Key sectors to watch in Tanzania as 2024 unfolds

Dar es Salaam. 2024 will be a year of further changes that are expected to boost economic growth in Tanzania in the face of global headwinds.

Global growth is projected to slow down for the third year in a row—from 2.6 percent last year to 2.4 percent in 2024, almost three-quarters of a percentage point below the average of the 2010s.

However, Tanzania is forecast to increase growth from a projected 5.1 percent in 2023 to 5.5 percent this year and 6.1 percent next year, according to the World Bank’s latest Global Economic Prospects report, which was released last week.

Ranging from policy reforms to the commissioning of a number of strategic projects, the developments are expected to have a positive impact on various economic activities from this year.

Some economists believe that the fast-tracking of the implementation of mega projects will play a key role in driving economic growth, which mostly depends on services and agriculture.

An economics lecturer at the University of Dodoma, Dr Lutengano Mwinuka, said several sectors, including energy, transport and agriculture, would stimulate the economy this year.

He added that the informal sector, which employs millions of Tanzanians, should also be prioritised.

“This sector includes individuals who need to formalise their businesses and connect with financial systems,” Dr Mwinka said.

The financial sector

The financial sector kicked off the year with the Bank of Tanzania (BoT) adopting a new monetary policy.

Starting this month, the central bank announced a shift from the policy targeting money reserves to an interest-based one which regulates the interbank rate.

The new policy, according to BoT governor Emmanuel Tutuba, is expected to maintain price stability and support sustainable economic growth.

The financial sector is also readying for universal health insurance (UHI), whose law was accented to by President Samia Suluhu Hassan last month. The law seeks to ensure that all people have access to health insurance coverage and thus better healthcare.

The Tanzania Insurance Regulatory Authority (Tira) is expected to unveil new regulations on UHI this month.

Insurance commissioner Baghayo Saqware told The Citizen that the proposed regulations had been submitted to the Health ministry, which was ironing out some issues before the guidelines are made public.

“We submitted the regulations to the Ministry of Health in December and are now awaiting their response. We are actively enhancing our internal digital platforms to align with UHI requirements,” he said.

Dr Saqware called for close collaboration among various stakeholders, including insurance companies, development partners and the Health ministry, to educate Tanzanians about the significance of UHI.

The financial sector last year grappled with shortages of US dollars, but the central bank has taken a number of remedial measures and pledged that the situation would be much better this year.

Measures taken include urging exporters to ensure that proceeds from exports are remitted within 90 days after trading to guarantee sufficient amounts of dollars in circulation.

Transportation

The transport sector will see a new dawn when the long-awaited standard gauge railway (SGR) services between Dar es Salaam and Dodoma are launched later in the year.

President Samia Suluhu Hassan has issued a July deadline for the services to commence, saying the people were tired of excuses.

“I direct that services between Dar es Salaam and Dodoma start by the end of July 2024,” she said.

The government is also implementing the second phase of the Dar es Salaam bus rapid transit (BRT) project connecting Gerezani and Mbagala. Services on the route are expected to start later this year.

Plans are also underway to construct a 125-kilometre toll highway linking Kibaha in Coast Region and Morogoro under a public-private partnership (PPP).

Tourism sector

The tourism industry is expected to continue with its steady recovery after being ravaged by the global Covid-19 pandemic.

Tourism receipts jumped by 37.5 percent to $3.3 billion in the year to November 2023, while tourist arrivals rose by 27 percent to 1.797 million, according to the BoT’s monthly economic review for December 2023.

Industry players believe that 2024 will see more growth if the current situation remains unchanged.

Tourism is currently Tanzania’s leading foreign exchange earner, followed by gold, which brought in $3 billion in the year to November 2023, up from $2.8 billion earned the previous year.

Independent analyst Oscar Mkude said more emphasis should be placed on service sectors such as tourism by improving infrastructure to facilitate access to tourist destinations.

Energy

Electricity shortages were prevalent in 2023, mainly due to low water levels at hydropower stations, maintenance of gas-powered plants and increasing demand for power.

However, all eyes are now on the Julius Nyerere Hydropower Station (JNHPS) and the Rusumo hydropower station, both of which are expected to start generating electricity in March.

JNHPS will at first generate 470 megawatts and thus cover the current shortfall, while the Rusumo plant will add 27 megawatts to the national grid.

Reliable power supply will enable manufacturers to slash operating costs.

The energy sector is also waiting for the signing of the final host government agreements (HGAs) on the proposed liquefied natural gas (LNG) plant after negotiations with international energy companies are concluded in February.

The commencement of the $30 billion project in Lindi Region is expected to come as a big boost to the economy, according to experts.

Manufacturing

Several manufacturing projects are expected to start this year. They including a $540 million cement project in Tanga.

Hengya Cement Limited is seeking to build the largest cement factory in East Africa that will create at least 4,000 and 8,000 direct and indirect jobs, respectively.

“We value this project because it will change the lives of Tanga residents and give the construction sector fresh impetus. The investor initially faced two challenges. One was payment of compensation to Kilindi residents and request for the status of strategic investor, which gives additional incentives,” Tanzania Investment Centre (TIC) executive secretary told The Citizen recently.

“However, I want to assure the public that the government is finalising the request for incentives and the project will start in 2024,” he added.

Cement prices remained stubbornly high in the country in 2023 despite surplus production.

Mr Mkude said the importance of the manufacturing sector in increasing exports and ultimately reducing pressure on foreign exchange could not be overemphasised.

He added that manufacturing had the potential to significantly contribute to the creation of jobs for Tanzanians and increase agricultural productivity.

The manufacturing sector could also help in structural transformation by diversifying the economy, which is currently dependent on agriculture.

Mining

Tanzania is implementing Vision 20/30 in the mineral sector by increasing the size of surveyed areas from 16 percent currently to 50 percent come 2030.

Tanzania has 322 quarter degree sheets (QDS), with a QDS being equivalent to 2,916 square kilometres, or 720,252 acres of land.

Data collected from geophysical surveys would ensure that the country benefits more from available natural resources.

Among the priorities in the mining sector for 2024/25 is to conduct research on minerals in the country through the Geological Survey of Tanzania (GST) to attract investors.

Agriculture

Positive results are expected in agriculture, which accounts for about 26 percent of the economy and over 60 percent of employment in Tanzania, following a slew of reforms and an increased budget.

Initiatives such as Building a Better Tomorrow (BBT) have attracted the attention of global agencies, with USAID recently committing to invest $100 million in the next five years to increase youth participation in agriculture.

The sector is also receiving significant financing from commercial banks.

In November 2023, agriculture recorded a 38.9 percent increase in credit followed by transport and communication at 25.3 percent, according to the BoT.

Dr Mwinuka said the agricultural sector, which employs the vast majority of Tanzania, had received significant funding in the current financial year’s budget, adding that there was a need to monitor prioritised projects such as irrigation and assess their impact on farmers.

Startups

The startup ecosystem is awaiting the industry’s policy, which is expected to address the pressing challenges startups face and pave the way for their continued growth and success.

President Samia Suluhu Hassan has promised that the government will continue create an enabling environment to ensure the sustainable growth of startups.

“The government will continue to cooperate with startup institutions and continue to create an enabling environment for their prosperity,” she said in her New Year message.

Tanzanian startups face limited access to funding, unfavourable policies, inadequate infrastructure and a talent gap.

A recent report, Africa: The Big Deal 2023, highlights the stark funding disparity between Tanzania and Kenya.

While Kenya secured a staggering $800 million in 2023, Tanzania managed a modest $25 million, a 69 percent drop from the previous year’s $80.7 million.