Tanzania is experiencing an unprecedented surge in Foreign Direct Investment (FDI), positioning itself as East Africa’s premier investment hub. With a strong policy and infrastructure reform agenda, Tanzania is not only attracting capital but also creating jobs, transferring technology, and reducing poverty in line with its Vision 2050 of achieving a USD 1 trillion economy.

Key Trends and Performance (2023–Q3 2024/25)

• FDI Growth: FDI increased from USD 1.3–1.6 billion in 2023 to USD 6.56 billion in 2024, representing a more than 400% jump. In Q3 of 2024/25 alone, Tanzania attracted USD 1.36 billion.
• Projects & Jobs: In 2024, 901 projects were registered with a total capital of USD 9.31 billion, creating 212,293 jobs, the highest since 1991. In Q3 2024/25 alone, 24,444 jobs were created.
• GDP Growth: FDI-driven growth led to a GDP increase from 5.3% in 2023 to 5.5% in 2024, with a projection of 8% by 2030.

Main FDI Sectors

1. Manufacturing – Led all sectors with 377 projects valued at USD 3.1 billion in 2023 alone.
2. Transport & Infrastructure – Contributed over USD 1.2 billion.
3. Agriculture – Projected to attract USD 2 billion in agro-processing FDI by 2030.
4. Renewable Energy – With USD 3 billion projected by 2030, including strategic projects like the Julius Nyerere Hydropower Plant.
5. Real Estate – Driven by policy changes allowing 99-year leases, it attracted USD 185.54 million in Q3 2024/25 from UAE investors.

Policy and Institutional Reforms

• TISEZA Act 2025: Merged TIC and EPZA, introduced a USD 50 million threshold for strategic projects, expedited permits, and established a national land bank.
• National Land Policy 2023: Enabled long-term lease access to land for foreign investors.
• Tanzania Electronic Investment Window (TeIW): Reduced investment registration times from 60 to 30 days.
• One Stop Facilitation Centre (PISC): Supports 80% of investors, easing FDI logistics.

Challenges Still to Address

• Infrastructure Gaps: Only 45% of Tanzanians had electricity access in 2023, hindering scalability of SEZs.
• Land Disputes: Affect around 20% of investment projects, especially in rural zones.
• Bureaucratic Inefficiencies: 15% of FDI projects experienced delays due to poor inter-ministerial coordination.
• Foreign Exchange Shortages and regional disparities persist, particularly in Nyasa Zone.

2025–2030 Strategic Goals

• USD 15 billion in annual FDI by 2030.
• 1 million jobs created by 2030.
• USD 5 billion in infrastructure investment: 20,000 km of roads and 10,000 MW energy capacity.
• 50% of FDI projects to be joint ventures.
• 95% of all FDI applications processed digitally via TeIW.
• USD 1 billion directed to underserved regions like Nyasa Zone.

Inclusive and Sustainable Growth

Programs like Vikapu Bomba (training 5,000 women in 2024 and targeting 50,000 by 2030) and SEZs like Kibaha Textile Park (projected 38,400 jobs) emphasize inclusive development. FDI also aligns with SDG 8 (Decent Work) and SDG 13 (Climate Action) by promoting green energy and equitable employment.

Conclusion

Tanzania’s FDI trajectory showcases how robust policy, sectoral strategy, and institutional reform can unlock transformative economic growth. By addressing remaining gaps and promoting equity, Tanzania is on course to become a regional economic powerhouse by 2030.

As Tanzania advances toward its Vision 2050 goals, a robust and inclusive tax system is becoming increasingly central to the country’s development strategy. The Tanzania Investment and Consultant Group Ltd. (TICGL), through its recent report “Tanzania’s Tax System and Economic Development (2025–2030)”, sheds light on how the government’s tax reforms are driving economic growth, while also revealing critical systemic challenges that must be addressed.

Economic Progress Anchored in Tax Reform

Tanzania’s economy has shown resilience and promise, with GDP growth projected at 6.0% in 2025 and 7.0% by 2028. Key growth sectors include:

• Manufacturing: 156 projects registered in 2025 worth $3.7 billion, creating 41,117 jobs.
• Agriculture: Boosted by a ¥22.7 billion Japanese loan, the sector employs 65% of the workforce and contributes 26% of GDP.
• Clean energy: Investment commitments of $40 billion (Mission 300 Summit) raised electricity production from 1,602 MW to 3,077 MW by 2025.

Much of this development has been supported by rising tax revenues. In 2024/25, the Tanzania Revenue Authority (TRA) collected TZS 29.41 trillion, including a record TZS 3.587 trillion in December 2024 alone. This revenue funded critical initiatives such as:

• $650 million Sustainable Rural Water Supply Program
• ICT infrastructure in Dodoma and Kigoma
• Education and health investment, currently at 3.3% and 1.2% of GDP, respectively

Key Issues Hindering Fiscal and Inclusive Growth

Despite these gains, the study outlines ten pressing issues that must be tackled to ensure sustainable development:

1. Narrow Tax Base

Only 7% of Tanzania’s population is registered as taxpayers. With the informal sector employing 72% of the workforce, vast economic activity remains untaxed. This limited base restricts the country’s fiscal space and puts pressure on the formal sector.

2. High VAT Refund Arrears

Businesses faced TZS 1.2 trillion in unpaid VAT refunds in 2024. These delays affect cash flows, particularly for exporters and SMEs, and hinder business expansion.

3. Excessive Compliance Costs

Complex procedures and audit burdens increase operating costs by 10–20% for private enterprises. This discourages SMEs from entering or staying in the formal economy.

4. Business-Discouraging Tax Rates

The 30% corporate income tax and 10% withholding tax on retained earnings introduced in 2025 significantly burden SMEs. For example, SMEs (95% of all businesses) reported a 15% drop in reinvestment capacity due to this withholding tax.

5. Rural-Urban Disparities

Access to financial services is 85% in urban areas but just 55% in rural regions. This gap affects tax registration, compliance, and equitable access to public services.

6. Public Debt Pressure

Public debt stood at 45.5% of GDP in 2022/23. The fiscal deficit reached 2.5% of GDP in 2024/25, with borrowing of TZS 6.62 trillion domestically and TZS 2.99 trillion externally, highlighting the need for increased domestic revenue.

7. Inequitable Tax Benefit Distribution

Only 30% of eligible smallholder farmers accessed the tax exemptions meant for agricultural productivity. This shows a gap between policy design and grassroots impact.

8. Digital Divide

Although digital tax platforms improved compliance by 12% (2023–2024), poor digital literacy and infrastructure outside urban areas limit effectiveness.

9. Climate Vulnerability

Tanzania risks losing up to 0.5% of GDP by 2050 due to climate-related disruptions. While green taxes were proposed (e.g., TZS 500 billion carbon tax), implementation is still nascent.

10. Tensions with Private Sector

The private sector perceives some reforms—such as the 10% withholding tax—as hostile to reinvestment. This could dampen momentum in sectors like manufacturing, where private investment is essential.

The Way Forward

The report outlines several reforms to address these issues:

• Expand the tax base: Lowering the VAT registration threshold to TZS 50 million could increase registered taxpayers by 15%, raising TZS 2 trillion more annually.
• Introduce simplified presumptive taxes: This would formalize 10% of the informal sector, adding TZS 1.5 trillion in new revenue per year.
• Automate VAT refunds: Clearing 80% of refund arrears by 2027 could boost business confidence and increase investment by 5%.
• Invest in digital infrastructure: Increasing rural access to tax platforms could reduce evasion by 15%, generating an additional TZS 3 trillion by 2030.
• Sustain green growth: Implementing green taxes to support $227 million in climate adaptation will ensure resilience and help meet Tanzania’s net-zero targets.

Conclusion

Tanzania’s tax system is a cornerstone of its economic transformation agenda. While the country has made impressive strides in revenue mobilization and sectoral development, major structural and operational issues remain. Addressing these through inclusive, technology-driven, and equity-focused reforms is not only vital for achieving Vision 2050 but also for securing a prosperous and resilient future for all Tanzanians.

Introduction

Tanzania is accelerating its economic transformation by leveraging Public-Private Partnerships (PPPs) as a key strategy for sustainable development. With a total development budget of TZS 54.575 trillion for 2021/22 to 2024/25, the government is focusing on infrastructure, energy, and social service projects. Notably, TZS 33.794 trillion of this budget is sourced domestically, showcasing Tanzania’s commitment to reducing reliance on external funding.

The PPP cost-sharing model, where the private sector contributes 80% while the government covers 20%, plays a pivotal role in financing major projects such as the Standard Gauge Railway (SGR), Julius Nyerere Hydropower Project, and rural electrification initiatives. These projects aim to create 10,000 jobs and add TZS 1 trillion annually to the economy, reinforcing Tanzania’s position as a regional economic hub.

Tanzania’s Development Budget and Key PPP Projects

The table below outlines the development budget allocations across fiscal years:

1. Infrastructure Projects

• Standard Gauge Railway (SGR): Enhancing regional trade and connectivity.
• Kigongo-Busisi Bridge & Road Networks: Reducing transport costs and boosting trade in the Lake Zone.
• Msalato International Airport: Supporting tourism and international business.

2. Energy Sector

• Julius Nyerere Hydropower Project (2,115 MW): A game-changer in energy stability.
• Rural Electrification Program: Targeting universal energy access.

3. Social Services

• Education Investments: Improving school infrastructure and student loans.
• Healthcare & Water Projects: Strengthening public health and clean water access.

4. Economic Development

• Agricultural Modernization: Expansion of irrigation and agribusiness.
• Dodoma City Development: Strengthening government operations and investment climate.

Economic Impact of PPPs

1. Job Creation:
   • PPP projects are projected to create 10,000 jobs, with 8,000 in the private sector and 2,000 in government-related roles.
2. Economic Growth:
   • Infrastructure development is expected to boost Tanzania’s economic output by TZS 1 trillion annually.
   • Trade efficiency could improve by 5%, enhancing Tanzania’s regional competitiveness.
3. Financial Efficiency:
   • Government capital savings of 80%, reducing reliance on state funding.
   • Private sector absorbs 80% of risks, ensuring cost-effective project implementation.
   • The Julius Nyerere Hydropower Project alone could generate TZS 31.725 billion annually, with a 15% efficiency increase expected from private-sector involvement.

Regional PPP Comparisons

Tanzania’s PPP model aligns with successful strategies in other African nations:

Success Factors in PPP Implementation

1. Clear Regulatory Framework:
   • Strengthening PPP laws and procurement processes ensures efficiency and investor confidence.
2. Risk Allocation:
   • Construction risk is managed by the private sector.
   • Political risk is absorbed by the government to maintain stability.
   • Market risk is shared to balance incentives and mitigate uncertainties.
3. Financial Structuring:
   • A 70:30 debt-to-equity ratio is common in PPPs.
   • Government-backed guarantees reduce investor risk.
   • Revenue-sharing mechanisms ensure sustainable returns for both public and private players.

Recommendations for Tanzania’s PPP Strategy

1. Optimize Cost-Sharing Models:
   • Maintain a 70-30 private-public cost-sharing structure to align with successful regional practices.
   • Focus on revenue-generating sectors like toll roads and renewable energy to enhance sustainability.
2. Prioritize Strategic Sectors:
   • Transportation: To boost trade efficiency.
   • Renewable Energy: To ensure sustainable power supply.
   • Technology & Digital Economy: To foster innovation and job creation.
   • Water & Sanitation: To enhance public health.
3. Strengthen Risk Mitigation Mechanisms:
   • Establish a dedicated PPP unit for project monitoring.
   • Standardize contracts and legal frameworks to attract investors.
   • Improve public awareness to gain community support for PPP projects.

Conclusion

Public-Private Partnerships are indispensable in Tanzania’s journey toward achieving Vision 2025. With infrastructure, energy, and social services at the core of PPP investments, Tanzania is reducing government financial burdens, improving public service delivery, and stimulating long-term economic growth.

By expanding PPPs into healthcare, education, and emerging industries, Tanzania can maximize economic resilience, enhance investor confidence, and create sustainable development pathways. With an annual economic output increase of TZS 1 trillion, Tanzania’s PPP-driven model positions the country as a leading economic hub in East Africa.