2017 Index of Economic Freedom

Tanzania

overall score58.6
world rank105
Rule of Law

Property Rights33.8

Government Integrity29.2

Judicial Effectiveness28.8

Government Size

Government Spending89.5

Tax Burden80.3

Fiscal Health76.6

Regulatory Efficiency

Business Freedom50.1

Labor Freedom64.3

Monetary Freedom69.6

Open Markets

Trade Freedom76.0

Investment Freedom55.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 49.1 million
  • GDP (PPP):
    • $138.5 billion
    • 7.0% growth
    • 6.8% 5-year compound annual growth
    • $2,904 per capita
  • Unemployment:
    • 3.2%
  • Inflation (CPI):
    • 5.6%
  • FDI Inflow:
    • $1.5 billion
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Tanzania has made progress in achieving income growth and poverty reduction over the past decade. While small in size, the financial sector has undergone modernization, and credit is increasingly allocated at market rates, supporting the development of a more vibrant entrepreneurial sector.

Despite these recent gains, however, the Tanzanian government seems to lack strong commitment to further institutional reforms that are essential to long-term economic development. Long-standing structural problems include poor management of public finance and an underdeveloped legal framework that interferes with regulatory efficiency. Trade and investment policies needed to sustain open markets are undercut by lingering government interference in the economy. Widespread corruption further undermines the weak rule of law.

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Background

John Magufuli of the Chama Cha Mapinduzi (CCM) party was elected president in October 2015, succeeding Jakaya Kikwete, also of the CCM. Their party and its earlier iterations have been in power since independence in 1961. In 2016, the United States froze some aid to Tanzania after declaring that elections won by the ruling party in the semiautonomous island of Zanzibar were fraudulent. The country has a high HIV/AIDS rate. In 2016, a large field of helium gas was discovered in Tanzania, and efforts to exploit the find are ongoing.

Rule of LawView Methodology

Property Rights 33.8 Create a Graph using this measurement

Government Integrity 29.2 Create a Graph using this measurement

Judicial Effectiveness 28.8 Create a Graph using this measurement

Complex land laws have been accompanied by a high incidence of land disputes. The inadequately resourced and corrupt judiciary remains subject to political influence. Although corruption continues to be pervasive in all aspects of political and commercial life, the new president, who campaigned on an anti-graft platform and promised to establish an anticorruption court, has undertaken reforms to enhance institutional effectiveness.

Government SizeView Methodology

The top personal income and corporate tax rates are 30 percent. Other taxes include a value-added tax and a tax on interest. The overall tax burden equals 13.2 percent of total domestic income. Government spending has amounted to 18.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.5 percent of GDP. Public debt is equivalent to 40.5 percent of GDP.

Regulatory EfficiencyView Methodology

The business environment remains hampered by inefficient regulations. Although requirements for launching a business are not time-consuming, the licensing process costs over five times the average level of annual income. Labor regulations are not flexible enough to support a vibrant labor market. The International Monetary Fund reported in 2016 that the public electricity utility TANESCO remains financially unsustainable.

Open MarketsView Methodology

Trade is important to Tanzania’s economy; the value of exports and imports taken together equals 50 percent of GDP. The average applied tariff rate is 7.0 percent. Foreign investment in land is restricted, and investment in other sectors may be screened. State-owned enterprises distort the economy. The financial sector continues to evolve. Credit is allocated largely at market rates, and a range of commercial credit instruments is available to the private sector.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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