Economic and Investment Overview of Tanzania (2024-2025)
General Overview
Tanzania, officially known as the United Republic of Tanzania, is an East African nation bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. To the east, the country meets the Indian Ocean, boasting breathtaking coastlines and the Zanzibar Archipelago.
Dodoma serves as the capital, while Dar es Salaam remains the largest city and economic hub. Tanzania covers an area of 947,303 square kilometers and has a population of approximately 61.7 million as of 2024. The official languages are Swahili and English, with Arabic also spoken in Zanzibar. The national currency is the Tanzanian Shilling (TZS).
Tanzania is renowned for its extraordinary landscapes, including Mount Kilimanjaro—the highest peak in Africa—the vast Serengeti plains, Lake Victoria, and its rich biodiversity.
Political Landscape
Tanzania operates as a unitary presidential republic with a single-party system. The country’s current leader is President Samia Suluhu Hassan. Known for its political stability, Tanzania is considered one of the safest and most stable nations in Africa.
Economic Overview
Tanzania’s economy is classified as developing, with substantial growth in recent years. The country’s key economic sectors include:
Agriculture: Employing nearly 65% of the population, agriculture contributes significantly to exports, with major commodities such as coffee, tea, cashews, and cloves.
Tourism: A vital source of revenue, tourism thrives on attractions like the Serengeti, Mount Kilimanjaro, and Zanzibar.
Mining and Resources: The country is rich in minerals, including gold, diamonds, and tanzanite—a gemstone unique to Tanzania. Offshore gas reserves are also expected to boost the economy by 2030.
Industrial Development: The government is actively promoting manufacturing and industrial growth to diversify the economy.
Despite strong economic expansion, challenges remain, including poverty, education and healthcare gaps, climate change risks, and youth unemployment (which stands at over 10% among the 15-24 age group). Tanzania’s public debt is moderate at 40% of GDP but is rising, with concerns over currency devaluation. Access to credit remains limited, with high real interest rates of 5-7%.
Macroeconomic Performance
Tanzania’s Gross Domestic Product (GDP) in 2024 was estimated at US$85.48 billion, with a 5.6% growth rate in Q1 2024, up from 5.1% in 2023. GDP per capita was approximately US$1,224.37. The main economic contributors include:
- Agriculture (25% of GDP, 65% of labor force, 80% of exports): The sector remains dominant but is vulnerable to climate shocks such as droughts and floods. The government is prioritizing agricultural development through initiatives like the Southern Agricultural Growth Corridor of Tanzania (SAGCOT).
- Mining (7% of GDP): Gold accounts for 50% of Tanzania’s exports (US$2.8 billion in 2022), and the country has 550 billion cubic meters of natural gas reserves. The Mining Commission is working to streamline regulations and attract foreign investors.
- Tourism (10% of GDP): The sector has recovered to pre-pandemic levels, with 1.5 million tourist arrivals in 2023, driven by national parks and Mount Kilimanjaro. Industry and Construction (6.8% growth in 2023): The government is implementing the Five-Year Development Plan III (2021-2026) to drive industrialization and infrastructure expansion.
- Energy Investments in natural gas, renewable energy (solar, wind, and geothermal), and rural electrification are accelerating Tanzania’s energy transformation.
Key drivers of economic expansion include the Standard Gauge Railway (SGR) project (US$2.9 billion) linking Tanzania to Uganda and Rwanda, the Julius Nyerere Hydropower Plant (2,115 MW), and institutional reforms under President Hassan, which have improved the investment climate.
Inflation and Monetary Policy
Inflation has been successfully controlled, decreasing from 3.3% in July 2023 to 3.0% in July 2024. The Bank of Tanzania has maintained tight monetary policies to stabilize the foreign exchange market, with the government aiming to keep inflation within the 3-5% range.
Economic Outlook for 2025
Tanzania’s economy is projected to grow by approximately 6% in 2025, up from an estimated 5.4% in 2024. However, potential risks include regional conflicts, volatile commodity prices, global economic slowdowns, and climate-related natural disasters. Overall, Tanzania's macroeconomic indicators reflect a positive trajectory, with improvements in GDP growth, inflation control, and fiscal management.
Investment and Trade
Tanzania’s investment and trade landscape has shown resilience and growth, supported by government reforms and a favorable business environment.
Exports and Imports
Tanzania’s major export products include minerals (gold, diamonds, coal), coffee, cotton, cashew nuts, tea, sisal, tobacco, pyrethrum, and cloves. The country’s major imports are machinery, transport equipment, textiles, petroleum products, and construction materials.
- Exports (Q3 2024): US$2.81 billion
- Imports (Q3 2024): US$3.82 billion
Trade Agreements and Partners
Tanzania is a member of the East African Community (EAC), the Southern African Development Community (SADC), and the African Continental Free Trade Area (AfCFTA), providing access to regional and continental markets. Major trading partners include China, Germany, Japan, India, the European Union, the UAE, the UK, Kenya, and South Africa.
Investment Climate
Tanzania has witnessed a recovery in Foreign Direct Investment (FDI), which now stands at 2% of GDP. In the 2023/24 fiscal years, the country attracted US$3.5 billion in FDI, reflecting renewed investor confidence. The Tanzania Investment Centre (TIC) registered 416 projects in Q1 2024, more than double the 203 projects recorded in the same period of 2022/23.
Key sectors attracting investment include:
- Manufacturing – A core contributor to industrialization.
- Construction – Significant infrastructure projects, including roads, bridges, and housing developments.
- Mining – Increased interest in gold, graphite, and nickel exploration.
Government Initiatives and Policies
The Tanzanian government is actively promoting investment through several key initiatives:
Tanzania Investment Centre (TIC): The lead agency for investment facilitation.
- Five-Year Development Plan III (2021-2026): Focuses on industrialization, human development, and economic transformation.
- Public-Private Partnerships (PPP): Encourages infrastructure development and industrial growth.
Tanzania’s Trade and Investment Outlook
Tanzania’s investment and trade sectors have been on a solid recovery path, supported by government reforms, an enabling economic environment, and a strong focus on attracting foreign direct investment (FDI). With significant opportunities in agriculture, mining, energy, tourism, and infrastructure, the country is poised for sustained economic growth in 2024. Despite existing challenges, the government’s commitment to economic reforms and regional integration under the African Continental Free Trade Area (AfCFTA) creates a promising and investor-friendly climate, positioning Tanzania as a key destination for trade and investment in the region.
Trade Between Tanzania and Italy
Italy is one of Tanzania’s long-standing trading partners, with bilateral trade exceeding €170 million in 2023. Over the years, trade between the two nations has demonstrated growth and diversification across multiple sectors. Tanzania has a legislative framework that favors international investments, with bilateral agreements in place with key global partners, including Italy. These agreements are designed to promote trade and investment by preventing double taxation, thereby easing the financial burden on non-resident investors.
Exports and Imports
In 2023, Tanzania’s imports from Italy increased significantly, amounting to:
- €25.68 million in food products
- €19.06 million in chemicals
- €11.43 million in pharmaceuticals
- €43.64 million in machinery and equipment
- €8.7 million in computers and electronics
- €5.83 million in metal products
Conversely, Italy imported goods worth approximately €62.94 million from Tanzania. Italy ranked as Tanzania’s 22nd export destination and 13th largest supplier, while Tanzania stood as Italy’s 110th export destination and 112th supplier.
Business Opportunities
Opportunities for Italy in Tanzania
1. Agri-Food – Export of processed food products (e.g., pasta, wine, olive oil) and agricultural technology solutions.
2. Energy and Infrastructure – Collaboration in renewable energy (solar, wind) and infrastructure development.
3. Technology – Export of industrial machinery and advanced technological solutions for agriculture and mining.
4. Tourism – Investment in hotel facilities, tourism partnerships, and service expansion.
Opportunities for Tanzania in Italy
1. Agricultural Exports– Expanding the export of coffee, tea, and fish products to the Italian market.
2. Gems and Minerals – Promotion of Tanzanian tanzanite and other precious gems in Italy.
3. Industrial Collaboration – Attracting Italian investments for local industry development and job creation.
Key Trade Sectors
Italian Exports to Tanzania
Italian exports to Tanzania are dominated by various sectors, including:
- Machinery and Equipment – A significant portion of imports, aiding Tanzania’s industrial growth.
- Chemicals and Pharmaceuticals – Essential for Tanzania’s healthcare and industrial sectors.
Emerging Trade Trends and Opportunities
- Agri-Food Growth – Italy remains a key trading partner for agri-food products, with increasing demand for both fresh and processed exports from Tanzania.
- Energy and Infrastructure – Italian companies have significant opportunities in Tanzania’s renewable energy and infrastructure sectors, aligning with the country’s sustainable development goals.
Investment and Commercial Sectors
1.Agriculture and Agri-Food
Tanzania has enormous agricultural potential, and Italian companies can contribute by:
- Investing in the cultivation and processing of coffee, tea, spices, and fruit.
- Providing agricultural technologies and irrigation solutions.
- Exporting advanced agricultural machinery.
2.Energy and Infrastructure
With a strong need for energy and transport infrastructure, Italian companies can play a crucial role by:
- Engaging in renewable energy projects (solar, wind, hydroelectric).
- Constructing roads, bridges, and ports.
- Supplying advanced construction machinery and equipment.
3. Tourism
Tanzania is one of Africa’s top tourist destinations, attracting investments in:
- Hotel and resort construction and management.
- Cultural tourism and eco-tourism promotions.
4. Mining and Natural Resources
Tanzania is rich in minerals such as gold, tanzanite, and natural gas. Italian companies can participate in:
- Mineral exploration and extraction.
- Supplying technology and equipment for the mining industry.
5. Blue Economy
There is increasing cooperation between Italy and Tanzania in sustainable fisheries and aquaculture, focusing on:
- Strengthening Tanzania’s fishing industry.
- Promoting marine conservation efforts.
Government Incentives and Support Tanzanian Incentives for Investors
- Customs concessions for machinery imports.
- Access to land for investment projects.
- Double taxation exemptions.
Italian Support for Investments in Tanzania
- Development cooperation programs via the Italian Agency for Development Cooperation (AICS).
- Trade missions facilitated by the ICE Agency.
- Training and technical assistance programs.
Challenges for Italian Companies
Despite significant opportunities, Italian companies face several challenges in Tanzania:
-Bureaucracy and Corruption– Complex administrative procedures and corruption can slow investment processes.
-Infrastructure Deficiencies– Underdeveloped rural infrastructure increases operational costs.
- Political and Economic Competition – While Tanzania is stable, regional tensions and the presence of other European and Asian competitors create a challenging market.
- Logistics and Financing Constraints – Unlike China or the UAE, Italy lacks strong logistics and financing support in Tanzania.
Competitive Strategies for Italy
To increase its market share in Tanzania, Italy can adopt competitive strategies in key sectors:
1. Agri-Food
- Promote niche exports (e.g., olive oil, wine, pasta).
- Form joint ventures with Tanzanian firms to improve agricultural production and processing.
- Provide training programs for farmers and businesses.
2.Energy and Infrastructure
- Invest in renewable energy projects with financing support from Italian and European institutions.
- Form public-private partnerships (PPP) for infrastructure development.
3. Tourism
- Develop luxury hotels and resorts to cater to high-end tourism.
- Promote cultural and eco-tourism in partnership with Tanzanian operators.
4. Mining and Natural Resources
- Export Italian mining machinery and technologies to improve efficiency.
- Support local SMEs in sustainable mining practices.
5. Technologies and Innovation
- Provide agricultural technologies to improve production efficiency.
- Promote digital solutions for Tanzanian SMEs, including management software and e-commerce platforms.
6. Pharmaceuticals and Healthcare
- Export affordable generic drugs to Tanzania.
- Provide medical equipment and training to healthcare professionals.
Conclusion
Tanzania remains a promising destination for investment and trade, with significant opportunities in agriculture, mining, energy, tourism, the green economy, and infrastructure. Despite challenges such as bureaucracy and infrastructure constraints, the Tanzanian government’s commitment to economic reforms and regional integration under AfCFTA creates a favorable business environment.
Although Italy plays a smaller role in Tanzanian trade compared to major competitors like China, India, and South Africa, it has the potential to differentiate itself by targeting high-quality niche markets, leveraging advanced technologies, and fostering partnerships with local SMEs.
A major milestone in Italy’s engagement with Tanzania is the inclusion of Tanzania in the Mattei Plan, Italy’s strategic initiative to strengthen economic and energy partnerships with Africa. This plan emphasizes sustainable development, infrastructure, and industrial growth, aligning with Tanzania’s long-term economic goals.
With increased bilateral collaboration and government-backed initiatives, Italian investments in Tanzania are expected to grow significantly, benefiting both nations. By prioritizing sustainability, innovation, and strategic partnerships, Italy can solidify its position in one of East Africa’s most dynamic and promising markets
