This country profile was published in November 2008 in our annual 'Africa in 2009' issue. The next edition, 'Africa in 2010' will be on sale 23 November 2009.

Click on the drop-down menu above to see Tanzania's Top Companies and Top Banks.

By 2009, after three years in power, President Jakaya Kikwete will want to ensure his continuation in office in elections scheduled for October 2010. Kikwete’s popularity is not as high as it was a year ago but he is widely expected to win a second and last five-year term. There could be a stronger opposition camp than ever in the wake of an impending bill authorising several parties to merge or field a single candidate, although this may be easier said than done. One of the larger opposition parties, Chama cha Demokrasia na Maendeleo (Chadema), has not yet found common cause with its rivals, the Tanzania Labour Party, the National Convention for Constitution and Reform or Zanzibar’s Civic United Front (CUF). Some opposition politicians have nevertheless attracted notice, including Chadema’s Wilbroad Slaa and Zitto Kabwe, and the CUF’s Hamad Rashid Mohammed.


The president’s moves against high-level graft in government and the ruling Chama cha Mapinduzi (CCM) have earned him rivals among old allies like former-prime minister Edward Lowassa and businessman Rostam Aziz. Lowassa claims innocence in the corruption case that forced him to resign and he is now thought to be nursing presidential ambitions. 


Another corruption scandal at the Bank of Tanzania, which saw Tsh113bn ($117m) siphoned off by 22 local companies, rumbles on. Three-quarters of the money was handed back before a deadline set for 31 October. Prosecutors say they are preparing charges against those businessmen who did not return their pot, but the most prominent accused are expected to evade prosecution. 


The CCM will want to maintain the tradition of allowing the sitting president to serve a second term, but powerful cliques are fighting Kikwete’s determination to reinstate a leadership code of conduct that will forbid businesspeople from holding office and running their private companies concurrently. If this pressure were to threaten his hold on power, the president could yet go after more high-profile politicians and bureaucrats accused of corruption.


Another area of pressure on Kikwete comes from Zanzibar’s main opposition party, the CUF, which hopes to force Zanzibar’s President Amani Abeid Karume and conservative ruling party members into a power-sharing government before the 2010 elections. Karume reneged on an earlier deal to do so but now says a coalition could follow the next elections, after he steps down.


The economy clearly has the potential to keep doing well. In 2007/08, real GDP growth was 7.3%, fuelled by manufacturing, construction and services. Exports grew in value by 30%. The forecast for 2008/09 is 7.7% growth, based mainly on ongoing construction activity and strong export performance.


The country was hurt by a rise in inflation to 11.6% in September, although the Bank of Tanzania governor Benno Ndulu promised action to bring down the rate below 7% in 2009, perhaps hoping to be helped by lower oil prices. The IMF warned the government’s high revenue targets would be difficult to meet and that any shortfall should be matched by expenditure restraint and avoidance of unwarranted recourse to domestic borrowing. New finance minister Mustafa Mkulo has a tough task ahead in increasing tax collection rates.


The IMF also urged the development of the financial sector and increased public investment in infrastructure. In a reference to the Bank of Tanzania corruption scandal, the Fund urged strengthening of its internal controls. Dependency on donors in the 2008/09 budget was reduced to 34% from 40% the previous year. Seemingly convinced by Kikwete’s moves to combat corruption, the World Bank, USAID and AfDB approved new loans. 


Manufacturing, which accounts for less than 10% of GDP, will be important for the government’s ambitious ‘Vision 2025’. “We need to boost the industrial sector if we are to become a middle income country by 2025 and such can only be achieved through improved infrastructure, availability of long term development financing loans and reliable energy,” said Hussein Kamote, director of policy and research at the Confederation of Tanzania Industry. One source of finance could be the state-owned Tanzania Investment Bank (TIB), which has received a recent capital injection.
Tourism and mining are two leading foreign currency earners.

Tourism earned $1bn in 2007 and the government hopes there could be close to 1m foreign arrivals in 2008 against fewer than 800,000 the previous year, thanks to a boost from the American travel industry, which declared Serengeti National Park’s wildebeest migration as one of the seven wonders of the world.


There is a government target to increase mining’s contribution to GDP from the current 3% to 10% by 2010. The mining sector is under review as government seeks to claim more revenue from a sector dominated by multinational corporations. A presidential review committee proposed sweeping changes in ownership, taxes and royalties paid by giant mining companies which have been earning windfall profits because of world market prices for gold. 


Companies such as Barrick Gold Corporation have already agreed to pay $7m annually to the government as tax advances, following years of non-payment of taxes as a result of faulty laws. Finance minister Mkulo says that this year, Tanzania is going to introduce a 0.3% alternative tax for mining companies which post losses in three consecutive years. Other mining prospects include uranium, with companies like Australian Uranex hoping to begin production by 2010. 


The 2008/09 budget drew criticism from the public for allocating agriculture only 6.4% of the budget, behind education, health, infrastructure and water. Salum Shamte, chairman of the Agriculture Council of Tanzania (ACT), said that more funding is needed for extension services, rural infrastructure development and easy access to loans by rural farmers which could be achieved by establishing an agricultural and rural development bank. The ACT did, however, have kind words for Kikwete’s decision to hand some Tsh69.3bn recovered from the Bank of Tanzania scandal to finance agriculture and manufacturing sectors. He has also pledged to ensure that an agricultural and rural development bank be formed before his term in office ends.


The government’s poverty strategy receives support from 14 donors, offering direct budget support for the reduction of poverty that, according to official data, affects 34% of the population, mostly in the rural areas. However, some activists claim that nearly 50% of the population still live below the poverty line. 

Intensifying the battle for education and health

Tanzania has already attained a 97% primary school enrolment rate and a 100% polio vaccination rate. President Jakaya Kikwete has now kicked off an ambitious programme to build a secondary school in every electoral ward. Part of the money to be used to provide these services derives from funds made available from the Heavily Indebted Poor Countries initiative.


Midway through his first five years in office, President Kikwete told parliament that this year, he planned to start a campaign to build a health centre in every ward to ensure that every Tanzanian has access to health services. The president has to ensure he doesn’t promise too much lest he provides fodder to the opposition as elections approach. 


The battle against HIV/AIDS is being stepped up. With support from the Global Fund to Fight AIDS, Malaria and Tuberculosis, the Clinton Foundation, the US President’s Emergency Fund for AIDS Relief and other donors, the country has a target to put more than 500,000 of the estimated 2m people infected by the virus on anti-retroviral medication by 2010. If not properly tackled, experts warn that the impact of HIV/AIDS will badly affect the economy and fuel widespread poverty.