2016 Index of Economic Freedom

Tanzania

overall score58.5
world rank110
Rule of Law

Property Rights25.0

Freedom From Corruption31.0

Limited Government

Government Spending88.4

Fiscal Freedom79.2

Regulatory Efficiency

Business Freedom47.5

Labor Freedom62.6

Monetary Freedom67.7

Open Markets

Trade Freedom73.2

Investment Freedom60.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 47.7 million
  • GDP (PPP):
    • $127.1 billion
    • 7.2% growth
    • 6.8% 5-year compound annual growth
    • $2,667 per capita
  • Unemployment:
    • 3.1%
  • Inflation (CPI):
    • 6.1%
  • FDI Inflow:
    • $2.1 billion
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Tanzania’s economy has grown substantially in recent years, but much of the population still remains below the extreme poverty line. The services sector has developed somewhat, but tourism remains underdeveloped due to a lack of proper infrastructure.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 58.5 (up 1 point)
  • Economic Freedom Status: Mostly Unfree
  • Global Ranking: 110th
  • Regional Ranking: 17th in Sub-Saharan Africa
  • Notable Successes: Fiscal Freedom and Investment Freedom
  • Concerns: Rule of Law and Regulatory Efficiency
  • Overall Score Change Since 2012: +1.5

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Background

John Magufuli of the Chama Cha Mapinduzi party was elected president in October 2015, succeeding Jakaya Kikwete, also of the Chama Cha Mapinduzi party. Their party and its earlier iterations have been in power since independence in 1961. Adoption of a limited number of market-based policies has stimulated growth, but property rights remain uncertain, and corruption is endemic. Tanzania has a high HIV/AIDS rate and poor infrastructure. In 2012, the Millennium Challenge Corporation selected Tanzania for a second compact. It successfully completed its first compact, the world’s largest, in September 2013. A 50-year border dispute with Malawi resurfaced in 2012 when Malawi gave a British firm exploration rights for oil in Lake Malawi. In 2014, Tanzania began the naturalization process for approximately 200,000 Burundian refugees. Tanzania is a transit point for human and drug trafficking.

Rule of LawView Methodology

Property Rights 25.0 Create a Graph using this measurement

Freedom From Corruption 31.0 Create a Graph using this measurement

Corruption remains pervasive in all aspects of political and commercial life, especially in the energy and natural resources sectors. Almost $500 million in foreign aid was withheld in late 2014 after the fraudulent withdrawal of $122 million from the central bank. The underresourced and corrupt judiciary remains politically influenced. Complex land laws have been accompanied by a high incidence of land disputes.

Limited GovernmentView Methodology

The top personal income and corporate tax rates are 30 percent. Other taxes include a value-added tax and an interest tax. The overall tax burden equals 16.8 percent of total domestic income. Government spending has declined to 19.7 percent of GDP. The budget deficit has declined to below 5 percent of GDP, and public debt has reached a level equal to 33 percent of total domestic output.

Regulatory EfficiencyView Methodology

Despite some progress, business formation and operation remain difficult. Requirements for launching a business are not time-consuming, but the licensing process costs over five times the average annual income. Labor regulations are not efficient enough to support a vibrant labor market. Subsidies to the telecommunications sector increased in 2015, and the government repeatedly interfered in the state-owned electricity firm’s pricing decisions.

Open MarketsView Methodology

Tanzania’s average tariff rate is 8.4 percent. All land is owned by the government. The government may not expropriate property without providing compensation. State-owned enterprises operate in the energy and telecommunications sectors. The small financial sector has been evolving. Credit is allocated largely at market rates, and various commercial credit instruments are available to the private sector.

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 Download Charts

Regional Ranking

rank country overall change
1Mauritius74.7-1.7
2Botswana71.11.3
3Cabo Verde66.50.1
4Rwanda63.1-1.7
5Ghana630.0
6Seychelles62.24.7
7South Africa61.9-0.7
8Namibia61.92.3
9Madagascar61.1-0.6
10Côte d'Ivoire 601.5
11Swaziland59.7-0.2
12Benin59.30.5
13Uganda59.3-0.4
14Burkina Faso59.10.5
15Gabon590.7
16Zambia58.80.1
17Tanzania58.51.0
18Senegal58.10.3
19Kenya57.51.9
20Nigeria57.51.9
21The Gambia57.1-0.4
22São Tomé and Príncipe 56.73.4
23Mali56.50.1
24Djibouti56-1.5
25Mauritania54.81.5
26Niger54.3-0.3
27Cameroon54.22.3
28Burundi53.90.2
29Togo53.60.6
30Guinea53.31.2
31Mozambique 53.2-1.6
32Comoros52.40.3
33Sierra Leone52.30.6
34Liberia52.2-0.5
35Guinea-Bissau51.8-0.2
36Malawi51.8-3.0
37Ethiopia51.50.0
38Lesotho50.61.0
39Angola48.91.0
40Democratic Republic of Congo46.41.4
41Chad46.30.4
42Central African Republic45.2-0.7
43Equatorial Guinea43.73.3
44Republic of Congo 42.80.1
45Eritrea42.73.8
46Zimbabwe38.20.6
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