Tanzania has set its sights on becoming a $1 trillion, upper-middle-income economy by mid-century. Under a long-term plan known as Vision 2050, the country is seeking to grow the size of its economy tenfold from current levels and to increase GDP per capita to $7,000 from $1,318.
The country's population is projected to increase from 69m presently to more than 118m by 2050, a demographic surge that underlines the rapid pace of economic growth needed to create jobs, raise incomes, and improve living standards to the levels targeted under Vision 2050. Launched last year by President Samia Suluhu Hassan, this new economic blueprint calls for a shift from exporting raw materials to producing more valuable finished goods. To support this industrialisation drive, the plan prioritises human capital investments, including expanded access to healthcare and the introduction of skills-based education at all learning levels.
It positions the private sector as the engine of growth and emphasises structural reforms to enhance economic competitiveness, improve the business and investment environment, and reduce regulatory compliance costs. It also outlines measures to boost climate resilience, given the country's heavy reliance on agriculture, which accounts for nearly a quarter of its GDP.
Deeper structural reforms needed
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Vision 2050 is ambitious. Tanzania's real GDP expanded by 6% in 2025, up from 5.5% growth the previous year. The International Monetary Fund (IMF) projects sustained growth of 6.3% to 6.5% through 2028. While this growth rate is among the highest on the continent, it still falls short of what is required to meet Vision 2050's targets. To grow the economy tenfold in 25 years, Tanzania would need to average annual growth of at least 9.6%.
Beyond stronger headline growth, analysts stress that the success of Vision 2050 will ultimately hinge on deeper structural transformation. Researchers at the Tanzania Investment and Consultant Group (TICG), a Dar es Salaam-based economic consulting and investment advisory firm, argue that Vision 2050 is "achievable if Tanzania successfully navigates its current political challenges, accelerates revenue mobilisation, and implements inclusive growth policies".
Following the October 2025 polls, they argue that Tanzania needs to focus on restoring investor and international confidence through "credible democratic reforms and transparent accountability processes".
Likewise, they argue that Tanzania's tax-to-GDP ratio must be increased from 13.1% to between 17% and 20% to finance development sustainably and reduce dependence on external borrowing.
Crucially, they stress that growth must be inclusive and translate into real wage gains for ordinary citizens. Inequality, they contend, is one of Tanzania's most entrenched challenges and is largely responsible for the paradox of high poverty amid strong economic growth.
Tanzania has made only modest progress in poverty reduction. The poverty rate remains stubbornly high at about 43%, down marginally from 45% in 2018, according to the World Bank. These elevated poverty levels persist despite years of robust economic growth, highlighting the fact that much of the gains witnessed in recent years have been concentrated in a few hands.
Growing the economy
"The most profound challenge Tanzania faces is the disconnect between strong macroeconomic performance and the lived economic reality for ordinary Tanzanians. GDP grew 37.5% in nominal terms from 2020 to 2025.
Yet urban wages rose only 5.3% and rural wages 4.9% over the same period. After adjusting for inflation, real wage growth is essentially zero, meaning that most Tanzanians have not materially benefited from Tanzania's "economic success story," notes TICG.
"The productivity gains from Tanzania's economic growth are not being captured by workers. The gains flow disproportionately to capital owners, particularly in the mining sector where foreign companies dominate. Unless targeted inclusive growth policies are implemented, poverty reduction will remain frustratingly slow despite impressive headline growth," it adds.
For Amran Bhuzohera, chief economist and research lead at TICG, Tanzania can only escape the poverty trap if it accelerates efforts to modernise agriculture, makes real progress on industrialisation, and reduces the high levels of informality in the economy.
"Agriculture employs over 60% of the workforce but generates only about 26% of GDP, a productivity gap rooted in rain-fed farming and minimal irrigation coverage," he tells African Business.
"Agricultural modernisation and agro-processing will lift rural incomes directly," he says, citing the plan under Vision 2050 to expand irrigation to 15% of irrigable land from roughly 2.5% currently. He notes that there are untapped opportunities for value addition of key agricultural exports like cashew nuts, coffee and cotton.
Turning to manufacturing, Bhuzohera argues that the sector has largely underperformed despite decades of significant policy attention. "Manufacturing has been essentially flat at roughly 8% of GDP since the mid-1990s for over 30 years. This is despite waves of liberalisation," he notes.
In 2025 Tanzania's manufactured exports reached $1.5bn, which represented 14.7% of total goods exported, according to data from the Bank of Tanzania. Under Vision 2050's medium-term targets, Tanzania aims to grow manufactured exports to $5bn by 2035 and raise manufacturing's share of GDP to 15% by 2030. "TICG modelling indicates manufacturing needs to reach 15% to over 20% of GDP for genuine structural transformation," Bhuzohera notes.
"What is needed to get there is deliberate rather than incidental industrial policy. We need SEZs [special economic zones] with genuinely world-class infrastructure and logistics, value-addition mandates on minerals and agricultural output rather than raw exports, targeted FDI [foreign direct investment] incentives, and an explicit export diversification target to ensure manufactured exports reach at least 30% of total exports by 2031," he says.
Efforts to reduce poverty are inseparable from the drive to formalise Tanzania's economy, Bhuzohera argues. He points out that the informal economy accounts for roughly 46% of GDP and 71% to 76% of employment. These enterprises are for the most part unregistered and remain locked out of larger markets and formal credit. They are also notoriously difficult to regulate and tax.
"The high degree of informality in our economy continues to limit both government revenue and formal job creation."
Cushioning the poorest
As Tanzania works to reduce poverty over the long-term, Bhuzohera argues that it must, in the meantime, rethink how it cushions the most vulnerable from price shocks. Headline inflation figures, he says, fail to capture the full impact of rising food prices on the household budgets of the nation's poorest.
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"Headline inflation is well-managed, around 4% as of June 2026 but food inflation, at roughly 6.6%, disproportionately hits the bottom 50% of earners, who allocate 75% to 85% of their household budgets to food.
"That combination is what creates the 'poverty inflation trap' characterised by macro stability at the top, real hardship underneath it," he argues.
Bhuzohera welcomes the continued use of the Tanzania Social Action Fund (TASAF) - the country's flagship social-protection programme - to cushion the most vulnerable through direct cash transfers. But he insists that the methodology for determining payouts must evolve to reflect food-price dynamics.
"We need social protection indexed to food inflation specifically, not the headline CPI [consumer price index], so that cash-transfer programmes like TASAF retain real value exactly when food prices spike," he says.
He argues that National Food Reserve Agency strategic releases should prioritise staples consumed by low-income households. This move should be paired with market infrastructure investments targeting storage and transport corridors to reduce the price volatility that comes from supply-chain friction.
"Climate vulnerability also needs to be decisively addressed to cushion the poor," he adds. Droughts and floods can undo two years of food-price stability in a single poor season."
