Tanzania: Please don’t stop the music

6/22/2017 - Report
ic_blogtagTanzaniaCountry Risk

Country Report

Stable growth foundations

Tanzania entered a high growth trajectory in 2001. Growth exceeded +5% each year ever since and climbed to about +7% over the last decade. 

Yet as the income level is still very low (6% of GDP per capita in Advanced Economies), the catch-up process can easily continue during the next decade as long as the country builds on its good record of reform implementation. One key achievement is the technological component of growth. 

Annual investment reaches about 30% of GDP per year during the last decade, and the capital stock is now among the best in the continent. It is 460% of GDP, above Chinese levels and about two times the common figure for African peers with comparable income levels such as Côte d’Ivoire and Senegal.

Moreover, Tanzania benefits from an effort to develop infrastructure and operating institutions. The country is also leveraging its geographical position. Tanzania is ranked 61st in the World Bank survey with regard to the quality of logistics, well above the average for Africa and neighbouring countries with similar performances. 

As foreign investors, particularly from China, are on the hunt for regional opportunities there is a room for economic integration. East Africa is the main African channel of investment under the Chinese One Belt One Road strategy to develop new trade routes.

The development of the offshore and onshore natural gas industry is a key strength, going hand in hand with this positive regional momentum. The rapid development of the energy sector will provide the country with a successor to the declining metals & mining sector, which still generates about one third of good exports.