Tanzania

Politics:

• Analysis

  Tanzania politics: Quick View - Parliament selects standing committee leade

  Event

  Parliament has announced the names of the members of parliament (MPs) who will lead its newly formed standing committees.

  Analysis

  Earlier this year the speaker of parliament, Anne Makinda, disbanded the Parastatals Organisation Accounts Committee (POAC), claiming that it was irrelevant. This was strongly criticised, not least because the POAC's high-profile role in holding ministers to account last year had established its position as one of the most effective parliamentary committees. A report presented by the committee to parliament in mid-2012, detailing considerable levels of corruption in various public organisations, had been instrumental in sparking the resignation of six senior cabinet ministers. The chairman of the committee, Zitto Kabwe (who is deputy leader of the main opposition party, Chadema), had played a particularly vital role, using the threat of a "no-confidence" motion against the government to spur it into action.

  The POAC has now been reconstituted and named the Public Accounts Committee, with Mr Kabwe remaining at its helm. Its scope has been expanded from examining the accounts of the 300-odd parastatals to scrutinising the budgets of all government ministries. Given the POAC's effectiveness in monitoring the performance of parastatals, its enhanced mandate is likely to lead to some improvement in the broader management of the public finances. If the new PAC is able to deliver results, this would further boost Mr Kabwe's profile and also cement his presidential ambitions.

  Meanwhile, the former prime minister, Edward Lowassa, has been re-elected chairman of the Foreign Affairs Committee. The committee's mandate has, however, narrowed, as it has been stripped of the defence and security functions. Local media reports have suggested that the change in its scope may have been a response to Mr Lowassa's controverisal claim in late 2012 that Tanzania was prepared to go to war over its border dispute with Malawi, which was at odds with the official line. The position of Mr Lowassa's faction has, however, been strengthened by the appointed of two of his key allies-the former-attorney general, Andrew Chenge, and an MP, Peter Serukamba-to head the newly formed committees on budget monitoring and infrastructure development. Overall, Mr Lowassa remains the front-runner to succeed the president, Jakaya Kikwete, as the next leader of the ruling party, Chama Cha Mapinduzi (CCM).

  March 28, 2013

• Background

  Tanzania: Key figures

  Jakaya Kikwete

  The minister of foreign affairs for ten years, Mr Kikwete became president in 2005 and quickly set about consolidating his power base. He represents the more progressive and reformist section of the CCM and has taken unprecedented action in high-profile corruption cases. In doing so, Mr Kikwete has had to tread a fine line, balancing attempts to increase accountability with a need to keep political allies on side. His popularity suffered a mid-term slump in 2008 as high inflation eroded standards of living and the wider population felt that they had not benefited enough from high economic growth. Although Mr Kikwete appears committed to market-oriented reforms, his agenda is often stifled by some members of parliament and civil servants who remain more closely aligned with Tanzania's socialist past.

  Amani Abeid Karume

  The current Chama Cha Mapinduzi (CCM) vice-president and president of Zanzibar, and son of the first president of the isles. He has been unable to exploit his father's legacy to restore political stability on Zanzibar. He is often seen as a puppet of the mainland leadership, but is still an important political player within the party. He is unable to stand for a third term in 2010 under the Constitution and his power has already begun to ebb as potential successors have begun to position themselves.

  Seif Shariff Hamad

  A former chief minister for Zanzibar, he is now the secretary-general of the opposition Civic United Front. He called for violence in the run-up to the 2000 elections but has since moderated his tone and enjoys considerable support on Zanzibar. However, if the stalemate in the muafaka talks (see Zanzibar) over the future of the isles continues, moderates such as Mr Hamad may lose their grip on the party.

  Edward Lowassa

  Mr Lowassa is a former university colleague and close ally of Mr Kikwete and was appointed prime minister in 2005. Prior to that, Mr Lowassa served extensively within the government of Benjamin Mkapa, working as water and livestock development minister until his promotion to his present office. Rumoured to have presidential ambitions, Mr Lowassa resigned as prime minister in February 2008 following corruption allegations over his involvement in the Richmond corruption case (see Recent political developments).

  Rostam Aziz

  A local businessman, member of parliament for Igunga and former CCM treasurer, Mr Aziz was a key ally and fund raiser in Mr Kikwete's successful presidential bid in 2005. Mr Aziz was linked to the Richmond affair and was removed from the position of CCM treasurer in late 2007. Whether he supports a second term for Mr Kikwete will be a key indication of internal CCM dynamics and could help determine who secures the party's presidential nomination in 2010.

  December 02, 2008

• Structure

  Tanzania: Political structure

  Official name

  United Republic of Tanzania

  Form of state

  Republic, formed by the 1964 union of Tanganyika and Zanzibar

  Legal system

  Based on English common law, the 1977 union and 1985 Zanzibar constitutions, as amended

  National legislature

  National Assembly, comprising 295 members (232 directly elected on the mainland; five delegates from the Zanzibar parliament; the rest appointed); Zanzibar's House of Representatives (59 members, including nine women appointees) legislates on internal matters

  National elections

  Mainland legislative and presidential elections were last held in October 2010; Zanzibar presidency and House of Representatives elections were last held in October 2010; next elections scheduled for October 2015

  Head of state

  President, elected by universal adult suffrage every five years

  National government

  The president, vice-president and Council of Ministers

  Main political parties

  Chama Cha Mapinduzi (CCM); Civic United Front (CUF); National Convention for Construction and Reform (NCCR-Mageuzi); United Democratic Party (UDP); Chama Cha Demokrasia na Maendeleo (Chadema); Tanzania Labour Party (TLP)

  President: Jakaya Kikwete

  Vice-president: Mohamed Ghalib Bilal

  President of Zanzibar: Ali Mohamed Shein

  Prime minister: Mizengo Pinda

  Key ministers

  Agriculture, food security & co-operatives: Jumanne Maghembe

  Community development, gender & children: Sophia Simba

  Defence & national service: Shamsi Vuai Nahodha

  East African co-operation affairs: Samuel Sitta

  Education: Shukuru Kawambwa

  Energy & mineral resources: Sospeter Muhongo

  Finance: William Mgimwa

  Foreign affairs & international co-operation: Bernard Membe

  Health & social welfare: Hussein Mwinyi

  Home affairs including public safety: Emmanuel Nchimbi

  Industry, trade & marketing: Abdallah Kigoda

  Justice & constitutional affairs: Celina Kombani

  Labour, employment & youth development: Gaudensia Kabaka

  Lands, housing & human settlements development: Anna Tibaijuka

  Natural resources & tourism: Khamis Kagasheki

  Transport: Harrison Mwakyembe

  Works: John Magufuli

  Without portfolio: Mark Mwandosya

  Central bank governor

  Benno Ndulu

  March 21, 2013

• Outlook

  Tanzania: Key developments

  Outlook for 2013-17

  • The president, Jakaya Kikwete, and his party, Chama Cha Mapinduzi (CCM), will continue to dominate the political scene. However, the CCM is far from united and divisions are likely to grow as the 2015 elections approach.
  • The Economist Intelligence Unit expects the CCM and its next presidential candidate-Mr Kikwete cannot stand again-to win the 2015 elections, albeit with the main opposition party, Chadema, securing greater representation.
  • We forecast that the fiscal deficit will moderate from 6.2% of GDP in 2012/13 to 4.3% of GDP in 2016/17 as steady (if unspectacular) progress is made in curtailing recurrent spending growth and expanding the revenue base.
  • Real GDP growth will pick up to an annual average of 7.2% in 2013-15, driven by investments in the gas sector and pre-election spending, before moderating to 6.9% in 2016-17 as investment growth begins to tail off.
  • Inflation will moderate to 8.7% in 2013 as global oil prices fall and monetary policy stays tight and is likely to remain in the 7.5-8.5% range thereafter, unless Tanzania experiences another drought.
  • We forecast that the current-account deficit will narrow to 10.9% of GDP in 2014, before widening to 11.7% of GDP in 2017, driven by trends in gold prices.

  Review

  • The murder of a Catholic priest has highlighted the growing security risks posed by anti-Union sentiment on Zanzibar. With Tanzania unwilling to cede significant authority to Zanzibar, the situation could prove intractable.
  • The long-delayed appointments to the CCM's new Central Committee have been fairly neutral. This suggests that Edward Lowassa remains the most likely candidate to succeed Mr Kikwete as president in 2015.
  • Contrary to the government's long-standing plans, its debut international sovereign bond issue has taken the form not of a Eurobond, but a US$600m seven-year, amortising, floating-rate bond issued via a private placement.
  • The energy and minerals minister has said that a windfall tax on gold is still under consideration. The authorities have, so far, shied away from imposing rules that breach mine agreements but may succumb to rising public pressure.
  • The government's decision to draw on the full amount (US$114m) available to it under its precautionary stand-by credit facility with the IMF suggests that it may be struggling to finance Tanzania's sizable current-account deficits.
  • The failure of over 50% of candidates in the most recent secondary-school leaving exam has starkly highlighted the poor quality of Tanzania's education system, which has major economic and social repercussions.

  March 21, 2013

Economy:

• Background

  Tanzania: Economic background

  COUNTRY BACKGROUND

  FROM THE ECONOMIST INTELLIGENCE UNIT

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	30.8	30.2	29.4	28.6	27.7
  Industry	20.2	20.8	21.4	21.7	22.2
  Services	48.9	48.9	49.2	49.7	50.1
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  Official statistics on Zanzibar are unreliable and produced infrequently but coupled with other data can give a reasonable impression of the economic structure. The importance of agriculture has fallen since the 1990s, going from around 40% of GDP to around 25% of GDP in recent years. This has declined for two main reasons—a falloff in clove export earnings and an increasing focus on tourism. However, agriculture remains important in terms of employment, with much of the population earning a living from subsistence farming. Tourism constitutes the bulk of the services sector, which in turn accounts for over half of Zanzibari GDP. The industrial sector is small. The other main source of employment is public administration.

  December 02, 2008

• Structure

  Tanzania: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 21, 2013

• Outlook

  Tanzania: Country outlook

  Tanzania: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Tanzania is not expected to face significant threats to its stability in the run-up to the next elections, due in October 2015, owing to the dominance of the president, Jakaya Kikwete, and the ruling party, Chama Cha Mapinduzi (CCM). However, the growing clout of the main opposition party, Chama Cha Demokrasia na Maendeleo (Chadema)--which has maintained a much higher public profile than any previous opposition party and has secured some important political and by-election victories against the CCM since the 2010 elections--could lead to sporadic low-level unrest. Recent rallies organised by Chadema have met with a hostile response from the police, resulting in violent clashes--a trend that is likely to continue as the CCM's poor track record of raising standards of living contributes to a further rise in Chadema's appeal. The other potential source of unrest on the mainland is dissatisfaction with the distribution of revenue from the gas sector, as highlighted by the violent protests in the gas-rich region of Mtwara in January. Such cases of violent unrest are virtually unprecedented in Tanzania (apart from Zanzibar), and their emergence points to a shift in the political landscape, although the risks to broad political stability remain low.

  ELECTION WATCH: A formal review of the constitution is under way and is due to be completed by end-2013. It seeks to address some of the complaints raised by the opposition and civil society about the current version, such as the excessive powers that it gives to the executive. The constitutional reform process is contentious, with Chadema and other opposition parties unhappy at its apparent domination by the CCM. The opposition's desire for a constitution that gives less power to the presidency and provides a more level electoral playing field is unlikely to be realised fully, but should lead to some changes. The CCM, assuming that it remains united, is likely to remain on top at the elections, with its candidate--key contenders include a former prime minister, Edward Lowassa; the foreign minister, Bernard Membe; and the works minister, John Magufuli--installed as president. The opposition is expected to continue to make gains, and there is the prospect that a genuine multiparty democracy will start to emerge. However, this would be undermined if Chadema were to split because of the competing presidential ambitions of two of its senior members, Wilbrod Slaa and Zitto Kabwe.

  INTERNATIONAL RELATIONS: Tanzania's relations with its main donors and trading partners are expected to remain favourable. The government will continue to support publicly the development of the East African Community (EAC), although further integration--including full monetary union--will be contentious. It will need to accommodate nationalistic concerns over land and immigration, and, consequently, Tanzania will continue to resist closer EAC integration. Relations with Malawi will remain poor, as the potential for hydrocarbons discoveries in Lake Nyasa (known in Malawi as Lake Malawi) has raised the stakes in the long-dormant border-demarcation dispute between the two countries. However, an escalation to military conflict is extremely unlikely.

  POLICY TRENDS: The main goal of economic policy--to push up the growth rate in order to reduce poverty--will remain firmly on the agenda. A key objective will be to boost spending on infrastructure, financed by raising new funds and by public-private partnerships. Power cuts are likely to become less frequent from 2013 as new coal plants come on stream, but supply will remain inadequate owing partly to the financial difficulties of the state-owned power utility, Tanesco. Tanzania's large natural gas reserves will eventually play an important role in alleviating the power deficit, but commercial production is not expected to begin before 2017. A new law to regulate the gas sector--governed at present by production-sharing agreements negotiated individually by each company--is due by mid-2013. This should provide some clarity on the policy outlook, which is highly uncertain at present. Further reform in the agricultural sector is needed to boost the fortunes of the two-thirds of Tanzanians who earn a living from the land. However, the government is likely to shy away from the fundamental changes needed to increase sectoral growth, particularly in the area of land rights. More generally, any move away from Tanzania's long history of slow policy reform will be difficult to achieve.

  ECONOMIC GROWTH: Real GDP growth is forecast to pick up from an estimated 6.9% in 2012 to 7.1% in 2013, driven by faster investment growth as the government begins to clarify the policy framework for the natural gas sector. Growth is forecast to increase to an average of 7.3% in 2014-15, driven by robust investment growth and pre-election fiscal spending, and to moderate to 6.9% in 2016-17 as investment growth starts to tail off following a number of years of very fast expansion. Economic growth would be lower if drought were to occur again, leading to yet another power crisis. The inefficient bureaucracy, weak policy responses, shortages of skilled labour and inadequate infrastructure will continue to keep growth well below potential in 2013-17.

  INFLATION: Having increased sharply in the latter half of 2011, inflation fell from 19.7% in January 2012 to 12.1% in December, underpinned by higher food output, a fall in global oil prices and tight monetary policy. The Economist Intelligence Unit expects it to moderate further, to an average of 8.7%, in 2013 as these trends continue but underlying stickiness in prices prevents a faster decline; and to 7.9% in 2014 as commodity price trends remain supportive. An increase to 8.4% is forecast in 2015 as the pace of currency depreciation picks up, boosting imported inflation, and monetary policy is loosened slightly in the run-up to the election, with a decline to a range of 7.5-8.1% in 2016-17. There is one significant caveat to this forecast--it is reasonably likely that at some point in the next five years there will be another drought and a consequent increase in food prices, although it is impossible to predict when this might happen.

  EXCHANGE RATES: The Tanzanian shilling was unusually stable in 2012, underpinned by a tight monetary policy stance, a gradual moderation in inflation and confidence in Tanzania's economic prospects. In 2013 the shilling is expected to revert to a trend of gradual depreciation as the wide fiscal and current-account deficits weigh on it. The pace of depreciation is expected to pick up from 2014 as Tanzania's terms of trade deteriorate because of a decline in gold prices. Throughout the forecast period, however, the currency will be supported by strong growth in inflows of foreign direct investment (FDI) and relatively stable international oil prices. Overall, the shilling is forecast to depreciate from an annual average of TSh1,581:US$1 in 2012 to TSh1,636:US$1 in 2013 and TSh1,974:US$1 in 2017. The economy's acute vulnerability to drought presents a major risk to this forecast, and exchange-rate depreciation would be significantly higher in such an event.

  EXTERNAL SECTOR: The trade deficit is expected to widen in nominal terms as prices for the country's largest export, gold, decline steadily from 2014, and as robust economic growth fuels demand for imports. The lacklustre performance of gold exports will be largely offset by strong growth in manufactured goods exports, as well as by the onset of uranium exports in 2014, ensuring that export growth remains positive for most of the forecast period. However, imports will continue to grow at a faster rate, driven by rapid investment growth and high domestic demand, although the relative stability of international prices for oil (which accounts for almost one-third of imports) will keep the overall import bill in check. The services surplus will widen owing to growth in tourism revenue, which has shown considerable resilience to weak external demand, although this could be revised down if the security situation on Zanzibar continues to worsen. We expect the income deficit to narrow marginally from 2015 as lower gold prices hit profits in the mining sector, leading to less repatriation of profit. The surplus on the current transfers account will remain large, reflecting continued donor support. We forecast that the current-account deficit will narrow to 11.8% of GDP in 2013 and further, to 10.9% of GDP, in 2014, before widening to 11.7% of GDP in 2016-17 as the decline in gold prices accelerates. Financing the deficits will be a challenge, although robust growth in FDI inflows (particularly in the gas sector) and Tanzania's continued favourable access to external funds will ensure that it is able to finance its deficits.

  March 25, 2013

• Forecast

  Tanzania: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	6.9	7.1	7.2	7.4	6.7	7.0
  Consumer prices (av, 2000=100)	16.1c	8.7	7.9	8.4	7.6	8.1
  Consumer price inflation (end-period)	12.1c	6.5	7.4	8.9	8.2	7.7
  Lending interest rate (av)	14.7	16.2	14.9	15.4	14.6	15.1
  Government balance (% of GDP)d	-5.0	-6.2	-5.2	-5.0	-5.1	-4.3
  Exports of goods fob (US$ m)	5,643	6,209	6,799	6,995	6,991	7,195
  Imports of goods fob (US$ m)	-10,290	-10,872	-11,658	-12,507	-13,375	-14,307
  Current-account balance (US$ m)	-4,241	-4,194	-4,332	-4,899	-5,612	-6,178
  Current-account balance (% of GDP)	-13.4	-11.8	-10.9	-11.1	-11.7	-11.7
  External debt (year-end; US$ bn)	11.6	13.2	13.9	14.8	15.9	17.2
  Exchange rate TSh:US$ (av)	1,581c	1,636	1,703	1,788	1,882	1,974
  Exchange rate TSh:¥100 (av)	1,976c	1,764	1,802	1,857	1,930	2,046
  Exchange rate TSh:€ (end-period)	2,065c	2,200	2,252	2,281	2,426	2,507
  Exchange rate TSh:SDR (end-period)	2,415c	2,528	2,606	2,701	2,863	2,959
  a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Actual. d Fiscal years ending in June.

  Download the numbers in Excel

  Download text file (csv format)

  March 21, 2013

View detailed map

Country Briefing

Land area

883,749 sq km (881,289 sq km mainland, 2,460 sq km Zanzibar), plus lakes totalling 59,100 sq km

Population

47.7m (2012 IMF estimate)

Population in '000 (2012 World Gazetteer estimates):

 Dodoma (political capital): 191

 Dar es Salaam (commercial capital): 3,461

 Mwanza: 641

 Zanzibar Town: 540

 Arusha: 504

 Mbeya: 340

 Morogoro: 299

 Tanga: 256

Climate

Tropical on the coast, semi-temperate inland

Weather in Dar es Salaam (altitude 14 metres)

Hottest month, January, 23-32°C; coldest month, July, 18-29°C; driest month, September, 26 mm average rainfall; wettest month, April, 263 mm average rainfall

Languages

Swahili, English

Measures

Metric system

Currency

Tanzanian shilling (TSh)

Fiscal year

July 1st-June 30th

Time

Three hours ahead of GMT

Public holidays

January 12th, Zanzibar Revolution Day; March 5th, Union Day; May 1st, Workers' Day; July 7th, Sabasaba; August 8th, Farmers' Day; December 9th, Independence Day; December 25th, 26th and 27th; Tanzania also observes Eid al-Haj, Mawlid and Eid al-Fitr, which vary according to the Islamic lunar calendar

January 11, 2013