2021 Index of Economic Freedom

Tanzania

OVERALL SCORE61.3
WORLD RANK93
Rule of Law

Property Rights41.3

Judicial Effectiveness40.2

Government Integrity34.5

Government Size

Tax Burden80.7

Government Spending91.8

Fiscal Health90.8

Regulatory Efficiency

Business Freedom45.7

Labor Freedom67.7

Monetary Freedom72.9

Open Markets

Trade Freedom64.4

Investment Freedom55.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 58.0 million
  • GDP (PPP):
    • $193.5 billion
    • 6.3% growth
    • 6.6% 5-year compound annual growth
    • $2,771 per capita
  • Unemployment:
    • 2.0%
  • Inflation (CPI):
    • 3.4%
  • FDI Inflow:
    • $1.1 billion

Tanzania’s economic freedom score is 61.3, making its economy the 93rd freest in the 2021 Index. Its overall score has decreased by 0.4 point, primarily because of a decline in trade freedom. Tanzania is ranked 8th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.

Tanzania’s economy retained its spot in the moderately free category for the third consecutive year. The government says it prioritizes industrialization and job creation with a commitment to pursuing a development strategy led by the private sector, but rising protectionist tendencies have deterred foreign direct investment. Economic freedom is also stymied by the weak rule of law and the lack of business freedom.

IMPACT OF COVID-19: As of December 1, 2020, 21 deaths had been attributed to the pandemic in Tanzania, and economic growth was forecast to decline to 1.9 percent for the year.

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Background

In 1964, shortly after independence from Britain, Tanganyika and the island of Zanzibar merged to form Tanzania. The Chama Cha Mapinduzi (CCM) party has been in power continuously since independence. John Magufuli of the CCM was reelected to a five-year term as president in 2020, but the election was marred by violence and the intimidation and harassment of the opposition. Magufuli’s first term was marked by an aggressive “anti-corruption” campaign that included crackdowns on civil society and political opponents. Despite vast mineral and natural resources and tourism, most Tanzanians are poor and dependent on subsistence agriculture. Plans for the construction of an oil pipeline from western Uganda to Tanzania’s Tanga port are ongoing.

Rule of LawView Methodology

Property Rights 41.3 Create a Graph using this measurement

Judicial Effectiveness 40.2 Create a Graph using this measurement

Government Integrity 34.5 Create a Graph using this measurement

All land belongs to the state, but secured interests in leased land and movable property are recognized and enforced. Complex land laws have provoked numerous disputes, and land ownership remains restrictive. The poorly resourced, ill-trained, and corrupt judiciary remains under political influence. Corruption is pervasive in government procurement, the awarding of licenses and concessions, dispute settlements, regulations, customs, and taxation. Enforcement of anticorruption legislation is politically motivated.

Government SizeView Methodology

The top individual income and corporate tax rates are 30 percent. Other taxes include a value-added tax and an interest tax. The overall tax burden equals 11.5 percent of total domestic income. Government spending has amounted to 16.6 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.0 percent of GDP. Public debt is equivalent to 38.1 percent of GDP.

Regulatory EfficiencyView Methodology

Tanzania has failed to improve its business freedom for the fourth straight year, and start-up processes now take more time. However, both the value added per worker and the labor force participation rate have increased. The government provides large subsidies to state-owned enterprises and maintains price controls on fuels, utilities, and agricultural commodities.

Open MarketsView Methodology

Tanzania has four preferential trade agreements in force. The trade-weighted average tariff rate is 10.3 percent, and 19 nontariff measures are in effect. Trade and investment policies needed to sustain open markets are undercut by lingering government interference in the economy. Foreign investment in several sectors remains restricted. The financial sector is underdeveloped, and less than 50 percent of adult Tanzanians have formal banking accounts.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Mauritius772.1
2Rwanda68.3-2.6
3Botswana67.6-2.0
4Seychelles66.32.0
5Cabo Verde63.80.2
6Namibia62.61.7
7Côte d'Ivoire61.72.0
8Tanzania61.3-0.4
9South Africa59.70.9
10Benin59.64.4
11Ghana59.2-0.2
12The Gambia58.82.5
13Nigeria58.71.5
14Uganda58.6-0.9
15Gabon58.11.4
16Senegal580.0
17Madagascar57.7-2.8
18Togo57.53.4
19Niger57.32.6
20Guinea56.50.0
21Burkina Faso56.5-0.2
22Djibouti56.23.3
23Mauritania56.10.8
24São Tomé and Príncipe55.9-0.3
25Comoros55.72.0
26Mali55.6-0.3
27Eswatini55.1-0.2
28Kenya54.9-0.4
29Guinea-Bissau54.91.6
30Angola54.22.0
31Lesotho53.5-1.0
32Cameroon53.4-0.2
33Malawi530.2
34Sierra Leone51.73.7
35Ethiopia51.7-1.9
36Mozambique51.61.1
37Republic of Congo50.78.9
38Chad50.40.2
39Zambia50.4-3.1
40Burundi49.90.9
41Equatorial Guinea49.20.9
42Liberia49.20.2
43Democratic Republic of Congo49-0.5
44Central African Republic48.8-1.9
45Eritrea42.33.8
46Zimbabwe39.5-3.6
47Sudan39.1-5.9
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