INFLATION | Tanzanian Shilling (TSHS) Weakens Becoming the World’s Worst Performing Currency in 2025 So Far

Tanzania’s economy is experiencing strong growth, but its currency, the Tanzanian shilling, is under significant pressure, making it the worst-performing currency globally this year.

The Tanzanian shilling has depreciated by 8.9% in 2024, with a further 0.2% drop on Tuesday, reaching 2,645.10 per dollar—its lowest level since late November 2024, according to Bloomberg.

This sharp decline stems from increasing imports and mounting public debt associated with large-scale infrastructure projects.

Key Takeaways

• Tanzanian Shilling Decline – The Tanzanian Shilling has depreciated by 8.9% in 2024, making it the worst-performing currency globally due to rising imports and increasing public debt
• Infrastructure Investments – Large-scale projects like the Bagamoyo deep-water port, the $5 billion East African Crude Oil Pipeline, and a $42 billion LNG facility are driving economic growth but adding financial strain
• Rising Imports and Debt – Imports grew by 5% to $16.9 billion, while external debt increased by 11.5% to $33.9 billion, contributing to continued pressure on the currency
• Future Outlook – Analysts expect further shilling depreciation before stabilization, but long-term economic benefits from infrastructure investments could offset current financial pressures

Despite Tanzania’s projected GDP growth of 6% in 2025, analysts foresee continued weakening of the Tanzanian Shilling before any signs of stabilization. Shani Smit-Lengton, a senior economist at Oxford Economics Africa, attributes this downward trend to a widening current-account deficit and seasonal liquidity constraints. However, she notes that ongoing infrastructure investments could deliver long-term economic gains.

Tanzania’s Infrastructure Boom

The country is aggressively expanding its infrastructure, undertaking projects such as the deep-water container port in Bagamoyo and the $5 billion East African Crude Oil Pipeline connecting Uganda’s oil fields to Tanzania’s Tanga port. Additionally, Tanzania is progressing with a massive $42 billion liquefied natural gas (LNG) project in collaboration with global energy firms Shell, Equinor, and Exxon Mobil.

While these developments are poised to stimulate long-term economic growth, they are also driving higher imports and increasing national debt, compounding pressure on the already fragile Tanzanian Shilling.

Rising Imports and Debt Burden

Tanzania’s imports of goods and services surged by 5% over the year leading up to January 2025, reaching $16.9 billion, according to the Bank of Tanzania. This increase is primarily due to greater demand for industrial supplies and transport equipment, reflecting growth in key sectors such as manufacturing, construction, and transportation.

Meanwhile, the country’s national debt remained ‘broadly stable’ at $47.6 billion, with external debt rising by 11.5% to $33.9 billion in the same period. Although these investments contribute to economic expansion, they also impose financial pressures that further strain the Tanzanian Shilling.

As Tanzania navigates these economic shifts, the challenge remains balancing rapid growth with currency stability, ensuring long-term benefits without exacerbating short-term vulnerabilities.

_________________________________________

_________________________________________