Africa Economics & Strategy Weekly: Tanzania: The re-emergence of shilling seasonality and unanswered questions

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Africa Economics & Strategy Weekly: Tanzania: The re-emergence of shilling seasonality and unanswered questions

Africa Economics & Strategy Weekly

29 June 2026 Citi Research

Tanzania (BoT) is pushing ahead renewed efforts to create an interbank market

although flows through it are still small.

We think the driver of this shilling depreciation were the post-COVID policy

choices under the new president, Samia Suluhu Hassan, who assumed the

presidency from the vice-presidency, without an election but in a smooth

political transition, following the death of John Magafuli on March 17, 2021.

Importantly this also saw a re-orientation of economic policy. Having assumed

office without a popular mandate, the new president made the decision to really

push ahead and finish a range of development projects that had been started by

Mr Magufuli before her first electoral test in October 2025. In particular, the

focus was on completing three major projects - the Standard Gauge Railway

(SGR) up to the administrative capital Dodoma, the Julius Nyerere Hydropower

Project (JNHPP), and the Kigongo–Busisi (Magufuli) Bridge.

The problem with this, was that the resulting rise in the fiscal deficit associated

with this policy change was also against the background of ongoing strained

relations with donors5. Facing external financing constraints, there was a sharp

rise in domestically funded government capital spending. This, in turn, quickly

spilled over into rising capital goods imports, which in turn drove a widening of

the current account deficit. One way to think about this, is that there was a

delayed post-COVID fiscal expansion in Tanzania compared to much of the rest

of Africa, which with constrained external financing, eventually spilt over into a