Why is Tanzania a mixed economy

Tanzania has one of Africa’s fastest growing economies with nearly 7 percent annual national GDP growth since 2000. Yet, widespread poverty persists with 49 percent of Tanzania’s population living below the international extreme poverty line of $1.90 per day (World Bank, 2011). Among Tanzania’s predominantly rural population (73 percent), economic growth has been limited. Inclusive, broad-based growth is hindered by low productivity growth in labor-intensive sectors like agriculture, which employs 77 percent of working age adults. The agriculture sector grew just 4 percent per year over the past decade.

Private sector engagement is an essential component of the economic development of Tanzania and the country’s efforts to reach middle-income status by 2025. Businesses in Tanzania are at the forefront of growth through job creation, innovation, generating tax revenue, and fair competition. The Tanzanian private sector’s vast financial resources and expertise in market-based solutions have the potential for tackling systemic societal challenges. Currently employing about 70 percent of the youth in Tanzania, the private sector provides a critical pathway to self-reliance.

In Tanzania, USAID seeks more sustainable and enterprise-driven outcomes from our activities. USAID focuses on accelerating growth in rural-based, job-creating sectors (e.g., agriculture and food production and processing and natural resource-based tourism) while reducing constraints to private sector investment in these areas.

USAID objectives include advancing Tanzania’s socio-economic status toward middle-income status by 2025; sustaining inclusive, broad-based economic growth; supporting private sector investment in energy as well as agriculture and natural resource-based tourism; and increasing the access of women and youth to resources and knowledge that allow them to take advantage of opportunities in these sectors.

Challenges

Efforts have been made to increase collaboration with the private sector, implement market-based solutions for greater sustainability, and mobilize private capital. However, Tanzania still faces several obstacles to improving its business-enabling environment. Regulatory challenges for starting businesses, labor and employment, land tenure, human settlement, limited tax relief for local industries, and lack of transparency among regulatory agencies on how they carry out regulatory functions have a negative impact on the private sector, are an impediment to economic growth, and complicate Tanzania’s journey to self-reliance.

Impact

  • Training: Trained 200 Business Development Providers (advisors), who provided training and other value-added services to over 4,300 micro, small, and medium enterprises. Additionally, trained over 180 financial institution staff and facilitated agricultural-related credit on behalf of micro, small, and medium enterprises, 63 percent of which are owned by women and 22 percent by youth.
  • Youth: Increased access to financial services to often-excluded rural youth through the establishment of 73 youth savings and lending groups.
  • Policy: Established a policy network of 17 partners to move forward key agricultural policy issues relevant to the private sector.
  • Public-Private Partnership: Supported private sector opportunities in sustainable water management that have resulted in producers adopting climate-smart, water-efficient practices. Established public-private partnerships for water provision, sanitation, and water resource management. Introduced improved commercially viable water and sanitation products and services to local governments.
  • Land Tenure: Assisted villages and district administrations to map parcels and deliver 50,000 certificates of customary rights of occupancy.
  • Health: Improved business and financial management practices among accredited drug dispensing outlets. Led to increased access to finance based on improved practices and allowed dispensing outlets to make malaria and family planning commodities more readily available to customers.
  • Development Credit Authority: Provide partial credit guarantees to reduce risk and generate additional lending to underserved markets and sectors and demonstrate the long-term commercial viability of lending in developing markets.

STORIES

How Solar Power is Bringing Water to Rural Tanzania

Changing the Face of Clean Water in Tanzania

Development Credit Authority Works with Coffee Exporters in Northern Tanzania

Water Management: Helping Women in Rural Tanzania Find Their Voice

Empowering Regional and District Level Planners in Tanzania to Address Climate Change Threats to Agriculture

From Occasional Potato Farmer to District Loan Manager

Strengthening Women's Land Tenure Rights in Matembo

Building Local Capacity to Protect and Manage Water Resources in Tanzania

Agricultural Finance in Tanzania

WIth Limited Jobs, Tanzanian Youth Learn New Ways to Earn Income

Farmers' Field Day

Voices from the Field

Rural Tanzanians Map Their Country's Future

Beekeeping Empowers Maasai Women in Northern Tanzania

Into the Woods - Protecting Tanzania's Forest Landscape and Biodiversity Legacy

Land Rights Mark a New Frontier for Tanzania's Rural Women

Mobile Mapping Expands across Africa

Three Reasons Why People in Tanzania Are Going Off-Grid

Savings and Loan Groups Empower Women in Tanzania

IAGRI: Transforming Students into Leaders

Teresia Turns on the Light - Electricity and Opportunity Transform a Tribal Village in Tanzania

Development Financing “Sea Change” Drives Real Change

Agricultural trade drives Tanzania’s economy