017), URT
and milk powder were 274 percent, 11,900 percent, (2017), WFP (2021), and World Bank (2023).
TABLE 5 • Impact of Climate Change on Tanzania’s Livestock Systems
Livestock
production zone Production system Primary climate-related changes Impacts
Central Agro-pastoral and • Prolonged dry spells • Heat stress
semi-arid
• Water scarcity • Pasture shortages and degradation
• Erratic rainfall pattern • Longer travel to grazing land and water sources
• Disease outbreaks
• Overgrazing
• Lower vegetation cover
• Loss of biodiversity
Coast Rainfed sub-humid • Sea-level rise • Destruction of livestock infrastructure
and humid
• coastal erosion • Livestock losses and displacement
• Extreme weather events • Contamination of livestock drinking water
• Saltwater intrusion • Pasture degradation
• Floods and storms
Lake Rainfed sub-humid • Greater variability in rainfall • Pasture loss and degradation
and humid patterns and extreme temperatures
• Reduced forage quality and availability
• Increasing frequency and intensity • Spread and intensification of endemic livestock diseases
of droughts and water scarcity
• Trade restrictions
Source: Kimaro et al. 2018; Lyimo et al. 2013; Mweya et al. 2017; WFP 2021.
for livestock and compromising animal health,

BOX 6: THE ONE HEALTH APPROACH
growth, and reproduction. All livestock systems
across Tanzania’s major livestock production zones The One Health approach underscores the interconnections
are being negatively impacted by climate change among human, animal, and ecosystem health, recognizing their
(Table 5). These trends are expected to persist and interdependence (WHO 2020). Livestock production poses
various health risks, including zoonotic diseases, antimicrobial
intensify in the coming decades, constraining efforts
resistance, and environmental pollution. Zoonotic diseases,
to improve stagnant and low national-level yields which transmit between animals and humans, constitute
(BMZ/GIZ 2023). around 75 percent of emerging infectious diseases (WHO
Many livestock farmers in Tanzania have 2021). Livestock production intensifies this risk by facilitating
close contact between animals and humans, fostering disease
limited access to essential resources such as
transmission. Moreover, antibiotic use in livestock contributes to
land, water, and fodder, particularly in arid and antibiotic resistance, a grave human health concern (FAO 2019).
semi-arid regions. Large herds produced under
rainfed extensive grazing systems depend on
natural pasture for feed. Transhumance is a common Coast fever, foot-and-mouth disease, peste des petit
practice to mitigate variation in feed and water avail- ruminants, Newcastle disease, Marek’s disease, and
ability, accentuating competition between herders contagious bovine pleuropneumonia raise mortality
and farmers for land and water. Land degradation and reduce fertility, and restrict trade, leading to economic
deforestation further exacerbate vulnerabilities in the losses for livestock farmers. In 2015 alone, 329 animal
livestock sector (Baltussen et al. 2019). disease outbreaks were reported involving 32 animal
Several livestock diseases that affect disease conditions, causing over 5,800 deaths
animal health, productivity, and market access (Maziku et al. 2017).
are endemic across Tanzania and undermine Infrastructure and technical capacity for
food safety. Diseases such as Rift Valley fever, East water supply, veterinary services, market access,

and transportation are inadequate. Limited access competitiveness of Tanzania’s livestock sector by
to veterinary care, vaccines, and diagnostic facilities limiting productivity, constraining market access,
impairs disease management and control efforts, and hindering value chain development.
while poor market infrastructure limits opportunities
for value addition and market integration. Limited Relative to its contribution to the agriculture
access to water also hampers animal productivity sector and overall economy, the livestock sec-
(Kitalyi et al. 2022). In 2015, only 20 percent of live- tor is grossly underfunded from public sources.
stock keepers had access to veterinary professionals Between 2017/18 and 2021/22, the sector’s alloca-
(Caudell et al. 2022). tion of public expenditures was equivalent to a mere
Livestock market risks are widespread and 0.03 percent of GDP, while it contributed 7.4 percent
persistent, especially those linked to food-borne of GDP (World Bank 2022). Over this period, the
diseases. Despite the presence of urban abattoirs livestock sector received 6.4 percent of the agricul-
and some rural slaughterhouses, many livestock tural budget allocation and represented 10 percent
destined for slaughter and for the commercial sale of of actual expenditures. Between 2017 and 2022,
meat are killed at small and rural concrete slaughter 9 percent of the agricultural budget depended on
slabs, usually owned by local butchers, where they are donor support, but none of this external aid went to
slaughtered using simple tools (Waldman et al. 2020). the livestock sector.
Tanzania is therefore a hotspot for bacterial zoonoses Despite its major economic potential, the
that cause diarrhea and blood-stream infection (sep- livestock suffers from limited access to agricul-
sis), both of which are major preventable causes of tural research and extension services and inputs.
death (LLH 2024). Livestock farmers often suffer from inadequate
Tanzania’s livestock sector faces numerous equipment, limited access to inputs, including fodder,
economic risks and governance challenges. There seeds, and fertilizer, and veterinary or breeding ser-
are significant fluctuations in input costs, changes vices (e.g., artificial insemination). Moreover, access
in consumer preferences, and disruptions in supply to extension services is constrained, leading to sub-
chains across the sector. Limited access to trade optimal use of inputs and poor animal husbandry
credit, market information, and risk management tools practices by farmers (World Bank 2023).
further exposes farmers to economic uncertainties Livestock producers (especially women
and livelihood risks (Baltussen et al. 2019). Moreover, and youth), processors, and public institutions
weak governance, inadequate policy frameworks, lack the necessary skills, knowledge, and
and limited institutional capacity undermine efforts capacity to drive growth in the livestock sector.
to address vulnerabilities facing farmers and other Inadequate training, education, and technical skills
stakeholders in the livestock sector. Finally, incon- development hinders innovation, technology adop-
sistent and incomplete implementation of policies, tion, and value chain upgrading, limiting productivity
lack of coordination among stakeholders, and insuf- gains and market competitiveness (Kitalyi et al. 2022).
ficient investment in research and extension services Many livestock producers in Tanzania face
impede the adoption of climate-smart practices and challenges in accessing inputs such as quality
sustainable livestock management techniques (World breeds, vaccines, feed supplements, and veteri-
Bank 2023). nary services. The country has slightly more than
1,000 registered veterinarians (lower than Kenya’s
2,000) and over 4,100 veterinary paraprofessionals,
Barriers to Competitiveness23
23
This section draws from Baltussen et al. (2019), CSIRO
A range of structural, institutional, and sys- (2020 a-c), IFC (2018), Kibona et al. (2022), Maziku et al.
temic challenges intersect with climate risks (2017), Mweya et al. (2017), Reardon et al. (2023), and
and other drivers of vulnerability to reduce the URT (2017).
most of whom are left unsupervised (Frumance et ning, land development, sustainable land use and
al. 2021). In 2018, only 5 percent of livestock-rearing investment in livestock production systems (IFPRI
households reported vaccinating their animals 2020; Lugoe 2011).
against food and mouth disease, a deadly endemic Finally, many policies, regulations, and
disease present in most of Tanzania (Casey-Bryars et administrative procedures are complex and
al. 2018). inconsistent. Inadequate enforcement of standards
Poor access to credit constrains the and trade regulations, coupled with bureaucratic
adoption of modern practices and technologies, hurdles, creates uncertainties, increases compliance
reducing productivity and competitiveness. costs, and limits market access for livestock products.
Women and youth are especially disadvantaged, Incentives for private investment in the livestock
limiting their contributions to productivity growth and sector are also ineffective (World Bank 2023). The
income generation (Baltussen et al. 2019). inadequate business environment hampers private
The country’s livestock market is widely sector participation in the livestock sector, which is
dispersed, highly seasonal, fragmented, and critical to drive growth and create employment oppor-
characterized by informal trading practices, low tunities (Box 7).
standards, lack of market information, and limited
value addition. Weak market linkages, unstable
supply chains, and price volatility deter investments, Emerging Strengths and
and inadequate marketing processes discourage Opportunities24
quality standards and hinder market competitiveness.
Moreover, inadequate disease control, inefficient Despite the numerous vulnerabilities and barri-
slaughtering practices, poor hygiene standards, and ers facing Tanzania’s livestock sector, there are
lack of product differentiation reduce consumer confi- advantages and opportunities with profound
dence, limit market opportunities, and constrain price strategic significance.
premiums (Ekwem et al. 2023).
Infrastructure for transportation, market The country’s strategic geographical location,
access, and processing of livestock and livestock combined with its significant animal stocks and
products is inadequate. Thin and low-quality road production potential, presents an opportunity
networks, lack of cold storage facilities, and inef- to expand into regional and international export
ficient logistics raise transaction costs, increase markets. With excellent sea access and 7 bordering
post-slaughter losses, and restrict market opportuni- neighboring countries, Tanzania can capitalize on
ties for livestock producers. Tanzania’s estimated growing demand for meat, dairy, and other livestock
cold storage capacity in abattoirs, meat processing products in neighboring countries within both the East
plants, and specialized retail establishments stands African Community (EAC) and the Southern African
at 6,700 tons of meat per day, equivalent to 39 kg Development Community (SADC), as well as in global
per capita annually. However, much of this capacity markets. Leveraging these opportunities requires
remains underutilized, partly because poorly imple- strengthening compliance with relevant safety and
mented cold chains result in post-slaughter losses quality standards.
and waste of approximately 100,000 metric tons of Increasing demand for processed and
meat each year—equivalent to 15 percent of Tanza- value-added livestock products—such as pack-
nia’s yearly production (Mushi 2023). aged meat, dairy products, and ready-to-eat
Land tenure insecurity and conflicts over meals—offers opportunities for investment and
grazing rights lead to land degradation, resource
overuse, and reduced investment in sustainable 24
This section draws from Banda and Tanganyika (2021),
land management practices. Insecure land tenure FAO/NZAGRC (2019), URT (2017), URT (2022), Wang et
and unclear land use plans hamper long-term plan- al. (2022), and World Bank (2023).

BOX 7: BOOSTING PRIVATE INVESTMENT IN TANZANIA’S LIVESTOCK SECTOR
According to Tanzania’s Livestock Sector Transformation Plan 2022/23–2026/27, the private sector has a vital role in driving the development
of Tanzania’s livestock sector by providing investments, technologies, and expertise and creating opportunities for innovation, value addition,
and market access. This is important to enhance the productivity and profitability of farmers. However, hurdles such as poor access to finance,
infrastructure limitations, and regulatory challenges need to be addressed to fully unlock the sector’s potential and ensure inclusive growth
for all stakeholders.
An enabling environment for private investment in the livestock sector is critical. Currently, duplications, overlaps, and unclear mandates
across public agencies such as the Directorate of Veterinary Services (DVS), local government authorities (LGAs), and Tanzania Meat Board
(TMB) result in high operational costs of livestock-related businesses. An average dairy company in Tanzania must comply with 31 licensing
requirements, 18 of which involve overlapping mandates. Such a firm is also subject to 12 inspections, of which 10 are overlapping (IFC 2018).
These overlapping mandates and inspections create inefficiencies and an unnecessary burden on the government, which is required to finance
entities with duplicative mandates, and the private sector, which needs to assume the costs associated with compliance.
Rationalizing and streamlining the regulatory framework could reduce costs imposed by duplicative licensing and inspection requirements.
This could reduce operational costs, increase competitiveness, and free up resources needed to finance productive processes. Key reforms to
improve the business environment in the livestock sector include:
• Removing overlapping mandates related to slaughter facilities registration, slaughter permits, meat registration/inspection, and issuance
of livestock movement permits between the DVS, LGAs, and TMB.
• Removing overlapping mandates for beef, goat, and mutton import and export permits between TMB, DVS, and the Tanzania Bureau of
Standards.
• Rationalizing taxes for feed (crop by products such as soya bean cake and maize bran), milk, and milk products.
• Introducing tax incentives, subsidies, and other financial incentives to encourage private sector investment in the livestock sector. This
could include tax breaks for agribusinesses, subsidized loans for livestock farming, and grants for research and innovation.
Source: World Bank 2023.
job creation in processing and value-addition embryos, and breeding stock. These products can
facilities. By adding value to raw livestock products contribute to genetic improvement programs in other
through processing, packaging, and branding, countries and support sustainable livestock produc-
Tanzania can produce products such as canned tion systems worldwide while generating income for
meat, frozen cuts, cheese, leather goods, and pet Tanzania’s livestock producers and traders.
treats. These types of products can meet consumer Tanzania’s vast land resources and tradi-
preferences for convenience, quality, and food safety tional knowledge in livestock management offer
while capturing higher margins and enhancing market opportunities for implementing climate-smart
competitiveness. agricultural practices. By adopting sustainable
Tanzania’s rich diversity of indigenous live- land management techniques, leveraging animal
stock breeds25 presents an opportunity to meet welfare-enhancing agroecological principles in its
the diverse preferences and requirements of con- largely pasture-based production system, and pro-
sumers in domestic and international markets. By moting climate-resilient livestock breeds, the country
promoting indigenous breeds known for their unique can enhance its resilience to climate change while
flavor, nutritional value, and resilience, the country can maximizing productivity and sustainability in the live-
cater to multiple markets and differentiate its livestock stock sector.
products based on quality and authenticity, tapping The country’s emerging digital technologi-
into the growing demand for specialty and heritage cal landscape and increasing connectivity provide
breeds. The country’s diverse indigenous livestock
also offer opportunities for exporting livestock genet- 25
For instance, the Chagga and Pare cattle breeds, the
ics and biotechnology products, including semen, Maasai goat breed, and the red Maasai sheep breed.
opportunities for harnessing innovation in livestock
BOX 8: METHANE INTENSITY REDUCTION AND
production and trade. By embracing technology solu-
CARBON FINANCE INCENTIVES
tions such as mobile applications for veterinary services
and biotechnology for genetic improvement, Tanzania Implementing mitigation measures in Tanzania aimed at
can enhance productivity, efficiency, and competitive- improving breed quality, water management, pasture utilization,
ness in the livestock sector, leveraging its strengths in feed quality, and animal health, in line with Tanzania’s Livestock
traditional knowledge and cultural heritage. Sector Transformation Plan (2022/23–2026/27), yields
promising results. Targeting 1 percent of the beef cattle
The absorption capacity of the Ministry population, these interventions would result in a mere 2 percent
of Livestock and Fisheries signals its ability increase in GHG emissions while boosting protein production by
to increase public investment, especially for 52 percent compared to the business-as-usual scenario, thereby
reducing emission intensity per kilogram of protein by 33 percent.
development activities. Between 2017/18 and
At the farm level, implementation of these measures is projected
2020/21, the average public budget execution rate to generate annual carbon revenues ranging from US$213 to
was 99 percent in the livestock sector, pointing to the US$1,586 , contingent upon valuation (World Bank, 2023).
huge untapped potential to use public investment to
bridge investment gaps in the sector. The internal
rate of return on livestock projects ranges from 15 to FIGURE 38 • K
ey Components of Sustainable and
86 percent, indicating the substantial viability of public Climate-Smart Livestock Systems
investment in the sector (World Bank 2023).
Tackling Methane: Tanzania’s

Absolute Reduction of
Livestock Sector – A Solution in reduction of emissions intensity
through efficiency
Climate Change Mitigation emissions
gains
The livestock sector is a significant contributor to Sustainable and Increasing carbon

global GHG emissions, accounting for 14.5 per- Healthy diets climate-resilient stocks through
livestock systems land management
cent of total emissions, mainly due to methane
production in animal digestive systems. Methane
is 80 times more powerful than carbon dioxide in One Health Open and equitable
approach trade in livestock
warming the planet, making it a major driver of climate products
change. Yet, it is much less understood and prioritized
than carbon dioxide. Finance for methane abatement
is alarmingly low, accounting for less than 2 percent
of global climate finance (World Bank 2023). Globally,
reducing GHG emissions from food systems is vital
for achieving the objectives of the Paris Agreement.
Despite the challenges post by climate change, change, and forestry sector) and the highest
ensuring food security remains a paramount priority methane-emitting sector in Tanzania (Figure 39).
in Tanzania, with domestic production—particularly in Within agriculture, enteric fermentation from live-
the livestock sector—playing a pivotal role in protein stock is the largest category of emissions (Panel A
production. This presents an opportunity to innovate, in Figure 40).26 As in other countries (Menghistu et
collaborate, and implement sustainable solutions that
not only mitigate emissions but also enhance food 26
Enteric fermentation is the digestive process in ruminant
security and resilience. animals that breaks down carbohydrates into simple,
In 2022, agriculture was the second highest digestible molecules, resulting in the production of
GHG-emitting sector (after the land use, land-use methane as a by-product.

FIGURE 39 • GHG and Methane Emissions by Sector, 2022
A. GHG emissions by sector in Tanzania, 2022 B. Methane emissions by sector in Tanzania, 2022
Land-use change
69.56
and forestry
Agriculture 38.63
Agriculture 61.36
Transport 6.78
Land-use change
Waste 6.38 2.81
and forestry
Buildings 5.43
Industry 3.56 Waste 2.77
Electricity and heat 2.67
Manufactoring and
2.2 Other fuel combustion 0.46
construction
Other fuel combustion 0.63
Fugitive emissions 0.25
Fugitive emissions 0.25
Aviation and shipping 0.24
0 10 20 30 40 50 60 70 80 0 5 10 15 20 25 30 35 40 45
GHG emissions (million mt of CO2 equivalents) Methane emissions (million mt of CO2 equivalents)
Source: Friedlingstein et al. 2022.
FIGURE 40 • Farmgate GHG Emissions and Emissions Intensity from Selected Agricultural Products, 2020
A. Farmgate GHG emissions in Tanzania, 2020 B. Emissions intensity from selected agricultural products in
Tanzania, 2020 (kg CO2 /kg)
Sheep meat 58.5

Enteric fermentation 31.4
Cattle meat 56.3
Other 12.1
Pig meat 8.9
Drained organic soils 6.9 Cow milk 4.4
Rice paddy 1.6

Synthetic fertilizer 5.3
Eggs 1
Manure left on pasture 4.3 Chicken meat 1
0 5 10 15 20 25 30 35 Non-rice cereals 0.2
GHG emissions (million mt of CO2 equivalents) 0 10 20 30 40 50 60 70

Source: FAOSTAT.
al. 2021), dairy, cattle meat, and sheep production lation grows and the demand for livestock products
registers the greatest emissions intensity in Tanzania increases, it is crucial to implement mitigation strate-
(Panel B in Figure 40). gies, particularly for smallholder farmers that rely
The livestock sector is a leading source of heavily on livestock for their livelihoods.
GHG and methane emissions in Tanzania. A single Tanzania is exploring potential avenues for
cow emits over 80 kg of methane annually. With accessing carbon finance through climate-smart
36.6 million cattle in the country, this sector stands livestock sector responsible investments, with the
out as a notable emitter of GHG. As Tanzania’s popu- objective of complementing the country’s live-
stock Transformation Plan (2022/23–2026/27). livestock development between 2023/24 and
The World Bank has provided technical assistance to 2028/29. At about US$109 million/year, this level of
the Government of Tanzania during the preparation public investment in the livestock sector is ambitious
of a roadmap for sustainable livestock investments. but realistic. It represents a fivefold increment over
The objective of this study was to assess Tanzania’s the budget for the livestock sector prior to 2021 and
preparedness to access carbon markets for emission is 50 percent higher than the 2023/24 budget. This
reductions resulting from the livestock sector and level of investment could be justified in the livestock
identify strategies and pathways to reduce methane, sector given its current underfunding and absorption
including: (i) implementing an absolute reduction capacity (World Bank 2023).
of emissions (e.g., through the control of livestock The authorities could pursue several
numbers, improved manure management, or the policy and investment reforms to strengthen
use of renewable energy in processing); (ii) reduc- resilience and boost the competitiveness of the
ing emission intensity through efficiency gains (e.g., livestock sector. These focus on boosting productiv-
increased production per animal through optimized ity, strengthening trade and value addition, adapting
feeding, breeding and animal health improvements to and mitigating climate change, and improving sec-
through the adoption of a one health approach); and tor governance and institutions, with important roles
(iii) increasing carbon stocks in rangeland soils and for the private sector. Specifically, the government
trees (e.g., through soil organic carbon sequestration should consider:
in grasslands and better pastureland management.
Implementing mitigation interventions and Boosting Sustainable Productivity
controlling the animal population over the next
six years could potentially reduce emissions Enhancing access to veterinary services, vaccina-
by 13 percent while increasing production by tions, and disease control measures to reduce
29 percent. Furthermore, Tanzania could generate livestock mortality rates and improve overall herd
revenues from reducing carbon emissions if it adopts health. This would involve helping private veterinary
appropriate policies and strengthens the institutional clinics and pharmaceutical companies expand their
framework for monitoring, reporting, and verification. reach to remote areas to enable them to provide
Embracing climate-smart practices and essential services such as vaccinations, disease
methane mitigation initiatives in Tanzania’s live- diagnostics, and veterinary care.
stock sector is important achieve the triple-win Strengthening and expanding breed
objectives. These objectives are to limit global warming improvement programs to enhance the genetic
in the near term, enhance resilience, and empower liveli- quality and productivity of livestock breeds. These
hoods of the most vulnerable. By investing in innovative efforts should focus on traits such as milk yield, meat
technologies and sustainable practices, the country quality, and disease resistance while prioritizing
can significantly reduce methane emissions while driv- adaptability to local conditions and demands. Private
ing economic growth, ensuring food security, and breeders and genetic companies can collaborate
protecting the environment. This would not only position with research institutions and government agencies
Tanzania as a pioneer in sustainable development but to introduce high-yielding, disease-resistant livestock
also set a powerful example for other nations to follow breeds through breeding programs and artificial
in terms of harnessing the potential of the livestock sec- insemination services.
tor to create a greener future for generations to come. Improving rangeland and pasture man-
agement. Practices such as agroforestry, land
water and land management through landscape
Policy Recommendations approach can not only enhance climate resilience,
improve soil fertility and reduce erosion, but also
An estimated US$546 million (Tsh 1.3 trillion) restore the quality of rangelands and increase soil
of public investment is required for sustainable carbon. Regenerative grazing (matching livestock

numbers to grassland carrying capacity, rotational niche markets offer opportunities for Tanzania to
grazing to allow grassland to recover after grazing) differentiate its products, cater to specific consumer
can stimulate plant growth and capture carbon in preferences, capture higher value in export trade,
soil organic matter. and create new jobs. Some potential export markets
Increasing and sustaining public funding for its livestock products include halal products;
for research and development to address key organic and free-range products; indigenous
challenges facing the livestock sector, such as breeds and specialty products with unique flavors
disease management, feed efficiency, and cli- and qualities; ethnic and cultural products; and
mate resilience. This aims to foster innovation and health and wellness products. Private exporters and
technology transfer. Private companies can allocate agribusinesses can explore new market opportuni-
resources to livestock research and development ties for Tanzania’s livestock products, diversifying
initiatives focused on addressing key challenges in export destinations and product offerings to meet
the livestock sector. the evolving demands of global consumers. Food
Adequately funding and appropriately safety, quality assurance, and relevant certifications
facilitating extension services and farmer coop- and accreditation schemes should be implemented
eratives to provide ongoing support, training, and throughout the supply chain.
knowledge-sharing opportunities for livestock Significantly improving market linkages
producers (especially women and youth). A and transportation infrastructure, particularly
major focus should be on facilitating the adoption of in remote and underserved areas. This could
climate-smart technologies and practices, such as be done based on the One Health approach that
agroforestry, water harvesting, and pasture manage- strengthens collaboration among stakeholders
ment, and increasing the uptake and expansion of involved in human, animal, and environmental health,
good animal husbandry practices under a One Health with the aim to enhance awareness, monitoring, and
approach that prevents and mitigates climate-related adherence to trade-related standards. This would
health threats.27 Given the vastness and geographic be supported by improved marketing practices,
diversity of Tanzania and the spread of livestock including linking price premiums to product quality
production, extension services would benefit from to give producers better incentives and ability to
an electronic platform that supports communica- afford improved practices. This would require efforts
tion among and between staff and farmers. Private to improve the capacity of and awareness among
agribusinesses can provide both physical and digital producers, processors, inspectors and regulators,
technical assistance, training, and advisory support to and consumers. The private sector, including agro-
farmers, promoting the adoption of best practices and processing companies and traders, could invest
modern digital technologies. in market infrastructure, cold storage facilities, and
transportation networks to improve market access
Enhancing Trade and Value Addition for livestock producers.
Promoting private sector investment
Diversifying market opportunities for Tanzania’s and intensifying value addition and processing
livestock products by exploring new export
markets, value-added processing, and product
differentiation strategies to meet evolving con- 27
‘One Health is an integrated, unifying approach to
sumer preferences and market demands. The balance and optimize the health of people, animals, and
country should leverage its abundant grazing lands, the environment. It is particularly important to prevent,
predict, detect, and respond to global health threats
diverse livestock breeds, and create a more sup-
such as pandemics. The approach mobilizes multiple
portive policy environment to proactively position sectors, disciplines, and communities at varying levels of
itself as a reliable supplier of high-quality livestock society to work together. One Health involves the public
in several potential niche export markets. These health, veterinary health, and environmental sectors.
activities in the livestock sector to increase the stewardship, the country will mitigate the risk of zoo-
competitiveness of Tanzania’s livestock products, notic diseases and antimicrobial resistance, thereby
including meat, milk, and leather. Private agro- improving public health outcomes and enhancing
processing companies could invest in meat and dairy consumer confidence in livestock products.
processing facilities, leather tanneries, and the devel-
opment of value-added products to increase the value Strengthening Climate Change Adaptation
and marketability of Tanzania’s livestock products. and Mitigation
Concurrently, strategic investments in infrastructure,
including transportation networks, market facilities, Designing and effectively implementing climate-
cold chain logistics, and essential agricultural inputs smart adaptation strategies and risk management
such as animal feeds and seeds, could be comple- plans for the livestock sector. This would include
mented by the establishment of private veterinary early warning systems, insurance schemes, and emer-
services and livestock pharmacies. These initiatives gency response mechanisms to mitigate the impacts
aim to improve the accessibility of services and of climate change on livestock production and trade.
broaden market access for smallholder farmers. The Private insurers and risk management firms could
creation of a favorable business environment, marked develop climate adaptation strategies and insurance
by transparent and consistent policies, coupled with products tailored to the needs of livestock farmers,
incentives to promote innovation and technology providing financial protection against climate-related
adoption, is pivotal for fostering growth and bolstering risks and disasters.
competitiveness. Leveraging public-private partner- Mitigating Methane Emissions for Climate
ships can further enhance service delivery to farmers Action. This would involve prioritizing climate-smart
and value-chain actors, amplifying the impact of these livestock production practices to reduce GHG emis-
interventions. sions, including methane, and lay the foundation for
Implementing and sustaining an effective carbon offset projects. Potential practices include
and well-coordinated regulatory and institutional improved livestock feeding regimes and waste man-
framework for food safety to boost private sector agement systems, rotational grazing, agroforestry,
investment in the livestock sector. This would, manure management, and soil conservation. Private
among other objectives, aim to reduce overlaps investors could support sustainable land manage-
and duplications in mandates across agencies. Tax ment initiatives, such as reforestation projects and
incentives, targeted subsidies, and other financial soil conservation programs, to enhance the long-
incentives—such as tax breaks for agribusinesses, term productivity and resilience of grazing lands.
subsidized loans for producers, and grants for Establishing and implementing a robust monitoring,
research and innovation—could also be introduced to reporting, and verification system could provide the
encourage private sector investment in the livestock foundation for accessing carbon financing, serving
sector. as a significant incentive for both the government and
Implementing a One Health approach farmers.
within the livestock sector is pivotal for foster- Scaling up renewable energy solutions to
ing comprehensive growth, bolstering health reduce the carbon footprint of livestock farm-
outcomes, ensuring environmental sustainability, ing operations and provide sustainable energy
and enhancing competitiveness. By integrating sources for powering facilities and equipment.
the principles of One Health into livestock manage- Potential solutions include solar-powered water
ment practices, Tanzania can forge a resilient and pumps and biogas digesters. Private companies
interconnected system that optimizes productivity could invest in renewable energy solutions, such as
while safeguarding the health of animals, humans, solar power and biogas, to reduce energy costs and
and ecosystems alike. Through coordinated disease carbon emissions in livestock farming operations,
surveillance, vaccination programs, and antimicrobial contributing to environmental sustainability.

Improving Sector Governance, The government should develop the right incentives
Institutional Capacity, and Enabling Policy mechanisms to encourage farmers to adopt good
Reforms animal husbandry practices and enhance institutional
capacity. By fostering partnerships between the
Pursuing sector governance and policy reforms government, research institutions, the private sector,
and institutional strengthening to implement and civil society, Tanzania can leverage collective
climate-smart livestock practices and improve expertise to address challenges, drive innovation,
competitiveness. An effective governance frame- and promote inclusive growth. This holistic approach
work is essential to ensure that the necessary lays the foundation for a vibrant, sustainable, and
policies, regulations, and incentives are in place to competitive livestock industry that contributes to food
support sustainable practices and ensure the par- security, economic development, and environmental
ticipation of all stakeholders in the livestock sector. sustainability.
ANNEX 1
CORE MACROECONOMIC DATA
SOURCES FOR THE REPORT
Sector Series Latest Data Point Source Measurement Year

Tanzania Mainland
Real GDP at constant 2015 prices by activity GDP data: 2023 National Bureau of Statistics, Bank of Calendar Year
and by demand, MFO Spring Survey 2023, Tanzania, Haver, Integrated Labor Force
High frequency data:
monthly tourist arrivals at Tanzania Mainland Q1-2024 Survey, World Bank staff estimates.
by nationality, monthly electricity and quarterly
cement production data.
Inflation CPI Inflation (headline, food, non-food, core, April 2024 National Bureau of Statistics, Bank of Calendar Year
energy), PPI inflation Tanzania, World Bank staff estimates.
Monetary M3, reserve money, broad money and private March 2024 Bank of Tanzania Calendar Year
sector credit
Fiscal and Revenues, expenditures, grants, financing, Fiscal data: Ministry of Finance, Bank of Tanzania Fiscal Year
Debt expenditure arrears; PPG debt (total, external 8M-FY2023/24 WB/IMF Debt Sustainability Analysis
and domestic) Debt data: FY2023/24 (June 2024)
External Current account, balance sheet, exports 3M-2024 Bank of Tanzania and National Bureau of Calendar Year
and imports of goods and services, FDI, Statistics.
government official reserve
Zanzibar
Real GDP at constant 2015 prices by activity, tourist GDP data: 9M-2023 Bank of Tanzania and Office of the Chief Calendar Year
arrivals Government Statistician (OCGS) – Zanzibar
Tourist data: 2023
Inflation Inflation (headline, food, non-food) February 2024 Bank of Tanzania Calendar Year
Current Exports and imports of goods and services, February 2024 Bank of Tanzania Calendar Year
account merchandise trade data
Fiscal Revenues, expenditures, grants, financing H1-FY2023/24 Bank of Tanzania and OCGS – Zanzibar Fiscal Year
43
ANNEX 2
SUMMARY OF SPECIAL FOCUSES
FROM THE LATEST TANZANIA
ECONOMIC UPDATES
TEU – Issue 20: “Overcoming Demographic Chal- icy has played a vital role in supporting inclusive and
lenges While Embracing Opportunities” sustainable growth. However, total public spending in
Infant and child mortality rates in Tanzania have Tanzania is below the average for Sub-Saharan Africa,
significantly decreased over the past few decades, low-income countries, and lower-middle-income
whereas fertility rates have only slightly decreased. countries, while budget execution rates in Tanzania
Consequently, the population growth rate remains remain low, especially for development spending. This
high, at three percent and the population is estimated special focus further identified policies and reforms
to double every 23 years. This high growth rate is to close the policy and compliance gaps further
expected to cause a surge in demand for essential ser- and increase revenue collection for improved public
vices such as education and health, and employment spending, steering towards the National Development
opportunities, outstripping the economy’s capacity to Vision 2025, which envisages Tanzania as a middle-
provide them. Accelerating the demographic transition income country with well-developed human capital,
in Tanzania could bring about shifts in the age structure an adequate supply of high-quality livelihoods, and
which would contribute to economic growth and pov- rising living standards.
erty reduction, helping the country reap the potential
benefits of lower fertility rate. Priorities for policy action TEU – Issue 18: “Clean Water, Bright Future: The
include renew commitment on family planning, expand Transformative Impact of Investing in WASH”
access and strengthen completion of secondary edu- The provision of near-universal access to water, sani-
cation for girls, and promote women’s empowerment. tation and hygiene (WASH) services can drastically
improve multiple facets of Tanzania’s population.
TEU – Issue 19: “The Efficiency and Effectiveness Although there has been progress towards increasing
of Fiscal Policy in Tanzania” access to WASH services, achieving the Sustainable
Over the past decade, Tanzania has made strides in Development Goals of the UN will require greater pri-
broadening its tax collection efforts, and its fiscal pol- oritization. The Water Sector Development Program
45
(WSDP) has made significant progress; however, the exercise secure land rights, hold a bank account, or
current WSDP-3 stands to have the largest impact have access to finance. These gender disparities
towards providing near-universal access to WASH prevent women from maximizing their contribution to
services yet. Achieving the goals of WSDP-3 would Tanzania’s economic development.
mitigate the high volume of yearly deaths due to inad-
equate WASH services, would significantly reduce TEU – Issue 16: “The Recovery Resilience, and
economic loss, and would bring substantial increases Transformation of Tanzania’s Tourism Sector”
in job creation and workforce productivity. With a Tanzania’s abundant nature and rich cultural
majority of the population without adequate WASH resources are a considerable economic opportunity.
services, the provision of near-universal access will The tourism sector can support the government’s
be crucial for the development of Tanzania. broader development objectives by: (i) creating jobs,
both directly and through backward linkages to other
TEU – Issue 17: “Accelerating Growth by Expand- sectors; (ii) generating foreign-exchange earnings;
ing Women’s Economic Opportunities and (iii) providing revenue to support the preservation
Ensuring Equitable Access to Assets” and maintenance of natural and cultural heritage; and
Over the last two decades, a growing share of Tanza- (iv) expanding the tax base to finance development
nian women have entered salaried employment, and expenditures and poverty-reduction efforts. However,
an increase in the female labor-force participation rate the COVID-19 crisis severely impacted Tanzania’s
(LFPR) has accelerated Tanzania’s transition to lower- tourism sector as the disruption of global travel and
middle-income country. However, women still face tourism activity resulted in job losses and business clo-
multiple challenges, including persistent gender gaps sures. This prompted policymakers, investors, firms,
in wage rates and agricultural productivity. Despite and development practitioners to reconsider tourism’s
recent progress, women are less likely to own a home, underlying sustainability and value proposition.
ANNEX 3
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TANZANIA

Public Disclosure Authorized

Livestock Sector in Tanzania

THE WORLD BANK GROUP | EAST AND SOUTHERN AFRICA REGION

Rights and Permissions

Publication design and layout by The Word Express, Inc.

1. Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Macroeconomic Outlook and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

3. Special Focus: Harnessing A Climate-Smart and Competitive Livestock Sector . . . . . . . . . . . . 25

Annex 1: Core Macroeconomic Data Sources for the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Annex 3: References for the Special Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Recent Economic Developments Tanzania has managed a steady and

Executive Summary xiii

Ghana Kenya Mozambique Headline inflation, Mainland Core inflation, Mainland

Source: Bank of Tanzania, WB staff estimates. Source: NBS, WB staff estimates.

(continued on next page)

2018 2019 2020 2021 2022 2023

Executive Summary xvii

(% y/y change, contribution in ppt.) (Tsh trillion)

Source: WB staff estimates. Source: NBS, WB staff estimates.

BOX 2: TANZANIA’S GOVERNMENT SPENDING MULTIPLIER

(continued on next page)

Private Sector Public Sector Total 0.0

Recent Economic Developments 3

TABLE B3.A • Regulations and Taxes in Tanzania and SSA, 2023

Indicator Tanzania SSA All Economies

Recent Economic Developments 5

FIGURE 6 • CPI Inflation, January 2021–April 2024 4

supply increased by 124 percent in 2023/24, up from 114

(% y/y change) (% y/y change, contribution in ppt.)

input costs for manufacturers of food, beverage, and

Recent Economic Developments 7

FIGURE B4.A • Traditional MCI and Broad MCI FIGURE B4.B • B

Traditional MCI Broad MCI Interest Rate Credit Broad MCI

Source: WB staff estimates. Source: WB staff estimates.

Traditional MCI = rt – rb + 1.7 (rert – rerb) * 100, and

(continued on next page)

Recent Economic Developments 9

% of GDP (% contribution in ppt.)

Recent Economic Developments 11

Fiscal Year (July to June) Jul–Feb (8M)

environment, broadening the tax base, and strength-

Fund/World Bank Debt Sustainability Analysis

Recent Economic Developments 13

(% of GDP) (% y/y change, contribution in ppt.)

(Levels) (% y/y change, contribution in ppt.)

Recent Economic Developments 15

Direct investment Portfolio investment Rwanda Ethiopia Kenya

Net taxes Services Industry

Recent Economic Developments 17

(% y/y change, contribution in ppt.) (% y/y change, contribution in ppt.)

Recent Economic Developments 19

TABLE 2 • Medium-Term Outlook, 2021–2026

2021 2022 2023 2024 2025 2026

Macroeconomic Outlook and Risks 23

Introduction tions that not only mitigate environmental degradation

Zambia Pigs 3.7 3 0.06 2

Tanzania’s total livestock population is also among the

2010 2022 0% 20% 40% 60% 80% 100% 120%

Tanzania 7.4 Tanzania 26.1

FIGURE 6 • CPI Inflation, January 2021–April 2024 4

TABLE 2 • Medium-Term Outlook, 2021–2026