Tanzania Economic Update : Special Theme - Investing in Basic Education for Tanzania's Strong Foundations and Future

Overview & Synopsis

This report presents the February 2026 Tanzania Economic Update, analyzing the country’s recent macroeconomic performance alongside a special focus on strengthening foundational human capital through basic education. Tanzania’s economy demonstrated resilient growth, with GDP expanding to approximately 5.8 percent in the first half of 2025, driven by strong performance in mining, construction, and financial services, as well as robust export activity. Macroeconomic stability has been supported by low inflation, improved foreign exchange conditions, and a relatively stable fiscal position, although pressures persist due to revenue constraints, rising expenditures, and increasing debt vulnerabilities. The report highlights that while economic fundamentals remain solid, structural challenges continue to limit inclusive growth. Job creation, particularly in the formal sector, has not kept pace with rapid population growth, resulting in significant reliance on informal employment. Sectoral imbalances, capacity constraints in infrastructure and tourism, and exposure to external and climate-related risks further shape the economic outlook. A key theme of the report is the critical role of investing in quality basic education to support Tanzania’s long-term development. Despite progress in expanding access to schooling, learning outcomes, resource allocation, and education financing remain key concerns. Only a fraction of students complete the full cycle of basic education, reflecting challenges in retention, transition, and system efficiency. Additionally, declining public spending relative to GDP, large class sizes, and uneven teacher distribution undermine the quality of education delivery. The report emphasizes that strengthening basic education is essential for improving workforce readiness, enhancing productivity, and enabling structural transformation toward higher-value sectors. Policy priorities include expanding access, improving learning outcomes, addressing resource inefficiencies, and ensuring sustainable education financing. By aligning education systems with labor market needs and maintaining macroeconomic stability, Tanzania can better leverage its growing youth population to achieve inclusive and sustained economic growth.