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Tanzania: Economy

The economy is mostly based on agriculture, which accounts for more than half of the GDP, provides 85 per cent (approximately) of exports, and employs approximately 80 per cent of the workforce. Topography and climate, though, limit cultivated crops to only 4 per cent of the land area. The nation has many resources including gold and natural gas. Extraction of natural gas began in the 2000s. Gas is drawn into the commercial capital, Dar Es Salaam and exported to various markets overseas. Lack of overall development has hampered the extraction of these various resources, and even up to the present there has been effort to develop the natural resource sector but no major quantifiable results.

The industry is mainly limited to processing agricultural products and light consumer goods. Tanzania has vast amounts of natural resources including gold, diamonds, coal, iron ore, uranium, nickel, chrome, tin, platinum, coltan, niobium and other minerals. It is the third-largest producer of gold in Africa after South Africa and Ghana. Tanzania is also known for the Tanzanite gemstones. Tanzania has dozens of beautiful national parks like the world-famous Serengeti and the Ngorongoro Conservation Area, that generate income with a large tourism sector that plays a vital part in the economy. Growth from 1991 to 1999 featured a pickup in industrial production and a substantial increase in output of minerals, led by gold. Commercial production of natural gas from the Songo Songo island in the Indian Ocean off the Rufiji Delta commenced 2004,] with natural gas being pumped in a pipeline to the commercial capital Dar es Salaam, with the bulk of it being converted to electricity by the public utility and private operators. A new gas field is being brought on stream in Mnazi Bay.

Recent public sector and banking reforms, and revamped and new legislative frameworks have all helped increase private-sector growth and investment. Short-term economic progress also depends on curbing corruption and cutting back on unnecessary public spending.

Prolonged drought during the early years of the 21st century has severely reduced electricity generation capacity (some 60 per cent of Tanzania’s electricity supplies are generated by hydro-electric methods). During 2006, Tanzania suffered a crippling series of “load-shedding” or power rationing episodes caused by a shortfall of generated power, largely because of insufficient hydro-electric generation. Plans to increase gas- and coal-fueled generation capacity are likely to take some years to implement, and growth is forecast to be increased to seven per cent per year, and perhaps eight or more.

There are 3 major airlines in Tanzania, the Air Tanzania Corporation, Precision Air which provide local flights (Arusha, Kigoma, Mtwara, Mwanza, Musoma, Shinyanga, Zanzibar) and regional flights to Kigali, Nairobi, Mombasa routes and a third one that provides local flights only. There are also several charter aeroplane firms. There are two railway companies: TAZARA caters for service between Dar-es-Salaam and Kapiri Mposhi, a district of the Central Province in Zambia. The other one is the Tanzania Railways Corporation, which provides services between Dar-es-Salaam and Kigoma, a town on the shores of Lake Tanganyika and between Dar-es-Salaam and Mwanza, a city on the shores of Lake Victoria. There is also service across the Indian Ocean between Dar-es-Salaam and Zanzibar by several modern hydrofoil boats. Tanzania is part of the East African Community and a potential member of the planned East African Federation.

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