Tanzania avoided a recession in 2020, but the COVID-19 pandemic has significantly impacted lives and livelihoods across the country.
The emergency of the COVID-19 novel coronavirus plunged the global economy into a recession in 2020, and the pace of recovery remains uncertain among advanced and emerging economies.
Tanzania has fared relatively well compared to its regional peers, but economic growth has slowed significantly.
The real GDP growth rate fell from 5.8% in 2019 to an estimated 2.0% in 2020, and per capita growth turned negative for the first time in over 25 years.
Since President Samia assumed office in March 2021, through speeches and official statements, President Hassan has signalled a desire to spur domestic economic growth and foreign investment.
One month after she took office, Hassan made her first policy speech, during which she publicly vowed to regain investors’ trust.
She pledged to offer “incentives to strategic investors and dismantle hurdles that discourage investors from doing business in the country.”
Addressing business environment challenges and attracting FDIs has been a key priority of the 6th Phase Government under President Samia Suluhu Hassan’s leadership.
So what does the Tanzanian government under President Samia Suluhu do to recover from the Covid-19 crisis?
Boosting private investment and enhancing productivity are separate but complementary objectives.
President Hassan’s government has been consistently deepening capital to further narrow Tanzania’s infrastructure gap and create adequate employment opportunities for its growing workforce.
Improving the quality of governance, expanding the supply of public services, and addressing regulatory constraints on doing business will enable Tanzania to attract the investment it needs. For instance,
For instance, In January 2020, she met with the leaders of the Tanzania Private Sector Foundation (TPSF)–the apex body of the private sector in Tanzania–to discuss various issues related to trade and investment promotion in the country to expand the tax base.
Agriculture continuing to be a cornerstone of the economy has received a tremendous increase in budget allocations, especially the horticulture sector, with anticipation of it positively impacting the trade balance.
The 2020/2021 budget allocated for Agriculture was Tsh. 294 billion, while 2022/2023 is Tsh. 751 billion, which is equivalent to 224% increase.
Overall, the Minister proposed amendments to various laws in 18 areas through the Finance Act 2022/23 that will further improve the business environment.
Increasing the productivity of agriculture through investments in rural infrastructure, production systems, and distribution networks while bolstering the sector’s resilience to natural shocks could facilitate the growth of a labour-intensive manufacturing sector that utilizes excess rural labour and adds value to agricultural commodities.
Removing trade restrictions and improving the regulatory environment for agricultural input markets (e.g. seeds, fertilizers) could support more excellent private investment in agriculture and agro-processing.
Improving governance, greater revenue mobilization, increasing expenditure efficiency, and an enduring commitment to macroeconomic stability.
The government has established a track record of sound macroeconomic management, but further revenue mobilization and public expenditure policy reforms will be required to create adequate space for productive investment without jeopardizing fiscal sustainability.
President Samia’s government is currently catalyzing private investment, including FDI, by narrowing the infrastructure gap, improving the quality of public services, and enhancing the business climate.
However, there are five key areas that President Samia Suluhu should focus on for Tanzania to reach the 2025 country’s development plan. i.e. (i) productive investment; (ii) human capital development; (iii) agricultural transformation; (iv) digital technology; and (v) public sector capacity-building, which includes the capacity to leverage partnerships with the private sector.
These will be essential to generate inclusive and sustainable growth and maintain Tanzania’s status of a middle-income economy it gained in 2020.