Country Report Tanzania May 2011

Highlights

Outlook for 2011-12

  • The president, Jakaya Kikwete, and his party, Chama Cha Mapinduzi (CCM), will continue to dominate the political scene. However, the party is far from united and divisions are likely to grow in the forecast period.
  • Having been liberated from the constraints of pleasing different factions in order to maintain support, Mr Kikwete is expected to pursue reform more vigorously in his final term in office.
  • Revenue growth will be stronger in 2010/11, but the government will maintain its expansive expenditure programme, with the fiscal deficit peaking at 6.6% of GDP. A slight slowdown in spending should allow it to fall to 6% in 2011/12.
  • Real GDP growth is expected to increase to 7.1% in 2011 and 7.5% in 2012 as investment, trade and tourism pick up. Agriculture should also perform well (weather permitting), helped by government subsidies.
  • Inflation is forecast at 7.7% in 2011 and 6.5% in 2012. Rising international commodity prices, oil especially, will have a negative effect on the local economy during 2011, but should moderate in 2012.
  • The current-account deficit is forecast to fall to 8.3% in 2011, before increasing to 8.9% of GDP in 2012. This is mainly due to trends in the trade account.

Monthly review

  • The CCM has announced major changes in the composition of its governing National Executive Committee (NEC) as the party leadership accepted that reform is needed to improve performance.
  • The new NEC has begun its tenure by talking tough, including a commitment to reinvigorating the party by tackling the problem of underperforming leaders at both the district and regional levels.
  • The government has deferred debate on its proposed Constitutional Review Bill, mainly owing to the need to extend the period for public debate on the bill.
  • The government is increasing its military and naval commitment to the country's offshore maritime zone in order to prevent attacks by Somali pirates.
  • The Tanzanian Petroleum Development Corporation (TPDC) has postponed its planned fourth licensing round from April until 2012. A major find between now and then will increase the value of the bids on the new blocks.
  • The Bank of Tanzania has distanced itself from claims that it is looking into the idea of being able to draw on funds held in offshore accounts by mining companies if necessary at times of crisis.

Outlook for 2011-12: Political stability

Having secured re-election at the presidential and legislative elections in October 2010-albeit with a lower share of the vote than in 2005-the president, Jakaya Kikwete, and the ruling party, Chama Cha Mapinduzi (CCM), have another strong mandate to lead Tanzania over the next five years. As a result, the country is unlikely to face any significant threats to its political stability during the forecast period. However, since the start of 2011 it has become increasingly clear that there will be a background rumble of discontent as the Chama Cha Demokrasia na Maendeleo (Chadema), which emerged as the main opposition party at the elections, seeks to establish a higher-profile political role.

The main reason for these tensions is because, rather than use a more conventional parliamentary route to challenge the government, Chadema seems intent on adopting a more aggressive and populist approach, certainly by Tanzanian political standards, in opposing the CCM. Recent marches organised to protest at the conduct of the 2010 elections and to demand constitutional reform have resulted in violent clashes with the police. Nevertheless, although the political battle with Chadema will dominate the headlines from time to time, it is not considered to be a major threat to overall political stability unless badly mismanaged by the dominant CCM.

Instead, the main focus will be on whether during his final term in office, liberated from the constraints of pleasing different factions within the CCM in order to maintain support, Mr Kikwete can step up his tentative efforts to reform the party. The first step in this direction happened in April 2011 with major changes to all the senior posts within the National Executive Committee, with alterations to the wider structure of the party expected to follow. However, it still remains unclear whether the changes are a genuine effort at overhauling the party, or part of a more superficial campaign to marginalise various factions within the CCM. It is also debatable how much time and effort Mr Kikwete will be prepared to devote to political infighting and how much he wants to allocate to other national policies.

One element that is likely to help Mr Kikwete is that the political elite on the mainland will not be distracted this time by political unrest on the islands of Zanzibar, as the formation of a government of national unity (GNU) in 2010 has created a political compromise that is acceptable to all parties. This is especially the case because the new Zanzibari president, Ali Mohammed Shein, is a loyal ally of Mr Kikwete and a political moderate whom the Economist Intelligence Unit expects to try to make the GNU work in the spirit of compromise in which it was agreed. However, the Zanzibar question is unlikely to die away completely in the coming years. In particular, if-as seems likely-there is a commercially developable hydrocarbon find close to the archipelago in the coming years, a higher degree of political nationalism on the islands is likely to emerge.

Outlook for 2011-12: Election watch

Presidential and legislative elections were held in October 2010. Although peaceful, they were far from perfect, with a low turnout and an opaque vote-counting process. The government has announced that it will push ahead with a formal review of the constitution in the next few years, which is likely to update the constitution and make it more suitable for a multiparty environment. The next elections are not due until 2015.

Outlook for 2011-12: International relations

Given that one criticism that constantly dogged Mr Kikwete's first term in office was his high international profile, which led to claims that the president was not focusing sufficiently on pressing domestic issues, we expect him to adopt a lower international profile in the early part of his second term in office. At a regional level the government will continue to support the development of the East African Community (EAC), especially now that the common market has come into operation. However, further integration will be a source of contention. The government appears to be aware that the development of the EAC will underpin its longer-term economic ambitions. Nevertheless, it will be forced to temper this conviction because of nationalistic concerns over land and immigration. Tanzania will therefore continue to act as a brake on closer EAC integration, and this will vex relations with other member states, especially Kenya and Uganda.

Outlook for 2011-12: Policy trends

Economic policy in 2011-12 will be orientated around growth and poverty reduction as the priorities, balanced against the need to reduce the fiscal deficit and tighten monetary policy in the face of rising inflation. However, even with fiscal consolidation, the government will seek to increase capital spending, an area continually held back by capacity constraints. In this respect the government's main aim is to boost spending on infrastructure development, financed by a combination of raising new funds (such as a debut Eurobond) and public-private partnerships.

Further reforms in the agricultural sector are still needed to boost the fortunes of the roughly two-thirds of Tanzanians who earn a living from the land. The government has shied away from the fundamental changes necessary to increase growth in the sector, particularly in land rights, but the launch of the ambitious Southern Agricultural Growth Corridor of Tanzania (SAGOT) scheme-which involves ramping up agricultural production in an area of the country approximately the size of Italy-may be the start of a major boost to the government's Kilimo Kwanza (agriculture first) policy. A key aim is that of improving infrastructure and providing small-scale farmers with a link to markets as well as access to better inputs of both seeds and fertiliser.

With Mr Kikwete successfully re-elected to a second and final term and no longer shackled by having to make compromises in order to win re-election, it may also prove possible for the president to push through more contentious reforms, such as reform of the weak legal system and the reduction of corruption. Encouragingly, the new cabinet consists of a cabal of ministers who are not only loyal to the president, but who also reflect his overall thinking on many key policy issues, so progress with much-needed liberalisation and reform is a distinct possibility. Nevertheless, it is important not to get carried away, as breaking away from Tanzania's long history of slow policy reform will be a difficult task.

Outlook for 2011-12: Fiscal policy

We expect the government to maintain its aim of seeking to boost development spending in the coming years. The extent to which the deficit rises, however, will depend on a combination of domestic revenue growth and the government's capacity to increase spending, notably on development projects. Capacity constraints tend to mean that development expenditure comes in below target, and this trend is expected to continue. Meanwhile, with the economy picking up steadily, domestic revenue collection should continue to improve. We therefore expect the fiscal deficit to peak at 6.6% of GDP in 2010/11 (July to June) before falling back to 6% of GDP in 2011/12, owing to strong economic growth that should translate into increases in revenue collection. In addition, although the fiscal stimulus will be maintained, it will not be at the same level as seen between 2008 and 2010, when the government attempted to offset the effects of the poor global economic environment.

Disquiet among donors over corruption scandals and the slow pace of reform, as well as their own budgetary pressures, means that direct budget support will not keep pace with the growth in domestic revenue. Despite this, project support will remain vigorous. In addition, there is still considerable scope to increase domestic borrowing, which is inexpensive at the moment, as interest rates on government securities are low, although we expect them to rise moderately during the forecast period. The government will also continue to consider issuing a debut Eurobond and may even agree a syndicated bank loan.

Outlook for 2011-12: Monetary policy

In recent years the main thrust of the monetary policy of the Bank of Tanzania (BoT, the central bank) has been to control the growth of broad money supply and credit growth to the private sector, in order to support economic growth and meet the inflation target. However, the situation is complicated by the high weighting of food in the inflation index and the volatility of money-supply growth and its lagged impact on the inflation rate. Indeed, with the pick-up in inflation in early 2011, the BoT may well struggle to meet its inflation target this year, although, given the steady pick-up in growth in private-sector credit in late 2010, it will have less concern about tightening policy than it has had in recent years. Nevertheless, a residual concern about the level of lending rates charged by commercial banks in the economy will persist. In recent years these rates have moved little regardless of what the central bank has done in terms of monetary policy. To this end, the BoT is expected to push ahead with what it terms its "second generation" of financial sector reform. However, to make a real impact the government will also need to implement difficult reforms, such as making it easier to use land as collateral.

Outlook for 2011-12: International assumptions

International assumptions summary
(% unless otherwise indicated)
 2009201020112012
GDP growth
World-0.74.94.34.2
OECD-3.52.92.52.3
EU27-4.21.81.91.7
Exchange rates
¥:US$93.787.981.881.0
US$:€1.3931.3261.3651.295
SDR:US$0.6460.6520.6370.648
Financial indicators
€ 3-month interbank rate1.230.841.331.88
US$ 3-month Libor0.690.340.410.79
Commodity prices
Oil (Brent; US$/b)61.979.6101.085.0
Gold (US$/troy oz)973.01,224.71,367.31,232.5
Food, feedstuffs & beverages (% change in US$ terms)-20.411.730.3-12.1
Industrial raw materials (% change in US$ terms)-25.644.528.0-10.7
Note. Regional GDP growth rates weighted using purchasing power parity exchange rates.

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Outlook for 2011-12: Economic growth

Economic growth is expected to be strong during 2011-12, underpinned by the construction, mining and services sectors. Construction growth will be driven by donor-funded infrastructure development-notably in roadbuilding and the power sector-and by commercial and residential development in major cities. Gold exports will rise steadily, bolstered by high global prices and increased production. Growth in services will be driven by telecommunications and transport, and financial services will benefit from the banking sector's relative isolation from global markets.

Economic growth will be aided further by a pick-up in agricultural performance (weather permitting) as the government supports the sector with large subsidies. However, long-standing constraints, such as poor energy and transport infrastructure, as well as excessive bureaucracy, will restrain economic growth. Overall, real GDP growth is expected to reach the government's target of 7.1% in 2011 and 7.5% in 2012; these levels are relatively strong but below potential and will not translate into any major increase in income per head.

Outlook for 2011-12: Inflation

There has been a steady increase in the inflation rate since October 2010, with the most recent data showing that prices rose by 8% year on year in March. Much of the rise has been driven by an increase in food prices, which is normal at this time of year, especially following the weak vuli rains. However, there are signs that the longer main rains could also be weak this year and that inflationary pressures are becoming more generalised, with rising oil prices also starting to have an impact. Furthermore, the economy faces ongoing structural rigidities against a background of robust growth and the overhang of loose fiscal and monetary policy from 2009-10; we therefore think that it will be a major challenge for the BoT to meet its 5% target for June 2011 and that inflation will remain elevated in 2011. As a result of these factors we expect inflation to average around 7.7% in 2011, although from this higher base, and assuming a reasonable harvest in 2012, it should ease back moderately next year, to around 6.5%.

Outlook for 2011-12: Exchange rates

After a volatile couple of years there have been signs that the shilling is now stabilising at a level of around TSh1,500:US$1, and this is expected to continue into 2011, with an average rate of TSh1,507:US$1. Strong exports, increasing foreign reserves and inflation below recent historical averages will all help the shilling, although confidence will remain fragile and will be linked closely to global trends; the movement of the US dollar against the important export market of the euro zone will have a significant effect. The story will be broadly similar in 2012, although the slightly wider current-account deficit is expected to exert some downward pressure, with the shilling averaging TSh1,534:US$1 for the year as a whole.

Outlook for 2011-12: External sector

Tanzania's structural trade imbalance will keep the overall current account firmly in deficit during 2011-12. The value of gold exports-which account for more than one-third of total exports-will be boosted by steady increases in production and high prices. However, although still high, the price in 2012 is expected to be below earlier peaks and will therefore act as a brake on export value growth. The import bill will remain significant, especially as capital import growth for infrastructure is scaled up. In addition, average oil prices will remain high.

The surplus on the services account will widen as tourism growth picks up on the back of the global economic recovery, although this recovery will be only gradual, as Western markets remain depressed. The deficit on the income account is expected to widen as gold companies repatriate higher profits. The surplus on the current transfers account will remain large, as Tanzania continues to benefit from donor support. However, the pace of increase in this surplus will be slower than in previous years as some bilateral donors reassess their priorities in the wake of recession. The overall current-account deficit is forecast to fall to 8.3% of GDP in 2011, before the deterioration of the trade balance sees it increase to 8.9% of GDP in 2012.

Outlook for 2011-12: Forecast summary

Forecast summary
(% unless otherwise indicated)
 2009a2010b2011c2012c
Real GDP growth6.06.97.17.5
Consumer prices (av, 2000=100)12.17.2a7.76.5
Consumer price inflation (end-period)12.25.6a7.66.2
Lending interest rate (av)15.014.3a14.713.5
Government balance (% of GDP)d-4.8-6.4-6.6-6.0
Exports of goods fob (US$ m)3,364.73,970.34,754.14,636.2
Imports of goods fob (US$ m)-5,834.2-6,729.8-7,631.4-8,018.5
Current-account balance (US$ m)-1,816.2-2,056.3-2,125.5-2,560.9
Current-account balance (% of GDP)-8.5-8.6-8.3-8.9
External debt (year-end; US$ bn)7.38.28.99.6
Exchange rate TSh:US$ (av)1,320.31,409.3a1,506.51,533.7
Exchange rate TSh:¥100 (av)1,409.01,603.6a1,842.81,893.5
Exchange rate TSh:€ (end-period)1,901.61,986.6a2,011.41,958.6
Exchange rate TSh:SDR (end-period)2,092.32,295.4a2,363.82,364.9
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. d Fiscal years (July-June).

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The political scene: The CCM engages in a bout of spring cleaning

On April 12th it was announced that there had been some major changes in the composition of the National Executive Committee (NEC) of the ruling Chama Cha Mapinduzi (CCM) party. The main topic at the meeting was apparently the party's relatively poor performance at the October 2010 elections, which led the party leadership to accept that the CCM needed to reform from within. The three key changes made to the leadership of the secretariat of the NEC were the appointment of:

  • a new secretary general: Yussuf Makamba was replaced by a retired, but long-serving former civil servant, Wilson Mukama;
  • a new deputy secretary general (mainland): George Mkuchika was replaced by the former publicity and ideology secretary, John Chiligati; and
  • a new deputy secretary general (Zanzibar): Vuai Ali Vuai has been appointed to replace Saleh Ramadhan Feruzi.

While these changes are probably the most high profile, much of the party's formal secretariat was changed. In addition to the above changes, the other two most important developments were that the member of parliament (MP) for Iramba West, Mwigulu Lameck Nchemba, was appointed as the party treasurer to replace Rostam Aziz, who is reported not to even have attended the meeting. In addition, January Makamba, the MP for Bumbuli and son of the outgoing secretary general, became the secretary for foreign affairs and international relations. The final changes included the appointment of Nape Nnauye to replace Mr Chiligati, while Asha Juma is now secretary for economic affairs and finance.

The political scene: The president consolidates his grip on power

Speaking about the changes, the country's president and chair of the CCM, Jakaya Kikwete, has been keen to stress that in his view they are a crucial step in terms of revitalising the party, a key part of the overall plan of putting it back in touch with the people before the 2015 elections are held. In this respect he has received some support. Speaking to the local press, Dr Elisante Ole Gabriel of Mzumbe University was broadly positive, arguing that the changes were not only a step forward, but that they should drive a change in overall political strategy. However, other political commentators have been more cautious in their views about the changes. Some, such as Dr Benson Bana from the University of Dar es Salaam have argued that changing the people at the top of the party is not the solution but rather that what is required is to reorganise the party at the grassroots level, an area that was its traditional strength from the days when Tanzanian was a one-party state.

While time will show whether the changes will lead to the revitalisation of the wider party, the more immediate reality is that they reflect the current internal politics of the CCM, as the president seeks further to consolidate his grip on the party and to remove those members in key posts closely associated with his former prime minister, Edward Lowassa. However, the limits on this ability to push through a complete change are shown by the appointment of January Makamba, albeit in a less influential position than his father.

There is also an argument that the appointment of Mr Mukama is a political compromise, in that he reflects a safe pair of hands who has not offended any of the party's main factions, rather than a new leader of the party likely to drive through a major overhaul of its structures. However, he is still relatively close to the president, having had an important role in helping draft the CCM's last election manifesto; this document has always been important to Mr Kikwete, who often argues that progress in implementing the manifesto is the yardstick by which his presidency should be judged. Mr Kikwete's confidence in Mr Mukama is also apparent from his recent role as chairman of the parliamentary committee on energy and minerals that oversaw the changes to the country's mining legislation.

The political scene: A new anti-corruption drive within the CCM

The new National Executive Committee has begun its tenure talking tough. Its publicity secretary, Nape Nnauye, noted in his first press conference that the reformed NEC was committed to reinvigorating the party by moving on underperforming leaders at both the district and regional levels, arguing that the first challenge is to "cleanse the party" while "dealing with members who are tarnishing the good image of the government". His words broadly echo those of Mr Mukama who, speaking to the local press on his appointment, but without naming names, noted that party members implicated in corruption scandals should either quit the party or be prepared to "face the music".

While such sentiment is encouraging in terms of improving governance standards in Tanzania, if the new leadership of the party does actually match words with action, then the divisions with the CCM are likely to become increasingly bitter in the coming year. They may even be enough to drive some high-profile members from the party to form new ones, which will add a further dimension to Tanzania's developing democracy.

The political scene: Reform of the constitution is temporarily delayed

The speaker of the Tanzanian parliament (The Bunge), Anna Makinda, has announced that following a request from the Constitutional, Justice and Administration Committee the government was formally deferring any debate over its proposed Constitutional Review Bill and would instead seek to resubmit a revised bill at a later date. She gave several reasons for the delay, notably the need to extend the period for public debate on the bill, and as part of this, the bill would now be published in Kiswahili, widening the number of people able to read it. She also noted that the government will seek to remove any current ambiguities in the bill identified by various critics and the committee.

In response to the delay, the opposition announced that it was calling off planned demonstrations calling for the withdrawal of the bill. The withdrawal will widely be seen as a victory for the opposition, which was arguing that a quick passage was an attempt by the government to keep a tight control over the process, whereas now it would have to move more slowly and consult more widely. However, the reality is that this is probably more a pyrrhic victory, with the government likely to remain in firm control of the whole reform process even if it does allow a superficial wider debate about some of the main issues. This reflects the fact that even if there is a wider debate it is unlikely to reach any consensus on the need for more radical reform of the constitution.

Economic policy: Offshore maritime security to be boosted

Speaking to parliament in mid-April, the prime minister, Mizengo Pinda, announced that the government had decided to increase its military and naval commitment to the country's offshore maritime zone in order to prevent attacks by Somali pirates, mainly against firms exploring for oil off the coast of Tanzania. He explained that in March and April alone there had been 11 instances of piracy in the country's waters, largely aimed at kidnapping offshore oil workers, and that in response to this the government will offer to provide protection to vessels involved in oil and gas exploration in Tanzanian waters. In addition, he also committed the government to providing escorts to ships entering Tanzanian waters if they requested it.

The problem of pirate attacks off the East African coast is rising, with only a handful of the most high-profile attacks making any significant headlines. Moreover, the cost of it is increasing-the UN estimates the annual cost of piracy in the Indian Ocean at between US$5bn-7bn a year. Not only is there the cost of the increased military outlay, but recently the Kenyan government has stressed the cost, in both time and money, of trying to prosecute pirates through its overstretched legal system as it had been requested to do by the international community. Added to this are the additional insurance and related costs to shipping lines, which pushes up the price of shipping goods into and out of East Africa.

Economic policy: Fourth offshore licensing round is postponed

Despite the increase in incidents with pirates and the rising costs, to date these seem to have had only a limited impact on the level of oil and gas exploration off the coast of Tanzania. In fact, all of East Africa remains a high-profile hot spot for exploration. This in part reflects the fact that the prospects of a significant find off the shore of Tanzania seem to have increased in the last year, as highlighted by the announcement by Dominion Petroleum in early April that it had been granted a one-year extension to the initial exploration period on Block 7, until May 2012, to evaluate more fully its prospects. In September 2010 Dominion had announced that there was a potential hydrocarbon resources of 7trn cu ft of gas and 1.1bn barrels of oil in the block; while at roughly the same time Ophir Energy also announced that they had made a new gas discovery on its Chaza-1 exploration well. This adds to the discoveries made in the last year at its Chewa and Pweza wells and, as Orphir noted in its press release, raises the prospect that there could be sufficient quantities of gas to allow the processing and export of liquefied natural gas (LNG) from Tanzania.

Given these developments, there was some disappointment from international oil companies at the April 11th decision by the Tanzanian Petroleum Development Corporation (TPDC) to postpone its planned fourth licensing round from April to some time in 2012. This was to have offered an additional 13 blocks, in addition to the 17 onshore and offshore blocks currently being explored in the country. The TPDC argued that the delay will allow it to more clearly demark the new blocks using additional seismic data, although there is also the possibility that a major find between now and then will increase the value of the bids on the new blocks.

Economic performance: The shilling has been surprisingly stable

While both the Ugandan and Kenyan shillings have depreciated against the US dollar since the start of the year, the Tanzanian shilling has been remarkably stable, trading for most of the year around the TSH1,500:USD1 range. The stability is unusual in that the Tanzanian shilling often weakens in the first quarter of the year as inflows onto the market-particularly from traditional export crops and tourism-are limited while demand is high. However, this year the stability is probably a result of the fact that the shilling was exceptionally weak in the 2008-10 period. The shilling depreciated against the US dollar by around 15% from the end of 2008 to the end of 2010. Looking back at the history of the currency, after periods of substantial depreciation, there is often a period of prolonged stability, and it could well prove that the shilling is in one of these periods again, with the exchange rate continuing to trade at around its current levels for much of 2011.

In contrast with the Bank of Uganda (the Ugandan central bank), the Bank of Tanzania (the central bank) has in recent years shown little inclination to intervene in the foreign-exchange market on a sustained-or even short but aggressive-basis, in response to any currency weakness. Instead it has preferred to continue slowly to build up its foreign-exchange reserves. At the end of 2010 foreign-exchange reserves had risen to US$3.9bn, up from US$3.47bn at end-2009. However, it is worth nothing that with the rapid growth in imports in 2010, reserves cover has actually fallen modestly. Using the provisional current-account data provided by the Bank of Tanzania in its Monthly Economic Report, the level of coverage has fallen from 4.9 months of import and service payments in 2009 to 4.6 months in 2010, although both levels are probably high enough so that the modest fall is unlikely to be of any major concern to the central bank.

Economic performance: Utilising offshore mining accounts as "quasi reserves"

In a twist to the debate about the correct level of foreign-exchange reserves a country should hold, a number of local newspapers have reported that the bank of Tanzania has commissioned a consultancy to look into the idea of being able to draw on funds held in offshore accounts by mining companies if required at times of crisis. At present, under the 1998 Mining Act, many mining companies legally hold offshore accounts into which they deposit revenue from mineral sales, only repatriating, or converting the money into shillings, when they need to meet the day-to-day running costs of their mines and make tax payments. It is for this reason that there are much more limited inflows into the foreign-exchange market than the total value of mineral exports would indicate. Gold exports were worth US$1.49bn in 2010 according to central bank data, but it is hard to know how much was actually sold onto the local foreign-exchange market. This, in turn, is why earnings from traditional exports such as coffee and tea are often more important in influencing the value of the shilling.

Although entirely legal, these accounts have always attracted a degree of political sensitivity in Tanzania, with some-most recently led by the chairman of the Mining Review Commission, Mark Bomani-arguing that while they may have initially been required as an incentive for mining companies to invest in Tanzania, this was no longer the case given the development of the foreign-exchange market. However, the Economist Intelligence Unit considers that this claim should be treated with a degree of caution as large and lumpy flows by mining companies into and out of Tanzania could significantly increase exchange-rate volatility.

At present, the Bank of Tanzania has made no firm decision about whether to pursue the option of being able to access the offshore accounts. The governor, Benno Ndulu, has noted that gaining rights to access the money in the accounts is potentially a legal minefield, which in itself could mean that the idea might never take off. The Tanzanian Chamber of Mines has, unsurprisingly, taken the lead in opposing any moves in this direction on behalf of the mining companies.

Data and charts: Annual data and forecast

 2006a2007a2008a2009a2010b2011c2012c
GDP       
Nominal GDP (US$ m)14,33116,82520,76221,36823,77725,67228,913
Nominal GDP (TSh bn)17,94120,94824,83828,21333,50938,67544,344
Real GDP growth (%)6.77.17.46.06.97.17.5
Expenditure on GDP (% real change)       
Private consumption8.16.04.83.55.66.57.0
Government consumption8.29.513.25.18.57.27.5
Gross fixed investment16.014.57.810.06.56.57.0
Exports of goods & services-3.316.819.65.16.58.08.5
Imports of goods & services10.316.312.32.64.56.06.6
Origin of GDP (% real change)       
Agriculture3.94.04.63.24.55.05.5
Industry8.59.58.67.08.07.58.0
Services7.88.18.57.27.67.98.3
Population and income       
Population (m)40.141.342.543.745.046.447.8
GDP per head (US$ at PPP)1,1091,1891,2681,3171,3811,4591,564
Fiscal indicators (% of GDP)       
Central government budget revenue18.219.122.820.920.421.321.2
Central government budget expenditure24.124.622.825.726.827.927.2
Central government budget balanced-6.0-5.50.0-4.8-6.4-6.6-6.0
Public debt27.526.327.432.3b34.435.234.2
Prices and financial indicators       
Exchange rate TSh:US$ (end-period)1,2621,1321,2801,3271,463a1,5241,542
Exchange rate TSh:€ (end-period)1,6651,6531,7801,9021,987a2,0111,959
Consumer prices (end-period; %)6.76.413.512.25.6a7.66.2
Stock of money M1 (% change)26.117.719.923.820.2a18.018.5
Stock of money M2 (% change)21.520.519.817.725.4a14.916.6
Lending interest rate (av; %)15.716.115.015.014.3a14.713.5
Current account (US$ m)       
Trade balance-1,947-2,634-3,434-2,470-2,759-2,877-3,382
 Goods: exports fob1,9182,2273,5793,3653,9704,7544,636
 Goods: imports fob-3,864-4,861-7,012-5,834-6,730-7,631-8,018
Services balance279462350146190275368
Income balance-23-300-228-175-189-239-276
Current transfers balance589652609683702716729
Current-account balance-1,102-1,820-2,702-1,816-2,056-2,125-2,561
External debt (US$ m)       
Debt stock4,0495,0085,9647,3258,2268,8879,562
Debt service paid1086465164167186207
 Principal repayments562022105113128140
 Interest51444259555867
Debt service due108122268260215186207
International reserves (US$ m)       
Total international reserves2,2442,8702,8483,2063,645a4,1924,611
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. d Fiscal years (July-June).
Source: IMF, International Financial Statistics.

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Data and charts: Quarterly data

 2009   2010   
 1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr
Central government finance (TSh bn)        
Revenue1,364.41,228.11,634.81,668.61,492.01,259.21,512.5n/a
Expenditure1,722.32,117.41,904.32,100.91,880.72,492.81,980.7n/a
Balance-357.9-889.3-269.6-432.3-388.7-1,233.6-468.2n/a
Prices        
Consumer prices (2000=100)140.5140.7142.1144.5149.3151.2150.7151.9
Consumer prices (% change, year on year)13.912.112.510.26.37.56.05.1
Financial indicators        
Exchange rate TSh:US$ (av)1,315.01,326.11,317.61,322.51,337.21,371.71,444.91,483.3
Exchange rate TSh:US$ (end-period)1,313.71,314.21,312.71,326.81,330.21,379.61,483.81,455.2
Deposit rate (av; %)8.418.228.107.157.266.316.556.11
Discount rate (end-period; %)18.3310.314.403.707.587.587.587.58
Lending rate (av; %)15.0015.4415.0514.6314.6914.6114.3913.59
Treasury-bill rate (av; %)12.018.123.554.915.062.273.274.87
M1 (end-period; TSh bn)3,351.33,492.13,628.23,924.54,061.84,173.34,456.94,715.5
M1 (% change, year on year)16.624.721.923.821.219.522.820.2
M2 (end-period; TSh bn)7,631.97,832.18,443.48,780.19,075.19,801.410,348.711,012.6
M2 (% change, year on year)14.318.519.017.718.925.122.625.4
Foreign trade (TSh bn)        
Exports fob826.9757.21,023.61,211.61,077.51,086.81,375.51,472.9
Imports cif-2,001.2-1,762.0-2,274.0-2,353.1-2,446.0-2,562.3-2,842.7-3,026.9
Trade balance-1,174.3-1,004.8-1,250.4-1,141.4-1,368.5-1,475.5-1,467.2-1,554.0
Foreign reserves (US$ m)        
Reserves excl gold (end-period)2,6512,8483,2353,2063,2273,2183,2843,645
Sources: UN Food and Agriculture Organisation; Bank of Tanzania, Economic Bulletin; IMF, International Financial Statistics.

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Data and charts: Monthly data

 JanFebMarAprMayJunJulAugSepOctNovDec
Exchange rate TSh:US$ (av)
20081,1641,1611,1861,2171,2041,1841,1671,1611,1591,2291,2501,274
20091,3181,3181,3091,3351,3301,3131,3251,3191,3091,3151,3251,327
20101,3321,3381,3411,3501,3731,3921,3951,4451,4951,4951,4921,463
Exchange rate TSh:US$ (end-period)
20081,1721,1731,2371,2011,1971,1811,1641,1651,1631,2791,2591,280
20091,2871,3031,3141,3201,3101,3141,3261,3171,3131,3211,3281,327
20101,3241,3261,3301,3441,3761,3801,3821,4721,4841,4831,4711,455
M1 (% change, year on year)
200820.421.024.621.718.316.39.616.318.822.121.819.9
200915.119.116.613.615.524.732.326.921.919.619.623.8
201026.724.221.224.023.319.518.422.522.821.121.020.2
M2 (% change, year on year)
200820.419.525.221.218.818.116.519.521.224.822.719.8
200917.718.414.313.815.318.521.518.919.014.215.317.7
201020.119.318.923.422.025.124.426.422.625.325.825.4
Deposit rate (av; %)
20089.89.99.18.87.68.27.27.67.47.68.17.9
20098.47.98.98.27.88.68.47.88.27.47.36.7
20107.57.07.26.56.16.35.97.06.86.26.06.1
Lending rate (av; %)
200815.315.115.214.714.814.815.114.814.914.814.316.1
200914.915.015.115.515.415.515.115.114.914.814.714.4
201014.414.914.814.614.514.714.314.414.514.512.813.5
Consumer prices (av; % change, year on year)
20088.68.99.09.79.19.39.59.811.611.812.313.5
200913.714.113.812.812.111.411.712.912.912.49.78.7
20106.56.06.37.37.57.76.86.84.54.25.55.6
Exports fob (TSh bn)
2008262.1259.1201.0245.0209.7217.0324.9269.7272.0272.3345.3323.9
2009260.4268.8297.7264.4242.9249.9334.3304.2385.1492.2330.2389.2
2010326.6321.6429.3395.0276.1415.7305.5478.5591.5375.5556.8540.7
Imports cif (TSh bn)
2008574.6623.7571.6741.8801.9686.8711.8749.1782.4798.6786.6641.1
2009681.5630.5689.3439.8649.2673.1794.4708.9770.7804.2775.3773.6
2010836.6824.2785.2792.2844.1926.0938.2964.8939.7975.61013.11038.3
Trade balance fob-cif (TSh bn)
2008-312.5-364.6-370.6-496.8-592.2-469.9-386.9-479.4-510.4-526.3-441.4-317.2
2009-421.0-361.8-391.5-175.4-406.3-423.1-460.1-404.7-385.6-312.0-445.1-384.4
2010-510.0-502.6-355.9-397.2-568.0-510.3-632.7-486.3-348.2-600.0-456.3-497.6
Foreign-exchange reserves excl gold (US$ m)
20082,7602,7622,7442,7322,7022,6482,6722,5552,7252,5682,7272,863
20092,7142,6852,6662,7182,6972,8633,1413,4293,5033,4503,4603,470
20103,5243,4993,4833,5673,4503,4683,5683,4963,5463,7313,7233,905
Sources: IMF, International Financial Statistics; Haver Analytics.

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Data and charts: Annual trends charts

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Data and charts: Monthly trends charts

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Data and charts: Comparative economic indicators

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Basic data

Land area

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

Population

43.7m in 2009 (Economist Intelligence Unit 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

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: Hussein Mwinyi

East African co-operation affairs: Samuel Sitta

Education: Shukuru Kawambwa

Energy & mineral resources: William Ngeleja

Finance & economic affairs: Mustafa Mkulo

Foreign affairs & international co-operation: Bernard Membe

Health & social welfare: Haji Mpanda

Home affairs including public safety: Shamsi Vuai Nahodha

Industry, trade & marketing: Cyril Chami

Justice & constitutional affairs: Celina Kombani

Labour, employment & youth development: Gaudensia Kabaka

Lands, housing & human settlements development: Anna Tibaijuka

Natural resources & tourism: Ezekiel Maige

Water & irrigation: Mark Mwandosya

Central bank governor

Benno Ndulu

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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