Tanzania

Politics:

• Analysis

  Tanzania politics: Quick View - Opposition MP is reinstated following court

  Event

  Tanzania's Court of Appeal has ruled that Godbless Lema be reinstated as MP for Arusha Urban, overturning a ruling by the Arusha High Court in April 2012 that nullified Mr Lema's 2010 election victory.

  Analysis

  The verdict is the latest political victory for the main opposition party, Chadema, and has consolidated its hold on power in northern Tanzania. Mr Lema won the 2010 parliamentary election in Arusha Urban with 56,561 votes, defeating Batilda Burian of the ruling Chama Cha Mapinduzi (CCM) by almost 20,000 votes. However, the Arusha High Court nullified his victory on the grounds that he had defamed Mr Burian during his campaign rallies. The Court of Appeal overruled this verdict on the basis that there was insufficient evidence that the people who had petitioned the results in Arusha Urban were registered voters in the constituency.

  Chadema's political standing continues to rise; it has maintained a high public profile since the 2010 elections, secured important by-election victories and kept the CCM's poor track record on corruption firmly under the spotlight. This bodes well for political competition in Tanzania, where the CCM has long been completely dominant, but also points to a small rise in the risk of political unrest. A number of recent rallies organised by Chadema have turned violent, partly due to a disproportionate response by the police. This trend is set to continue as the party steps up its efforts to break the CCM's dominance at the grass-roots level.

  Against this backdrop, local elections in 2013 will serve as an important litmus test for both parties' prospects in the 2015 national elections. The opposition is expected to push for a more level electoral playing field, including the dissolution of the National Electoral Commission, which it accuses of helping the CCM to rig the 2010 polls. Whatever progress it makes in this regard, however, the CCM would remain on top in the polls. Although Chadema's share of the presidential vote increased from 5.9% in 2005 to 26.3% in 2010, it continued to lag far behind the CCM's 61.2%. Its parliamentary representation is even smaller; this increased from 2% of seats in 2005 to 9.2% in 2010, compared to the CCM's 78% (down from 89% in 2005).

  December 27, 2012

• 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)

  Key ministers

  President: Jakaya Kikwete

  Vice-president: Mohamed Ghalib Bilal

  President of Zanzibar: Ali Mohamed Shein

  Prime minister: Mizengo Pinda

  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

  December 01, 2012

• 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 CCM and its next presidential candidate-Mr Kikwete cannot stand again-are expected to win the 2015 elections, albeit with the opposition securing greater representation.
  • Economic policy will continue to focus on pushing up the growth rate in order to reduce poverty. However, Tanzania's long history of slow policy reform will continue to impede the pace of progress.
  • The fiscal deficit is expected to moderate from 2013/14, averaging 5.3% of GDP over the forecast period, as steady (if unspectacular) progress is made in curtailing recurrent spending growth and expanding the revenue base
  • Real GDP growth is forecast to average 7.1% in 2013-17, assuming favourable rains and a pick-up in investment, trade and tourism. However, poor energy and transport infrastructure will keep growth below potential.
  • Trends in global commodity prices will continue to have a large bearing on the current-account deficit, which is forecast to narrow to 11.4% of GDP by 2014 and widen to 13% of GDP by 2017, driven largely by gold prices.

  Review

  • Mr Kikwete's recent reshuffle of the CCM's seven-member secretariat has provided little indication of who he favours as the party's next presidential candidate.
  • The results of the CCM's intra-party elections, however, have left the faction led by the former prime minister, Edward Lowassa, in a dominant position.
  • The deputy secretary-general of Chadema, Zitto Kabwe, has accused London-listed Ophir Energy of paying bribes to senior officials to acquire offshore exploration rights in Tanzania.
  • The allegations will put renewed pressure on the CCM, which is struggling to revamp its corruption-tainted image, and are likely to ensure that the fourth licensing round, due to begin in May 2013, is closely scrutinised.
  • The government's recently released draft natural gas policy has provided little new information about the policy framework, shedding no light on the tax regime or whether domestic consumption will be prioritised.
  • Inflation has continued to moderate, to 12.9% in October from 17.9% a year ago, underpinned by a more favourable harvest, slower growth in oil prices, less power rationing and greater currency stability.

  December 01, 2012

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

  
  

  

  December 01, 2012

• Outlook

  Tanzania: Country outlook

  Tanzania: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Tanzania is unlikely 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). Since the 2010 election Chama Cha Demokrasia na Maendeleo (Chadema), which emerged as the main opposition party at the polls, has maintained a much higher public profile than any previous opposition party and has secured some important political victories over the CCM, both in by-elections and in parliament. With an increasingly confident Chadema, dissatisfaction with wages in the public sector, and a stream of corruption allegations, the CCM has been on the back foot, stumbling from crisis to crisis and responding to events rather than shaping the agenda. Little change is likely on this front, unless the CCM is able to defy expectations and resolve its internal divisions. These have grown as different factions vie to take over from Mr Kikwete, who is due to step down when his second and final term as president ends in 2015. The party's next presidential candidate will be selected in early 2015, but the results of the CCM's internal elections in late 2012 suggests that the faction associated with a former prime minister, Edward Lowassa, is now in the strongest position. If Mr Lowassa were to win the candidacy, this would be likely to entrench the decline in the CCM's popularity--Mr Lowassa's reputation has been tainted by allegations of corruption ever since he was forced to resign from his post as prime minister in 2008 owing to his association with the high-profile Richmond-Dowans scandal. However, this decline in popularity is from a high base and the CCM is expected to remain the dominant political force over the forecast period.

  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 of the constitution, such as the excessive powers that it gives to the executive. The review will also try to avoid a repeat of the problems experienced during the 2010 elections, including an opaque vote-counting process. 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 Mr Lowassa; the minister for foreign affairs, Bernard Membe; and the minister for works, 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, ending the domination enjoyed by the CCM since independence. However, this would be undermined if Chadema were to split because of the competing presidential ambitions of two of its members, Wilbrod Slaa and Zitto Kabwe.

  INTERNATIONAL RELATIONS: The government will continue publicly to support 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, as a result, Tanzania will continue to act as a brake on closer EAC integration. This was highlighted by the increase in work permit fees, including for EAC citizens, in early August. Bilateral relations with Malawi have deteriorated, as the potential for hydrocarbon 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. The prospects for an agreement over the short term are slim, although there is little risk of military action.

  POLICY TRENDS: The main goal of economic policy--to push up the growth rate in order to lower poverty--will remain firmly in the spotlight. The government will have to balance the need for fiscal consolidation with increasing capital spending, which has continually been held back by capacity constraints. 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 below-cost electricity tariffs that curtail investment in the sector. Recent natural gas finds will be no panacea for the country's power problems (at least over the short term), as investments are yet to be made in processing capacity. 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 remains uncertain, with little information on the tax regime in the sector or whether domestic consumption will be prioritised. 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: A sustained improvement in growth in the agricultural sector--the country's largest employer--would be required to drive Tanzania's development forward. There are some provisional signs that this is possible with ongoing commercial investment into the sector, but the dependence on smallholder farmers and rain-fed irrigation will remain a problem (as will low levels of fertiliser application). Growth will also be helped by some alleviation of the electricity constraint from 2013, allowing more sustained expansion in the manufacturing sector. The other main development will be in the mining sector, where gold will begin to lose its place to hydrocarbons as the driver of growth towards the end of the forecast period. Overall GDP growth is forecast to average 7.1% in 2013-17. The rate of growth would be lower if drought were to occur again, leading to yet another power crisis. Bureaucracy, weak policy responses, shortages of skilled labour and inadequate infrastructure will continue to act as a drag on growth. As a result, projected growth rates will remain below potential and will have only a modest impact on poverty reduction.

  INFLATION: Inflation has moderated, from 19.8% at end-2011 to 12.9% in October 2012, owing to higher food output, a fall in global oil prices and continued tight monetary policy. A further moderation, to an average of 7.2%, is expected in 2013 owing to a better harvest in 2012, combined with tighter fiscal policy in 2013/14 and lower international fuel prices. In 2014-16 faster currency depreciation is expected to push inflation up to an average of 7.9% by boosting import prices. Favourable food and oil price trends should prevent a more rapid increase. Inflation is expected to moderate to 7.6% in 2017, as the pace of exchange-rate depreciation slows. There is one large 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 has been remarkably stable in 2012, underpinned by a tight monetary policy stance, a gradual moderation in inflation and the shilling's appreciation at the start of the year (which seems to represent the unwinding of some of the sharp depreciation seen at end-2011, when the shilling is likely to have overshot economic fundamentals). 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 further in 2014-16 as Tanzania's terms of trade deteriorate because of a steep decline in gold prices, before reverting to a more gradual weakening in 2017. Throughout the forecast period, however, the currency will be supported by strong growth in inflows of foreign direct investment (FDI), particularly into the natural gas sector. Overall, the shilling is forecast to depreciate from TSh1,585:US$1 in 2012 to TSh1,651:US$1 in 2013 and TSh2,037:US$1 in 2017.

  EXTERNAL SECTOR: The Economist Intelligence Unit estimates that the current-account deficit will have narrowed to 13.2% of GDP in 2012 as the import bill fell slightly, underpinned by lower domestic demand for diesel following an improvement in the power supply situation. The trade deficit is expected to widen modestly in nominal terms in 2013 and 2014, as strong growth in demand for capital goods (which are largely imported) offsets a small decline in oil prices in 2013 and the impetus to exports from the onset of uranium mining in 2014. Exports are forecast to stagnate in 2015, contract in 2016 and grow only marginally in 2017 as gold prices fall, offsetting continued steady growth in exports of manufactured goods. Meanwhile, import growth will pick up on the back of strong domestic demand, infrastructure development and investment in the natural gas sector, causing a significant deterioration in the trade account.

  December 01, 2012

• 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	7.0	7.1	7.3
  Consumer prices (av, 2000=100)	15.9	7.2	7.6	7.9	8.1	7.6
  Consumer price inflation (end-period)	9.7	6.7	7.0	7.5	7.3	7.0
  Lending interest rate (av)	15.9	15.7	14.6	14.9	15.1	14.6
  Government balance (% of GDP)c	-6.2	-6.3	-5.5	-5.0	-5.1	-4.6
  Exports of goods fob (US$ m)	5,129	5,680	6,200	6,228	5,978	6,047
  Imports of goods fob (US$ m)	-9,624	-10,210	-10,932	-11,712	-12,503	-13,354
  Current-account balance (US$ m)	-4,149	-4,169	-4,356	-4,989	-5,865	-6,530
  Current-account balance (% of GDP)	-13.2	-12.0	-11.4	-11.9	-12.9	-13.0
  External debt (year-end; US$ bn)	11.5	13.5	15.2	17.1	19.1	21.0
  Exchange rate TSh:US$ (av)	1,585	1,651	1,724	1,820	1,944	2,037
  Exchange rate TSh:¥100 (av)	1,997	1,998	1,988	2,046	2,109	2,228
  Exchange rate TSh:€ (end-period)	2,068	2,113	2,159	2,330	2,525	2,576
  Exchange rate TSh:SDR (end-period)	2,476	2,550	2,621	2,787	3,003	3,070
  a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Fiscal years ending in June.

  Download the numbers in Excel

  Download text file (csv format)

  December 01, 2012

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

46.2m (2011 estimate)

Population (2002 census)

Dodoma (political capital): 1,699,000

Dar es Salaam (commercial capital): 2,498,000

Mwanza: 2,942,000

Mbeya: 2,070,800

Tanga: 1,642,200

Arusha: 1,292,700

Zanzibar Town: 391,600

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

March 14, 2012