- Under President Samia Suluhu Hassan, Tanzania has seen significant economic transformation, culminating in attracting over $1 billion in foreign direct investment.
- Tanzania’s consistent economic policies have played a key role in this achievement, fostering an environment conducive to growth and investment.
- However, this impressive FDI growth is juxtaposed against a decrease in the value of invested projects and Domestic Investment.
Under the astute leadership of President Samia Suluhu Hassan, Tanzania has witnessed a significant economic transformation, culminating in attracting over $1 billion in foreign direct investment. This remarkable achievement is the result of a series of strategic policies and reforms that have shaped Tanzania’s economic trajectory.
Tanzania’s journey from a command economy to a market economy has been pivotal in shaping its current economic structure. Since 1985, the country has embraced market-oriented policies, opening up its economy to global trade and investment.
Agriculture plays a critical role in this economy, contributing 28.7 per cent to the nation’s GDP and employing half of its workforce. This sector is not just an economic pillar but also a lifeline for millions of Tanzanians, underscoring the importance of sustainable agricultural practices and policies to support this key area of the economy.
Tanzania’s economic trajectory is largely attributed to its macroeconomic stability and sound policies. The remarkable growth of 4.8 per cent in 2020, bringing the GDP to $64.4 billion, is a testament to this stability. As the second-largest economy in East Africa and the seventh-largest in Sub-Saharan Africa, Tanzania’s consistent economic policies have played a key role in this achievement, fostering an environment conducive to growth and investment.
Tanzania’s economic trajectory: areas of expansion
Tanzania’s dynamic economic landscape showcases a blend of challenges and opportunities, particularly in its investment sector. The Tanzania Investment Centre (TIC) report highlights a significant increase in Foreign Direct Investment (FDI), which soared by 100.53 percent from $524.42 million in Q1 2022 to $1053.32 million in Q1 2023. This surge indicates a robust influx of foreign capital, potentially reflecting heightened confidence in Tanzania’s economic trajectory and attractive investment opportunities.
However, this impressive FDI growth is juxtaposed against a decrease in the value of invested projects and Domestic Investment (DI). The DI attracted in Q1 2023 was $1,016.17 million, a 46.82 per cent drop from the previous year. This decline occurred despite an increase in the number of ventures, from 82 in Q1 2022 to 137 in Q1 2023, projected to create significantly more jobs.
The sectors leading FDI attraction included commercial buildings, manufacturing, agriculture, transportation, and tourism, while the top factors attracting DI were agriculture, economic infrastructure, manufacturing, and commercial building. The manufacturing sector notably registered 58 projects, expected to create 8,634 jobs with an estimated capital of $356 million, followed by the transport and commercial building sectors.
The top FDI sources for Tanzania in Q1 2023 were China, Singapore, Germany, India, and Mauritius, underscoring the diverse global interest in Tanzania’s economy trajectory. Additionally, the new Investment Act, No. 10 of 2022, has influenced the investment landscape, with TIC research expert Anna Lyimo noting that special strategic investment projects, requiring over $300 million in capital, significantly boost the value of registered projects when they occur.
International growth projections for Tanzania
The projections by the International Monetary Fund (IMF) and the World Bank paint a promising picture of Tanzania’s economic future. The IMF’s projection of a 6.0 per cent GDP growth by 2026 and the World Bank’s forecast of 5.1 per cent growth in 2023 highlight the potential for continued economic expansion. The 4.6 per cent GDP growth in 2022, reaching $75.5 billion, reinforces Tanzania’s position as a growing economic force in the region.
Since the turn of the millennium, Tanzania has maintained impressive growth rates of 6 to 7 per cent. The IMF’s projection of a 5.2 per cent GDP growth rate for 2023 continues this trend. This consistent growth over the past decades reflects the country’s economic resilience and the effectiveness of its economic policies and reforms.
Despite these promising figures, Tanzania’s economic trajectory faces the challenge of widespread poverty. President Samia’s administration is keenly aware of this issue and is actively working towards economic policies that not only attract foreign investment but also ensure equitable growth. Her strategy includes bolstering the agricultural sector, enhancing education, and improving healthcare systems.
Investments in infrastructure have been a key focus of President Samia’s economic policy. Significant projects in transportation, energy, and communication are underway, aiming to boost the country’s overall development and create a more connected and efficient economy. These infrastructure developments are crucial for attracting foreign investment as they facilitate trade and provide the necessary groundwork for industrial and economic activities.
The energy sector, in particular, has seen substantial growth and investment under President Samia’s leadership. Efforts to harness Tanzania’s vast natural gas reserves and renewable energy sources are underway, which will not only meet the country’s energy needs but also position it as a key energy exporter in the region.
President Samia engaging international partners
In addition to these domestic initiatives, President Samia has been proactive in engaging with international partners and investors. Her government’s open and favorable attitude towards foreign investment, coupled with the strategic geographical location of Tanzania, has made the country an attractive destination for global capital. The government’s commitment to maintaining macroeconomic stability and implementing reasonable policies has further enhanced investor confidence.
As Tanzania continues its journey of economic transformation, it is becoming an exemplary model for other African nations. The combination of strategic economic planning, investment in key sectors, and a focus on inclusive development under President Samia’s leadership is setting a new benchmark for sustainable growth in the region.
President Samia Suluhu Hassan’s tenure has been transformative for Tanzania. By attracting more than $1 billion in foreign investment and implementing a series of strategic reforms and policies, she has not only boosted the country’s economy but also laid the foundation for a more equitable and prosperous future. Tanzania, under her leadership, stands as a beacon of hope and a testament to the potential of emerging economies in Africa.