Dar es Salaam - November 2, 2026: Tanzania's economy continued to demonstrate resilience in September 2026, supported by strong private-sector credit growth, increased export earnings, improved tourism receipts and robust government revenue collection, despite mounting pressure from rising global energy prices and geopolitical uncertainties.
The latest Bank of Tanzania (BoT) Monthly Economic Review for October 2026 paints a picture of an economy maintaining relatively stable inflation, expanding financial sector activity and growing international trade, while facing emerging challenges associated with higher import costs and a widening current account deficit.
The report, which analyses developments through September 2026, highlights several indicators demonstrating the performance of Tanzania's economy and the opportunities and risks facing businesses, investors and policymakers.
Inflation Remains Within National Target
One of the notable developments was the continued stability of inflation, with headline inflation remaining at 4.3 percent in September 2026, unchanged from August.
The rate remained within the Government's medium-term inflation target of 3 to 5 percent, supported by moderation in energy, fuel and utilities inflation, which partly offset an increase in food prices.
Food inflation, however, increased slightly to 3.9 percent in September from 3.7 percent in August, largely reflecting higher prices of sorghum, potatoes, finger millet and wheat.
Meanwhile, core inflation remained unchanged at 4.1 percent.
The Bank of Tanzania noted that inflationary pressures could remain elevated in the coming months, particularly due to geopolitical tensions in the Middle East and anticipated El Niño-induced rains during the Vuli season.
Nevertheless, the country's food supply position provides some support, with food stocks held by the National Food Reserve Agency standing at 478,160.2 tonnes at the end of September 2026.
Private Sector Credit Expands by 34.2 Percent
The financial sector continued to record strong performance, particularly in lending to the private sector, reflecting sustained demand for financing to support business expansion and economic activities.
According to the report, credit extended by banks to the private sector grew by 34.2 percent year-on-year in September 2026.
Extended broad money supply (M3) also increased by 25.9 percent, reflecting continued expansion in financial activity and credit demand.
The growth in private-sector lending was broad-based across different economic activities.
Transport and communication recorded the highest annual credit growth at 78.3 percent, followed by trade at 52.5 percent and agriculture at 41.9 percent.
Mining and quarrying recorded credit growth of 35.2 percent, while building and construction expanded by 34.3 percent.
Hotels and restaurants recorded growth of 32.7 percent, demonstrating continued financing activity in the hospitality sector.
Personal loans continued to account for the largest share of banks' outstanding credit, representing 33.9 percent, followed by trade at 15.6 percent and agriculture at 13.7 percent.
The performance highlights the important role of banks in financing productive economic activities, supporting businesses and facilitating investment across different sectors.
Interest Rates Edge Up as Monetary Policy Tightens
Interest rates recorded moderate increases during September, reflecting the prevailing monetary policy environment.
The overall lending rate increased to 15.54 percent from 15.05 percent in August 2026, while the negotiated lending rate for prime borrowers rose to 12.03 percent from 11.93 percent.
On the deposits side, the overall time deposit rate increased to 9.02 percent from 8.78 percent.
The Bank of Tanzania's Monetary Policy Committee had previously raised the Central Bank Rate (CBR) to 6.25 percent for the quarter ending September 2026, compared with 5.75 percent in the preceding quarter.
The adjustment was intended to contain potential second-round inflationary pressures arising from higher energy, fertilizer and transportation costs associated with geopolitical developments in the Middle East.
For businesses and individuals, developments in lending rates remain important, particularly in determining the cost of borrowing and access to financing.
Government Securities Attract Strong Investor Demand
Tanzania's government securities market continued to demonstrate strong investor appetite during September 2026.
The Bank of Tanzania conducted Treasury bill auctions with a combined tender size of TZS 678.3 billion. The auctions attracted bids worth TZS 1,205 billion, demonstrating demand significantly above the amount offered.
Successful bids amounted to TZS 654.6 billion, while the overall weighted average Treasury bill yield remained at 4.85 percent.
Demand was also strong in the Treasury bond market, where the Bank conducted auctions for five-year, 10-year and 15-year bonds.
The auctions attracted total bids of TZS 1,267.2 billion, of which TZS 489.7 billion were accepted.
Yields on five-year and 10-year Treasury bonds declined to 9.53 percent and 10.69 percent, respectively, while the 15-year bond yield increased to 10.79 percent.
These developments reflect continued investor interest in government securities and the importance of the domestic capital market in mobilising resources to finance Government operations.
Shilling Records Marginal Appreciation Against US Dollar
The foreign exchange market remained relatively stable during September 2026, supported by inflows from commodity exports and tourism.
Total turnover in the Interbank Foreign Exchange Market (IFEM) reached USD 151.7 million, with the Bank of Tanzania selling USD 7.2 million to smooth excessive exchange rate volatility.
The Tanzanian shilling recorded a marginal appreciation against the US dollar, trading at an average exchange rate of TZS 2,654.91 per US dollar compared with TZS 2,657.01 in August 2026.
However, on an annual basis, the shilling depreciated by 7.4 percent, largely reflecting a base effect following significant appreciation in September 2025.
The developments underline the importance of export earnings, tourism receipts and foreign investment in supporting the country's foreign exchange market.
Gold and Manufactured Goods Drive Export Growth
The external sector recorded strong export performance, although the current account deficit widened due to the faster growth of imports.
Exports of goods and services increased by 19.9 percent to USD 21.07 billion in the year ending September 2026, compared with USD 17.57 billion recorded during the corresponding period in 2025.
Gold remained a major contributor to export earnings, with its export value increasing to USD 5.83 billion from USD 4.43 billion.
Manufactured goods exports also recorded substantial growth, rising to USD 2.20 billion from USD 1.55 billion, supported by increased shipments of iron, steel and glassware.
Traditional exports recorded mixed performance. Tobacco exports increased to USD 596.1 million from USD 486.2 million, while cashew nut exports declined to USD 369.3 million from USD 527.6 million.
Coffee exports also declined to USD 280.4 million from USD 330.3 million.
The figures demonstrate the growing contribution of minerals and manufactured products to Tanzania's export earnings, while highlighting the importance of strengthening traditional agricultural exports.
Tourism Earnings Continue to Support Foreign Exchange Inflows
Tourism remained another important contributor to the country's foreign exchange earnings.
The Bank of Tanzania reported that service receipts increased by 14.8 percent to USD 8.62 billion in the year ending September 2026, compared with USD 7.51 billion in the corresponding period in 2025.
Tourism receipts increased to USD 4.57 billion from USD 4.39 billion, reflecting continued growth in tourism activity.
Transport service receipts also recorded significant growth, reaching USD 3.48 billion compared with USD 2.67 billion in the preceding year.
The increase was largely supported by higher earnings from freight services associated with transit trade.
The continued growth in tourism and transport earnings reinforces their importance in supporting Tanzania's external sector and creating opportunities across hospitality, transportation and related industries.
Rising Imports Put Pressure on Current Account
Despite strong export performance, Tanzania's import bill continued to increase, putting pressure on the country's current account position.
Imports of goods and services rose by 24 percent to USD 22.13 billion in the year ending September 2026, compared with USD 17.85 billion in the corresponding period in 2025.
The increase was driven by higher imports of industrial supplies, petroleum products, freight services and industrial transport equipment.
Notably, imports of petroleum products increased by 72.3 percent to USD 3.81 billion, compared with USD 2.21 billion in the preceding year.
The Bank attributed the increase partly to elevated international energy prices arising from geopolitical tensions in the Middle East.
Consequently, the current account deficit widened to USD 2.40 billion in the year ending September 2026, compared with USD 1.88 billion recorded in the corresponding period in 2025.
The development highlights the exposure of Tanzania's external position to fluctuations in international commodity prices, particularly energy prices.
Foreign Exchange Reserves Reach USD 6.03 Billion
Despite the widening current account deficit, Tanzania maintained a relatively strong foreign exchange reserve position.
The country's foreign exchange reserves stood at USD 6.03 billion at the end of September 2026, sufficient to cover 4.3 months of projected imports of goods and services.
The reserve position remained above the national adequacy benchmark.
According to the Bank of Tanzania, the reserves were supported by sustained export earnings and the Bank's gold purchase programme.
Maintaining adequate foreign exchange reserves is important in supporting the country's capacity to meet external payment obligations, manage external shocks and maintain confidence in the economy.
Government Revenue Collections Exceed Targets
Government revenue performance was also encouraging at the beginning of the 2026/27 financial year.
In July 2026, total Government revenue collections reached TZS 3.50 trillion, exceeding the target by 9.5 percent.
Central Government revenue amounted to TZS 3.35 trillion, accounting for 95.8 percent of total collections.
Tax revenue contributed TZS 2.88 trillion, surpassing the target by 9.8 percent, reflecting improvements in tax administration and taxpayer compliance.
Non-tax revenue amounted to TZS 477.9 billion, slightly below the target of TZS 480.2 billion.
On the expenditure side, Government spending amounted to TZS 3.57 trillion during the month, comprising TZS 2.78 trillion in recurrent expenditure and TZS 792.9 billion allocated to development projects.
The strong revenue performance provides an important foundation for financing Government priorities and supporting public service delivery and development programmes.
Zanzibar Records Improved Inflation Performance
The report also highlights developments in Zanzibar's economy, where headline inflation moderated to 4.3 percent in September 2026 from 5.6 percent in August.
The moderation was mainly attributed to lower prices of food and non-alcoholic beverages, which account for 41.9 percent of Zanzibar's Consumer Price Index basket.
The inflation rate remained within the medium-term target of 5 percent, although it was higher than the 3.5 percent recorded in September 2025.
On the external sector, Zanzibar's current account surplus increased by 18.7 percent to USD 986.8 million in the year ending September 2026, supported mainly by improved service receipts, particularly tourism-related earnings.
These developments underline the importance of tourism and related services in supporting Zanzibar's economic performance.
Conclusion: Opportunities Amid Global Economic Uncertainties
The Bank of Tanzania's October 2026 Monthly Economic Review presents a generally positive picture of Tanzania's economic performance, with stable headline inflation, strong private-sector credit growth, expanding exports, improved tourism earnings and adequate foreign exchange reserves.
However, the widening current account deficit, rising petroleum import costs and uncertainties in the global economy remain important issues requiring continued attention.
For the banking industry, the strong growth in private-sector credit demonstrates sustained demand for financial services and opportunities to expand lending to businesses across agriculture, trade, transport, mining, manufacturing and other productive sectors.
For investors, the performance of government securities, continued growth in gold exports and tourism receipts, alongside developments in financial markets, provides important insights into the country's investment environment.
Going forward, sustaining economic resilience will depend on strengthening domestic production, diversifying exports, improving productivity, expanding access to affordable financing and maintaining sound macroeconomic policies.
Source: Bank of Tanzania – Monthly Economic Review, October 2026.
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