Tanzania Ranks 9th in Africa’s Financial Markets, but the Absa Report Reveals a Deeper Structural Problem

Tanzania has climbed to a score of 62 in the 2026 Absa Africa Financial Markets Index, placing ninth among 29 African economies and firmly inside the continent’s top ten financial markets. The headline is encouraging. Tanzania improved from a recalculated score of 60 in 2025, recorded one of the stronger improvements in market depth, maintained high scores for macroeconomic stability and market transparency, introduced its first exchange traded funds, saw heavily subscribed bond issues and continued reforms in money markets. Yet the more important conclusion from the report is not that Tanzania now ranks ninth. It is that the country has built a considerably stronger institutional and macroeconomic foundation for financial markets than the markets themselves have yet been able to use. Tanzania scores 85 for market transparency and another 85 for its macroeconomic environment, but only 43 for market depth and 35 for pension fund development. Foreign exchange access stands at 60 and legal standards at 65. The imbalance between those scores provides one of the clearest diagnoses of Tanzania’s financial system: the country increasingly possesses the stability, regulation and information infrastructure associated with developed financial markets, but still lacks enough securities, liquidity, investors and private issuers to turn that architecture into a deep source of capital for the economy. The ranking itself also needs to be interpreted carefully. Tanzania’s score increased from 60 to 62, but its position moved from eighth to ninth because other countries improved faster. South Africa remains first with 85, Mauritius second with 77 and Namibia third with 71, while Uganda ranks fourth at 68, Kenya fifth at 65, Ghana sixth at 64, Botswana seventh at 64 and Nigeria eighth at 63. Tanzania nevertheless sits ahead of Morocco, Egypt, Rwanda, Zambia and a large group of African financial markets. Under the report’s recalculated methodology, Tanzania’s score has moved from 60 in 2022 to 58 in 2023, 61 in 2024, 60 in 2025 and 62 in 2026, showing gradual improvement rather than a sudden leap. That makes the 2026 report more useful as a structural assessment than as a ranking table. Tanzania’s strongest scores come in areas that governments and regulators can improve directly through policy: macroeconomic management, disclosure, monetary policy communication, financial regulation and increasingly sophisticated market infrastructure. Its weakest scores appear in areas that require behaviour from the private economy: companies choosing to list, investors trading securities, pension funds allocating capital beyond government debt, corporations issuing bonds and foreign exchange markets developing enough turnover to become genuinely liquid. Tanzania has therefore made more progress in creating the conditions for capital markets than in generating the volume of capital market activity those conditions are intended to support. Tanzania’s Financial Market Is Stronger Than It Was, but Still Much Shallower Than the Ranking Suggests Market depth is where the contradiction becomes most visible. Tanzania’s score increased by nine points to 43 in 2026, one of the larger improvements recorded in the index, supported by money market reforms, heavily subscribed bond issues, repo activity and a broader range of financial products. The improvement is real, but the underlying components show why Tanzania remains far from the continent’s deepest markets. The country scores only 21 for market size and 15 for liquidity, compared with 53 for product diversity, 70 for broader market depth features and 55 for its primary dealer system. Those numbers describe a market that has more instruments and better architecture than actual trading. Tanzania can introduce exchange traded funds, strengthen repo markets, improve bond issuance processes and create new securities, but a financial market becomes economically deep only when those instruments are repeatedly issued, actively traded and held by a sufficiently diverse investor base. Liquidity is especially important because it determines whether an investor can leave a position as easily as they entered it. A stock exchange can list companies and a bond market can issue securities, but if buyers and sellers appear infrequently, investors face a different type of risk: the asset may be valuable, yet difficult to sell without accepting a substantial discount. This matters to institutional investors, foreign portfolio investors and companies considering whether public markets are worth the cost of listing. The report’s assessment therefore suggests that Tanzania has moved beyond the stage where the principal problem is the absence of financial market institutions. The Dar es Salaam Stock Exchange exists, government bonds are heavily subscribed, exchange traded funds have arrived, repo activity has improved and the regulatory architecture is becoming more sophisticated. The harder problem is now utilisation. A financial market can be constructed administratively. Liquidity cannot. Tanzania Has Built a Strong Transparency Framework Tanzania scores 85 for market transparency, placing it seventh among the 29 countries assessed and behind only South Africa, Kenya, Egypt, Ghana, Nigeria and Uganda. The score reflects strong performance across financial disclosure, sovereign credit ratings, monetary policy communication, fiscal information and macroeconomic data. This is one of Tanzania’s less appreciated financial advantages. Investors need to know when inflation data will be released, how government borrowing is changing, what monetary policy authorities are signalling, whether debt is increasing and how companies are performing before capital can be priced properly. The quality of that information affects the premium investors demand for uncertainty. The report also notes that Tanzania improved sovereign credit rating coverage and is developing a framework to recognise and supervise domestic credit rating agencies and opinion providers. That could become particularly important for corporate finance because smaller Tanzanian companies are often too small to justify the cost of international credit ratings. A credible local ratings industry could allow domestic investors to compare corporate risk more systematically and support a larger corporate bond market. Tanzania is also developing a daily sovereign yield curve, which the report says should improve pricing transparency. A functioning yield curve is one of the basic pieces of infrastructure required for deeper debt markets because government borrowing rates provide a benchmark against which private borrowers can be priced. If the government can borrow at a particular rate over five or ten years, investors can determine what additional return they should demand from a company carrying greater credit risk. The economic importance of transparency is therefore indirect but substantial. Tanzania is creating the information system through which capital can eventually be priced more efficiently. The remaining challenge is ensuring that enough private securities actually exist for investors to price. Macroeconomic Stability Is Tanzania’s Strongest Asset The report is especially positive about Tanzania’s macroeconomic environment, where the country scores 85 and ranks among Africa’s stronger performers. It highlights real GDP growth of 5.9 percent in 2025, up from 5.5 percent in 2024 and 5.1 percent in 2023, together with relatively contained inflation, financial sector stability and external debt management. It also credits government efforts to improve debt transparency, public investment management, monitoring of contingent liabilities and development of the domestic government securities market. Tanzania’s macroeconomic position matters to financial markets because capital is sensitive to instability. High inflation destroys the value of long term local currency investments. Rapid currency depreciation increases the risk faced by foreign investors. Large fiscal deficits can push governments into domestic markets so aggressively that they absorb savings otherwise available to companies. Weak banks can transmit financial distress through the economy. Tanzania has avoided many of the extreme versions of those problems. The result is that investors can analyse Tanzanian assets without first having to price hyperinflation, sovereign default or severe financial sector instability into every decision. The report also credits Tanzania with relying increasingly on concessional financing and grants while directing non concessional borrowing towards strategic and high return projects, alongside reforms intended to reduce refinancing risk. Restrictions on foreign investment in government securities have also been removed. These are important changes because they enlarge the investor base available to the government while potentially improving price discovery in domestic debt markets. There is nevertheless a contradiction hidden inside that success. A strong government securities market can improve Tanzania’s financial system while simultaneously making it more difficult for private companies to compete for capital. If government bonds offer attractive returns with relatively low perceived risk, banks, pension funds and insurers have little reason to purchase corporate bonds or equities whose risks are harder to assess. Tanzania therefore needs the government bond market to mature without allowing the government to become the overwhelmingly dominant consumer of domestic savings. Pension Funds Reveal Tanzania’s Largest Missed Opportunity The weakest part of Tanzania’s profile is pension fund development, where it scores 35. This weakness deserves more attention than the ranking alone because pension funds should be among the most important sources of long term Tanzanian capital. Pension funds collect contributions over decades and carry liabilities stretching far into the future, making them structurally suited to long duration investments. They can finance government bonds, corporate debt, equities, infrastructure vehicles, property and other assets whose returns take years to materialise. Yet the Absa report finds that in Tanzania corporations hold more than half of listed equities while domestic institutional investors account for less than 5 percent. Ghana and Nigeria display a similar pattern. That figure is economically revealing. Tanzania has pension institutions, listed companies and a functioning stock exchange, but the institutions with some of the largest pools of domestic long term savings remain relatively minor participants in listed equities. This reduces liquidity because pension funds could provide stable demand for shares. It also reduces incentives for companies to list because prospective issuers need confidence that investors capable of purchasing large positions will actually participate. A company considering an initial public offering will compare the cost, disclosure requirements and governance obligations of listing with the amount of capital it can realistically raise. If the domestic institutional investor base is shallow, bank credit or private financing may remain more attractive. The same weakness limits the development of corporate bonds. Tanzania’s government debt market is considerably more mature than its corporate debt market because government securities are issued regularly, have clearer benchmarks and attract institutional demand. Companies face a more difficult environment because investors have fewer ratings, less trading history and weaker secondary liquidity through which to assess corporate risk. This creates a self reinforcing cycle. Pension funds avoid private securities because markets are shallow, while markets remain shallow because pension funds avoid private securities. Breaking that cycle will require more than instructing pension funds to invest differently. Tanzania needs investible companies, stronger disclosure, credible corporate ratings, more free float, better governance and instruments whose risk and return profiles make them genuinely attractive to trustees responsible for workers’ retirement savings. Tanzania’s Foreign Exchange Market Is More Open Than It Is Liquid The same pattern appears in foreign exchange. Tanzania scores 60 for access to foreign exchange, but the deeper breakdown shows relatively strong rules and reporting alongside weak market liquidity. This distinction matters because foreign exchange access has two dimensions. The first is whether laws and regulations allow investors to obtain foreign currency and move capital. The second is whether there is actually enough currency trading in the market for large transactions to occur efficiently. Tanzania has made progress on the first. The report recognises reasonably open arrangements and strong reporting standards. But interbank foreign exchange liquidity remains much weaker than in markets such as Uganda, which now scores 81 overall for foreign exchange access and has developed a much deeper swap and interbank market. For foreign investors, this influences the attractiveness of Tanzanian assets. An investor can earn an attractive return on a bond or equity position in shillings but still face uncertainty when converting proceeds back into dollars or another currency. If the foreign exchange market is shallow, the investor has to consider not only the underlying investment return but also the ease of exit. The implication is that Tanzania’s foreign exchange reforms should increasingly focus on market depth rather than only rules. More interbank trading, stronger market making, deeper swap activity and more instruments for managing currency risk would make foreign exchange access more practical for businesses and investors. Climate Risk Is Becoming Part of Tanzania’s Financial Supervision The report also identifies Tanzania as one of the countries that introduced climate stress testing into financial supervision in 2026, joining a group of 11 markets using such tools. Tanzania, Benin and Seychelles were new additions. Absa-Africa-Financial-Markets-I… This is relevant because climate risk increasingly appears on bank and insurer balance sheets through channels that are not immediately environmental. Drought can reduce agricultural production and cause loan defaults. Flooding can damage property pledged as collateral. Extreme weather can increase insurance claims. Changes in global climate policy can alter the value of assets associated with carbon intensive industries. Climate stress testing attempts to answer a financial question: what happens to banks, insurers and other institutions if those physical and transition risks become large enough to affect borrowers and asset values simultaneously? For Tanzania, where agriculture remains important to employment and economic activity and where infrastructure is vulnerable to weather shocks, the exercise is particularly relevant. It also shows how financial regulation is expanding beyond conventional measures of capital adequacy and credit risk towards longer term structural risks. The index gives Tanzania 65 in legal standards and enforceability, a moderate score that places it well below Mauritius, South Africa, Ghana and Nigeria. The report specifically notes that Tanzania is pursuing legal and regulatory reforms following work with the United Nations Economic Commission for Africa and Frontclear, particularly around frameworks that support financial market transactions. This matters because sophisticated financial markets require enforceable rules around collateral, insolvency and netting. A repo, derivative or securities lending transaction is only useful if investors know what happens when one party fails. Legal uncertainty makes financial institutions more reluctant to transact and can keep otherwise viable markets shallow. Mobile Money Gives Tanzania a Distribution Advantage Most Older Markets Never Had One of the report’s most important observations about Tanzania sits outside the conventional market rankings. It notes that linking mobile money wallets directly to central securities depository accounts has increased retail activity on the Dar es Salaam Stock Exchange. This is potentially far more significant than it first appears. Traditional capital markets were built around brokers, banks and physical financial institutions. Tanzania already possesses a digital financial distribution system reaching millions of people through mobile money. If securities, collective investment schemes and government instruments can be integrated into infrastructure households already understand, Tanzania can reduce one of the largest barriers to retail investment: the distance between having money and knowing how to invest it. The report points to a wider continental trend in which 40 percent of adults in Sub Saharan Africa now hold mobile money wallets and 35 percent save through formal channels. Tanzania therefore does not have to build a new retail financial distribution network from scratch. It has to connect an existing one to productive assets. This could eventually broaden domestic ownership of government bonds, exchange traded funds, equities and collective investment products. But the technology cannot solve the supply problem by itself. A million additional retail investors are useful only if there are enough attractive securities for them to purchase. This returns Tanzania to the same problem identified throughout the report: access is improving faster than depth. The Report Suggests Tanzania’s Next Financial Reform Should Focus on the Private Economy For much of the past decade, Tanzania’s financial market reforms have concentrated on institutional architecture: government securities, regulation, settlement systems, disclosure, foreign participation, monetary policy and new financial products. Those reforms were necessary and explain why Tanzania now scores strongly in transparency and macroeconomic conditions. The next reform cycle needs to focus much more directly on issuers and investors. Tanzania needs more companies capable of raising money through markets rather than banks. That means increasing listings, developing corporate bond issuance, creating credible credit ratings, expanding private market structures and improving the pipeline through which medium sized companies can eventually become investible public businesses. The private sector also needs to see the capital market as a financing venue rather than principally a place where existing shareholders trade securities. Tanzania’s largest companies frequently remain privately held, subsidiaries of multinational groups or financed predominantly through banks. As long as those firms have little incentive to issue shares or bonds publicly, the supply of securities available to investors will remain limited. Institutional investors need to change with the market. Pension funds and insurers can provide patient capital, but they need products with credible risk assessment and sufficient liquidity. Retail investors can be brought in through mobile channels, but they need products simple enough to understand and inexpensive enough to use. Foreign investors need confidence that currency can be obtained when they exit. These reforms reinforce each other. More issuers create more assets. More assets attract more investors. More investors improve liquidity. Better liquidity makes listing more attractive to issuers. Greater issuance gives pension funds alternatives to government securities. A deeper institutional investor base makes corporate bonds easier to sell. A more active foreign exchange market reduces the risk faced by foreign participants. That is how a financial market becomes deep. Tanzania’s East African Position Is Strong, but Uganda and Kenya Show What Is Still Missing Tanzania’s ninth place ranking gives it a respectable position within East Africa, but the performance of Uganda and Kenya provides useful comparisons. Uganda ranks fourth overall with 68 and Kenya fifth with 65, ahead of Tanzania’s 62. Their strengths differ. Uganda has built one of Africa’s strongest foreign exchange markets and scores 81 for FX access, while Kenya scores 100 for market transparency and has experienced record bond trading volumes. Tanzania’s relative strengths lie in macroeconomic stability, transparency and recent improvements in money markets and bond issuance. The comparison shows that Tanzania is not fundamentally missing institutional capacity. It is missing scale and activity. Kenya demonstrates what happens when market information combines with stronger turnover and a broader investment industry. Uganda demonstrates the value of deeper foreign exchange infrastructure. Tanzania can therefore identify specific gaps without needing to redesign its entire financial system. Regional integration could also reduce the disadvantages of individually small markets. East Africa already possesses large pension funds, banks, insurers, asset managers, exchanges and millions of retail financial customers, but these pools of capital remain fragmented by national borders, regulatory systems and currencies. If Tanzanian issuers could more easily access Kenyan and Ugandan investors, and Tanzanian investors could participate seamlessly across the region, East African markets could achieve a scale that no single domestic exchange currently possesses. For Tanzania, regional integration should therefore be viewed not only as a political project but as a liquidity strategy. The Uchumi360 Insight The most important conclusion from the Absa Africa Financial Markets Index is not that Tanzania ranks ninth. It is that Tanzania’s financial institutions appear considerably more developed than the market activity occurring inside them. A country scoring 85 in transparency and 85 in macroeconomic conditions has already solved part of the financial development problem. Investors have relatively good information, the macroeconomic environment is comparatively stable, government securities markets are improving, new products are appearing and regulators are incorporating increasingly sophisticated issues such as climate risk. But market depth remains 43 and pension fund development only 35. Those numbers show where the economic constraint has moved. Tanzania no longer needs only to build financial market institutions. It needs to make them economically consequential. That means moving domestic savings into productive companies, giving pension funds credible alternatives to sovereign debt, persuading more firms to raise public capital, increasing secondary trading, expanding corporate bond markets, deepening foreign exchange liquidity and turning mobile money users into investors rather than simply payment customers. The difference matters because banks alone cannot finance every stage of Tanzania’s development. The country wants more manufacturing, energy projects, mining investment, logistics infrastructure, housing, technology companies and large domestic businesses capable of competing regionally. Many of those activities require long term capital that conventional bank balance sheets are not ideally structured to provide. Capital markets exist precisely to solve that problem. The Absa report suggests Tanzania has built much of the machinery. The next test is whether the machinery can move significantly more capital from savers to businesses that can put it to productive use. Tanzania is already one of Africa’s ten strongest financial markets. The harder achievement will be becoming one of its deepest. FAQ Where does Tanzania rank in the 2026 Absa Africa Financial Markets Index? Tanzania ranks ninth among 29 African economies with an overall score of 62. What are Tanzania’s six pillar scores? Tanzania scores 43 for market depth, 60 for access to foreign exchange, 85 for market transparency, 35 for pension fund development, 85 for the macroeconomic environment and 65 for legal standards and enforceability. What is Tanzania’s strongest area? Tanzania performs strongest in market transparency and the macroeconomic environment, scoring 85 in both areas. What is Tanzania’s biggest financial market weakness? Pension fund development is the lowest scoring pillar at 35, while market depth remains weak at 43. Liquidity within both securities and foreign exchange markets is also a constraint. What improved Tanzania’s score in 2026? The report highlights money market reforms, heavily subscribed bond issues and the launch of Tanzania’s first exchange traded funds. Tanzania’s market depth score increased by nine points. Why are pension funds important to Tanzania’s capital market? Pension funds hold long term savings that can potentially finance equities, corporate bonds, infrastructure and other productive investment. The report says domestic institutional investors currently account for less than 5 percent of listed equities in Tanzania. What does the report say about Tanzania’s economy? The report highlights Tanzania’s sustained GDP growth, contained inflation, external debt management and financial sector stability. It records real GDP growth of 5.9 percent in 2025, following 5.5 percent in 2024 and 5.1 percent in 2023. What should Tanzania do next? The report itself identifies weaknesses in liquidity, institutional participation and market depth. The analytical implication is that Tanzania’s next phase of reform should focus less on creating new market structures and more on increasing issuance, trading, institutional investment, corporate financing and foreign exchange liquidity.