Skip to main content

Tanzania is undergoing a digital transformation; this is reflected by the growing number of people connected to communications and internet services. The urgent need for technological solutions to challenges created by the COVID-19 pandemic has further boosted the digital transformation of the country. Multiple projects, aimed at improving connectivity and the digital environment, are having an impact on the country’s social, cultural, and economic frameworks, through enhanced access to key services and improved productivity.

Background: The Tanzania Development Vision (TDV) 2025 is a long-term plan to transform Tanzania´s economy from low-performing and agriculture-based to knowledge-based and semi-industrialized with middle-income by 2025. Digital technologies play an increasingly important role in addressing key elements of the country’s development goals. This is underlined by the Digital Tanzania Project (DTP) which aims to increase access to high-quality broadband internet services for government, businesses and citizens, and to improve the government's capacity to deliver digital public services.

Although Tanzania is considered to have abundant sources of renewable energy, including hydro, wind, solar, geothermal, and biomass resources, non-hydro sources only contribute to around 2% of current electricity generation. The country’s plentiful renewable energy potential offers the possibility to overcome some of the challenges faced by the energy sector in a cost-effective way. Some of these challenges are limited access to electricity, untapped energy resources, and grid expansion constrained by geography and low population.

Background: A renewable energy zoning study, carried out by the International Renewable Energy Agency (IRENA) and the Lawrence Berkeley National Laboratory (LBNL), found that wind power in Tanzania could displace much of the oil-based power at a third of the cost, due to the high correlation of wind resources with system demand. IRENA estimates that the overall share of renewables in electricity production, including large hydropower, could reach 78% by 2030.

Institutional barriers for the diffusion of renewable energy technologies are predominant in Tanzania, and they usually trigger financial and technological barriers. The government is working on overcoming the barriers to contribute to ensuring access to affordable, reliable, sustainable and modern energy.

Tanzania has abundant energy sources including hydro, natural gas, solar and geothermal. Tanzania depends on hydroelectric power for approximately 31% of its total renewable energy generation. However, its dependence on hydropower combined with climate conditions which can cause droughts, often results in power supply shortages.

Background: Tanzania is endowed with diverse renewable energy resources, ranging from biomass and mini-hydro to geothermal, solar and wind. Tanzania’s power sector is dominated by state-owned TANESCO (Tanzania Electricity Supply Company Limited. Currently, Tanzania’s total power installed capacity is 1,606 MW, composed by hydro 567 MW (42%), natural gas 607 MW (45%) and liquid fuel 173 MW (13%).

Tanzania’s economy has experienced a lot of growth over the last decade and its stable economic environment has led to a development in many sectors, particularly the ICT Sector. The National ICT Backbone (NICTBB), a large investment made by the government, links all the government’s district and regional headquarters. NICTBB’s development led to an 80% drop in bandwidth costs, and various improvements in the ICT sector. The ICT sector’s potential for growth via smart investments is regarded as a large opportunity.

Background: Tanzania ranks 107th out of the 130 countries in the World Economic Forum’s (WEF) Networked Readiness Index (NRI) 2021, and is ranked 10th in Africa. However, WEF’s NRI for 2021 suggests that Tanzania has a greater network readiness than would be expected, given its income level, creating a good basis for investments and improvements in the country’s ICT sector.

Agriculture is one of the backbones of Tanzania’s economy. It is dominated by smallholder farmers, dependent on rainfall for irrigation. Farmers and other stakeholders face considerable challenges, especially with regard to access to credit and in developing value-added processing. The government has taken measures to address these challenges by introducing subsidies, as well as removing unnecessary levies that have been seen to hamper the growth of the sector. The government has also implemented investment opportunities, such as the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) to facilitate the region’s development.

Background: Agriculture in Tanzania represents approximately 26.9% of the country’s GDP, with the majority of the country’s workforce involved in this sector. Agriculture is undoubtedly the largest and most important sector of the Tanzanian economy, with the country benefitting from a diverse production base that includes livestock, staple food crops, and a variety of cash crops. Tanzania’s objective is to prioritize agriculture for economic growth. The government has attempted to help the private sector through the Agricultural Sector Development Program Phase II (ASDPII) initiative and the establishment of the Southern Agricultural Growth Corridor of Tanzania (SAGCOT).

Tanzania has huge untapped potential in terms of investment and developing scalable start-ups. According to this UNCTAD Rapid eTrade Readiness Assessment, the country is well-positioned to integrate into the global digital economy due to its growing economy and rapidly developing innovation ecosystem – thus creating new opportunities.

Background: The Tanzania Commission for Science and Technology (COSTECH) aims to introduce programmes that will boost the ability of tech entrepreneurs to attract investment and encourage “innovation sandboxes”: digital environments that enable stakeholders to build innovative concepts and solutions. COSTECH also highlighted the need to support entrepreneurs with investment readiness, business management skills, HR and financial management during their growth stage. UNICEF partners with the University of Dar es Salaam (UDSM) in Tanzania to establish the youth for children (Y4C) – this provides technological resources, design workshops, training and skill-based seminars to enhance leadership and innovation capacity of young people.

The government is investing in developing the country’s electrical infrastructure. Energy access is a crucial element in the fight to end poverty. It also greatly increases productivity as increased electrification and use of power in rural areas is associated with growth in economic activity and the production of more goods and services.

Background: Renewable energy in Tanzania has increased over the past decade due to the Government’s and other organizations’ efforts on renewable energy projects such as TREEP and TAREA. These initiatives include installing off-grid and grid power systems and advocacy work. About 45% of the country’s electricity comes from hydro and, in rural areas, households connected to electricity accounted for 24.5% in 2019/20 compared to 16.9% in 2016/17. By 2025, peak electricity demand in the country is predicted to quadruple to 4,000 megawatts. Tanzania is aiming for a total installed capacity of 10 GW by 2025 to satisfy this need. Meanwhile, by 2033, the country hopes to have nearly doubled its electrification rate to 75%. The Rural Electrification Expansion Program for Tanzania (TREEP) aims to provide both grid and off-grid energy to 1.3 million rural households and businesses. The project focuses on solar energy, specifically photovoltaic systems. As of 2021, The World Bank has labelled TREEP as “moderately satisfactory”.

Tanzania’s tech ecosystem has shown positive growth over the past few years, but is not yet attracting sufficient funds and investors. Compared to hubs in South Africa, Nigeria, Egypt and Kenya, Tanzania receives far less attention from venture capitalists and Africa-focused funds. Out of 98 disclosed tech deals in Africa in 2019 totaling $1.25bn, only one deal was made in Tanzania, according to a funding report by intelligence firm Briter.
The government is trying to improve the situation – creating plans to create a local "Silicon Valley" that will incubate startups and set a clear path for creative ideas to thrive within the next three years.

Background: Research conducted by Max Cullevier and Maxine Bayern in 2021 on most active investors by number of deals in Africa’s startup ecosystem showed that Tanzania is still playing catch-up to other active African countries in securing investment deals to the growing startup industry from investors within and outside the continent. Tanzania has barriers that have been seen as detrimental to investors - such as increased bureaucracy.

Tanzania is still trying to recover economically from the COVID-19 pandemic. Tourism was the fastest growing sector in the Tanzanian economy prior to the pandemic. The 16th Tanzania Economic Update, Transforming Tourism: Toward a Sustainable, Resilient, and Inclusive Sector reports that the pandemic’s impacts on global tourism deeply affected Tanzania. Sustainable recovery of Tanzania’s tourism sector is a government priority, including support for nature-based landscape and seascape management through the development of co-investment and partnership opportunities.

Background: Pandemic-related shocks slowed Tanzania's GDP growth rate from 5.8% in 2019 to an estimated 2.0% in 2020, as shocks to sectors like tourism, manufacturing and related services reduced business revenues and labour income. Tourism, in particular, is a big contributor to GDP growth but it was deeply affected by the pandemic. For example, by 2020, the number of visitors had dropped by 60% and revenue had dropped by 72%. The government is determined to drive the re-growth of the sector.

The United Republic of Tanzania is located in the African Great Lakes region in East Africa. Tanzania is one of the fastest-growing economies in East Africa and became the second-largest economy in East Africa by 2020. Following two decades of sustained growth, Tanzania also reached an important milestone in July 2020, when it formally graduated from low-income country to lower-middle-income country status. Tanzania’s achievement reflects sustained macroeconomic stability that has supported growth, in addition to the country’s rich natural endowments and strategic geographic position. In the World Bank Doing Business Report of 2020, Tanzania ranked fourth among the East African Community for ease of doing business.

Rate this content: 
Average: 5 (2 votes)
Last updated: 29.04.2022 - 16:38
Back to top