Flag of Tanzania

Economic Growth and Trade

Tanzania economic growth
Agricultural trade drives Tanzania’s economy
Megan Johnson/USAID

 

Tanzania is a democratic republic of 44 million people, with an average annual gross domestic product growth rate of 6-7 percent over the past decade. Despite recent economic growth, the poverty rate has only decreased 2 percent and the number of people below the poverty line has actually increased due to population growth. Human development indicators, though improving gradually, remain low. While nationally, 34 percent of Tanzanians are below the income poverty line, in some regions as much as 57 percent of the population are unable to meet their basic needs. It is unlikely that Tanzania will be able to achieve the first Millennium Development Goal--to eradicate extreme poverty and hunger--without significant additional assistance. 

Agriculture is the mainstay of the economy, contributing close to 26 percent of GDP and employing 75 percent of the labor force, with women contributing more than 75 percent of the labor. Tanzania is a net importer of rice; however, with improved yields, it could fulfill growing domestic and regional demand. Furthermore, while Tanzania is largely self-sufficient in its main staple crop, maize, it still faces shortfalls in some years due to weather variability and low yields.

Limited financial resources, weak infrastructure, and poor policies have not provided incentives to develop the agricultural sector. Only 9 percent of the Tanzania population has access to formal financial services, and only 4 percent has received a personal loan from a bank. Further, the credit squeeze resulting from the global financial crisis was acute in Tanzania’s agriculture sector.

USAID enhances agricultural productivity through the expansion of irrigation and market access by reducing transport costs for farm inputs and products, thereby increasing Tanzania’s competitiveness in domestic and regional markets. Through Feed the Future, USAID promotes policies that provide an enabling environment for private sector investment in agriculture, create more consistent trade policies, assist in the implementation of more gender equitable policies, and enable the implementation of key nutritional interventions.

Through the Partnership for Growth, the United States is working to accelerate and sustain broad-based economic growth in a select group of four nations, including Tanzania. A joint U.S.-Tanzanian team has determined inadequate power supply and rural roads as the most binding constraints to growth and have created a joint country action plan spanning 2012-16 that will address these constraints by coordinating development partners and leveraging private investment. 

USAID is helping Maasai women in Tanzania gain literacy and numeracy skills so that they can obtain land rights, start businesses, and become involved in local government. By 2011, more than 2,000 women had completed the program. Their new communication skills allow them to conduct business activities more easily and empower them to assert their rights. For the first time in their lives, these women are earning incomes independently through small enterprises and farming. One graduate of the program says, "It has helped me to mobilize other women because the program saw potential in us."
 

Last updated: February 11, 2014

Share This Page