Tanzania has attracted a number of our clients, having had relative political stability since introducing multi-party politics in 1992. Tanzania’s tourism and natural gas sectors are looking hot for investment opportunities over the coming years. The country’s business environment could become significantly more attractive, with more deregulation of state-controlled sectors, along with a reduction in red tape.

We ensure our clients make sound business decisions in Tanzania, using our risk-assessed total analysis model. Our research teams keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Our expert views are supported by our interactive data and forecasting. We also provide in-depth analysis on 11 of Tanzania’s most important industries. Our expert insight will help you to tackle Tanzania with ease.

Country Risk

Tanzania Country Risk

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Core Views

  • Uncertainty will characterise Tanzania's political climate over the coming months as the general election on October 25 approaches. We believe key investment decisions - particularly in the energy sector - are likely to be delayed until the dust from the election has settled and policy direction becomes clearer.

  • Economic growth in Tanzania will soften in 2015 as October's general elections and continued policy uncertainty in the energy sector weigh on investment. We are forecasting real GDP to expand by 6.4% in 2015 compared to 6.9% in 2014.

  • Tanzania will undergo a modest improvement in its external position over the next two years as lower oil prices help to reduce the country's hefty imported fuel bill. Despite this short term adjustment, high import demand and sluggish growth in exports will see the...

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Tanzania Operational Risk Coverage (9)

Tanzania Operational Risk

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Tanzania is characterised by a generally low level of operational risk, highlighting the importance of its maritime connectivity, the high availability of labour, and a diversity of trade and economic opportunities. Key advantages include the largest working age population in employment in the region, one of the continent's most well-connected port systems, and a flourishing trade and investment environment. Other assets include moderately low labour costs, high primary school education rates, and a wealth of natural gas reserves, though production will not start until 2023.

Tanzania offers investors and businesses a variety of advantages and disadvantages within its logistics capabilities. Due to its strategic location, Tanzania's transport system serves as an important link in regional trade, enabling landlocked neighbours to access maritime trade routes through Tanzania. Within this, firms benefit from a competitive and...

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Tanzania Crime & Security

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Tanzania's most significant security threat stems from its high crime rates and its corrupt and inadequate police force. While petty crime occurs most frequently, businesses face an increased risk of violent crime, as well as cybercrime and maritime piracy. The threat of domestic terrorism remains limited; however, regional terrorist groups have conducted a number of notable attacks in East Africa in the last few years, exposing businesses to the potential for significant property damage and injury to or loss of personnel. Tanzania's interstate security risks present the lowest level of risk. With a low likelihood of outright conflict and relatively good military capabilities, firms face limited potential for disruptions in their operating environment. Consequently BMI awards Tanzania a score of 37.3 for Crime and Security Risk, placing it 20th regionally, behind East African states Ethiopia (16th) and Rwanda (17th).

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Tanzania Labour Market

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With one of the most competitive labour markets in Sub-Saharan Africa (SSA), Tanzania offers a low level of labour risk to investors and businesses. Benefits include flexibility in hiring and firing workers, a high percentage of working-age citizens and women employed in the workforce, and one of the highest primary education net enrolment rates in Africa. However, businesses face a moderate level of risk in the country's educational sector. Despite rapid growth in enrolment rates as well as educational facilities, a scarcity of state funding has constrained the development of secondary and tertiary education, resulting in a limited supply of high-skilled and technical labourers. As a result of these factors, BMI has awarded Tanzania a score of 47.0 out of 100 for Labour Risk, ranking the country eighth regionally.

Although Tanzania has experienced significant growth in the country's secondary and...

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Tanzania Logistics

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The greatest risk to investors in Tanzania stems from the country's underperforming transport network, which is preventing the country from fulfilling its role as a gateway for regional trade in East Africa and creating supply chain delays for Tanzania's importers and exporters. While a number of significant projects are under way to improve the existing network, investors in the short term will face port congestion, increasing the cost of imports and exports, and a poor quality of transport infrastructure in internal networks. These factors contribute to the country's uncompetitive score of just 24.2 out of 100 for Transport Network, ranking the country 35th out of 48 countries. This represents the country's lowest score and regional ranking in the BMI Logistics Risk Index.

Tanzania's utilities sector still reflects its status as a developing country, with water shortages,...

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Tanzania Trade & Investment

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BMI View: Tanzania offers a number of strategic advantages to investors and businesses, including a relatively low level of legal risk, a declining level of government intervention and increasing economic openness. However, firms continue to face challenges in the form of non-tariff trade barriers, widespread corruption and difficulty competing with public sector firms in key economic sectors. As a result, Tanzania receives a score of 36.2 out of 100 for Trade and Investment Risk, ranking 21st regionally after neighbouring Zambia (sixth), Rwanda (ninth), Uganda (12th) and Kenya (16th).

Businesses face the highest degree of trade and investment risk from the Government Intervention pillar, which highlights the limitations of the country...

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Tanzania Industry Coverage (13)

Agribusiness

Tanzania Agribusiness

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BMI View: We continue to favour the Tanzanian coffee industry over the medium term, owing to the potential for growth on the back of strong investment in capacity. The grain industry in Tanzania will remain less competitive than in other countries in the region, particularly South Africa and Zambia, and we see little potential for the country to become a major grain exporter. The country's sugar sector will see limited production growth over the next few years, due to low sugar prices and Tanzania's lower productivity than many of its regional neighbours.

Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)
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Autos

Tanzania Autos

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We are revising our forecast for 2015 up to 15% after a strong sales performance in 2014. The latest data available for 2014 indicates that sales of brand new light vehicles increased 82.2% in 2014 . BMI attributes this growth to improvements in dealership networks and steady growth in private consumption in the country. We predict steady growth in new light vehicle sales from 2016 to 2019, averaging 7.6%.

However, we stress that owing to the markets erratic growth, low numbers of total sales, and limited availability of data these numbers may be subject to revision over 2015. Even with this growth, we believe that only 10,833 new light vehicles will be sold in the country annually by 2019.

When compared with a population of some 49.3mn, it is clear that new cars will remain unaffordable to the vast majority of Tanzanians for many years. Instead, used cars will continue to be the more significant...

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Commercial Banking

Tanzania Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Food & Drink

Tanzania Food & Drink

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BMI View: Private consumption will be the main driver of economic expansion in 2015 and 2016, contributing 4.3 percentage points (pp) to headline growth in each year. As in much of the region, the collapse in oil prices is already being reflected in Tanzania through lower fuel costs, which will contribute to lower average annual inflation in 2015, strengthening consumer purchasing power. The upshot of falling fuel costs will mean more cash in consumers' pockets which should translate into increased spending on other goods and services. In addition to benefitting from increased consumer spending power, consumer-focused companies will see their own transport costs reduced.

Headline Industry Data (local currency)

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Freight Transport

Tanzania Freight Transport

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BMI View: We forecast positive growth across Tanzania's freight modes in 2015 and 2016, and over our medium-term forecast period to 2019. Much of this growth - in air and rail freight in particular - is coming from a low base, and will pick up in line with the robust expansion we expect in Tanzania's economy, which is riding on a natural gas development boom. Our positive long term outlook for Tanzania's prospects is supported by the extensive development of the country's wider transport infrastructure. The Tanzanian government plans to float a USD1bn eurobond for FY15/16. The proceeds will be used to finance the country's mega infrastructure projects. According to Finance and Economic Affairs Minister Saada Mkuyu, the government is fully prepared...

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Infrastructure

Tanzania Infrastructure

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BMI View : We have slightly downgraded our 2015 real growth forecasts for Tanzania's construction industry in light of a corruption scandal in the power sector damaging investor confidence and restricting the government's budget. Major infrastructure plans in the rail, and port sectors are overoptimistic but will provide opportunities nonetheless. The fall in oil prices may threaten the major investments into Tanzania's offshore gas sector, which supported our long-term infrastructure forecasts.

There are number of key developments, which underpin our upbeat medium-term forecast scenario:

  • The Tanzanian government plans to float a USD1bn eurobond for FY15/16. The proceeds will be used to finance the country's mega infrastructure projects....

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Insurance

Tanzania Insurance

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BMI View: Non-life business dominates the Tanzanian insurance industry landscape, capturing almost 90% of total industry premiums. Motor insurance is the largest part of this and will remain so, but health insurance shows the greatest promise over the next five to ten years, growing by around 16% annually. The underdeveloped life sector will grow rapidly, but from a very low base; per capita premiums in 2015 will reach just USD0.80.

Life insurance in Tanzania is small by any standards, with premiums in 2015 of just USD42mn, only USD0.80 per capita. This also equates to insurance penetration of under 0.11% of GDP, a figure that will grow only slowly to 2019, reaching 0.13%. By 2019, premiums will have only reached USD68mn, or TZS139bn. This represents strong growth of around 17% annually, in local currency terms, albeit from a low base. The sector...

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Mining

Tanzania Mining

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BMI View: Tanzania's mining sector growth will contract due to weak global mineral prices, which will discourage production growth over coming years. Beyond our forecast period to 2019, the country's mining sector could diversify as various miners are looking to invest in the country's nickel, coal and uranium resources.

Although Tanzania holds vast deposits of coal, cobalt, copper, diamonds, gold, nickel, silver and uranium, we forecast the country's mining sector will contract over 2015-2019. Weak gold prices will halt gold production growth and delay or halt new projects from coming online altogether. Despite this, the Tanzania's mining industry will remain relatively significant in regional terms as the country is currently Africa's fourth-largest producer of gold and continues to produce growing numbers of diamonds. In...

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Oil & Gas

Tanzania Oil & Gas

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BMI View: Continued regulatory uncertainty and a bearish outlook on the global LNG market pose a growing threat of delay to FID on the Tanzania LNG project. Further delay to FID could see the country's first gas exports driven outside our 10-year forecast period.

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Headline Forecasts (Tanzania 2013-2019)
2013 2014e 2015f 2016f

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Pharmaceuticals & Healthcare

Tanzania Pharmaceuticals & Healthcare

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BMI View: The introduction of compulsory health insurance in Tanzania will increase uptake of the scheme among some sectors of the population. Despite the impressive employment rate, contributions from those employed in the informal and agriculture sectors will be less likely, limiting its uptake.

Headline Expenditure Projections

  • Pharmaceuticals: TZS797bn (USD479mn) in 2014 to an expected TZS909bn (USD496mn) in 2015; +14.0% growth in local currency terms and +3.5% in US dollar terms. Forecast downgraded slightly in both local currency and US dollar terms from Q215.

  • Healthcare: TZS4,403bn (USD2.65bn) in 2014 to TZ4,845bn (USD2.65bn) in 2015; +10.1% growth in local...

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Power

Tanzania Power

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BMI View: We expect to see robust and sustained growth in Tanzania's power sector over our ten-year forecast period to 2024. A number of projects are expected to come online, including large capacity gas-fired power plants, which will expand total generation. Moves to open the sector to foreign and private investment have gathered pace and we are seeing more foreign companies involved in the development generation, transmission and distribution of electricity in Tanzania. The country also attracts funding from a large number of international financing bodies, supporting growth. We do note, however, that barriers to growth remain, including the dominance of state-owned utilities and a lack of transparency in the...

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Shipping

Tanzania Shipping

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BMI View: Tanzania will continue to benefit from its location as a gateway for the East Africa Community (EAC). The merits of its location can be seen in the consistent upwards trajectory of container and bulk throughput at the port of Dar es Salaam. The development of the offshore gas sector in the coming years will boost both bulk and container volumes through the country's ports, thanks to an inflow of capital goods and increased wealth driving up imports of containerised consumer goods.

Tanzania, along with its East African peers, will reap the benefits of lower oil prices over the coming months. The latest inflation data confirm that the collapse in Brent crude prices is already being reflected in lower pump prices, easing inflationary pressures and more disposable income for consumers. Consumers will also benefit from a 200 basis point cut in the reserve...

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Telecommunications

Tanzania Telecommunications

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BMI View: The Tanzanian mobile rebounded in 2014, as its 2013 performance was impacted by SIM registration and the removal of inactive accounts. Penetration remains low so there is still room for growth, especially in rural areas which account for the majority of the population. Viettel's market entry, and its focus on rural areas, will drive further competition as the current operators will need to match the new entrant, and they will look to differentiate themselves with new services. MFS (mobile financial services) will be one, as Tanzania becomes the first fully interoperable country. Mobile data will continue to grow through the development of 3G and 4G networks, and this will impact the fixed market, especially on the voice side. The fixed broadband market will see some growth but will continue to remain a minor player compared to mobile access.

Key Data...

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