As an active member of the COMESA-EAC-SADC Tripartite, Tanzania has access to a vast export market. Exports are a vital driver of economic development, playing a key role in improving production, enhancing economies of scale, and increasing productivity through specialisation, as seen in various Asian countries. Engaging in international trade has consistently enhanced production efficiency by fostering the adoption of new technologies and innovative practices. Exports also generate foreign exchange earnings and stimulate the development of related industries, thereby boosting the entire economy. The CEO Roundtable of Tanzania (CEOrt), through its member expertise and collaborative approach, recognises Tanzania’s vast untapped export potential and advocates for measures to capitalise on these opportunities effectively.
Over the past 25 years, Tanzania has seen a ten-fold increase in its exports, growing from around USD 1.4 billion in 1999 to USD 14 billion. The recent edition of the Monthly Economic Review published by the Bank of Tanzania reports that exports of goods and services increased by 15% to USD 14.5 billion in the year ending May 2024. This growth has been primarily driven by non-traditional exports. Traditional exports, such as cashew nuts, coffee, and tobacco, have remained relatively stable over the years. Specifically, cashew exports showed growth until 2017 but then tapered off, representing a missed opportunity. None of these traditional exports individually exceed half a billion dollars in value.
In contrast, non-traditional exports, have seen significant growth. Mineral exports, particularly gold, an untapped resource in 1999, grew to USD 3 billion in 2023, reflecting the benefits of investments made two decades ago. Additionally, Tanzania’s services sector has grown significantly in recent years, with the Tanzania National Business Council (TNBC) forecasting that the share of tourism in the country’s GDP will reach 19.5% in 2025/26. The transport and logistics sector is also growing exponentially, with an average growth rate of 12% per year over the past 10 years. The Ministry of Works reports that this sector’s average contribution to the GDP over the decade from 2012 to 2022 is 14%.
While it is encouraging to see the growth trajectory of exports in Tanzania, examining them as a percentage of the national GDP reveals the unexplored potential that still exists. According to World Bank national accounts data, in 2012, Tanzania’s exports as a percentage of GDP accounted for approximately 22% of GDP. In subsequent years, growth was impacted by various global shocks including the pandemic, with Tanzania’s exports currently at 17% of GDP, still below the 2012 levels and impeded by production systems that are geared more towards import substitution rather than exports. The economy is growing not due to an increase in exports, but because of higher domestic consumption. Both the public and private sectors need to work collaboratively to increase the contribution of exports to GDP, tapping into the significant potential that remains.
The International Trade Centre (ITC) Export Potential Map estimates that Tanzania has untapped potential amounting to approximately USD 5.5 billion. The analysis identifies India as holding the largest untapped potential market, followed by the UAE, Switzerland, Vietnam, China, and others. In agriculture, the data from ITC highlights cashew nuts as offering the greatest untapped potential, followed by rice and legumes. There is also a significant opportunity gap in mineral exports, particularly gold, where an estimated USD 2 billion in potential remains untapped. Another critical consideration involved product diversification, as certain products are experiencing increased global demand, and Tanzania possesses the capacity to supply them. Therefore, it is advisable to assess and enhance production capacities for commodities like copper, sugarcane, nickel, and wheat, in order to fully realise this export potential.
Through economic diplomacy, the government of Tanzania aims to boost exports, a goal that necessitates active participation from the private sector to drive growth. A notable observation in sectors that have experienced export growth in recent years is the significant level of private sector investment. Sectors such as mining and tourism, which have attracted substantial private investments, have shown considerable export success. Conversely, agriculture, except for horticulture, has struggled to attract private sector participation and has seen relatively stagnant export levels. Addressing these challenges requires a combination of policy shifts, collaborative efforts and strategic approaches to unlock Tanzania’s full export potential.
Regulatory reforms are essential for Tanzania to leverage emerging global market opportunities, starting with collaborative cross-sector dialogue. Currently, the manufacturing sector lacks an export-oriented focus, necessitating a shift in mindset and regulatory frameworks to better support export activities. Learning from other countries, Tanzania could benefit from adopting new policies that facilitate ongoing dialogue between manufacturers and other private sector stakeholders. Unlike the current practice where policy asks are made in November with outcomes not known until the budget reading in June, countries like Zambia and Mozambique allow companies to submit policy proposals in November and receive a green paper response by February. This structured approach enhances dialogue and allows for timely adjustments, facilitating mutually beneficial agreements on policy. Furthermore, there is a crucial need for dialogue to improve Tanzania’s logistical infrastructure, particularly to support exports to high-potential markets that have been identified.
Tapping into Tanzania’s unexplored export potential is essential for multiple stakeholders: the public sector overseeing national development, the private sector driving growth, diplomatic consuls with performance targets to meet, and the general population benefiting from sustainable prosperity. As champions of Tanzania’s socio-economic development, the CEOrt is committed to advocating collaboratively on overarching issues, aiming for positive impacts through enhanced national exports.