Analysts warn of uncertainty as Tanzania heads into 2026

At the same time, Tanzania’s exposure to climate shocks—ranging from prolonged droughts to flooding—continues to endanger key sectors such as agriculture, energy and infrastructure.

These domestic pressures are unfolding against a backdrop of global economic volatility, tightening financial conditions and shifting trade alliances, all of which could constrain growth and strain public finances.

Independent economic analyst Oscar Mkude said the political environment will be a decisive factor shaping Tanzania’s economic fortunes in 2026.

“Good politics and leadership are the basket that carries development. This year, that basket appears worn out, and as a result, development is struggling,” he said, warning that weak political cohesion could erode the confidence required to sustain investment and reform momentum.

Mr Mkude stressed the urgency of internal reconciliation and unity, arguing that political fragmentation has left the country “pulling in different directions” instead of moving forward as a cohesive team.

“When a country is divided politically, reforms become difficult to implement. Even well-designed policies fail to deliver if there is no shared sense of direction,” he said, adding that prolonged political uncertainty could discourage both domestic and foreign investors.

On foreign relations, Mr Mkude cautioned against confrontational diplomacy, noting that Tanzania still depends partly on development assistance and concessional financing.

He estimated that about five per cent of the economy relies on support from institutions such as the World Bank, whose decisions are influenced by broader bilateral relations.

“We cannot play hardball when we are not yet economically consolidated like Russia, China or South Korea,” he said. While Tanzania is richly endowed with natural resources, he added, turning those resources into sustainable wealth requires technical expertise, market intelligence and industrial capacity that remain limited.

He also pointed to structural weaknesses, including a shortage of skilled labour, inadequate technological know-how and limited understanding of global market requirements.

“We must understand what markets want, the level of sophistication needed and how much society is willing to sacrifice today to build the future,” Mr Mkude said.

Fiscal risks, he added, could become more pronounced in 2026, citing weak revenue collection, undisciplined spending and shortcomings in public finance management.

These vulnerabilities, he warned, are particularly concerning in a period where “business is not as usual” and external buffers may be tested.

From a policy perspective, a lecturer at the University of Dodoma (UDOM), Dr Lutengano Mwinuka, said Tanzania has made progress in strategic planning through a five-year national growth plan aligned with Vision 2050. The framework, he said, provides a clear roadmap for long-term development and structural transformation.

However, Dr Mwinuka cautioned that implementation risks remain high, largely due to limited funding and competing priorities.

“Available resources can produce meaningful results if they are used efficiently and transparently,” he said. “But long-term success will depend on sustained cooperation with international partners, especially in sectors such as tourism that are highly sensitive to external perceptions.”

He noted that while the recent national election process began smoothly, uncertainties surrounding later stages could still affect investor sentiment, particularly if political tensions persist into 2026.

Echoing concerns about external relations, Associate Professor Abel Kinyondo, a development economist at the University of Dar es Salaam, said rebuilding trust with development partners should be a priority in the coming year.

“After the previous election, restoring trust has been a struggle,” he said, pointing to difficulties in re-engaging the United States, the European Union’s intention to conduct reviews and the withdrawal of Swedish development programmes.

According to Associate Prof Kinyondo, strained relations could limit access to concessional financing, technical assistance and preferential trade arrangements, thereby increasing pressure on domestic resources.

Climate change, he added, represents another major threat to economic stability. Unreliable and intermittent rainfall continues to pose serious risks to food security, particularly as agriculture remains the largest employer and a key source of livelihoods.

“Export crops such as cashew nuts and pigeon peas, which are vital sources of foreign exchange, are especially vulnerable,” he said.

He warned that since food inflation is the main driver of overall inflation in Tanzania, poor harvests could quickly translate into higher prices, eroding household purchasing power and destabilising the broader economy.

To mitigate these risks, analysts have advised better food storage practices and cautioned farmers against selling all their produce immediately to the National Food Reserve Agency (NFRA), urging households to retain reserves as a buffer against future shocks.

Offering a more upbeat assessment, independent economic analyst Christopher Makombe said Tanzania still has grounds for cautious optimism in 2026.

He projects GDP growth of between 6.2 and 6.4 per cent, supported by continued investment in infrastructure, tourism, manufacturing, mining and foreign direct investment.

He said inflation is expected to remain below five per cent, while the exchange rate is likely to stay relatively stable, helped by stronger foreign reserves and rising gold prices—an important advantage given Tanzania’s position among Africa’s top gold producers.

“Gold has provided an important cushion for the external sector, and higher prices help support reserves and exchange rate stability,” Mr Makombe said.

However, he cautioned that positive outcomes will hinge on political stability, investor confidence, effective climate adaptation and prudent management of external risks.

“Without progress on these fronts, Tanzania’s economic potential may remain unrealised despite strong fundamentals,” he said.

Looking at sectoral dynamics, a senior lecturer in the Department of Finance at the University of Dar es Salaam Business School, Dr Tobias Swai, said 2026 is likely to see stronger growth in investment and industrial activities that are less dependent on agriculture.

“Increased diversification into manufacturing, logistics, energy and services will help stabilise economic performance,” he said, noting that structural diversification is key to reducing vulnerability to climate shocks.

Dr Swai pointed to improvements in urban transport systems, particularly the completion of Bus Rapid Transit (BRT) projects, which he said are expected to enhance mobility, reduce congestion and boost productivity in major cities. “Efficient transport systems lower the cost of doing business and improve access to jobs and markets,” he said.

He also highlighted growing competition in the aviation sector, which he said could reduce travel costs, expand connectivity and stimulate commerce, tourism and regional trade.

Despite these positive trends, Dr Swai warned that the economy remains heavily dependent on agriculture, leaving it exposed to climate variability.

Delayed or erratic rainfall has already disrupted agricultural production and affected the entire supply chain, including the timely availability of fertilisers, seeds and transport services.

“These disruptions can alter market dynamics, reduce output in some sectors and underline the risks associated with overreliance on rain-fed agriculture,” he said.

As Tanzania looks ahead to 2026, analysts agree that the country stands at a crossroads. Strong growth potential, driven by infrastructure development, natural resources and a young population, offers opportunities for progress.

Yet political uncertainty, strained external relations and climate risks threaten to undermine these gains if not carefully managed.

The consensus among economists is that restoring political harmony, rebuilding trust with development partners, strengthening fiscal discipline and accelerating diversification away from climate-sensitive sectors will be critical in determining whether 2026 becomes a year of renewed momentum or one of missed opportunities.

 “While institutional progress is evident, Tanzania’s anti-trafficking response remains at a pivotal juncture,” Mr Mugambila said. “The report underscores the urgent need for renewed policy direction through an updated National Action Plan, stronger legal and institutional frameworks, improved technical implementation and victim-centred services and enhanced inter-agency coordination that places survivor protection, recovery and rights at the core of the response.”

In recent years, the government has strengthened coordination through the Anti-Trafficking Secretariat (ATS), including extending its operational footprint to Zanzibar with the establishment of a new ATS office.

Budgetary allocations to ATS activities have doubled over the past two years, a move that, while still insufficient to match the scale and sophistication of trafficking networks, signals growing political recognition of trafficking in persons as a national priority.

Further institutional reforms have sought to improve coherence across the Union. The creation of two deputy executive secretary positions within ATS—equivalent in rank to permanent secretaries—has established parallel leadership structures for Mainland Tanzania and Zanzibar, aimed at enhancing oversight, coordination and responsiveness across jurisdictions.

However, the report highlights a stark paradox confronting Tanzania’s anti-trafficking efforts: as protection mechanisms improve and institutional capacity expands, more victims are being identified, even as traffickers exploit new digital tools and platforms.

The report also places Tanzania’s experience within broader global debates on trafficking in persons, particularly interpretive challenges surrounding the Palermo Protocol. Certain forms of exploitation, such as child marriage, remain inconsistently classified across jurisdictions.

While some countries, including the United States, exclude child marriage from trafficking definitions, several African states recognise it as a form of trafficking under national law.

Other emerging issues—including digital trafficking, state-sponsored exploitation, climate change-induced migration and trafficking in conflict settings—are acknowledged in the report but remain underexplored, either due to limited local manifestation or gaps in prevailing theory and practice.

Data from Mainland Tanzania illustrate the scale and complexity of current trafficking trends. More than 2,400 trafficking cases were reported during the period under review, reflecting both widespread internal trafficking and significant cross-border movements.

Boys were disproportionately affected by labour-related exploitation, while girls and women were more commonly subjected to domestic servitude and sexual exploitation.

“Labour exploitation and forced criminality dominate domestic trafficking patterns,” Mr Mugambila said. “A pronounced surge in forced criminality cases was recorded in the Morogoro Region, positioning the Eastern Zone—comprising Dar es Salaam, Morogoro and Coast regions—as the national epicentre, with approximately 1,700 reported cases.”

The Lake Zone recorded about 400 cases, largely driven by cross-border movements linked to tobacco plantations and small-scale artisanal mining in the Great Lakes region, drawing victims from neighbouring countries such as Uganda and Burundi.

By trafficking typology, forced criminality accounted for more than 1,000 reported cases, far surpassing other forms and largely concentrated in Morogoro. Labour exploitation followed with approximately 900 cases, including domestic servitude and child labour in extractive sectors. Sexual exploitation accounted for about 370 cases, while other forms of trafficking totalled roughly 210.

The report concludes that without a renewed and comprehensive national action plan, Tanzania risks losing momentum at a time when trafficking dynamics are evolving rapidly, underscoring the need for decisive policy action to sustain and deepen recent gains.