Tanzania’s Economic Outlook: Private Sector Leaders Share Insights

Business leader insights into the current economic environment were key drivers of the dialogue at the April monthly meeting of the CEO Roundtable of Tanzania (CEOrt). The CEOrt which represents CEOs from over 170 leading companies in Tanzania cutting across multiple sectors of the economy, facilitates collaboration with the public sector to serve the shared purpose of enhancing impact in leadership and the country’s sustainable socio-economic prosperity. This recent engagement was an opportune moment for members to connect and engage development partners, financial institutions and other stakeholders to discuss current trends and identify opportunities for the local Private Sector to capitalize on the global market shifts whilst positively impacting their organizations and communities at large.

As the world continues to experience an array of disruptive events, Governments are making efforts to stay on track with their economic growth projections. Whilst the Covid-19 pandemic had set the course for a slowdown within key economic sectors, at the start of this year, before the Ukraine-Russia war began, a post-recession recovery appeared to be on the horizon. The economic effects of this humanitarian crisis, along with the existential crisis brought about by climate change, keep unfolding and the full impact remains to be seen.

From a broad economic overview, Tanzania has a strong outlook with projections of 5.8% real Gross Domestic Product (GDP) growth for 2022. Speaking at the CEOrt monthly meeting, Mr. David Tarimo, Country Senior Partner (PwC Tanzania) and CEOrt Board Member, outlined factors that contribute to the positive economic outlook. Beyond the GDP growth rate, the country’s inflation rate and exchange rate have been relatively stable. However, recent global developments have resulted in rising food prices, which are bound to impact industries, and whilst the debt trajectory has been on an incline, it was noted that the government needed to borrow and spend to overcome the previous period of stagnated growth. The private sector is also seeing gradual improvement in credit growth and robust numbers in gold exports. The increase in import numbers could be attributed to the rise in prices and, that being said, the rapid population growth rates also demand accelerated economic growth to meet their needs.

A seasoned tax expert, Mr. Tarimo went on to expound on the increase in taxes on imports, which could be an indicator of renewed interest in investment as well as more consumer spending. The export numbers and this increased domestic demand support the outlook presented in the Tanzania Economic Update released by the World Bank last month. Although shipping and logistics may be burdened by various costs, Tanzania has a geographic advantage through port access that may stimulate imports. Nonetheless, he cautioned, we need to keep in mind the law of diminishing returns so we do not end up in a situation where we are no longer trading efficiently.

During this members’ engagement, Mr. Tarimo also facilitated dialogue amongst the business leaders, sourcing their input according to their respective industries. Speaking on the state of capital markets, Mr. Moremi Marwa, CEO Dar es Salaam Stock Exchange (DSE), mentioned that this year started off relatively well as compared to the previous two years. However, with geopolitical challenges, performance seems to have subdued. He added that while 80% of our liquidity in the market depends on foreign investors, the global market trends have impacted the cross-listed companies more - domestic companies have not been affected as much. The DSE is keen to see how the government’s decision to once again change the T-bonds coupon rates will impact the debt market.

There may have been significant improvements in the credit aspect of financial services, but this is yet to translate into increased demand. These insights were shared by Mr. Kevin Wingfield, Chief Executive of Stanbic Bank Tanzania, as he spoke about the possible influence of global currency trends on local demand. In terms of financial services, a development partner, Jens Reinke from the International Monetary Fund (IMF) advised on the importance of better debt management for the government, as well as correct policies to channel funds to the right public investment projects that add to economic growth. Standard Chartered Tanzania CEO and CEOrt Board Chairman, Mr. Sanjay Rughani, also brought up the growing popularity of cryptocurrency, even though it is yet to have the right governance channels.

Changes in oil and gas prices have been the topic of widespread conversations in recent days. Kalpesh Mehta - Managing Director at Oryx Energies - assured the forum that Tanzania has sufficient oil reserves to meet market demand. In light of pushback following the recent oil price hikes in the country, he added that this is a completely regulated industry, and the approved price increases are driven not only by global trends but also in line with local mechanisms that aim to maintain sustainable supply in the market.

The fast-moving consumer goods (FMCG) industry has also experienced a significant impact from global trends. Adding to the discussion at the CEOrt engagement, Mr. Unguu Sulay, CEO - Coca-Cola Kwanza Ltd - shared about how the increase in import costs from freight and the price of sugar has resulted in their increased production costs, which subsequently leads to increased pressure to raise product prices. Their goal is to continue to monitor trends in the global market and not be reactive to singular shifts. 

Overall, business leaders have been encouraged by the government’s efforts to have constructive dialogue with the private sector. Mr. David Nchimbi, Partner - Deloitte Tanzania and CEOrt Board Member - gave the example of the tax regulatory authority and their willingness to hold discussions with stakeholders that aim to support both parties in reaching their objectives. Similarly, Mr. Bakari Machumu, Executive Editor at Mwananchi Communications Ltd, commended the government’s actions on the communication front, where they provide opportunities for dialogue and encourage thought leadership discussions towards meaningful collaboration and partnership. 

In the spirit of the holy month of Ramadan, the April engagement was preceded by iftar for members and invited guests. The CEOrt was honoured to welcome Sheikh Adam Mwinyi Pingu to the event, who led members in prayer before breaking their fast.

Experts, both local and international, agree on the positive outlook of Tanzania’s economic prosperity. However, business leaders remain cautiously optimistic, given that the global market carries a level of volatility, and shifts in trends continue to deliver impact as days go by.