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Tanzanian Economic Drivers and Governmental Role Research Paper


Tanzania is one of the largest economies in Africa with agriculture being the country’s main source of income. According to 2016/17 Gross Domestic Product (GDP), Tanzania’s economy grew by 7.2% in 2016, in accord with a trend displayed in recent years (World Bank). This growth has been influenced by the steady development of local private corporations and the consumption of local products and services.

The main industries that experienced growth during these years include the construction industry, service sectors, ports, and telecommunication. The barriers to doing business in Tanzania include poor infrastructure, corruption, tax evasion, and inadequate access to funding for local entrepreneurs. The ports constructed in 2015 have also been the main driver for growth due to the low prices of exporting, importing, and oil.

Natural Resources

Apart from agriculture and wildlife, Tanzania has a wide range of natural resource deposits that contribute to the economy. Some of the metallic minerals that are being exploited in Tanzania include gold, copper, silver, nickel, iron ore, and cobalt. Other precious metals and gemstones include diamonds, ruby, pearl, and garnets. Tanzania has large deposits of industrial minerals like limestone, salt, phosphates, gypsum, and soda ash.

Other minerals include energy source deposits such as uranium and coal. The mining activities of these minerals have been a main source of employment for the Tanzanian citizens and also a source of income for the government through taxes paid. Some of the minerals are also used in local industries and construction which has contributed to the recent economic growth.

Governmental Support

The government of Tanzania is encouraging local entrepreneurship by facilitating how young people start businesses and minimizing barriers that are likely to discourage them. Local entrepreneurs in Tanzania have a role in unlocking economic growth through the creation of employment, value addition to local resources, and local economic growth through paying taxes (TanzaniaInvest). The government focuses on capital availability for the aspiring local entrepreneurs and local policies that enhance innovation of business processes.

The SME policy of 2013 is one example of policies that are constantly updated to control the economy through equal wealth distribution, and control of prices. Another policy is the Sustainable Industrial Development Policy (SIDP) which considers people with small businesses and those with disabilities to take part and grow in local business activities.

The Gender and Women Development Policy, National Employment Policy Cooperative Development Policy, National Trade Policy, and National Environmental Policy all aim at capacity building for people who are interested in participating in local entrepreneurship. Local private industries employ 3 million people, about 20% of the Tanzanian population, and absorb about 500,000 youths annually due to increased demand for labor as the economy grows (Deloitte).

Economic Drivers

Tanzania is a major exporter of coffee, tobacco, cashew nuts, tea, sisal, and cotton which account for 56.8% of national economic resources since the late 1970s (Deloitte). The European Union purchases about 42% of Tanzania’s exports while Asia purchases about 22.9% (Deloitte). Tanzania also imports from the European Union with its main imports being machinery, oil, industrial raw materials, textiles, food, and apparel. Tanzania has been experiencing a negative balance of payments since the 1970s which have increased to $600 million in 2016 mainly because of the low-value commodities that the country exports (Deloitte).

International trade accords higher product prices based on the value-added to the products. Tanzania mainly exports agricultural commodities which are capital goods that contain less value. For Tanzania to achieve value addition potential to its capital goods, the country will have to upgrade its industrial capabilities. The negative balance of trade can only be overcome by supporting local entrepreneurs in the manufacturing and industrial sectors to enable them to purchase the required industrial machinery needed for increased value production.


Major financial changes that have changed trade upgraded the part of the private businesses and prompted the making of Tanzania Investment Center have enhanced an unfaltering GDP development in Tanzania since 2000. All things considered, the administrative structure for entrepreneurship could be additionally enhanced, and investors are not methodically assessed (Charle et al.).

The investment administration could be additionally supported by fortifying the Tanzania Investment Center to have the full order for endorsement of business licenses. Tanzania still needs a satisfactory infrastructure framework for the private segment to effectively take an interest in economic improvement. Access to land can be a long process for outsiders and local investors. Furthermore, limitations on rural agricultural trade obstruct interest in farming among Tanzanian citizens.

Through the ensuing parts of the world economic report, Tanzania has been given economic policy alternatives to address difficulties in business and local trade in perspectives of empowering Tanzania to draw in higher business and to conceivably turn into a local exchange and business hub.

It is worth pointing out that in the course of the research, a minor inconsistency in reports could be observed. Specifically, while the majority of sources cite impressive economic growth and steady progress, some experts also voice their concerns about the well-being of the general population. In other words, the generated wealth is not representative of the welfare of the average citizen. The most likely reason for such disagreement is the lack of tangible metrics.

While it is relatively easy to assess the economic growth using the GPD and other well-established performance indicators, it does not necessarily represent the distribution of wealth within the population. Simply put, the phenomenal economic growth in Tanzania is still influenced by the strong presence of the state and factors such as social inequality and corruption, making the GDP growth an unreliable metric and leading to disagreement among analysts.


The Tanzanian government has further promised to put more funds to help women and youth organizations to eliminate unemployment and put their potential in full exploitation to accelerate the nation’s development. The results expected are that the efforts will bear fruit and aid in poverty elimination, sustainable development as well as peace in the country. Although the government has put a lot of effort to advocate for gender equality and women empowerment, there are still many challenges continuing to face women’s progress up to date.

Works Cited

Charle, Prosper, et al. “African Economic Outlook, n.d. Web.

Deloitte. “Deloitte, 2017. Web.

TanzaniaInvest. “TanzaniaInvest, n.d. Web.

World Bank. “World Bank. 2017. Web.

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IvyPanda. 2020. "Tanzanian Economic Drivers and Governmental Role." November 19, 2020. https://ivypanda.com/essays/tanzanian-economic-drivers-and-governmental-role/.


IvyPanda. (2020) 'Tanzanian Economic Drivers and Governmental Role'. 19 November.

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