Tanzania

Chart 1 is a political map of Tanzania.

With a total land size of 947 303 km², the United Republic of Tanzania is the 13th-largest country in Africa, with the 8th-largest economy in terms of GDP and 5th-largest population. However, it still ranks at only 31st when comparing GDP per capita in PPP. According to the World Bank country income classification, Tanzania is a lower-middle-income country (LMIC) with a Gross National Income (GNI) of US$4 120 in 2024.  

Tanzania is situated in East Africa, bordered by Kenya and Uganda to the north, Rwanda, Burundi and the Democratic Republic of the Congo (DR Congo) to the west, Zambia, Malawi and Mozambique to the south and the Indian Ocean to the east. The country’s coastline stretches over 1 400 km along the Indian Ocean, providing access to important ports such as Dar es Salaam, which acts as the main maritime gateway for the country and several landlocked neighbours. The landscape is diverse, featuring the coastal plain, central plateau, the Great Rift Valley and highland zones. Mount Kilimanjaro, Africa's highest mountain, is in the mountainous and densely forested north-east of Tanzania. Three of Africa's Great Lakes are partly within Tanzania: Lake Victoria, Africa’s largest lake; Lake Tanganyika, the continent's deepest lake; and Lake Malawi.

The coastal region and islands experience a humid, tropical climate, while the interior has a more temperate or arid environment. Rainfall is unevenly distributed, with bimodal patterns in the north and unimodal patterns in the south and west, leading to periodic droughts and localised flooding. Environmental challenges include deforestation, soil erosion and land degradation, particularly in over-cultivated or densely settled areas.

Tanzania’s political system has evolved through several stages since the 1964 union of Tanganyika and Zanzibar. The country operated under an interim constitution until 1977, when a permanent charter was adopted and later amended to include a bill of rights. Zanzibar maintains its own constitution and governing institutions, with autonomy over domestic matters, though tensions over the balance of power between the mainland and the islands have periodically resurfaced.

For decades, politics was shaped by a one-party system dominated by the Chama Cha Mapinduzi (CCM), itself born from the merger of Tanganyika African National Union (TANU) on the mainland and the Afro-Shirazi Party in Zanzibar. This framework enshrined national unity and stability, often equating dissent with disloyalty. Multiparty politics was only introduced in 1992, and although Tanzania has held regular competitive elections since 1995, CCM has never lost power. Its dominance rests not only on access to state resources but also on its ability to absorb internal divisions and project itself as the custodian of unity and order.

The political opening of the early 1990s allowed for the emergence of opposition parties, but they remain weak. The 2025 elections are unfolding in a contested environment. President Samia Suluhu Hassan, in office since 2021, initially signalled a more open political climate, permitting opposition rallies and easing restrictions on the press. However, these moves have been offset by renewed repression, including the disqualification of the main opposition party Chama cha Demokrasia na Maendeleo (CHADEMA), the arrest of its leader Tundu Lissu and restrictions on civic space. Analysts argue this reflects a long-standing consensus model: while Tanzania has avoided ethnic conflict and maintained stability, its political culture continues to prioritise cohesion and discipline over adversarial contestation.

Human rights concerns remain pressing. Reports of arbitrary arrests, violent crackdowns on protests, censorship and the forced eviction of Indigenous Maasai communities illustrate a persistent pattern of repression alongside official narratives of order and unity.

Following the October 2025 general elections, the contrast between institutional continuity and restricted political pluralism has sharpened, underscoring the fragility of Tanzania’s democratic trajectory. The polls, which returned President Samia Suluhu Hassan and the ruling Chama Cha Mapinduzi (CCM) to power with an overwhelming majority (98%), were marred by serious irregularities, an internet shutdown and widespread reports of violence. In the days that followed, nationwide protests erupted across major cities as demonstrators—many of them young Tanzanians—denounced the results and the exclusion of opposition parties from the contest. Security forces responded with force, deploying live ammunition and imposing curfews amid a near-total blackout of communication. Human rights organisations and international media reported numerous deaths and injuries, though the full scale of casualties remains contested. Independent monitors documented arbitrary arrests and alleged instances of unlawful killings.

The African Union’s election observer mission concluded that the polls did not meet democratic standards and that the electoral environment was neither free nor fair. Condemnation from the AU, the UN and international partners has intensified scrutiny of the government’s legitimacy.

These events have reshaped Tanzania’s political landscape. Long regarded as a model of stability, the country now illustrates the limits of controlled pluralism—one that maintains order through coercion rather than legitimacy. The suppression of dissent and erosion of civic freedoms signal a deepening governance crisis and a fraying social contract. As Tanzania enters a new political cycle, the evolving relationship between state and citizen will determine whether stability in the coming years is rooted in consent or sustained by force.

Tanzania’s economy has been on a steady upward trajectory for more than two decades, with GDP growth averaging around 6% annually and total output projected to more than triple by 2043. This performance has underpinned the country’s transition to LMIC in 2020 and reflects relative macroeconomic stability, expanding exports, and investment in infrastructure. Yet these aggregate gains have not translated into commensurate improvements in individual incomes: in 2023, Tanzania ranked 31st among African countries in GDP per capita. The disconnect is driven by rapid population growth, low-productivity agriculture and a large informal economy that limits wages, productivity and fiscal revenues. Extreme poverty remains widespread, while persistent gaps in health, education and nutrition reinforce deprivation, particularly in rural areas.

In 2023, Tanzania ranked 165th out of 191 countries in the UNDP Human Development Report, placing it in the medium human development category. This position reflects slower progress compared to most of its East African neighbours.

Looking ahead, the government’s Third Five-Year Development Plan (FYDP III) and the draft Vision 2050 both acknowledge that sustaining high GDP growth will not be enough. The focus must shift towards structural transformation, job creation and human capital investment if growth is to raise living standards, reduce poverty and capture the demographic dividend.

Chart 2 presents the Current Path of the population structure, from 1990 to 2043.

Tanzania has a young and rapidly expanding population, with a median age of just 18.4 years. At independence in 1963, Tanzania’s population stood at around 11 million. By 2000, it had more than tripled to 34.5 million, and by 2023, it had nearly doubled again to reach 65.5 million. On the Current Path trajectory, the population will reach 110.5 million by 2043.

Although fertility rates are gradually declining, the pace remains slow. In 2023, the fertility rate was 4.6 children per woman, and by 2043, it is expected to fall to 3.3. This remains consistently higher than the average for African lower-middle-income countries, indicating that rapid population growth will continue to shape Tanzania’s development outlook. Various factors contribute to Tanzania’s high fertility and rapid population growth, including its large informal economy (46% of GDP in 2023), low levels of urbanisation (38% in 2023) and education (an average of 7.8 years of schooling among adults over 15) also contribute, as does the relatively early age of marriage—two years below the average of its peer group. These structural characteristics are such that they outweigh the fact that Tanzania has slightly higher access to modern contraceptives (at 40% in 2023) than the average for lower-middle-income Africa (at 37%).

Like many countries in sub-Saharan Africa, the population of Tanzania is predominantly young, with 43% under the age of 15 in 2023, gradually declining to 36% in 2043. About 54% of the Tanzanian population is in the 15-64 working-age group, and this will increase to 60% by 2043. The proportion aged 65 and older was 3% in 2023, slightly increasing to 4% in 2043. This gradual shift means the number of working-age Tanzanians will grow faster than the number of dependants. If the economy can absorb these new workers productively, the country can reap what is known as the demographic dividend: a period when a high ratio of workers (15-64 years) to dependants (0-14 years of age and  65+)  accelerates economic growth. In practice, this tends to occur once the ratio exceeds about 1.7 workers per dependant, but the dividend is never automatic. It requires heavy, sustained investment in quality education, accessible healthcare, decent job creation and women’s full economic participation. In 2023, Tanzania’s ratio of working-age population to dependants was estimated at 1.2:1, meaning there were 1.2 individuals of working age for every one dependant. It is projected to enter this window only after 2050 under the Current Path. Yet the groundwork must be laid now if the potential of its youthful population is to be unlocked.

Tanzania also has a large youth bulge at 48.9% in 2023, defined as the ratio of the population between 15 and 29 years to the total adult population (15+ years of age). A large number of young adults can lead to positive political change in a country through youth activism, but they can also carry the seeds for socio-political instability in the absence of economic opportunities. On the Current Path, Tanzania’s youth bulge will decline to 43.6% by 2043.

Chart 3 presents a population distribution map for 2023.

Tanzania’s population density is shaped by geographic, economic and demographic factors. As of 2023, Tanzania had an overall average population density of approximately 0.75 persons per hectare, while urban areas recorded a significantly higher average density of 28.3 persons per hectare. Tanzania’s population density remains low compared to the average for LMICs in Africa.

The country is divided into a total of 31 administrative regions, with 26 located on the mainland and 5 in the Zanzibar archipelago. The most populous region is Dar es Salaam, with over 5 million residents (about 8% of the national total), which serves as the economic and former administrative capital. Beyond Dar es Salaam, the only regions with populations above three million are Mwanza, Tabora, Morogoro and Dodoma. Dodoma was designated as Tanzania’s new capital in 1974 by President Julius Kambarage Nyerere, with the goal of fostering more centralised governance and balanced national development due to its strategic central location within the country. However, the relocation process was slow and gradual, with significant progress only happening decades later. Between 2012 and 2022, the population of Dodoma Region increased by just over 1 million people. Other major cities include Arusha, Mbeya and Tanga.

Although Dar es Salaam and Dodoma often attract more attention due to their political and economic significance, it is Geita’s rapid regional demographic expansion that stands out most clearly in the 2022 census results. Between 2012 and 2022, Tanzania’s fastest-growing region in absolute population terms was Geita, which added over 1.2 million people, rising from 1.74 million to nearly 3 million residents. Tabora followed closely, expanding by about 1.1 million people, while Dar es Salaam and Dodoma each grew by just over one million. The Geita region’s population growth is driven largely by the gold mining sector, which directly and indirectly employs over 100 000 people. It has also been fuelled by productive agricultural land supporting surplus crop and livestock output. Yet this expansion has outpaced urban management capacity, as Geita Town has spread into surrounding rural villages that lack basic services. Despite its rich resources, the town remains heavily dependent on agriculture, while mining and agro-processing are not fully leveraged to improve local livelihoods or strengthen value chains. The Geita Town Master Plan (2017–2037) outlines a coordinated strategy to harness the region’s mining and agricultural potential by promoting value addition, strengthening local governance, and guiding sustainable urban development.

The least densely populated areas are Iringa (1.2 million), Katavi (1.2 million) and Njombe (0.9 million).

Chart 4 presents the urban and rural population in the Current Path, from 1990 to 2043.

Tanzania’s urban population rose from 22% in 2000 to 38% in 2023 and will reach 51% by 2043. Its urbanisation rate remains below the lower-middle-income Africa average (about 49.2% in 2023).

With around 41 million people still living in rural areas (about 62% of the population), migration to towns and cities is set to remain robust, especially among young people seeking jobs and services. On the Current Path, Tanzania must accommodate more than 30 million additional urban residents by 2043, concentrated in Dar es Salaam and fast-growing secondary cities such as Mwanza, Dodoma, Arusha and Morogoro, alongside extensive peri-urban expansion.

While urbanisation can raise productivity through agglomeration and scale effects, the payoff is not automatic: early, sustained investment in serviced land, affordable housing, public transport, water and sanitation, and policies that expand formal jobs and integrate informal settlements will be essential to realise the benefits.

Tanzania’s updated National Land Policy recognises that rapid urbanisation must be matched with stronger land governance. The 2023 reforms make land registration in planned areas mandatory, aiming to reduce informal transactions, strengthen tenure security and expand the tax base. A new national geospatial system and online geo-portal will integrate maps, surveys and land data, improving planning for urban expansion. The policy also opens space for foreign and diaspora investment in housing, with safeguards to protect citizen interests, and designates land banks to encourage more structured real estate development. In parallel, the reforms tackle weak inheritance rights for women and promote fairer access to land, helping to address gender imbalances that often worsen in urban contexts. By modernising registration systems, streamlining data and clarifying ownership, the policy seeks to guide urban growth more sustainably and inclusively.

Chart 5 presents GDP in market exchange rates (MER) and growth rate in the Current Path, from 1990 to 2043.

Tanzania’s economy is relatively diversified, with the agriculture sector accounting for about 23% of total value addition, industry around 26% and services nearly 51%. Agriculture remains the largest source of employment, with two in three Tanzanians working in the sector.

Over the past two decades, Tanzania has built a track record of macroeconomic stability, even amid serious economic shocks such as the COVID-19 pandemic. Economic growth has been robust, with an annual average growth of around 6% between 2004 and 2023. Tanzania’s GDP tripled, from US$23.7 billion to around US$69.5 billion during the period. Fiscal balances have generally remained under control, inflation has stayed within single digits, and the investment climate has benefited from improvements in the business environment. This stability, combined with abundant natural resources and favourable demographics, has underpinned high levels of investment and rising productive capacity. Exports of gold, agricultural commodities and tourism services have further boosted growth by improving the country’s terms of trade.

Looking ahead, Tanzania’s economy is projected to expand from about US$69.5 billion in 2023 to roughly US$230.6 billion by 2043—an average annual growth rate of 6.1%. Yet the quality of this growth matters as much as the quantity. According to the World Bank, Tanzania’s progress to date has not translated into the depth of structural transformation or poverty reduction needed to meet its development ambitions. Public sector-led growth has delivered stability but is constrained in its capacity to drive broad-based development. To achieve the objectives outlined in Vision 2050, Tanzania will need to transition toward more inclusive, private sector-driven growth that generates productive jobs, especially for its rapidly expanding youthful workforce. This requires moving labour out of subsistence agriculture and informal activities into higher-value sectors, backed by sustained investment in education, health and infrastructure. Ensuring women and girls have equal access to opportunities will be central to unlocking human capital and capturing the demographic dividend. At the same time, building resilience to climate change will be essential to safeguard gains and prevent economic setbacks.

Chart 6 presents the size of the informal economy as per cent of GDP and per cent of total labour (non-agriculture), from 2020 to 2043. The data in our modelling are largely estimates and therefore may differ from other sources.

Informality in poorer countries stems not only from burdensome regulations or weak enforcement but also from broader conditions of underdevelopment. In wealthier economies, advanced technologies and favourable economic environments encourage workers to pursue formal wage employment, largely due to higher earnings. Likewise, managers are more inclined to register and operate within the formal sector, since the greater income opportunities in developed markets outweigh the costs of taxes and regulations. As economies progress, the informal sector generally contracts. According to a World Bank study, roughly 30% of aggregate output growth driven by productivity gains is associated with about a 25% decline in the average size of informal enterprises.

According to the International Labour Organization (ILO), ‘the informal economy refers to all economic activities by workers and economic units that are–in law or practice–not covered or insufficiently covered by formal arrangements’. The ILO definition of employment in the informal economy excludes the agricultural sector.

Despite ongoing policy initiatives, high informality persists in Tanzania. In recent years, the government has revised its National Employment Policy to expand formal jobs, updated the SME Development Policy to help small businesses move from the informal to the formal sector, strengthened the PPP framework to boost private sector-led employment, and introduced tax and registration reforms to lower barriers for businesses. While these measures aim to promote formalisation, their impact has so far been limited. The informal sector dominates Tanzania’s economy, accounting for 46% of GDP in 2023. This was the second-highest share in Africa, surpassed only by Zimbabwe at 54%. This means that a significant portion of Tanzanians are not registered or taxed. On the Current Path, Tanzania’s informal economy as a percentage of GDP will gradually decline to 39% in 2043.

The informal economy as a percentage of total labour stood at 76% in 2023, more than any African LMIC and ranked 4th highest when compared to all LMICs. Tanzania is expected to remain far above peer levels in the coming decades, declining only to 69% by 2043 compared to an African LMIC average of 54%.

Informality in Tanzania endures because of deep structural and institutional barriers. The economy remains dominated by smallholder agriculture and low-capital enterprises such as petty trade, small services, informal construction and home-based processing—activities that require little investment but yield low productivity. Formal job creation has not kept pace with rapid population growth, leaving the informal sector to absorb the roughly new workers who enter the labour market annually, which was estimated to be about 800 000 annually in 2022.

Complex registration and tax systems, weak enforcement capacity and fragmented policies further discourage formalisation. At the same time, low skills, limited access to finance and the cultural acceptance of informal work—especially among youth and women—sustain its appeal. Rapid urbanisation, combined with external shocks such as climate stress and COVID-19, has only reinforced the role of the informal economy as Tanzania’s shock absorber by providing livelihoods where the formal sector cannot, and making it the default rather than the exception in the country’s labour market.

Chart 7 presents GDP per capita in the Current Path, from 1990 to 2043, compared with the average for the Africa income group.

After two decades of sustained economic growth, Tanzania was reclassified by the World Bank from low-income to lower-middle-income status in July 2020. The shift occurred when its GNI per capita reached US$1 080, surpassing the LMICs threshold of US$1 036 at the time, with a GDP per capita (PPP) of US$2 565 in 2019. Despite this milestone, Tanzania’s GDP per capita remains among the lowest of Africa’s LMICs, higher only than that of Lesotho and Zimbabwe, and is likely to stay at the lower end of the group across many development indicators on the Current Path.

However, this has not translated into improved livelihoods. In 2023, Tanzania’s GDP per capita (PPP) was US$2 582, the third lowest amongst its peer grouping of Africa’s LMICs (ahead of Lesotho and Zimbabwe), and ranking 31st in Africa. By 2043, it will reach US$4 306, maintaining a pattern of underperformance relative to both its peer group (US$7 805) and the continental average (US$6 207).

The persistence of low per capita incomes reflects a pattern of growth that has been narrow, uneven and weakly transformative. Tanzania’s draft Vision 2050 acknowledges that, despite two decades of stable growth averaging 5-7% annually, the impact on poverty reduction has been limited. Growth has not been underpinned by sufficient diversification, productivity or export competitiveness. Much of the labour force remains in low-value agriculture or shifts into informal urban trade rather than higher-productivity manufacturing and services. Women, young people and people with disabilities are disproportionately concentrated in these low-paid informal jobs. Rapid population growth further dilutes output per head, while high levels of informality limit productivity, wages and fiscal revenues. Moreover, Tanzania has underutilised opportunities for value addition, regional integration and global value chains, leaving it vulnerable to shocks and reliant on low-productivity sectors.

Looking ahead, Vision 2050 sets an ambitious aspiration: to reach upper-middle-income status by 2050, which would require sustained annual growth of at least 10%. Achieving this will demand a decisive break from past growth patterns by building a more diversified, inclusive and globally competitive economy. The Vision stresses the importance of strengthening human capital, expanding productive employment and creating a predictable and enabling policy and regulatory environment to attract investment. In short, raising GDP per capita will depend not only on sustaining high growth, but on ensuring that growth is structurally transformative, inclusive and resilient.

Chart 8 presents the rate and numbers of extremely poor people in the Current Path from 2020 to 2043.

In 2022, the World Bank updated the poverty lines to 2017 constant dollar values as follows:

• The previous US$1.90 extreme poverty line is now set at US$2.15, also for use with low-income countries.
• US$3.20 for lower-middle-income countries, now US$3.65 in 2017 values.
• US$5.50 for upper-middle-income countries, now US$6.85 in 2017 values.
• US$22.70 for high-income countries. The Bank has not yet announced the new poverty line in 2017 US$ prices for high-income countries.

Starting with monetary poverty, using US$2.15, 40% of Tanzania’s population was considered extremely poor in 2023, equivalent to 26.8 million people. As a percentage of its total population, only Zambia, DR Congo and Lesotho had higher monetary poverty rates among Africa’s LMICs in 2023. On the Current Path, Tanzania’s extreme poverty rate will decline to 12% (or 13.2 million people) in 2043. Tanzania will still have a sizable extreme poverty burden but rank 10th instead of fourth in the portion of extremely poor people among Africa’s lower-middle-income countries.

While the US$2.15 extreme poverty line is used to monitor progress towards achieving Goal 1 of the Sustainable Development Goals (SDGs) towards eliminating extreme poverty by 2030, Tanzania is now categorised as a lower-middle-income country. The World Bank and others consider US$3.65 a more appropriate monetary poverty line than US$2.15 for these countries.

Using the US$3.65 per day poverty line, Tanzania had the second-highest poverty rate among its peer group in 2023, just behind Zambia. At this threshold, around 71% of Tanzanians (or 47.5 million people) were classified as poor. On the Current Path, this share will decline to 37% by 2043. However, due to rapid population growth, that still translates to 41.1 million people living in poverty.

Tanzania’s national basic needs poverty line was set at 49,320 Tanzanian shillings per adult per month in 2018 (about US$21.2, or roughly US$1.35 per person per day in PPP terms). Using this benchmark—which captures the minimum income required to cover both food and essential non-food needs—the poverty headcount declined from 38.6% of the population in 1991 to 26.4% in 2018, representing around 14 million people.

However, monetary poverty only tells part of the story. The global Multidimensional Poverty Index (MPI) measures acute multidimensional poverty by measuring each person’s overlapping deprivations across 10 indicators in three equally weighted dimensions: health, education and standard of living. The MPI complements the international US$2.15-a-day poverty extreme rate by identifying who is multidimensionally poor and also shows the composition of multidimensional poverty. The headcount or incidence of multidimensional poverty is often several percentage points higher than that of monetary poverty. This implies that individuals living above the monetary poverty line may still suffer deprivations in health, education and/or standard of living.

According to the 2024 Global MPI report, 47.2% of the population in Tanzania is multidimensionally poor, about eight percentage points higher than the monetary extreme poverty rate. An additional 23.1% of the population is also classified as vulnerable to multidimensional poverty. Multidimensional poverty is primarily concentrated on children aged 0-17 years, about 60%.

High poverty levels in Tanzania are shaped not only by the structure of growth, but also by the everyday vulnerabilities households face. Limited access to quality education, healthcare, clean water and electricity constrains human capital and locks many families into low-income trajectories. Rural households are particularly disadvantaged, relying heavily on rain-fed agriculture that is highly exposed to climate variability. Rapid population growth adds pressure on land and services. The government has introduced a range of initiatives to address these challenges, including the Productive Social Safety Net programme (PSSN), agricultural transformation strategies, and investments in health and education, yet coverage and impact remain uneven relative to need.

Chart 9 depicts the National Development Plan of Tanzania.

Tanzania has a long history of national development plans, dating back to the country's independence in 1961. The first five-year development plan was launched in 1964, and it was followed by a series of plans, each of which has been informed by the country's changing development priorities.

The early development plans in Tanzania were focused on achieving economic growth and self-reliance. The Arusha Declaration of 1967, a policy statement issued by the ruling party at the time, enshrined the principles of ujamaa (socialism) and self-reliance as the basis for the country's development. The development plans of the 1970s and 1980s focused on implementing these principles through policies such as the collectivisation of agriculture and the promotion of village industries.

In the early 1990s, Tanzania started to move towards a more market-oriented approach to development. The development plans of this period were therefore focused on promoting economic growth through private-sector investment and trade liberalisation. The National Development Vision 2025, launched in 1999, set a long-term goal for Tanzania to become a middle-income country by 2025. Vision 2025 was built around three pillars: ensuring a high quality of life for all Tanzanians, consolidating good governance and the rule of law, and creating a strong and competitive economy capable of withstanding global pressures.

To operationalise Vision 2025, Tanzania adopted successive Five-Year Development Plans (FYDPs). The First FYDP (2011/12–2015/16) emphasised infrastructure development and industrialisation; the Second FYDP (2016/17–2020/21) focused on advancing an industrial economy; and the Third FYDP (2021/22–2025/26), currently in effect, seeks to consolidate lower-middle-income status by accelerating economic transformation, strengthening human capital and promoting competitiveness.

Most recently, Tanzania has drafted the development Vision 2050, which extends the horizon of national planning and builds on the lessons of Vision 2025. It is built around three pillars supported by good governance, peace and stability:

1. a strong, inclusive and competitive economy;
2. human capabilities and social development;
3. and environmental integrity and climate resilience.

Its six goals prioritise:

1. Diversified, resilient, inclusive upper-middle-income economy.
2. Eradicate poverty (with focus on women, youth, persons with disabilities) and balanced regional development.
3. High quality of life: strong social services, human security, cohesion, cultural diversity, and national unity.
4. Human capability maximised: harness women and a growing youth population for national development and global citizenship.
5. Inclusive, transparent, accountable governance ensuring lasting peace, freedoms, and citizen security.
6. Sustainable management of ecosystems and resources, with climate resilience.

Vision 2050 aspires to achieve upper-middle-income status by mid-century, requiring sustained double-digit growth rates. It diagnoses the limits of past growth—highlighting that while GDP expanded by 5-7% annually over two decades, poverty reduction has been modest and structural transformation limited. The Vision therefore emphasises diversification, productivity and global competitiveness, underpinned by human capital development, social inclusion and resilience to climate and external shocks. Together, Vision 2050 and the FYDP III frame Tanzania’s long-term path towards an inclusive and transformative growth model.

Chart 29 presents GDP per capita in purchasing power parity (PPP) in the Current Path and each of the eight sectoral scenarios. The data is from 2020 with a forecast to 2043.

GDP per capita increases in all the scenarios above the Current Path. However, the Governance and the AfCFTA have the most significant positive impact with an increase of US$211 and US$203 per person above the Current Path in 2043, respectively.

Improved governance contributes directly to higher GDP per capita by strengthening state capacity, reducing corruption and ensuring more effective delivery of public goods. In the Governance scenario, reforms enhance the quality of regulation and the professionalism of the public administration, while curbing rent-seeking and leakages. These shifts expand fiscal space and enable more productive investment in infrastructure, health and education. Stronger institutions also reduce business costs, create a more predictable regulatory environment and attract higher levels of private and foreign investment, which in turn stimulate productivity growth. The dividends are not only economic: greater inclusion and accountability underpin political stability, reduce the risk of conflict and provide a more reliable foundation for long-term planning. The scenario’s emphasis on transparency, civic inclusion and institutional legitimacy is particularly relevant in light of the 2025 election crisis, which exposed deep public mistrust and the fragility of state-citizen relations. In this context, governance reform becomes not just a technical fix but a political necessity to restore stability, reduce exclusion and rebuild the social contract.

The AfCFTA indicates a general improvement in productivity and potential income. The findings are in line with many other studies that point out that deepening regional trade through AfCFTA presents a major opportunity for Tanzania to advance its economic prosperity.

The Agriculture scenario has the third most significant impact on GDP per capita, with an additional US$128 above the Current Path by 2043. Higher yields from modern farming techniques and better inputs raise overall productivity, boosting farm incomes and reducing rural poverty. Expanded irrigation, improved water management and ecosystem restoration strengthen climate resilience, lowering the vulnerability of smallholder farmers to droughts, pests and other shocks. Investments in storage, supply chains and rural roads reduce post-harvest losses and connect farmers more effectively to markets, enabling greater commercialisation and diversification beyond subsistence farming. At the same time, improved food access and nutrition enhance human capital and labour productivity. Stronger exports of cash crops such as cashew, coffee and cotton generate foreign exchange and government revenues, reinforcing fiscal capacity for investment in public goods. Together, these dynamics reduce food insecurity, raise rural incomes and stimulate demand across the economy, driving higher long-term growth.

The Manufacturing and Financial Flows scenarios have a comparatively modest impact on Tanzania’s GDP per capita by 2043. In the Manufacturing scenario, GDP per capita rises only modestly (US$71) above the Current Path, reflecting the low base and that structural constraints take time to ease. In Tanzania, the manufacturing sector remains dominated by low- to medium-skill activities—notably agro-processing and textiles—where productivity gains are slow and firms are yet to move into higher-value, technology-intensive production. Upgrading requires sustained investment in infrastructure, energy, finance and skills, all of which progress gradually over the forecast period. The continued presence of a large informal sector also limits the broader economic spillovers from industrialisation. Even so, the scenario represents an important step towards a more diversified and resilient economy. As productivity rises and industrial capabilities deepen, manufacturing could become a key driver of inclusive growth beyond 2043, creating better jobs and accelerating structural transformation.

The Financial Flows scenario delivers only a modest gain in GDP per capita for Tanzania (US$53). Foreign direct investment continues to flow mainly into extractive industries such as mining and gas, which are capital-intensive and generate limited employment or supply-chain spillovers. Aid remains important, particularly for fiscal space in health and infrastructure, but its share of GDP declines as the economy grows.  Remittances provide household resilience but are modest compared to regional peers and do little to drive structural transformation. Meanwhile, illicit financial outflows continue to erode scarce resources, underscoring the importance of stronger governance and financial oversight.

So far, the analysis has focused on the individual sectoral scenarios. These sectors are, however, not isolated; they are strongly interlinked. The Combined scenario envisions an integrated implementation of sectoral reforms. If this scenario were realised, Tanzania could expect a significant improvement in its human and economic development prospects. By 2043, GDP per capita (PPP) will be US$1 059 higher than in the Current Path in 2043, indicating that an integrated push across all the development sectors could significantly improve the living standard of the people of Tanzania.

Chart 30 presents poverty in the Current Path and for each scenario, from 2020 to 2043. The user can select the number of extremely poor people or the percentage of the population.

Poverty reduction remains one of Tanzania’s most urgent policy challenges. Despite two decades of robust economic growth, high population expansion, low productivity and uneven access to opportunity have kept millions trapped in deprivation. While all interventions reduce poverty relative to the baseline, the extent and inclusiveness of these gains vary, highlighting how institutional quality, human capital and structural transformation interact to shape development outcomes.

The Governance scenario delivers the strongest impact on poverty reduction, underscoring how institutional quality remains central to both growth and inclusion—an insight made even more urgent in light of Tanzania’s recent political upheavals. Institutional reforms strengthen both the efficiency and equity of resource use. Stronger tax systems expand fiscal space, while reduced leakages and corruption ensure that public funds reach the sectors and communities most in need. These improvements translate into better access to education, healthcare and infrastructure for low-income households. At the same time, governance reform lowers the transaction costs of doing business, broadens financial inclusion and enhances social protection systems.

In Tanzania’s context, where a large informal economy and weak service delivery constrain the benefits of growth, effective institutions act as a powerful multiplier. They accelerate economic expansion while ensuring that its dividends reach a wider share of society, improving the quality of essential public services and enabling more inclusive participation in the economy.

Education (the second most significant scenario) has a strong and multidimensional influence on poverty reduction in Tanzania. Enhancing skills, employability and productivity raises household incomes and resilience while lowering fertility and dependency ratios—mechanisms that have immediate welfare effects. Over time, education supports structural transformation by expanding the skilled labour force, improving institutional performance and broadening the tax base. Tanzania has made major strides in expanding access to primary education, but secondary enrolment remains low and tertiary access is minimal. This sharp drop-off limits the long-term developmental impact of education. Yet, expanding access without quality delivers limited results. Overcrowded classrooms, undertrained teachers and weak learning outcomes have constrained the poverty-reducing potential of past enrolment gains. Addressing quality alongside access is therefore critical.

The AfCFTA and the Large Infrastructure and Leapfrogging scenarios had the third-highest impact on reducing poverty. Regional integration expands markets for Tanzanian producers, encouraging a shift of labour from low-productivity subsistence farming into higher-wage sectors, such as agro-processing and manufacturing. This transition raises household incomes directly through job creation, while lower tariffs also cut the cost of imported consumer goods, making essentials more affordable. For Tanzania, with its heavy reliance on agriculture and persistent food insecurity, the combined effect of higher earnings and lower living costs is particularly powerful for poverty reduction. The Large Infrastructure and Leapfrogging scenario reduces poverty by easing structural constraints on productivity and inclusion. Expanding electricity access, broadband connectivity and transport networks lowers transaction costs, boosts enterprise activity and improves access to jobs and markets. Rural households gain from better energy and mobility, while digital access opens new income opportunities and financial inclusion. Together, these advances enhance livelihoods, stimulate local economies and reduce spatial inequality, accelerating the transition toward more inclusive growth.

Chart 31 presents GDP in the Current Path and in the Combined scenario from 2020 to 2043. The data is in US$ 2017 and at market exchange rates (MER).

The Combined scenario combines all eight sectoral scenarios: Governance, Demographics and Health, Education, Large Infrastructure and Leapfrogging, Agriculture, Manufacturing, AfCFTA and Financial Flows.

If fully implemented, this integrated reform pathway would substantially enhance Tanzania’s growth prospects. Between 2023 and 2043, the economy will grow at an average rate of 7.6%, compared to 6.1% on the Current Path. By 2043, Tanzania’s GDP at market exchange rates (MER) will reach US$305.2 billion—around US$75 billion larger than in the Current Path. Under this scenario, Tanzania will advance from being the 11th-largest economy in Africa to the 6th, behind only Nigeria, Egypt, South Africa, Ethiopia and Algeria.

However, while this trajectory marks a strong improvement, it remains below the double-digit growth rate envisaged in Tanzania’s Vision 2050. The Vision targets sustained annual growth of at least 10% to achieve upper-middle-income status by mid-century. The gap highlights both the ambition and the scale of the challenge: even under a best-case reform scenario, Tanzania will need to deepen productivity gains, diversify its economic base and accelerate value addition to fully realise its long-term transformation goals.

Chart 32 presents GDP per capita in purchasing power parity (PPP) in the Current Path and the Combined scenario. The data is from 2020 with a forecast to 2043.

In the Current Path, Tanzania’s GDP per capita (PPP) will rise from approximately US$2 582 in 2023 to US$4 306 by 2043. While this represents steady progress, it reflects incremental rather than transformative growth.

By contrast, the Combined scenario delivers a more ambitious outcome. GDP per capita (PPP) increases to US$5 365 by 2043, US$1 059 higher than in the Current Path, driven by compounding gains in productivity, institutional efficiency, human capital and deeper integration into regional and global markets. Crucially, this trajectory reflects not only faster income growth but a qualitative shift in Tanzania’s development model. Higher per capita income under the Combined scenario is associated with stronger job creation, accelerated poverty reduction, and a narrowing of inequality gaps as growth becomes more inclusive.

On the Current Path, Tanzania will rank 34th in Africa by 2043 in terms of GDP per capita (PPP). Under the Combined scenario, its position will improve markedly to 24th, reflecting the cumulative effect of simultaneous reforms across multiple sectors that together raise productivity and convergence with Africa’s more advanced economies.

In line with Vision 2050 and the African Union’s Agenda 2063, the Combined scenario underscores that sustained and coordinated reforms can unlock shared prosperity and long-term structural transformation. Yet, achieving the Vision’s ambition of upper-middle-income status will require not only continued expansion but a shift in the drivers of growth—toward innovation, skills and productivity-led development. Continued investment in education, technology and institutional reform will be essential to ensure that higher GDP per capita translates into enduring gains in wellbeing.

Chart 33 presents the value added by sector in the Current Path and in the Combined scenario, for 2023 and 2043. The data is in US$ 2017 and as a percentage of GDP.

In 2023, Tanzania’s service sector accounted for just over half of the country’s GDP (US$35.3 billion), followed by the agriculture sector, which accounted for 23% (US$16 billion). Manufacturing contributed 12% to GDP (US$8.4 billion). The energy sector was small, contributing 3.8% to GDP in 2023 (US$2.7 billion), translating, among other issues, into low levels of electricity access and inhibiting growth in the manufacturing sector. The ICT sector contributed 3.8% (US$2.7 billion).

Compared to the Current Path in 2043, the Combined scenario would see the following changes in the structure of Tanzania’s economy:

• the manufactures sector will contribute 17.1% of GDP, 1.9 percentage points higher than the Current Path projection, equivalent to an increase of US$17 billion.
• the ICTech sector will contribute 5.7% of GDP, 0.6 percentage points higher than the Current Path, equivalent to an increase of US$5.5 billion.
• the energy sector will contribute 1.6% of GDP, -0.1 percentage points smaller than the Current Path projection but equivalent to an increase of US$1.1 billion.
• the materials will contribute 8.1% of GDP, -0.5 percentage points smaller and equivalent to an increase of US$5 billion.
• agriculture will contribute 8.5% of GDP, be -0.5 percentage points smaller, equivalent to an increase of US$5.3 billion.
• The services sector will contribute 58.9% of GDP, will be -1.5 percentage points smaller, with an increase of US$40.5billion.

The evolution of Tanzania’s economy roughly mirrors that of its lower-middle-income peer group, with the service sector representing both the current and future lion’s share of contribution to GDP. With its sizeable informal services sector, low-productivity agricultural sector and relatively small manufacturing sector, Tanzania should invest in improvements in agriculture and grow its ICT sector to improve productivity and enhance livelihoods in other sectors, particularly manufacturing.

Chart 34 presents the size of the informal sector in the Current Path and in the Combined scenario, from 2020 to 2043.

Tanzania’s informal sector plays a dual role in the economy. It serves as a vital safety net for livelihoods, absorbing much of the workforce excluded from formal employment, but it also constrains productivity, structural transformation and domestic revenue mobilisation.

In 2023, the informal sector accounted for approximately 45.5% of GDP—the second-highest share in Africa after Zimbabwe, and well above the LMIC Africa average of 30.5%. On the Current Path, this share will decline modestly to 38.7% by 2043, while under the Combined scenario, it will fall further to 35.3%, reducing Tanzania’s ranking to the fifth-highest informal sector in Africa.

Informal employment likewise dominates the labour market. In 2023, 75.9% of Tanzania’s labour force, or 11.7 million people (excluding agriculture), worked informally. On the Current Path, this share will decline to 68.5% by 2043, and to 56.6% under the Combined scenario.

While informal work provides essential income opportunities, it is typically characterised by low productivity, limited access to finance and social protection and high vulnerability to economic shocks. Because most informal enterprises operate outside the tax system, informality constrains fiscal capacity and perpetuates underinvestment in public services. A smaller informal sector would deliver tangible benefits: broader tax revenues, stronger social protection, higher productivity and a more resilient labour market. The challenge is to ensure that formalisation is not merely administrative, but translates into better jobs, stronger firms and more inclusive growth.

The decline in informality under the Combined scenario reflects the compounded impact of reforms across multiple sectors. Productivity gains in manufacturing and agro-processing, better governance and regulatory efficiency, stronger regional integration through AfCFTA, and sustained investment in education and skills development all work together to expand formal employment and enterprise capacity. These dynamics reinforce each other: improved governance and access to finance lower the costs of doing business, while education and digital connectivity enhance employability and innovation. The result is a gradual but sustained shift from survivalist informal activity toward more productive, formalised participation in Tanzania’s growing economy.

Chart 35 presents poverty in the Current Path and the Combined scenario, 2020 to 2043.

In the Combined scenario, Tanzania will achieve a far greater reduction in poverty than on the Current Path. Using the LMIC poverty line of US$3.65 per day (2017 PPP), the poverty rate will decline from 71% in 2023 to 26% by 2043. This represents a 12.6 percentage-point improvement compared to the 2043 Current Path projection of 37%, translating to roughly 15 million fewer Tanzanians living in poverty.

When applying the international extreme poverty line of US$2.15 per day (2017 PPP), the Combined scenario will reduce extreme poverty from 12% on the Current Path to 6% by 2043—equivalent to around 7.2 million fewer Tanzanians living in extreme poverty.

These gains reflect the cumulative impact of coordinated reforms across all eight sectors, each reinforcing the others to boost productivity, employment and household incomes. Governance reforms improve the efficiency of public spending and service delivery, while investments in education and health strengthen human capital and resilience. Expansion of infrastructure and regional trade integration through AfCFTA stimulate industrialisation, job creation and income diversification, especially outside agriculture. Together, these dynamics accelerate structural transformation, narrow rural-urban income gaps and strengthen the link between growth and poverty reduction.

Crucially, the Combined scenario shows that poverty reduction is not only possible through faster growth, but through better quality growth that is inclusive, employment-intensive and supported by capable institutions. This pathway aligns with Tanzania’s Vision 2050 goal of eradicating extreme poverty and achieving an equitable, high-quality standard of life for all citizens.

Chart 36 compares life expectancy in the Current Path with the Combined scenario from 2020 to 2043.

In 2023, the life expectancy at birth for the average Tanzanian was 68 years, with women having almost four years higher life expectancy than men. On the Current Path, average life expectancy in Tanzania will increase to 73 years in 2043, with female life expectancy 4.2 years above that of men.

Under the Combined scenario, life expectancy in Tanzania will increase by 2 years, from 73 to 75 years in 2043. Female life expectancy will continue to be 4 years longer than men’s in 2043.

These improvements are driven by coordinated interventions across health, education, infrastructure and governance. In the health sector, reforms expand access to quality care, strengthen disease prevention and surveillance, and improve the availability of essential medicines and services. Investments in education, particularly in girls’ education and public health awareness, promote healthier behaviours and long-term wellbeing. Broader access to clean water, sanitation, nutrition and electricity, especially in rural areas, further reduces health risks and enhances living standards. Governance reforms increase the efficiency and accountability of public spending, while poverty reduction and social protection programmes extend access to healthcare for vulnerable groups.

Rising life expectancy is more than a measure of improved health; it is a cornerstone of Tanzania’s long-term development. A healthier and more productive population contributes to stronger human capital, higher labour force participation and intergenerational progress. These trends align with the objectives of Vision 2050, which emphasises a resilient, inclusive and productive population as the foundation for sustainable growth and national transformation.

Chart 37 compares carbon emissions in the Current Path with the Combined scenario from 2020 to 2043. Note that the data is in million tons of carbon, not CO2 equivalent.

Tanzania’s Vision 2050 frames economic transformation and industrialisation within a green growth agenda, emphasising low-carbon development, climate resilience and sustainable resource use. As the country continues to urbanise and expand energy-intensive sectors, managing its emissions profile will be essential for balancing growth with environmental sustainability, both for domestic environmental goals and regional climate commitments under the Paris Agreement and SADC Green Economy Strategy.

In the Current Path, Tanzania’s total carbon emissions from fossil fuels will increase substantially, reaching approximately 26.6 million tons by 2043, up from an estimated 5.9 million tons in 2023. In the Combined scenario, due to fast economic growth and increased energy demand, carbon emissions from fossil fuels will increase to 29.5 million tons by 2043.

To remain on a sustainable development path, Tanzania will need to align its rising energy demands with climate-smart policies and technologies. Priorities include improving emissions monitoring, investing in low-emission transport systems like mass rapid transit and the electric Standard Gauge Railway, and scaling up renewable energy deployment. Establishing a National Climate Change Financing Mechanism and a consolidated Climate Change Fund will be vital to mobilise public and private investment. Further reforms to institutional governance, including stronger accountability, transparency and localisation of Nationally Determined Contributions (NDC) actions, can accelerate the transition toward a resilient, low-carbon economy.

Chart 38 compares energy demand and production in the Current Path with the Combined scenario from 2020 to 2043.

Production is done in nine types, namely oil, gas, coal, hydro, nuclear, solar, wind, geothermal and other renewables. The data is converted into billion barrels of oil equivalent (BBOE) to allow for comparisons. Note that energy production could be for domestic use or for export.

In 2023, Tanzania’s total energy production was approximately 63 million barrels of oil equivalent (MBOE), compared to a total energy demand of 95 MBOE, leaving a production deficit of 32 MBOE. On the Current Path, energy production remains below demand. By 2043, production is projected to reach 115 MBOE, while demand is expected to rise to 339 MBOE.

Tanzania’s electricity mix is currently dominated by hydro and natural gas, with smaller contributions from oil, biomass cogeneration and emerging solar power. As of December 2024, the country’s total installed generation capacity stood at 3 404 MW, comprising 2 011 MW (59%) from hydro, a share that continues to rise with the phased commissioning of the Julius Nyerere Hydropower Plant, and 1 199 MW (35%) from natural gas, which remains central to Tanzania’s energy security and base-load supply. The remainder of capacity comes from heavy fuel oil and diesel plants (3%), biomass and cogeneration (2.6%) and a small but growing solar PV segment (0.1%), which is expected to expand significantly over the coming decade.

Renewables already account for 61.8% of installed capacity, and the government aims to raise this to 75% by 2030, supported by a pipeline of 880 MW of new large hydro, 463 MW of solar, 500 MW of wind and 130 MW of geothermal generation. The medium-term expansion strategy envisions an additional 2 463 MW from solar, wind, natural gas and geothermal by 2030, reinforcing efforts to diversify the mix and strengthen resilience to climate and supply shocks. Tanzania is also advancing regional power interconnections with Kenya, Rwanda and Burundi already operational, and new links to Zambia and Uganda under development—to enhance system reliability, enable energy trade and optimise dispatch across the regional grid.

Under the Combined scenario, both production and demand will grow more rapidly, reaching 136 MBOE and 351 MBOE in 2043, respectively.

Chart 39 summarises the policy recommendations for Tanzania.

The preceding analysis of Tanzania's developmental trajectory identifies several key challenges and opportunities that will shape its future economic landscape and societal well-being.

Tanzania has recorded impressive GDP growth over the past two decades, yet this has not translated into comparable gains in GDP per capita or poverty reduction, reflecting deep, interlinked structural constraints that limit productivity and inclusion. The most binding is extreme informality, accounting for 46% of GDP and 76% of employment, the second highest in Africa, which narrows the tax base and traps most workers in low-value activities. Structural transformation remains slow, with limited industrial expansion, declining trade openness and most employment concentrated in low-productivity or informal sectors. Education outcomes beyond the primary level remain weak, with low transition and completion rates in secondary and tertiary levels, while vocational training has not yet developed its full potential to provide job-ready skills and meet labour-market needs. Inadequate electricity access, along with transport and digital infrastructure gaps, further constrain competitiveness and industrialisation. Agriculture is still dominated by smallholder, rain-fed production, while rural–urban divides in income, opportunity and service access persist. Rapid population growth keeps dependency ratios high and strains social services.

Our analysis of eight sectoral scenarios demonstrates the transformative potential of targeted policy interventions to accelerate Tanzania’s development beyond the current baseline.

Among the individual scenarios, the AfCFTA delivers the largest improvement in GDP per capita and the second-largest reduction in poverty, reflecting the powerful growth effects of deeper regional integration.

The Governance scenario produces the greatest decline in poverty and the second-highest gain in GDP per capita, underscoring the central role of institutional quality and effective public management in driving inclusive growth.

The Agriculture scenario ranks third in GDP per capita gains, reflecting its potential to reduce food insecurity, raise rural incomes and generate wider economic linkages that drive long-term growth.

The Education scenario achieves the third-largest reduction in poverty, illustrating the long-term impact of human capital investment.

The Combined scenario highlights the synergistic impact of simultaneous investment across multiple sectors, showing that coordinated reforms can yield far greater outcomes than isolated efforts.

Under this integrated pathway, Tanzania’s GDP rises by US$80.4 billion above the Current Path by 2043, elevating the country from the 11th to the 6th-largest economy in Africa.

Poverty declines sharply, from 71% in 2023 to 24% in 2043, equivalent to 15 million fewer Tanzanians living in poverty (using the LMIC poverty line of US$3.65 per day).

To unlock the full potential of the Combined scenario, Tanzania should prioritise several key activities. The government should deepen regional integration by fully implementing AfCFTA commitments, improving trade logistics and enhancing export competitiveness. Streamlining border procedures and harmonising standards will strengthen Tanzania’s position as a regional trade hub.

Governance and public management should be strengthened by improving fiscal capacity, transparency and accountability. Enhancing local government efficiency and citizen participation will improve service delivery and trust in public institutions.

There is a need to lower barriers to formality by simplifying business registration, rationalising taxes and extending social protection and credit access to small enterprises. Formalisation will broaden the fiscal base, boost productivity and enhance job quality.

The country should invest in human capital by improving lower- and upper-secondary completion rates, expanding vocational and STEM education and aligning skills with market demand. Stronger education–industry linkages are essential to sustain long-term growth and innovation.

Tanzania can drive structural economic transformation by revitalising the manufacturing sector through targeted industrial policy, infrastructure investment and SME support. Expand agro-processing, mineral beneficiation and digital services to shift the economy toward value-added production and reduce overreliance on gold exports and low-value commodities.

Agriculture should be modernised to raise productivity and resilience through investment in irrigation, local seed and fertiliser production and post-harvest infrastructure. Integrating smallholders into value chains and expanding agro-processing will increase rural incomes and food security.

Tanzania’s industrialisation can be accelerated by expanding access to affordable finance, energy and serviced industrial zones. Promoting linkages between manufacturing, agriculture and mining can enhance local value addition and employment creation.

Infrastructure and digital transformation should be enhanced to drive productivity and inclusion, prioritising rural electrification, transport corridors, broadband expansion and ICT-enabled enterprise growth. Closing infrastructure gaps will unlock domestic markets and regional connectivity.

Energy security needs to be ensured by diversifying supply through renewables, natural gas and regional interconnections. Expanding off-grid systems will accelerate rural electrification and support inclusive industrialisation.

The country should enhance climate resilience by mainstreaming adaptation into planning, investing in sustainable land use and low-carbon infrastructure, and localising implementation of the Nationally Determined Contributions (NDCs). Scaling up nature-based solutions will protect livelihoods and critical ecosystems.

The demographic transition can be supported through investments in healthcare, girls’ education and voluntary family planning. Harnessing the demographic dividend will require parallel job creation and expanded social protection to absorb the growing labour force.