Country Risk Rating

A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high. - Source: Coface

Business Climate Rating

The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Intercompany transactions run major risks in the difficult environments rated C.


  • Mining wealth (gold, copper)
  • Gas potential thanks to offshore reserves discovered in 2010
  • Tourism assets (national parks, coastline)
  • Regional cooperation strategy, accelerated integration into the East African Community (EAC) under President Samia Suluhu Hassan
  • International support in the form of concessional loans
  • Development of monetary policy instruments


  • High dependence on gold prices
  • Vulnerability of agriculture (29% of GDP and 65% of employment) to climatic conditions
  • Inadequate infrastructure, particularly in electricity and transport
  • Inconsistent industrial policy and poor business environment
  • Religious tensions between the Zanzibar archipelago and the mainland
  • Low level of human capital

Current Trends


After proving relatively resilient in the face of the COVID-19 pandemic, thanks to gold exports (40% of the total) and the authorities’ refusal to impose significant health restrictions, the economy now has to deal with the effects of the war in Ukraine, particularly on prices. However, although growth is expected to decelerate, it should remain strong thanks to public and private investment in ongoing and future infrastructure projects. For instance, the standard gauge railway project, which started in late 2019 and aimed to link the country with Rwanda and Uganda into Burundi and the Democratic Republic of Congo, is expected to continue. Including this project, the 2022-2023 Ministry of Public Works and Transport budget anticipates the allocation of USD 1.7 billion to transport infrastructure development projects. This expenditure also includes purchasing four new Boeing aircraft by Air Tanzania. The USD 30 billion offshore natural gas development and liquefaction project is expected to start in 2023 as part of the agreement signed with Shell (UK) and Equinor (Norway). However, the immediate impact on growth will be small, as the final investment decision is expected in 2025. On the other hand, because of the war in Ukraine, the terms of trade are deteriorating, increasing the import bill. While imports will continue to be driven by capital goods required for infrastructure projects, rising fuel and food prices and disruptions in the fertilizer and pesticide markets will undermine the contribution of trade to growth. Moreover, tourism revenues, which were already struggling to recover their pre-crisis level, are expected to suffer from the reduction in tourist flows from Ukraine and Russia (11% of arrivals in 2021). In addition, rising bills for imported goods and commodity prices are fuelling inflation to its highest level since 2017, which will erode the contribution of private consumption. However, inflation is expected to remain below the central bank’s 5% target, and the announced removal of the mobile money tax will boost household purchasing power.



The public deficit, which remained high in 2021-2022 due to expenditures linked to the Socio-Economic Response and Recovery Plan, will increase again in 2022-2023 due to social and development costs. To combat the impact of inflation on household purchasing power, the government has announced fuel and fertilizer subsidies. Furthermore, health expenditure linked to the fight against COVID-19 will remain high until 2024. Finally, while partial debt service relief was granted in 2020-2021, debt service will increase in 2023. Public debt, which has increased by almost 15 percentage points of GDP since the early 2010s due to the financing of infrastructure projects, is expected to stabilize in 2023. The risk of debt distress remains limited, as about 70% of the external share (approximately 71% of total public debt) comprises concessional loans from multilateral and bilateral partners. Its domestic share is held mainly by commercial banks and pension funds.


Structurally in deficit due to Tanzania’s dependence on imports, the current account is expected to continue to post a significant (albeit slightly shrinking) deficit. Indeed, the deterioration in terms of trade and the slow recovery in tourism receipts due to the war in Ukraine will continue to weigh on the trade deficit. However, continued strong exports of mining products, starting with gold, will mitigate this deterioration. The primary income account (mainly investment income) is in deficit, particularly because of the repatriation of corporate profits. This is only half offset by the surplus in the secondary income account, mainly fuelled by expatriates’ remittances. The current account deficit will continue to be financed primarily by loans (concessional and non-concessional), foreign direct investment, and project aid. Exceptional financing from the IMF (USD 1 billion loans under the Extended Fund Facility) and the World Bank will contribute. A new allocation of SDRs equivalent to USD 543 million in 2021 will supplement the foreign exchange reserves, which were still estimated at 4.5 months of imports in end-June 2022.



Reelected in October 2020 for a second five-year term with nearly 85% of the vote in a high-stakes election, John Magufuli died in March 2021. Vice President Samia Suluhu Hassan was sworn in as President to complete Magufuli’s term (2025). On the domestic front, the President has taken steps to calm the social climate, starting with abolishing the mobile money tax in September 2022. Introduced in 2021, this tax provoked protests, leading the government to reduce it once. In addition, subsidies for fuel and fertilizer should also limit social discontent over price increases. Moreover, after years of fending off pressure from opposition parties and rights activists, the CCM has said that it is ready to reform the country’s constitution. However, without a timetable, such a reform seems unlikely to materialize before the 2025 elections. A possible body revision could reawaken latent tensions over Zanzibar’s status and the archipelago’s desire for independence.

Externally, efforts to position the country as a regional trade hub (pipeline project with Uganda, strengthening the country’s integration into the EAC, etc.) could strengthen ties with neighboring countries. While the Kitaya attack (October 2020), near the border with Mozambique, signaled that insecurity linked to the Islamist insurgency in its neighbor could reach it, it also allowed for greater security cooperation between the two countries. After the DRC joined the EAC in March 2022, multilateral cooperation on regional security is expected to intensify to contain the continuing instability there.


Coface (11/2022)