Economic Growth and Trade | Tanzania | U.S. Agency for International Development

Tanzania has one of Africa’s fastest growing economies with nearly 7 percent annual national GDP growth since 2000. Yet, widespread poverty persists with 49 percent of Tanzania’s population living below the international extreme poverty line of $1.90 per day (World Bank, 2011). Among Tanzania’s predominantly rural population (73 percent), economic growth has been limited. Inclusive, broad-based growth is hindered by low productivity growth in labor-intensive sectors like agriculture, which employs 77 percent of working age adults. The agriculture sector grew just 4 percent per year over the past decade.

Private sector engagement is an essential component of the economic development of Tanzania and the country’s efforts to reach middle-income status by 2025. Businesses in Tanzania are at the forefront of growth through job creation, innovation, generating tax revenue, and fair competition. The Tanzanian private sector’s vast financial resources and expertise in market-based solutions have the potential for tackling systemic societal challenges. Currently employing about 70 percent of the youth in Tanzania, the private sector provides a critical pathway to self-reliance.

In Tanzania, USAID seeks more sustainable and enterprise-driven outcomes from our activities. USAID focuses on accelerating growth in rural-based, job-creating sectors (e.g., agriculture and food production and processing and natural resource-based tourism) while reducing constraints to private sector investment in these areas.

USAID objectives include advancing Tanzania’s socio-economic status toward middle-income status by 2025; sustaining inclusive, broad-based economic growth; supporting private sector investment in energy as well as agriculture and natural resource-based tourism; and increasing the access of women and youth to resources and knowledge that allow them to take advantage of opportunities in these sectors.

Challenges

Efforts have been made to increase collaboration with the private sector, implement market-based solutions for greater sustainability, and mobilize private capital. However, Tanzania still faces several obstacles to improving its business-enabling environment. Regulatory challenges for starting businesses, labor and employment, land tenure, human settlement, limited tax relief for local industries, and lack of transparency among regulatory agencies on how they carry out regulatory functions have a negative impact on the private sector, are an impediment to economic growth, and complicate Tanzania’s journey to self-reliance.

Impact

Training: Trained 200 Business Development Providers (advisors), who provided training and other value-added services to over 4,300 micro, small, and medium enterprises. Additionally, trained over 180 financial institution staff and facilitated agricultural-related credit on behalf of micro, small, and medium enterprises, 63 percent of which are owned by women and 22 percent by youth.
Youth: Increased access to financial services to often-excluded rural youth through the establishment of 73 youth savings and lending groups.
Policy: Established a policy network of 17 partners to move forward key agricultural policy issues relevant to the private sector.
Public-Private Partnership: Supported private sector opportunities in sustainable water management that have resulted in producers adopting climate-smart, water-efficient practices. Established public-private partnerships for water provision, sanitation, and water resource management. Introduced improved commercially viable water and sanitation products and services to local governments.
Land Tenure: Assisted villages and district administrations to map parcels and deliver 50,000 certificates of customary rights of occupancy.
Health: Improved business and financial management practices among accredited drug dispensing outlets. Led to increased access to finance based on improved practices and allowed dispensing outlets to make malaria and family planning commodities more readily available to customers.
Development Credit Authority: Provide partial credit guarantees to reduce risk and generate additional lending to underserved markets and sectors and demonstrate the long-term commercial viability of lending in developing markets.