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.
Tanzania Country Risk
Tanzania's investment climate will feel the effects of continued policy uncertainty over the coming quarters which will keep economic growth below potential. Despite the passing of a peaceful and largely credible election on October 25 that in the end saw the incumbent Chama Cha Mapinduzi (CCM) party post a relatively comfortable victory, a number of lingering political issues will keep economic output below potential and growth someway short of its five-year trend levels.
Economic growth in Tanzania will feel the effects of policy uncertainty in the energy and mining sectors up to, and likely well beyond, the general election on October 25. While we expect growth to return to trend from mid-2016 onwards, risks to the medium-term growth picture are increasingly to the downside.
Putting post-electoral uncertainty to one...
Tanzania Operational Risk Coverage (9)
Tanzania Operational Risk
Tanzania Operational Risk
Tanzania is characterised by a moderate level of operational risk by regional standards, reduced by the importance of its maritime connectivity, the high availability of labour, and a diversity of trade and economic opportunities. Further advantages include moderately low labour costs, high primary school education rates, and a wealth of natural gas reserves, though production will not start until 2023. However, Tanzania's limited transport network, cumbersome trade procedures and corruption constrain business operations.
|Logistics And Security Risk Weigh On Operating Environment|
|Tanzania - Operational Risk Scores|
Tanzania Crime & Security
Tanzania Crime & Security
BMI View: Security risks in Tanzania are moderate in comparison to its regional peers, as the country enjoys stable relations with its neighbours and possesses one of the most capable military forces in the region. However, its porous borders elevate the threat of terrorism from regional groups and businesses remain exposed to organised crime and corruption. Tanzania receives a score of 35.6 for Crime and Security Risk, placing it 22nd out of 48 states regionally.
|High Crime Rates Elevate Risks To Businesses|
|Tanzania & SSA Regional...|
Tanzania Labour Market
Tanzania Labour Market
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...
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 24.1 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,...
Tanzania Trade & Investment
Tanzania Trade & Investment
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...
Tanzania Industry Coverage (13)
BMI View: We hold the view that the Tanzanian coffee industry will perform well over the medium term. The corn industry will remain less competitive than in other countries in the region but we see modest growth on the horizon for both corn consumption and production. The Tanzanian sugar sector will see limited production growth in the next few years, largely due to low sugar prices and the fact that Tanzania scores poorly on productivity measures compared to its regional neighbours.
Corn production will grow by 10% this year as it recovers from a recent drought. Corn output will reach 5.5mn tonnes.
Rice demand will grow by 3% to reach 1.82mn tonnes this year, growing modestly over the course of...
BMI View: Coming off the back of an estimated 48% contraction in passenger vehicle sales in 2015, growth in the passenger vehicle segment will be driven by increasing regional integration and investments in road networks over our forecast period to 2019. Passenger vehicle sales will average strong annual growth of 20.3% over our forecast period.
|Passenger Car And Light Commercial Vehicle Sales|
|f = BMI forecast. Source: Renault, BMI|
Tanzania Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Food & Drink
Tanzania Food & Drink
BMI View: Private consumption will be the main driver of economic expansion in 2016, contributing 4.3 percentage points to headline growth. 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 inflation in 2015, strengthening consumer purchasing power. The recent elections that brought John Magufuli of the ruling CCM party into power should alleviate some of the uncertainty that gripped Tanzania in the lead up to what turned out to be the most closely contested election ever.
Tanzania Freight Transport
BMI View: BMI predicts positive growth across all sectors of the freight mix in 2016 and continuing into the medium to long term. In line with GDP growth in the region and an increase in trade figures, the freight sector will continue to benefit from strong private consumption as well as an extensive investment programme aiming to shore up vital transport links and meet demand of growth in key industries in the country. Foreign investment from Asian and European trade partners will add to the growth of the freight industry in coming years.
Tanzania is well-positioned to benefit from economic growth going into 2016. Its importance in the area of natural gas will become more evident as production takes off. Meanwhile, its strong position in industries such as agriculture and metals...
BMI View: Tanzania's construction sector is forecast to grow 10% y-o-y in 2016 and remain buoyant over our 10-year forecast at an annual average of 9%. The development of critical transport networks, particularly port and rail infrastructure, will be the main driver of growth. The discovery of gas will impact our outlook only beyond 2020. While the government has made an effort to create a favourable environment for foreign investment, this is overshadowed by the incidence of government corruption and the dominance of Chinese firms.
We continue to forecast 10% real growth in Tanzania's construction industry value in 2016, averaging 8.7% over the next five years and 9% over our full 10-year forecast period. The key driver will be the expansion in port and rail...
BMI View: Although small by global standards, Tanzania's insurance sector is expected to grow rapidly, with both life and non-life set to record double-digit growth annually, in local currency terms, throughout our forecast period. In the short-term, currency movements against the strengthening US dollar mean we will see a contraction in premiums written when measured in US dollar terms, before the market recovers from 2017 onwards. The market benefits from the presence of well-capitalised regional insurers, as well as large and well-established domestic insurers. Over the longer term, as the market expands and matures, we expect to see more...
BMI View: Tanzania's gold sector will remain pressured by low gold 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.
Oil & Gas
Tanzania Oil & Gas
BMI View: Tanzania is a highly prospective, frontier market with a substantial gas resource base and significant underexplored acreage. However, prospects for large, export-led production growth have grown increasingly clouded, due to continued regulatory uncertainty, a global commodities rout and increased saturation of the Asian LNG market. Delays to the proposed Tanzania LNG project could push first exports beyond our 10-year forecast period.
Pharmaceuticals & Healthcare
Tanzania Pharmaceuticals & Healthcare
BMI View: Tanzania's inefficient pharmaceutical supply chain is a risk that should be heeded by drugmakers operating in the country. While the government has recognised the need to improve the situation and is implementing certain strategies to this end, the lack of funding and pre-existing structural issues will continue to hinder patients' access to essential medicines.
Headline Expenditure Projections
Pharmaceuticals: TZS797bn (USD479mn) in 2014 to an expected TZS900bn (USD446mn) in 2015; +12.9% growth in local currency terms and -6.9% in US dollar terms. Forecast downgraded from Q415.
Healthcare: TZS4,388bn (USD2.6bn) in...
BMI View: Tanzania's electricity generation will more than double from 2016 to 2024, up to a level of 13TWh, through a diverse mix of power plants coming online as the country actively moves away from reliance on hydropower. This ensures the country will suffer less from power cuts as it becomes less vulnerable to drought.
BMI View: Tanzania's location on the Indian Ocean enables it to serve as an entrypoint for the landlocked hinterland states of the EAC - namely Burundi, Rwanda and Uganda, and for the DRC additionally. As a result, we expect that Tanzania's shipping sector will continue to enjoy robust growth as it will benefit not only from domestic demand but also that of these states. Real GDP growth in the EAC is set to average more than 6% over the course of our forecast period, and a similar growth rate will be enjoyed by Tanzania itself, and this will drive both container and gross tonnage volumes upwards. At present, the Tanzanian shipping sector is somewhat constrained by the reliance on the port of Dar es Salaam, where development has lagged demand and problems with congestion are a frequent occurrence. However, over the medium term this will...
BMI View: The entrance of Viettel in October 2015 and Tigo's acquisition of Zantel is likely to redistribute the mobile market shares and potentially stimulate growth. Mobile data will continue to grow through 3G and 4G networks. The fixed broadband market will see growth, especially as the TTCL long-term investments begin to bear fruit and the country benefits from TTCL's advanced nationwide fibre-optic network supported by data centres, three active satellites and two commissioned satellites, due to be commissioned soon.
|Strong Investment Supports 3G/4G Market Growth|