Africa-Press – Tanzania. IN the high-stake arena of African finance, Tanzania is no longer playing catch-up. According to the 2025 Absa Africa Financial Markets Index (AFMI), the nation has solidified its position as a regional powerhouse, claiming the 3rd spot overall in Africa for Macroeconomic Environment and Transparency.
While regional peers grapple with fiscal volatility and currency devaluations, Tanzania’s approach to economic management, characterised by predictable monetary policy and low inflation, is paying significant dividends in investor confidence.
The 2025 AFMI report highlights a remarkable achievement: Tanzania secured near-perfect scores (100/100) for monetary policy transparency, budget releases, and macro data standards.
“This progress is not accidental,” says Irene Rwegalulira, Director of Global Markets at Absa Bank Tanzania. “It is the outcome of sustained commitment by policymakers and regulators to build a credible and resilient financial ecosystem. These elements help build investor confidence and create a stable environment for businesses and households alike.”
She further emphasises, “Ongoing efforts to strengthen market governance, align frameworks with international standards, and enhance transparency across key segments of the financial system are beginning to show results. This gives investors the predictability they need.” This stability is a sharp contrast to the liquidity constraints facing Addis Ababa or the debt-servicing pressures seen in Nairobi, effectively lowering the risk premium for international investors eyeing the East African Community (EAC).
Tanzania is aggressively diversifying its financial toolkit to fund a massive infrastructure pipeline. The standout milestone of early 2025 was the debut of the Sovereign Sukuk bond, a strategic pivot toward Islamic finance designed to tap into Middle Eastern liquidity.
Coupled with the “Samia Infrastructure Bond,” named after President Samia Suluhu Hassan, the government is signalling a shift away from expensive external commercial debt in favour of domestic and regional capital market solutions. These moves propelled Tanzania to 7th place in Market Depth, one of the few countries on the continent to show upward mobility in this pillar over the last year.
“From a global markets’ perspective, these developments are critical,” Rwegalulira explains. “Deeper markets enhance liquidity, improve price discovery, and reduce concentration risk. Over time, they also lower the cost of capital for both government and the private sector – freeing up resources for productive investment and economic growth.”
The structural achilles’ heel: Pensions, legal frameworks
Despite the “Tanzania Momentum,” the AFMI report and local experts agree that the glass is only half full. Two critical areas remain roadblocks to Tanzania breaking into the continent’s top 10 overall markets:
Pension Fund Participation: Tanzania’s pension assets per capita remain significantly below the index average. “Pension funds, as long-term investors, play a vital role in deepening financial markets,” Rwegalulira notes. “Tanzania still lags behind other markets in this area. Increasing their participation would help provide a steady source of local capital and diversify the investor base, rather than relying solely on banks and government issuance.”
Legal Enforceability (Pillar 6): While the Bank of Tanzania (BoT) is modernising frameworks, the report stresses that the enforceability of financial contracts and insolvency laws needs strengthening to build long-term trust. Rwegalulira adds, “Clear rules and effective enforcement—especially around financial contracts and insolvency—are critical for building trust. These are not technical issues; they directly affect how confident investors feel about committing long-term funds.”
A competitive regional landscape
Tanzania’s rise is recalibrating the EAC power balance. Her superior macroeconomic score and improved NPL ratio (scoring 94 in NPL management) make it an increasingly attractive “safe harbour,” according to the report.
The consensus from the AFMI is clear: the foundation is laid. The next phase of transformation will require “shared responsibility” between the government, regulators, financial institutions, and the private sector to improve financial literacy and modernise the legal “plumbing” of the markets.
“Encouragingly, the policy direction articulated by the government and the central bank aligns closely with the reform priorities highlighted in the Index,” Rwegalulira states. “If pursued with consistency, these actions can fundamentally reshape Tanzania’s financial markets – enhancing liquidity, improving resilience to external shocks, and positioning the country as a more competitive investment destination within the region.”
“Tanzania has built a solid foundation. The next step is to accelerate reforms so that our financial markets grow stronger and support the country’s long-term aspirations. Our journey has begun, and with continued collaboration and dedication, Tanzania’s financial markets can move from steady progress to truly transformative change.”
If the current trajectory holds, Dar es Salaam is well-positioned to become East Africa’s most stable— and innovative—investment destination by 2026.
