This week, an article in The Chanzo grabbed my attention. It highlighted a strong rise in credit to the private sector, pulling from theBank of Tanzania’s monthly economic review for the year ending December 2025.
When I went to read the actual report on the BoT website, one number shocked me: the growth in the extended money supply, known as M3, had shot up by 25.8 per cent.
That is a huge wave of cash flooding into the economy, and it got me thinking deeply about what is really happening on the ground. The last time such drastic growth occurred was in 2005, when M3 grew by 35 per cent.
I decided to dive back into the numbers. Drawing from sources like the Bank of Tanzania, the National Bureau of Statistics, and the state economy reports issued by the Ministry of Finance or Planning each year, I looked at trends stretching from 2005 to 2025.
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I am highly influenced by the insights of Li Keqiang, the late Chinese premier, who once said GDP figures can mask the truth. He focused instead on the “real economy”—things like electricity usage and freight movement that are hard to fake because they reflect everyday activity.
Tracking true growth
With some modern AI tools to help crunch the data, I checked connections between GDP and key signs of real life: how much electricity we are using, the flow of goods through transport and storage, credit to private businesses, usage of mobile money transactions, and the broad money supply. I even put specific emphasis on freight and electricity.
Using Li Keqiang’s insights, I developed a “Real Economy Index” (REI) for Tanzania. The results were telling. Electricity, freight, and credit to the private sector explain about 70 per cent of the changes in our GDP.
These are the engines that matter. When power cuts happen or trucks stop moving, the economy slows down, no matter what the official headline numbers say.
Interestingly, while mobile money is often hailed as a game-changer, the data shows it behaves more like a result of growth than a driver of it. It facilitates exchange but doesn’t necessarily produce new wealth in the same way as a factory running on reliable power does.
This brings me back to the M3 money supply spike of December 2025. A 25 per cent jump is massive. If it is not matched by a surge in goods (freight) and production (electricity), it risks fuelling inflation rather than real prosperity.
We saw this in 2005 during the EPA scandal era, where money supply ballooned without underlying economic substance.
Listening to citizens
One peasant in my constituency once told me, “Mheshimiwa, you people speak of billions; we only know the price of kerosene and salt.” This disconnect is why I often converse with boda-boda riders, food vendors, and farmers.
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Their reality is the true test of economic statistics. In 2017, I flagged the inconsistencies using the basics of economics—money supply, inflation and growth—and even spent days in a police cell for questioning the official data.
Now in 2025, this broader data reinforces it: true growth happens when power flows, goods circulate, and credit supports the productive sectors.
However, during all this time covered, the GDP figures given always appeared fine and positive, but the index I have composed shows the real ups and downs. That is why we always hear people say the economy is growing, but they are not seeing the benefits.
Jobless growth, growth without poverty reduction. Clear messages from the analysis are: for Tanzania to build lasting, fair progress that touches everyone, we need to prioritise electricity as a vital economic backbone—making it dependable and affordable for industries and people.
Policy for progress
We shall treat transport and storage as ways to boost output, not just routes. Here, the emphasis is on our geography; being a logistics hub is a clear way forward, and that must be aimed with precision.
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Also, we must channel loans to sectors that use energy and move products.
Putting it simply, the analysis above suggests policy makers should track the Real Economy Index (REI) alongside GDP, protect electricity and freight as core growth engines, expand productive credit—not just liquidity—and treat mobile money as a structural asset, not a growth substitute.
I keenly await the CAG reports for the year ending June 2025 and June 2026 to be able to make sense of this money supply growth.
Zitto Kabwe is a Tanzanian politician and the former Party Leader of ACT Wazalendo. He served as a Member of Parliament and Shadow Finance Minister, and was a member of the Executive Committee of the Commonwealth Parliamentary Association for the Africa region from 2011 to 2015. He is available at zittokabwe@gmai.com. These are the writer’s own opinions and do not necessarily reflect the viewpoints of The Chanzo. Do you want to publish in this space? Contact our editors at editor@thechanzo.com for further inquiries.
