Tanzania's economy: Strong growth forecast for 2024

Tanzania's economy is on track for significant growth in 2024, with the government and Central Bank forecasting a 5.5 per cent GDP increase, up from 5 per cent in 2023, solidifying its position as one of the fastest-growing economies in East Africa. In a recent interview with CNBC Africa, Imani Muhingo, Head of Research & Financial Analytics at Alpha Capital, shed light on the key factors propelling Tanzania's economic expansion. The Tanzanian economy is characterized by diversification, with key sectors such as mining, tourism, and agriculture acting as buffers against economic shocks. Muhingo highlighted the resilience of the economy during the global pandemic, citing the mining sector's growth and increased exports of gold and coal. The government's focus on improving the business environment has yielded positive results, especially in the financial sector, which experienced significant growth led by the banking industry. Net profits from banks have surged, and the mining sector has also seen growth due to investment-friendly policies. Additionally, the tourism sector has shown signs of recovery post-pandemic, while technology and information sectors are rapidly expanding. Muhingo emphasized that the government's recent policies aimed at enhancing the business environment and attracting investments are primary drivers of development, set to fuel future GDP growth. When questioned about inflation, Muhingo explained the government's strategies to maintain price stability, including a less accommodative policy by the central bank and investments in agriculture to ensure food sufficiency. The government's efforts to support agriculture through financing, subsidies, and investments in storage capacity have helped alleviate inflationary pressures stemming from food and energy costs. Turning to capital markets, Muhingo discussed Tanzania's progress in the field and outlined challenges such as market liquidity and a lack of new listings. Despite these hurdles, the country has seen advancements in sustainable financing, Islamic financing, and crowdfunding. Domestic investor participation has increased, while initiatives to promote financial awareness have been launched to educate the public. Muhingo suggested that developing venture capital could address liquidity and listing issues in the capital markets. In tackling widening inequality, Muhingo praised measures to improve the business environment, stimulate investment, and boost job creation, especially in sectors like agriculture, education, and health. He highlighted government initiatives such as free education and universal health insurance to enhance inclusive growth and benefit distribution. Looking towards global and regional competition, Muhingo emphasized Tanzania's efforts to attract foreign investments and promote tourism. By improving the business environment, mending bilateral relationships, and focusing on agriculture, Tanzania aims to position itself as a key player in the global economy. The government's proactive approach bodes well for Tanzania's economic prospects in 2024 and beyond.