Why experts are upbeat on Tanzania’s prospects in 2025

However, economic experts predict that the economic fundamentals will remain resilient throughout the year despite presence of key events like the elections and changes in the global stage that contain risks to the local economy.

Tanzania is expecting some milestones in its strategic projects like the standard gauge railway (SGR) and the Julius Nyerere Hydropower Project (JNHPP) which are expected to transform the economy by providing key infrastructure facilities.

The modern railway started operations for passenger railway services between Dar es Salaam and Dodoma last July, and soon the cargo services are expected to start after the Tanzania Railway Corporation (TRC) received 264 cargo carriages.

The JNHPP, which has already started to supply electricity to the national grid, is expected to be completed in June.

 “Inflation is likely to remain stable due to the anticipated improvement in electricity supply following the completion of the JNHPP,” says an independent analyst Christopher Makombe.

He also pointed out that the completion of the JNHPP would be a significant achievement, boosting Tanzania’s energy capacity.

Mr Makombe said that Tanzania is expected to continue benefiting from increased public investments in key growth sectors, with significant expenditure on public infrastructure driving GDP growth, which is projected to reach six percent in 2025.

Prof Abel Kinyondo of the Dar es Salaam University College of Education (Duce), notes that key infrastructures like the standard gauge railway (SGR) will bring about cargo efficiency transport especially from Dar es Salaam to Dodoma while the completion of the JNHPP will ensure reliable electricity that will boost the economy.

Finance and banking lecturer from the University of Dar es Salaam, Dr Thobias Swai, is optimistic about Tanzania's economy in 2025. He notes that financial trends have remained stable, with ongoing investments in infrastructure and industrial development.

“Government policies on liquidity, industrial investment and private sector lending are expected to continue fostering growth,” he says.

He also highlights improvements in the Dar es Salaam port activities and key infrastructure projects, such as the Kigongo-Busisi Bridge, which would boost mobility and trade in the Lake Victoria, supporting economic growth.

Dr Swai also mentions the anticipated reduction in internet costs due to the Starlink initiative, which will open up opportunities for digital innovation and economic expansion.

He says lower internet costs will benefit consumers and drive Tanzania’s digital economy, benefiting sectors like e-commerce, education and telecommunications.

Entrepreneurship and management expert, Dr Donath Olomi, also expects significant improvements in Tanzania’s business operations in 2025, particularly in infrastructure and technology. He acknowledges the government’s efforts to boost businesses through policy reforms and investments in key sectors.

“As Tanzania prepares for 2025, the year ahead holds both challenges and exciting opportunities. The country’s response to the challenges will determine its success in navigating both global and national changes,” he said.

The experts says despite good prospects for 2025, Tanzania also faces challenges, calling for the government to focus on climate change solutions, infrastructure investment, and preparing for a stable political environment.

“The nation’s trajectory looks positive, provided it adapts, innovates, and shapes its narrative to influence its future,” warns an independent economic analyst Oscar Mkude.

Scenarios such as the General Election scheduled for October 2025 and the global trends are some of the challenges which may affect the economy in the future.

General Election

Tanzania is expected to hold the General Election in October 2025, to elect the President, Members of Parliament as well as the ward councillors.

Prof Kinyondo believes that the upcoming elections, while uncertain, have the potential to reshape Tanzania’s political landscape.

He says that the opposition continues to be a major political force, and the results of the elections could either lead to significant change or deepen political divisions in Tanzania.

Mr Mkude raises concerns that during election periods, inflation may happen with large amounts of money circulating amid low production.

Global trends

In January 2025, Donald Trump will be sworn as the new US president, who may have influence on the shift of the US policy towards some global issues.

Experts say the return of former Mr Trump to office raises questions about his stance on key global issues, such as climate change, trade and international cooperation.

“In 2025, his actions could have repercussions like sanctions and economic disruptions, potentially affecting sectors such as agriculture in Tanzania,” warns an independent economic analyst, Mr Oscar Mkude.

He said that Trump's past policies, including withdrawing from climate change agreements, had significant global consequences.

Mr Mkude pointed out that Tanzania, like many countries, is already grappling with the effects of climate change, particularly in agriculture, which is vital to the nation’s economy.

He says that one of the major factors influencing Tanzania in 2025 will be the changing dynamics of global power.

"Engaging with global narratives is crucial. If Tanzania fails to do so, it risks being left to decisions made by others," he explains.

According to him, emerging powers like Brazil, Russia, India, China, and South Africa (BRICS) continue to shape global policies, their actions can have a direct impact on countries like Tanzania.

Mr Mkude also warns that global oil crisis will continue to cause difficulties, potentially raising energy prices and inflation rates.

Prof Kinyondo notes that Trump decision’s to reduce foreign aid, particularly from NGOs, could result in job cuts and further strain the economy.

Stable shilling

Mr Makombe says the recent appreciation of the Tanzanian shilling against the dollar, if maintained, will positively impact inflation, particularly through its effect on future fuel price calculations. These factors are expected to have a significant impact on the country's manufacturing sector and further boost exports.

He notes that Tanzania is also poised to benefit from an improved global economic outlook in 2025, with expected stability in the Middle East and the potential end of the Russia-Ukraine war, which could lead to lower global oil prices.

He said gold prices are likely to maintain their upward momentum, and as one of Africa’s top gold producers, Tanzania stands to benefit from an improved current account and a stable exchange rate.

He says foreign direct investment is expected to continue flowing into the country as economic and financial reforms attract more investors. However, key risks remain, particularly weather-related ones, as Tanzania's dependence on agriculture makes it vulnerable to adverse weather conditions.