Tanzania got Sh7.1 trillion richer in 2023

Dar es Salaam.  Tanzania's gross domestic product (GDP) grew by Sh7.1 trillion in 2023, the government announced on Thursday.

The GDP reached Sh148.3 trillion in 2023, the Minister of State in the President's Office (Investment), Prof Kitila Mkumbo, told Parliament.

Presenting the State of the National Economy in the House, Prof Mkumbo said the amount represented 5.1 percent growth compared to Sh141.2 trillion in 2022.

He, however, said the benefits of growth have not been evenly distributed, particularly among the nation’s poorest citizens.

Prof Mkumbo said the country’s economy remained resilient in the face of global headwinds which include the consequences of the Covid-19 pandemic on key supply chains, climate change, and political tensions and conflicts across the world.

Read: Why Tanzania's economy is projected to grow by 6.1 percent

“There has been an increase of annual export value from $975 million in 2000 to $5.63 billion in 2020 and consequently reaching $8.2 billion in 2023,” he said.

Prof Mkumbo told Parliament that the types of goods that Tanzania exports have changed over the past two decades. “For instance in the 2000s, 57 percent of Tanzania's export goods involved agricultural products sold to markets in Europe, the United States, and Africa.

However, twenty years later, Tanzania's exports are now dominated by minerals, with many products being sold to markets in Asia and African countries,” he said.

In 2023, 49 percent of exported goods were minerals, followed by manufactured goods (17 percent) and agricultural products (12 percent), said Prof Mkumbo.

However, despite this economic progress, the sectors driving the growth have not generated significant employment opportunities for those in poor households.

“The sectors with the highest growth rates in 2023 included arts (17.7 percent), finance and insurance (12.2 percent), mining (11.3 percent), and accommodation and food services (8.3 percent),” he said.

Prof Mkumbo noted that sectors traditionally expected to provide substantial employment saw slower growth rates.

He said Agriculture, which is vital for the majority of Tanzanians, grew by only 4.2 percent while manufacturing and trade expanded by 4.3 percent and 4.2 percent, respectively.

"The growth of our economy has depended heavily on public investment in infrastructure, while the private sector has not fully taken its role in driving economic growth as anticipated," he said.

He also highlighted issues with the composition of Tanzania’s exports, as the country’s portfolio remains heavily dependent on products with low added value.

“Manufacturing, which was projected to contribute 24 percent to the nation's exports by 2025, accounted for just 17.1 percent on average over the past five years (2019-2023), barely improving from 16.9 percent in 2019/20,” he said.

Moreover, the country still continues to face a significant trade imbalance, as while the value of the country's exports was $8.2 billion in 2023, the imports amounted to $13.7 billion.

“This situation indicates that we are still spending a considerable amount of foreign currency on importing goods that could be produced domestically," the minister told Parliament.

Going forward, Prof Mkumbo said the government's target was to achieve 5.4 percent GDP growth in 2024.

He said the country also plans to maintain its headline inflation rates at levels between 3 and 5 percent in line with the targets of the East African Community (EAC) and Southern African Development Community (SADC).

"The goals are to achieve tax revenue of 12.9 percent of GDP in 2024/25, up from an expected 12.6 percent in 2023/24; to maintain a budget deficit (including grants) not exceeding 3 percent of GDP; and to have foreign exchange reserves sufficient to cover at least four months of import requirements," said Prof Mkumbo.