GDP Is Growing, But Are People Better Off? Rethinking Tanzania’s Economic Statistics

Tanzania’s headline economic statistics suggest a country on a steady growth path. According to the National Bureau of Statistics (NBS), Tanzania’s GDP growth has averaged between 5.0% and 5.5%annually in recent years, even amid global shocks. In 2023/2024, growth was driven largely by construction, mining, transport, finance, and public infrastructure investment.

Yet household-level realities tell a more complicated story. Despite sustained GDP expansion, many Tanzanians report stagnant incomes and rising daily expenses. This disconnect has intensified public debate around whether official economic indicators while statistically accurate, adequately reflect welfare, living standards, and income security.

GDP Growth Measures Production, Not Household Welfare

GDP measures how much an economy produces, not how people live. NBS sectoral data shows that some of Tanzania’s fastest-growing sectors, such as mining, construction, and large infrastructure, are capital-intensive. For example, mining contributes over 9% of GDP, yet employs less than 2% of the total workforce.

This structural imbalance explains why GDP can grow while incomes stagnate. Agriculture, which employs about 65% of Tanzanians, contributes less than 30% of GDP and grows more slowly. When growth is concentrated in sectors that absorb little labour, its impact on household welfare remains limited.

Employment Numbers vs. Employment Quality

Official employment figures often overstate economic security. NBS Labor Force Survey data shows that over 84% of employed Tanzanians work in the informal sector, where incomes are low, unstable, and largely unprotected. Formal wage employment accounts for less than 16% of total employment.

Underemployment is the hidden weakness in Tanzania’s labor market. Many individuals classified as “employed” work fewer than 35 hours per week or earn incomes below basic needs thresholds. This means that employment growth does not necessarily translate into poverty reduction or improved living standards.

Inflation: Low Headline Numbers, High Daily Pressure

NBS inflation data indicates relative macroeconomic stability. Headline inflation has remained mostly within the 3–5% range, aligning with regional benchmarks and supporting monetary stability.

However, food inflation which carries the heaviest weight for low-income households, often exceeds headline rates. In several recent periods, food inflation has ranged between 6% and 9%, driven by weather variability, transport costs, and supply inefficiencies. Since food accounts for over 60% of spending among low-income households, the lived inflation experience is far higher than national averages suggest.

Cost of Living Varies Sharply by Location and Income

National averages conceal sharp regional and social differences. NBS Household Budget Survey data shows that urban households spend 30–40% of income on housing and transport, while rural households spend over 65% on food alone.

This means inflation affects Tanzanians unevenly. Rent increases in cities, fuel-linked transport costs, and seasonal food price spikes create localized inflation shocks that are not fully captured in national CPI figures deepening the perception gap between statistics and reality.

Income Growth Lags Behind Economic Expansion

GDP growth has outpaced household income growth. NBS survey data indicate that real household income growth remains modest, particularly in rural and informal urban areas. Productivity gains are uneven, and wage growth in informal sectors frequently fails to keep pace with rising costs.

As a result, economic growth feels exclusionary rather than inclusive. When output rises faster than incomes, purchasing power weakens, and the benefits of growth appear concentrated among specific sectors and income groups.

Why This Statistical Gap Matters

Economic data shapes trust in institutions and policies. When official numbers suggest progress but households feel financial strain, public confidence in statistics erodes even if the data is methodologically sound.

Bridging this gap is critical for effective policymaking. Statistics must not only measure growth accurately but also communicate distributional outcomes clearly and transparently.

Way Forward

GDP should be complemented with welfare-focused indicators, including real household income, consumption trends, and employment quality.

Inflation reporting should include disaggregated indices, reflecting food inflation, urban-rural differences, and income-specific consumption baskets.

Employment statistics must move beyond headcounts, capturing underemployment, earnings adequacy, and job stability.

Trust in NBS data will grow when Tanzanians see their lived realities reflected in official numbers, strengthening evidence-based policy and public confidence.