2015 Index of Economic Freedom

Tanzania

overall score57.5
world rank109
Rule of Law

Property Rights30.0

Freedom From Corruption33.0

Limited Government

Government Spending79.3

Fiscal Freedom79.9

Regulatory Efficiency

Business Freedom45.0

Labor Freedom61.4

Monetary Freedom69.7

Open Markets

Trade Freedom67.0

Investment Freedom60.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 46.3 million
  • GDP (PPP):
    • $79.4 billion
    • 7.0% growth
    • 6.7% 5-year compound annual growth
    • $1,715 per capita
  • Unemployment:
    • 3.5%
  • Inflation (CPI):
    • 7.9%
  • FDI Inflow:
    • $1.9 billion
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Tanzania’s economic freedom score is 57.5, making its economy the 109th freest in the 2015 Index. Its score has decreased by 0.3 point since last year due to declines in trade freedom and business freedom that outweigh improvements in half of the 10 economic freedoms, including freedom from corruption and monetary freedom. Tanzania is ranked 17th out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the world average.

Productive economic growth in recent years has helped to promote prosperity, but widespread poverty still plagues an economy that lacks fundamental aspects of economic freedom. A greater commitment to structural and institutional reforms is needed to create an efficient entrepreneurial environment and open markets.

Tanzania lacks an effective rule of law. Corruption remains pervasive and has been especially noticeable in energy and mining, which have experienced rapid growth in recent years. Business and labor regulations remain stringent and prohibitively difficult for new job-creating activities. Entrepreneurs find it hard to register businesses legally, and the formal labor market’s barriers to entry inhibit full employment. Efforts to open the economy have experienced some success, but government bureaucracy still delays some investment.

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Background

President Jakaya Kikwete was elected in December 2005 and re-elected in October 2010. Kikwete’s Chama Cha Mapinduzi party has been in power since the emergence of multi-party politics in 1961. The adoption of a limited number of market-based policies has stimulated moderate growth, but property rights are still uncertain, and corruption is endemic. Tanzania also has a high HIV/AIDS rate and poor infrastructure. Foreign investments have led to improvements in efficiency. A 50-year border dispute with Malawi recently resurfaced when Malawi gave a British firm exploration rights for oil in Lake Malawi. Tanzania hosts more than half a million refugees, mainly from the Democratic Republic of Congo and Burundi, and is a transit point for both human and drug trafficking.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 33.0 Create a Graph using this measurement

Corruption is pervasive in all aspects of political and commercial life, but especially in the energy and natural resources sectors. Tanzania’s judiciary remains under political influence and suffers from underfunding and corruption, in part due to increasing problems stemming from narcotics trafficking. Complex land laws have been accompanied by a high incidence of land disputes.

Limited GovernmentView Methodology

Tanzania’s top individual and corporate income tax rates are 30 percent. Other taxes include a value-added tax and a sales tax. The tax burden amounts to 14.4 percent of domestic production. Public spending is equal to 26.3 percent of the domestic economy, and government debt has reached 41 percent of gross domestic product.

Regulatory EfficiencyView Methodology

The business environment remains hampered by a lack of efficiency. Requirements for launching a business are not time-consuming, but licensing remains costly. Labor regulations are not modern and flexible enough to support a vibrant labor market. In late 2013, in line with IMF recommendations, the government curbed power subsidies and raised electricity tariffs to sustain growth and ease fiscal pressures.

Open MarketsView Methodology

The average tariff rate is 11.5 percent. Imports may face customs delays. All land is the property of the government. The small financial sector remains shallow, dominated by commercial banks. Banking is relatively sound, but the rate of banking penetration across the country remains low. A stock exchange has been in operation, but the capital market remains underdeveloped.

Country's Score Over Time

Bar Graph of Tanzania Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Mauritius76.4-0.1
2Botswana69.8-2.2
3Cabo Verde66.40.3
4Rwanda64.80.1
5Ghana63-1.2
6South Africa62.60.1
7Madagascar61.70.0
8Swaziland59.9-1.3
9Uganda59.7-0.2
10Namibia59.60.2
11Benin58.81.7
12Zambia58.7-1.7
13Burkina Faso58.6-0.3
14Côte d'Ivoire 58.50.8
15Gabon58.30.5
16Senegal57.82.4
17Tanzania57.5-0.3
18Djibouti57.51.6
19The Gambia57.5-2.0
20Seychelles57.51.3
21Mali56.40.9
22Nigeria55.61.3
23Kenya55.6-1.5
24Mozambique 54.8-0.2
25Malawi54.8-0.6
26Niger54.6-0.5
27Burundi53.72.3
28Mauritania53.30.1
29São Tomé and Príncipe 53.34.5
30Togo533.1
31Liberia52.70.3
32Comoros52.10.7
33Guinea52.1-1.4
34Guinea-Bissau520.7
35Cameroon51.9-0.7
36Sierra Leone51.71.2
37Ethiopia51.51.5
38Lesotho49.60.1
39Angola47.90.2
40Chad45.91.4
41Central African Republic45.9-0.8
42Democratic Republic of Congo454.4
43Republic of Congo 42.7-1.0
44Equatorial Guinea40.4-4.0
45Eritrea38.90.4
46Zimbabwe37.62.1
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