Tanzania’s economic rise is shifting the balance of trade in East Africa, with the country now leading regional trade and attracting significant foreign investment.
Tanzania’s economic transformation is capturing attention across East Africa. As the country accelerates its development, its economic growth is surpassing neighboring nations, particularly Kenya. In recent developments, Tanzania’s Dar es Salaam has surpassed Nairobi as the key commercial hub in the East African Community (EAC), with trade within the region reaching $12.1 billion in 2023. Kenyan President William Ruto acknowledged Tanzania’s remarkable economic performance, noting how it is reshaping the trade dynamics of the EAC.
Tanzania’s rise as a regional economic power is not only marked by trade dominance but also by strong growth projections. The International Monetary Fund (IMF) forecasts that Tanzania could surpass Kenya as the largest economy in the EAC within the next decade, driven by steady GDP growth and an influx of foreign investments.
The country’s economic strategy has been heavily influenced by the leadership of the late President John Pombe Magufuli and his successor, President Samia Suluhu Hassan. Over the last decade, Tanzania has maintained an average GDP growth of 5.5%, with projections continuing strong growth at 5.4% in 2024.
Tanzania’s appeal to foreign investors is rising, largely due to political stability, ongoing economic reforms, and a favorable business environment. The country’s mineral wealth, infrastructure investments, and attractive investment incentives are central to its appeal. Tanzania has also seen a marked increase in foreign direct investment (FDI), particularly in the mining, energy, and agriculture sectors. In 2023, the country netted $3.5 billion in FDI, with the total FDI stock reaching $20 billion.
Key to Tanzania’s investment success has been the introduction of the Tanzania Investment Act of 2022, simplifying business operations and offering favorable conditions for foreign investments. This includes protections for investors, a reliable dispute resolution mechanism, and a fair framework for profit repatriation.
The country’s infrastructure improvements, including a $2.9 billion hydropower project and a standard-gauge railway linking Dar es Salaam with neighboring countries, position Tanzania as a gateway to the EAC. Its extensive mineral resources, including gold, diamonds, and rare earths, further boost its attractiveness to global investors, particularly in the context of the growing demand for battery metals and electric vehicle production.
While Tanzania’s economic progress is impressive, challenges remain, such as high public debt and political risks surrounding the 2025 presidential election. Despite these concerns, Tanzania’s economic trajectory is set to continue reshaping East Africa’s economic landscape.