Analysts warn that continued instability risks reversing the strong growth the country has experienced in recent years and could undermine confidence among both domestic and international investors.
Independent Economic Analyst Walter Nguma told Channel Africa on Thursday that the situation had left the country in what he described as “a coma”, with the economy showing early signs of strain. He said the events of October, including violent clashes and days of anti-government protests, had shaken confidence in the country’s ability to return to stability in the near future.
Nguma noted that several international investors had already withdrawn from Tanzania, while others who had been preparing to enter the market had put their plans on hold. He said political leaders abroad had advised their nationals to be cautious about investing in the country, raising fresh concerns about the protection of capital and property.
According to Nguma, investor flight and reduced cash flow are already visible even before official economic assessments from the Central Bank. He added that the comments made by senior officials in foreign governments, including the United States, had further dented confidence in Tanzania’s economic prospects.
The unrest has also strained Tanzania’s standing in the East African Community. Nguma said political leaders in neighbouring countries had remained notably silent following accusations by Tanzania’s President that those behind the riots came from Kenya, Uganda, Rwanda, Burundi, Malawi and the Democratic Republic of Congo. He said the remarks had sparked tensions and created fears among regional investors who fear kidnapping or political reprisals.
Nguma warned that if political tensions escalate in the coming months, borrowing costs are likely to rise sharply, potentially pushing the country toward expensive commercial loans. He compared the situation to the period under late President John Pombe Magufuli, noting that the fallout could be even more severe.
Inflation pressures are also expected to intensify. Tanzania imports more than 70% of essential goods, including food and manufactured products, and Nguma said disruptions to trade and investment flows would raise prices further. He noted that food inflation had already begun to climb and that the long-term consequences of the unrest could be significant.
Nguma said the wider economy could face serious setbacks, particularly if development partners suspend grants that help fund critical sectors such as healthcare. He warned that the full impact of the unrest may only become visible in the coming months as the country’s reserves diminish.
–ChannelAfrica–
