Macroeconomic Resilience of Tanzania and Kenya

The document analyzes the macroeconomic resilience of Kenya and Tanzania from 2000 to 2022, examining the impacts of climate-related shocks, the global financial crisis, and the COVID-19 pandemic. It finds that while both countries used prudent monetary and fiscal policies, Tanzania exhibited less volatility in GDP per capita growth and maintained higher gross savings. The paper recommends simplifying tax systems, reducing non-concessional borrowing, and leveraging the African Continental Free Trade Area (AfCFTA) to enhance resilience.

• Kenya and Tanzania have faced significant macroeconomic shocks over the past two decades, including the global financial crisis (2007–2010), the COVID-19 pandemic (2020–2021), the Russia–Ukraine war (2022), and frequent floods and droughts occurring in 2000, 2008/09, 2012–2014, and 2017–2018.
• Climate-related shocks have severely impacted agriculture and tourism in both nations. In 2007/09, drought-affected food crops and livestock cost Kenya $500 million (2.6% of GDP) and Tanzania $200 million.
• Kenya experienced more severe economic contractions during the global financial crisis and the COVID-19 pandemic than Tanzania. Kenya's GDP growth fell from 6.9% in 2008 to 0.2% in 2009 during the GFC, and from 5.1% in 2019 to 0.4% in 2020 during the pandemic, resulting in recessions in both instances. Tanzania avoided recession during COVID-19, partly due to the absence of a lockdown and available fiscal space.
• Tanzania has demonstrated greater macroeconomic stability through higher gross savings and lower debt levels compared to Kenya. Tanzania's gross savings increased from 17.5% of GDP in 2000 to 34.9% in 2022, whereas Kenya's rose from 13% to 16.8% in the same period.
• Both countries struggle with revenue mobilization and high public debt, with debt levels exceeding 40% of GDP. Tanzania's revenue collection averages 14% to 15% of GDP, hampered by a large informal sector (46.7% of GDP) and tax exemptions costing 2.5% of GDP. Kenya's revenue averages 19.5% of GDP but is affected by tax evasion; for example, only 16.75% of firms that filed returns in 2021/2022 paid corporate tax.
• To improve resilience, the authors recommend that both countries simplify tax systems, reduce non-concessional borrowing, and utilize the African Continental Free Trade Area (AfCFTA) to diversify trade. Specific suggestions include adopting e-filing and e-payment systems and establishing a macroeconomic fiscal framework based on fiscal rules, social safety net funds, and strengthened fiscal institutions.

APA

Ngowi, D. Y. K., Songole, A. L., Kiama, A. D., & Mzee, A. (n.d.). Macroeconomic Resilience of Tanzania and Kenya. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2024/03/SAIIA_CoMPRA_PI_27_MacroeconResilienceTanzKenya.pdf

Chicago

Ngowi, Daniel Yohane Kamene, Abel Lawrence Songole, Agatha David Kiama, and Abeid Mzee. Macroeconomic Resilience of Tanzania and Kenya. South African Institute of International Affairs, n.d. https://saiia.org.za/wp-content/uploads/2024/03/SAIIA_CoMPRA_PI_27_MacroeconResilienceTanzKenya.pdf.

Wikipedia

{{cite report |last1=Ngowi |first1=Daniel Yohane Kamene |last2=Songole |first2=Abel Lawrence |last3=Kiama |first3=Agatha David |last4=Mzee |first4=Abeid |title=Macroeconomic Resilience of Tanzania and Kenya |publisher=South African Institute of International Affairs |url=https://saiia.org.za/wp-content/uploads/2024/03/SAIIA_CoMPRA_PI_27_MacroeconResilienceTanzKenya.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ngowindmacroeconomic, author = {Ngowi, Daniel Yohane Kamene and Songole, Abel Lawrence and Kiama, Agatha David and Mzee, Abeid}, title = {{Macroeconomic Resilience of Tanzania and Kenya}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2024/03/SAIIA_CoMPRA_PI_27_MacroeconResilienceTanzKenya.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }