World Bank has Categolized Tanzania as Lower Middle- Income Economy; What It Means to Tanzanians and Country’s Economy?




Tanzania was categorised as the lower middle-income country by the World Bank effective from July 1 2020, a development that has notably celebrated by authorities, Tanzanians and development partners and the world at large.

According to the World Bank, Tanzania is among seven countries that moved to a higher category this month, while three others went down in their economic status for 2019.

This means, Tanzania is now among the countries in the world with a GNI per capita between $1,006 and $3,955.

According to World Bank, Middle income countries (MICs) are home to 75% of the world’s population and 62% of the world’s poor. At the same time, MICs represent about one third of global GDP and are major engines of global growth.


What it means to Tanzanians and Country’s Economy?             

Getting into middle-income status is a step forward in the national development process. The categorisation reflects improvement in poverty reduction, and is a step forward in the country’s development.

This implies that for Tanzania which has great ambitions of growth plans through development projects and policies boosts its credit worthiness

It is worth noting that World Bank assignment to Tanzania based on Gross National Income (GNI) per capita- the total amount of money earned by nation’s people and business divided by its population.

GNI in this case, includes the nation’s gross domestic product plus the income it receives from overseas sources.

For Tanzania, this is a milestone because it attracts favourable credit as well as foreign investors due to impression that living standard and consumption has improved.

The efforts of President John Magufuli to motivate and attracting investors to invest in areas of our country have already attracted intentional researches and provided positive findings.


The Rand Merchant Bank (RMB) of South Africa released its 2019 edition of the “Where to Invest in Africa” report and stated that Tanzania is the 7th best destination to invest in Africa after Egypt, South Africa, Morocco, Ethiopia, Ghana and Kenya.

By climbing on two places in 2018, the bank perceives to be the most important conditions for viable investment in Tanzania and other winning Africa countries: economic activity, expressed as a weighted average of market size and forecasted levels of GDP growth, and the opening environment depicted as a weighted average of four international surveys that measure the ease of doing business

The surveys used are Doing Business Index, Global Competitive Index, Corruption Perceptions Index, and Economic Freedom Index. The report indicates that “though marginal, improvement for Tanzania have registered in all four aspects of operating environment index

Moreover, it is good news for Tanzanian industries, industry owners as credit worthness will improve, and industrial investors will get an opportunity to borrow externally. More lenders will trust Tanzanians and Tanzania will attract more investors.

The Indusrtrial sector of Tanzania is comprised of manufacturing (53%), processing (43%), and assembling industries (4%). The manufacturing sector in Tanzania consists mainly of food processing (24%), textile and clothing (10%), chemicals (8.5%), and others.

An article titled as: Tanzania Building Prosperity published by the Forbes Magazine, in July 2019 edition, quoted President Magufuli saying that all the infrastructures for industrialisation process are already in Place.

The government of President Magufuli focuses on industries, producing goods for mass consumption, such as clothes, textiles, and edibles.

The government has also focused on electricity development, which is the necessary step for achieving industrialisation. President Magufuli has repeated many times that without enough electricity the industrialisation strategy cannot be achieved in the country.

The government is constructing the 2,115 megawatts and biggest Mwalimu Nyerere Hydro power plant in East Africa and the fourth in Africa at Stigler’s Gorge along Rufiji River

The project, which is constructed by Arab Contractors and El Sewedy Electric Company and financed by taxpayers’ money at the cost of tsh 6 trillion ($ 3 billion) is expected to be completed by 2022.

Upon its completion the project, which has the reservoir length of 100 km and covering an area of about 1,350 square km, will provide for the country’s emerging industries and exporting the surplus to other East African Countries

According to Tanzania Electrical Company (TANESCO), the installed electricity generation capacity in Tanzania from hydro-power plants, natural gas and independent power producers which uses heavy furnace oil currently stands at just 1,600 megawatts. The 2,115 megawatts Rufiji plant is slated to further boost power generation


Upon the project completion in the next two years, Tanzania will become the leading power producer and supplier in East Africa. The project would reduce power costs, attract more investments and reduce prices of locally produced products,

The project will stimulate industrialization by adding to the national grid marking a major milestone in Tanzania’s power generation sector. In addition, it will employ an estimated 12000 Tanzanians directly and will boost the tourism industry through sport fishing, boat rides, and photographic safaris.

The contractors will also construct larger reservoirs to aid in flood control, water supply, irrigation, fisheries, and recreation.

The project will also stimulate tourism and expand towns. Villagers will also benefit immensely as 37 villages between Kibiti and Chalinze have been connected to electricity.

President Magufuli’s industrialisation drive has already started bearing fruits after cutting the country’s imports and earning 447.5 million US dollars from exports to East African countries by the year 2018.

Moreover, the Bank of Tanzania (BoT) economic and operations annual report for the year 2017/2018 that ended June 2018 shows that Tanzania continued to be a net exporter to SADC countries and others, with a trade surplus of 445.5 million US dollars in 2017, up from 397.2 US million dollars in 2016.

Furthermore, President Magufuli’s government supports an industrialization process by reducing taxes on locally produced goods. Moreover, in order to accelerate the industrialization drive, President Magufuli has urged banks to lower interest rates for industrial projects.

President Magufuli expressed his excitement following the new categorisation by the World Bank, thanking Tanzanians for the achievements

Written by John Simpson, Newyork


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