1. How big is Tanzania’s economy?
Tanzania, on the east coast of Africa, is one of the continent’s fastest-growing economies. They have a track record of macroeconomic stability despite some serious economic shocks. This is due to robust growth, well managed fiscal balances, and inflation has remained in the single digits. As a result, Tanzania has seen significant foreign investment.
- GDP: According to the World Bank, Tanzania’s GDP has seen significant growth over the past decade, reaching approximately $79 billion USD in recent estimates. This robust increase is fuelled by investments in infrastructure, extraction industries, and a burgeoning tourism sector.
- GDP per Capita: Despite overall growth, GDP per capita remains modest by international standards, estimated at around $1,185 USD. Africa, as a whole, has GDP per capita of $2 955 USD. This relatively low figure reflects the country’s large population and high proportion of the population living in rural areas.
- Population Size: Tanzania is home to a population of about 66 million people, making it one of Africa’s most populous nations. The population is youthful, with a median age of under 20 years, which presents both opportunities and challenges for economic planning and workforce development.
- Economic Growth Rate: Over the past several years, Tanzania has maintained steady real GDP growth, often ranging between 5% and 7% per annum. Even during global economic downturns, such as the COVID-19 pandemic, Tanzania’s economy proved relatively resilient, though growth did slow to below 5% in 2020 before rebounding in subsequent years.
Tanzania’s economy is driven largely by agriculture, which employs more than two-thirds of the population and explains the high percentage of rural residents. However, mining (particularly gold and tanzanite), tourism, and telecommunications have become increasingly important contributors to GDP. The government’s focus on industrialization and infrastructure has further diversified the economy, laying the groundwork for sustained growth.
2. Route to Market in Tanzania
In recent years Tanzania has prioritized significant improvements to its transport networks and utilities, recognizing their role in facilitating both domestic and international commerce.
Road Networks
Tanzania boasts one of the largest road networks in East Africa, spanning over 86,000 kilometres. Of this, about 12,000 kilometres are paved. The national road system connects major cities such as Dar es Salaam, Dodoma, Arusha, and Mwanza, and serves as a critical corridor for landlocked neighbouring countries. Major highways include the Central Corridor—which links Dar es Salaam with the interior and beyond to Rwanda, Burundi, and the Democratic Republic of Congo—and the Northern Corridor stretching toward Kenya and Uganda.
Rail Networks
Tanzania’s rail infrastructure has experienced revitalization efforts in recent years. The country is served primarily by two major networks:
- Tanzania Railways Corporation (TRC): Operating the Central Line, which connects Dar es Salaam with the country’s interior, extending to Kigoma on Lake Tanganyika and Mwanza on Lake Victoria.
- Tanzania-Zambia Railway Authority (TAZARA): This line, a product of Sino-African cooperation, links the port city of Dar es Salaam with Kapiri Mposhi in Zambia, facilitating regional trade and transit.
Efforts are underway to modernize and expand these networks to improve efficiency and capacity, including moves toward standard gauge railways.
Airports
Tanzania is served by several international airports, including:
- Julius Nyerere International Airport (Dar es Salaam): The largest and busiest airport in the country, serving as the main gateway for international and domestic flights.
- Kilimanjaro International Airport: Serves the northern tourism circuit, including Mount Kilimanjaro and several important game parks.
- Abeid Amani Karume International Airport (Zanzibar): Key for tourism and trade in the Zanzibar Archipelago.
Additionally, there are many regional and local airports that support the country’s vast tourism industry and provide vital links to remote areas.
Harbours
Tanzania’s strategic location on the Indian Ocean makes its ports crucial for both national commerce and regional trade. The main harbours include:
- Dar es Salaam Port: The largest and most important port, handling over 90% of Tanzania’s maritime cargo and serving as a critical hub for neighbouring landlocked countries.
- Mtwara Port: An emerging port in the south, with recent upgrades supporting the export of agricultural products and minerals.
- Tanga Port: Located in the north, important for regional trade flows and the export of goods such as coffee and sisal.
Investment in port modernization aims to reduce congestion, improve turnaround times, and enhance the overall efficiency of the maritime sector.
3. Infrastructure Development
Tanzania has undertaken a series of ambitious infrastructure projects to support its growing economy and improve connectivity. These will greatly assist with the transportation of goods across the country and help improve the GDP per capita. Some notable recent and ongoing initiatives include:
- Standard Gauge Railway (SGR): One of the country’s flagship projects, the SGR is designed to replace the aging meter-gauge railway and provide a modern rail link from Dar es Salaam to the interior, with extensions planned to Rwanda, Burundi, and DRC. The first phases are complete, with operations commencing on certain segments.
- Julius Nyerere Hydropower Project: Located on the Rufiji River, this massive hydroelectric dam aims to add over 2,000 MW to the national grid, supporting industrialization and expanding access to reliable electricity.
- Airport Modernization: Recent upgrades to Julius Nyerere International Airport have expanded passenger and cargo capacity, while Kilimanjaro and Zanzibar airports have also seen enhancements to meet growing tourism demand.
- The Dar Rapid Transit (DART) system: This is a bus rapid transit network in Dar es Salaam, has improved urban mobility, reduced congestion, and showcased an innovative approach to public transport in Africa.
These and other infrastructure projects are central to Tanzania’s vision of becoming a middle-income country, fostering economic diversification, and attracting domestic and foreign investment.
4. Retail Trade
Tanzania’s retail sector is undergoing rapid transformation, shaped by urbanization, rising incomes, and changing consumer preferences. Both traditional and modern retail trade models coexist, each playing a vital role in the economic and social fabric of the country.
Traditional Trade
Traditional retail trade remains dominant in Tanzania, especially in rural and peri-urban areas. As most of Tanzania’s population resides in these areas traditional trade accounts for over 60% Tanzania’s retail trade. This is only an estimated figure as traditional trade is impossible to measure due to few records being kept.
This sector is characterized by small, family-owned shops (dukas), open-air markets, street vendors, and informal kiosks. These outlets are central to daily life, providing access to essential goods and serving as community gathering points.
- Strengths: Proximity to consumers, flexibility in product offerings, and deep local knowledge.
- Challenges: Limited access to finance, inconsistent supply chains, and vulnerability to economic shocks.
Despite these challenges, traditional trade acts as a critical distribution channel for both local and imported products.
Modern Trade
Modern retailing is expanding, particularly in urban centres like Dar es Salaam, Arusha, and Mwanza. This sector includes supermarkets, shopping malls, convenience stores, and formal retail chains. Notable players include Shoprite, Nakumatt (which has exited the market but was influential), and local chains such as Shoppers Plaza and Village Supermarket.
5. How Frontline Research Group can facilitate Market Entry and Expansion
Frontline Research Group (FRG) have been conducting market research in Tanzania for many years and have geolocated over 99 000 retail outlets along with important data about each of these outlets. Research is ongoing and so this number continues to increase.
In addition, FRG have a number of ongoing retail tracking studies across Tanzania to keep tabs on the retail trade.
According to Steve Johnson, Managing Director, “CPG companies aiming to enter or expand their operations in Tanzania will find that our regional expertise makes this a lot easier. Our skill and expertise in operating in the traditional trade sector are unsurpassed”
Frontline Research Group employs advanced tools and methodologies for data collection and analysis, focusing on market trends, consumer behaviours, and competitive dynamics. Their ongoing retail census and audit programs provide continuous, reliable insights into the evolving retail environment.
