Updates from the Aga Khan Economic Planning Board for Tanzania

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 Life-long learning is one of the many mandates of the Economic Planning Board (EPB) for Tanzania. Many Jamati members can still have the opportunity to continue their learning in various ways. At EPB, we are partnering with an online platform, COURSERA, that offers some courses for free and others for a minimum fee of USD 75. It works with the top universities in the world and provides courses on diverse subjects. COURSERA was started with the vision that anybody, anywhere should have access to good quality education and knowledge.This EPB initiative is to give opportunity to members of the jamat to upgrade their skills and become more marketable.

Look out for the announcement on EPB Telegram platform for more details.

The Economic Planning Board for Tanzania is also pleased to share the summary below of the Tanzania economic outlook for various areas of the economy based on relevant documents and websites:

Prices and Food Stocks

  • Consumer Price Index Rebasing: The consumer price index (CPI) is rebased at least once every five years to reflect current consumption patterns of goods and services by households due to changes in taste, preferences, and technology.
  • Inflation Developments: Twelve-month headline inflation was 3.5 percent in January 2021 from 3.2 percent in the previous month, and is projected to remain low in the remaining period of 2020/21. On a month-to-month basis, overall prices rose by 0.8 percent in January 2021 compared with 0.4 percent in the corresponding month in 2020.

Money and Credit[1]

  • Money Supply: Credit extended by banks to the central government and private sector grew at an annual rate of 6.2 percent in January 2021 compared with 10.8 percent in December 2020 and 6.6 percent in January 2020. Credit to the central government, which was through banks purchase of government securities, rose by 24.6 percent. Credit extended to the private sector rose by TZS 513.8 billion, translating to an annual growth of 2.6 percent, compared to 3.1 percent in December 2020. The slow growth of credit to the private sector partly reflected spillover effects to businesses in the country, from the impact of COVID-19.
  • Interest Rates: Overall lending interest rate averaged 16.63 percent, declining from 16.81 percent. One-year lending interest rate averaged 15.76 percent compared with 15.51 percent. The overall and one-year time deposit interest rates averaged 6.68 percent and 8.23 percent, compared with 6.89 percent and 9.27 percent, respectively

Economic Outlook

  • The Five-Year Development Plan will guide economic policy in 2021-25, but protectionist tendencies in the mining sector may deter foreign private investment. Government will focus on industrialisation and advancement of infrastructure mega-projects.
  • The country is among few globally that avoided a Coronavirus-induced recession in 2020, recording only a slowdown in real GDP growth. Growth will pick up in 2021-22, driven by rising global demand and investment in infrastructure.
  • The Tanzanian shilling will weaken against the US dollar throughout 2021-25 as the twin fiscal and current-account deficits maintain pressure on the currency.
  • Infrastructure investment will be aimed at boosting Tanzania’s position as a regional trade hub for its landlocked neighbors.
2020a 2021b 2022b 2023b 2024b 2025b
Real GDP growth (%) 4.2 4.6 5.1 5.9 6.1 6.4
Consumer price inflation (av; %) 3.3c 4.4 4.5 4.7 4.4 3.9
Government balance (% of GDP)d -2.2 -2.7 -3.1 -3.3 -3.0 -2.8
Current-account balance (% of GDP) -2.3 -3.3 -3.7 -3.7 -3.6 -3.1
Money market rate (av; %) 4.5 5.5 7.0 7.6 8.1 8.0
Exchange rate TSh:US$ (av) 2,294c 2,304 2,360 2,419 2,458 2,492
  • Economist Intelligence Unit estimates.
  • Economist Intelligence Unit forecasts.
  • Fiscal years ending in June. Central government.

Economic policy in 2021-25 will continue to be shaped by the third Five-Year Development Plan (FYDP), which covers fiscal years 2021/22-2025/26 (July-June) and will build on the second FYDP, prioritizing job creation (with a target of 8m jobs), industrialization and advancement of infrastructure mega-projects. Tanzania’s strategy to promote the private sector has so far been undermined by the government’s various regulatory changes (regarding mining licenses and periodic trade restrictions) and increases in business taxes.

Monetary policy

We expect the Bank of Tanzania (BoT, the central bank) to retain its current accommodative monetary policy stance in 2021 as it seeks to support economic recovery. The BoT has kept its discount rate steady after a 200-basis-point cut in May 2020, to 5%. We expect the central bank to make another small rate cut in mid-2021, to boost the pace of economic recovery, and to retain an accommodative stance in 2022-23. However, the rate will probably be kept on hold in 2023 as inflation rises. Moderating price pressures in 2024-25 should allow for another rate cut in 2024, which will be maintained in 2025.

Source: www.eiu.com

The African Continental Free Trade Area: The African Continental Free Trade Area (AfCTA) kicked-off free trade amongst free member states from 01st January. The World Bank estimates that the agreement across the continent will touch 1.3billion with a combined GDP of $3.4trn

Where does the AfCFTA fit in Africa’s development agenda?

The Agreement establishing the African Continental Free Trade Area (AfCFTA) was signed at the 10th Extraordinary Summit of the AU Assembly on 21 March 2018 in Kigali, Rwanda. The AfCFTA Agreement entered into force on 30 May 2019. The AfCFTA is the continent’s most ambitious integration initiative. The AfCFTA is the con-tinent’s most ambitious integration initiative.

The main objectives of the AfCFTA are:

  1. create a single continental market for goods and services, with free move-ment of business persons and investments
  2. expand intra-Africa trade across the regional economic communities and the continent in general
  3. enhance competitiveness and support economic transformation

The AfCFTA Agreement is a framework agreement covering Trade in Goods and Services, Investment, Intellectual Property Rights and Competition Policy.

Source: www.tralac.org

Why the African Continent free trade area is a game changer for business

The World Bank reports that, the AfCFTA presents an opportunity to bring 30million out of extreme poverty and raise the income of 68million who currently live on less than $5.50 per day. In the East African region, it is expected that 4.8 million people will be lifted out of extreme poverty.

The implementation of AfCFTA will also help to usher in the kind of deep reforms necessary to enhance long term growth in African countries.

Source: www.thecitizen.co.tz/tanzania/oped/-why-the-african-continental-free-trade-area-is-a-game-changer-for-business-3256810

Africa tech investment holds steady in 2020, despite Covid-19

Funding for African tech startups continued to flow in 2020 despite pressures from Covid-19, dashing fears that the pandemic would ravage investment, new report finds.

Source: https://african.business/2021/01/trade-investment/investment-in-africa-holds-steady-amid-covid-19/

PwC Survey: 76% CEOs say global economic growth to improve in 2021

About 36% of CEOs said they were very confident about their revenue growth prospects for the next year, and 47% said they were very confident looking ahead three years.

Source: https://economictimes.indiatimes.com/news/company/corporate-trends/pwc-survey-76-ceos-say-global-economic-growth-to-improve-in-2021/articleshow/81451380.cms


Dar es Salaam Port cargo handling projected to rise by 43percent in four years
The cargo volume will increase by 7.5 million to 25 million tons by 2025, compared with 17.5 million tons last year.


Banks Africa – 2021 Outlook


We forecast GDP to grow by 4.6% in 2021, following 2.0% growth this year, a result of increased uncertainty due to the coronavirus pandemic and elections.
Problem loans of 9.6% of gross loans as of year-end 2019 will rise further due to coronavirus disruptions although loan restructuring will constrain the increase.
Banks’ profitability will fall because of higher provisions, even though Bank of Tanzania waived a 1% general provision on unclassified loans. Banks’ capital will fall from 18% in 2019 but will remain sufficient to absorb unexpected losses.
Banks will remain deposit-funded, with deposits contributing 85% of their liabilities. Foreign-currency deposits will likely fall due to coronavirus disruptions to tourism and trade. The loan-to-deposit ratio of 88% will likely improve due to slower loan growth.


We expect GDP growth of 5.0% in 2021, following a sharp slowdown in 2020. Economic activity is picking up as coronavirus-related restrictions ease. But risks remain high with the infection rate yet to peak.
Problem loan formation will increase as loan restructurings and repayment deferrals expire. Problem loans stood at 13.6% of total loans in August 2020.
Banks’ 2021F return on assets will drop to around 2%. Profitability will nonetheless remain strong and absorb higher loan provisioning without eroding capital.
Capital adequacy at 18.5% as of June 2020 provides good loss absorption capacity.
Banks’ deposit base will also remain stable, while their liquidity is sound at 47% of total assets at year-end 2019.


We expect subdued economic activity, with GDP expanding 3.1% in 2021 following a contraction this year.
Loan performance deteriorated in the first half of 2020 with problem loans increasing to 5.8% of gross loans from 3.8% in June 2019. We expect further deterioration to 7%-10% due to slow economic recovery.
Banks’ profitability (2.9% of total assets in 2019) will reduce due to lower revenue and higher provisioning charges. Banks’ capital adequacy will reduce but remain solid at over 15% of risk-weighted assets. Slow loan growth will restrain risk-weighted assets growth in 2021.
Banks will maintain good funding and liquidity profiles. Liquid assets-to-deposits was 49% in June 2020 with the loan-to-deposit ratio at 57%.

Source: www.moodys.com


Tanzania records 6pc growth in it mortgage market

Tanzanians mortgage market registered a 6percent annual growth rate on the value of bank issued mortgage loans last year, according to the central banks latest update.

Source: www.theeastafrican.co.ke
[1] www.bot.go.tz



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