African Union launches s 

Tuesday, December 10, 2013 

Tanzania surges ahead

TALKS: President Jakaya Kikwete meets with a potential investor in Colombo recently.

DAR ES SALAAM, Tanzania--Today, mainland Tanzania celebrates its independence anniversary.Tanzania’s economy has been growing steadily for the past 10 years. In 2012, the economy expanded by 6.9%, which is close to its more recent historical average. Most top business leaders believe that the economy is performing better in 2013 than in 2012 and are positive about the prospects for 2014, as revealed by a recent World Bank/KPMG survey.

 The rapid and stable growth of the Tanzania’s economy over the past few years, in spite of turbulence in world and regional markets, is explained by three factors. First, five crucial sectors have been expanding rapidly, with these five sectors driving almost 60% of growth in gross domestic product (GDP) since 2008. These sectors include the communications sector, whose contribution to GDP has doubled since 2008. The growth of this sector has transformed how Tanzanians trade and do business by facilitating a revolution in banking. 

With the rapid spread of mobile banking services, an estimated 45% of Tanzanian adults use their phone to receive and transfer money, with the cumulative value of these transfers reaching an estimated $1.4 billion per month. 

Second, economic growth has been fueled by a steady increase in domestic demand, with this increased demand resulting from the rapid rate of population growth. With its current, constant rate of population growth of 2.7% per year, Tanzania’s population is doubling every 25 years. Third, Tanzania’s economic performance has been fairly independent from net external trade, which is explained by the country’s relative isolation from world markets. 

Since early 2012, inflation has declined, dropping to 9.8% in March 2013. Lower food prices and prudent monetary policy have been the main contributors to this welcome development. However, this inflation rate is still double that of Uganda’s and Kenya’s. Furthermore, local food prices are significantly higher in Tanzania than in a sample of comparable developing countries. 

By John Sambo, Tuesday, December 10th, 2013