Tanzania is one of eleven countries in sub-Saharan Africa which registered a sound economic growth despite COVID-19 outbreak last year.

The country's real Gross Domestic Product (GDP) grew by 4,8 percent, which was above the African average of 3,4 percent, with the Government projecting to accelerate the growth rate to 5,6 percent in the next fiscal year.

The Minister for Finance and Planning, Dr. Mwigulu Nchemba, said generally 32 out of 45 countries in sub-Saharan Africa experienced a negative economic growth, two economies stagnated while only eleven countries including Tanzania posted a positive growth. "Despite the COVID-19 outbreak affecting the economies of many countries in the world, Tanzania is one of the few countries with positive economic growth by 2020," Dr. Nchemba told the August House when presenting the Economic Survey 2020 report and the National Development Plan for the 2021/2022 Financial Year yesterday.

The Finance Minister attributed the positive growth to the Government's decision to allow the citizens to continue performing their economic activities while adhering to Health guidelines and precautions during the COVID-19 pandemic. Tanzania witnessed a slowdown in GDP growth rate from 7,0 percent in 2019 to 4,8 percent in 2020. "The slowdown in the economic growth was due to the impact of COVID-19 in Tanzania's trading partners as well as floods which damaged transport infrastructure and delayed implementation of some development projects," said Dr. Nchemba.

He said that the impact of the COVID-19 pandemic was particularly evident in the economic activities of accommodation and food service as well as arts and entertainment which had negative growth in 2020. "The sectors which recorded high growth rates in 2020 include: Construction (9,1 percent), Information and Communication (8,4 percent), Transport and Storage (8,4 percent), Administrative and Support Services (7,8 percent), Professional, Scientific and Technical Activities (7,3 percent); Mining and Quarrying (6,7 percent); and Human Health and Social Work Activities (6,5 percent)," the Minister said.

He submitted that the GDP at current prices was 148,5tri/- in 2020 compared to 139,6tri/- in 2019. In addition, last year, Tanzania Mainland was projected to have a population of 55,9 million people compared to population of 54,2 million in 2019. Thus, the average per capita GDP reached 2,65m/- (1,151 US Dollars) in 2020 from 2,57m/- (1,118.9 US Dollars) in 2019, which is an increase of 3,1 percent.

Inflation trend

The Minister said that inflation remained under the single digit range where it declined from an average of 3,4 percent in 2019 to 3,3 percent in 2020 and 3,3 percent in April, this year. "Inflation trends have remained relatively stable due to steady supply of food, falling oil prices on the international world market, stability of the shilling against the US Dollar and other major convertible currencies as well as effective implementation of monetary and fiscal policies," said the Minister.

Monetary policies

Dr. Nchemba said the Bank of Tanzania (BoT) accommodative monetary policy managed to reduce interest rates in financial markets and in particular the lending and deposit rates. Overall lending rates, yearon-year basis, decreased to 16,58 percent to April, compared to an average of 16,91 percent last year, while one-year lending rates decreased to an average of 16,05 percent from 16,37 percent.

The overall deposit rates were 6,95 percent, slightly down from an average of 6,69 percent registered in April while one-year deposit rates increased to an average of 8,77 percent from 8,01 percent. The large portion of the total credit was directed to personal activities which accounted for 35,8 percent, followed by business 15,7 percent, manufacturing 10,1 percent and agriculture activities 8,0 percent.

The extended broad money supply (M3) increased by 7,8 percent, reaching 31tri/- in April compared to 28,76tri/-, last April. "The money supply continued to grow at a pace consistent with the demand for various economic activities," Dr. Nchemba said. Also the current account recorded a deficit of 1,177bn US Dollars compared to a deficit of 1,443bn US Dollars, last April. The decrease was contributed by the increase of the value of exports of gold, horticultural products as well as decrease in import value of oil and transport equipment," Dr. Nchemba said.

The Minister said foreign currency reserves have continued to remain at sufficient levels to meet the demand for imports of goods and services. As of April, foreign reserves were 4.97bn US Dollars, sufficient to cover 5.8 months of imports of goods and services, said Dr. Nchemba. The East African Community threshold is 4,5 months. Tanzania reached an important milestone in July 2020, when it formally graduated from low-income country to lower-middle income country status.

Tanzania's achievement reflects sustained macro-economic stability that has supported growth, in addition to the country's rich natural endowments and strategic geographic position.