Rebound in tourism expected to fuel Tanzania's economic growth to 6.3 percent

Arusha. Tanzania's gross domestic product (GDP) is predicted to rise by 6.3 percent this year, driven by a rebound in tourism and ongoing investments in public infrastructure, according to stakeholders citing international agencies.

In contrast, it is anticipated that inflation will moderate in 2024 to approximately 4 percent, possibly due to both domestic demand and changes in the price of commodities globally.

This was revealed in Dar es Salaam early this week during the CEO Roundtable Meeting on East African Integration and Economic Outlook 2024.

The event was organised by the East African Business Council (EABC) in partnership with the Switzerland-Tanzania Chamber of Commerce and the Tanzania Private Sector Foundation (TSPF).

The Confederation of Tanzania Industries (CTI) and RSM East Africa are other organisations roped in for the CEO Roundtable meeting in the country's commercial city.

The Economic Outlook 2024 reveals that the agricultural sector boosted Tanzania’s GDP growth by 14.2 percent, while Tanzania's manufacturing sector contributed 7.3 percent to the country's GDP growth.

The financial and insurance sectors grew by 14.7 percent in the third quarter of 2023, although Tanzania has been urged to upgrade the agricultural economy to value-based processing.

Contributing to a debate during the roundtable, EABC executive director John Bosco Kalisa stated that a global shortage of the supply of dollars has led to the depreciation of shillings.

Instead, he urged the East African Community (EAC) partner states to pay and settle intra-EAC trade in the local currency to mitigate the depreciation of the shilling against the dollar.

The panel session shared invaluable insights into the economic trajectory of the EAC bloc, which currently has eight member states: Tanzania, Uganda, Kenya, Burundi, Rwanda, South Sudan, the DR Congo and Somalia.

TPSF programme specialist Mr Godfrey Mondi emphasised the need to improve port efficiency for competitiveness and the use of the Pan African Payment Settlement System to boost intra-African trade.

In her contribution, Mrs. Jenipher Bashugwa, Managing Director, Alaska Tanzania Group, called for the commercialization of agriculture, the reduction of regulatory costs of compliance for SMEs, and the simplification of trade procedures.

Ms Amne Suedi, chairperson of the Switzerland-Tanzania Chamber of Commerce (STCC), emphasised the need for the elimination of non-tariff barriers, access to finance and venture capital to scale businesses in the EAC bloc.

In her contribution, EABC GoodWill Ambassador Mercy Sila emphasised the importance of support to formalise the informal sector and upgrade agribusiness.

The RoundTable, in which the business leaders discussed and raised several proposals, attracted 50 top business leaders representing various businesses in Tanzania.

Issues raised included the need for ratification of the EAC Double Taxation Treaty and enhancing business ties with the newest member of the EAC, Somalia, which was admitted into the bloc in November last year.

There were calls for reduction of electricity and Internet costs, infrastructure development, strengthening of public-private dialogue, skill development and enhancing policy predictability to attract investments.

Other matters that came up for discussion included the need to harmonise laws and reduce restrictions on service trade from the EAC Common Market Scorecard.

Others were digitising business processes and taxation, strengthening regional agro-value chains and trade, commercialising agriculture, trading in unique, comparative, and competitive products, and using the EAC arbitration mechanism.

Implementation of EAC commitments and a coherent strategy for public-private dialogue to improve trust between EAC partner states will eliminate barriers.

The strategy should include joint EAC power projects, Standard Gauge Railways to enhance the competitiveness of the EAC bloc, and the East Africa Build East Africa campaign.

Mr Paul Makanza, EABC Board Member, stated that EAC economies will grow at 5.48 percent this year, increasing from 4.9 percent in 2023, according to the IMF data for 2023.

In the meantime, EAC inflation is projected to reduce from 12.5 percent in 2023 to 7.9 percent in 2024, indicating a positive outlook for price stability.

STCC chair Ms Suedi added: “We should leverage our competitiveness as an EAC bloc in the global value chains.”

She emphasised the need for harmonisation of policies and infrastructure development for the prosperity of East Africans through trade.

Mr Kalisa also stated that East Africa accounted for the highest number of countries with GDP growth exceeding 5 percent in 2023, underscoring its continued strong performance and diversified economies.

Amb. John Robert Ulanga, Director of the Department of International Trade Coordination and Economic Diplomacy in the Foreign Ministry, was the guest of honour at the roundtable.

He emphasised that the implementation of the EAC industrialization strategy, transport interconnectivity, and trade facilitation are crucial to boosting intra-EAC and African trade.