Answering a foreign correspondent’s recent question about why Tanzania’s economy is growing at six per cent instead of ten, a prominent local businessman offered the usual optimistic soundbites – “the economy is growing,” “investors are pouring in,” and on and on and on.
While the economy is indeed growing and attracting investment, a closer look at twenty years of economic data suggests a more nuanced reality. The nation’s binding constraints are not a lack of resources, ideas, or even capital. They are a deficit of ambition and a failure to align the economy with that ambition.
Agriculture is the cornerstone of the Tanzanian economy, contributing around 26–28 per cent to the nation’s GDP and employing the majority of the population. However, for nearly two decades, this vital sector has grown at a modest average of two to four per cent, even as the wider economy has expanded at an average of six to seven per cent.
The consequences of this imbalance are starkly reflected in the country’s poverty statistics. In 2005, approximately 34 per cent of Tanzanians lived below the national poverty line. By 2025, that figure had only fallen to around 27 per cent.
This slow pace of poverty reduction, a mere seven percentage points in two decades, is inconsistent with the country’s headline GDP performance. The explanation lies in an economy that has grown around agriculture rather than through it.
Accelerating economic growth
If agriculture explains the persistence of poverty, the data also reveal where GDP growth truly accelerates: in manufacturing and construction. Manufacturing adds value, absorbs labour, and creates powerful linkages to farming, logistics, and services.
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For Tanzania to achieve sustained high growth, its manufacturing sector must consistently expand at a rate of eight to ten per cent. Construction plays an even more decisive role.
Across two decades of data, construction emerges as the strongest short-run transmission channel for GDP growth. When the construction of ports, railways, roads, and power plants expands, GDP responds almost immediately.
A continuous and predictable expansion of 10–12 per cent in the construction sector is essential for a high-growth trajectory.
Breaking structural ceilings
The growth of manufacturing and construction is, however, capped by two critical physical realities: electricity and freight capacity. These factors act as ceilings on economic expansion.
Scenario analysis based on Tanzania’s own historical data shows that sustaining 10 per cent GDP growth requires electricity usage and freight volumes to expand at roughly 25–28 per cent per year over the medium term.
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In concrete terms, this means that electricity usage, with a current peak demand of around 1,900 MW, would need to rise to roughly 4,600–5,100 MW within four years. Freight volumes would need to more than double over the same period.
Tanzania’s strategic location at the intersection of the Eastern Africa Power Pool and the Southern Africa Power Pool, and as a maritime gateway to the Great Lakes region, is a significant economic asset that has been largely underutilised.
Exporting surplus electricity is not a contradiction of domestic needs but a financing strategy. Power exports generate foreign exchange that can be reinvested in new generation and transmission infrastructure at home.
Regional freight creates the scale that justifies railways, ports, logistics hubs, and industrial zones—infrastructure that no domestic market alone could sustain.
A demanding formula
The data points to a clear and demanding growth formula: agriculture growing at or above eight per cent, driven by productivity; manufacturing growing between eight and ten per cent; construction sustained at 10–12 per cent; and electricity and freight expanding at 25–28 per cent.
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None of these elements works in isolation.
Together, they form a growth system. High growth will not come from hope or isolated projects. It will come from raising ambition to match our geography and aligning every major sector to that ambition.
The data is unambiguous: Tanzania is capable of far more—if it chooses to be.
Zitto Ruyagwa Z. 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 Chairperson of the Public Accounts Committee of the Tanzanian National Assembly. He is available at zittokabwe@outlook.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.
