2014 Index of Economic Freedom

Tanzania

overall score57.8
world rank106
Rule of Law

Property Rights30.0

Freedom From Corruption28.8

Limited Government

Government Spending78.3

Fiscal Freedom79.7

Regulatory Efficiency

Business Freedom47.0

Labor Freedom61.1

Monetary Freedom66.0

Open Markets

Trade Freedom76.8

Investment Freedom60.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 47.1 million
  • GDP (PPP):
    • $73.9 billion
    • 6.9% growth
    • 6.8% 5-year compound annual growth
    • $1,567 per capita
  • Unemployment:
  • Inflation (CPI):
    • 16.0%
  • FDI Inflow:
    • $1.7 billion
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Tanzania’s economic freedom score is 57.8, making its economy the 106th freest in the 2014 Index. Its score is essentially the same as last year, with improvements in investment freedom and trade freedom largely offset by combined deteriorations in monetary freedom, business freedom, and freedom from corruption. Tanzania is ranked 15th out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the world average.

Over the 20-year history of the Index, Tanzania’s economic freedom has been stagnant near the upper boundary of the “mostly unfree” category. Its overall score has increased slightly, but declines in the management of government spending, business freedom, and property rights have largely canceled out double-digit improvements in trade freedom and investment freedom.

Tanzania’s notable economic expansion in recent years has been facilitated by open-market policies related to global commerce. The financial sector and the investment framework are relatively well developed for the region. Nevertheless, Tanzania appears to lack any strong commitment to the further institutional reforms that are essential to the development of a strong private sector. Private property rights are weakly protected and poorly defined, deterring sustainable investment.

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Background

President Jakaya Kikwete was elected in December 2005 and re-elected in October 2010. Tanzania’s historically state-led economy has transitioned to a market-based economy but remains hindered by weak property rights, poor infrastructure, and a high HIV/AIDS rate. Thirty percent of the budget depends on donor assistance. The financial sector has expanded, and foreign-owned banks account for 48 percent of banking assets. Foreign investment has led to improvements in efficiency. A 50-year-old border dispute with Malawi resurfaced in 2012 when Malawi gave a British firm exploration rights for oil in Lake Malawi. Agriculture is the most important sector of the economy, providing about 27 percent of GDP and 80 percent of employment.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 28.8 Create a Graph using this measurement

Limited GovernmentView Methodology

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

Regulatory EfficiencyView Methodology

The top individual income and corporate tax rates are 30 percent. Other taxes include a value-added tax (VAT) and an interest tax. The overall tax burden equals 15.2 percent of gross domestic income. Overall government expenditures amount to 27 percent of GDP, and public debt equals about 41 percent of the size of the economy. Institutional and policy reforms have begun to lay the foundation for prudent public finances.

Open MarketsView Methodology

Although requirements for launching a business are not time-consuming, the licensing process still costs almost five times the level of average annual income and takes more than 200 days to complete. Labor regulations are not efficient enough to support a vibrant labor market. In 2013, the government spent more than 1 percent of GDP to subsidize losses at TANESCO, the state-owned power utility.

Country's Score Over Time

Bar Graph of Tanzania Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Tanzania to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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