Tanzania’s jobs challenge is about quality, not quantity, experts say

Tanzania needs to focus on creating more productive businesses and improving the quality of employment rather than concentrating only on the number of people entering the labour market, experts have said. They argue that although millions of Tanzanians are engaged in economic activities, most work in the informal sector, where earnings, job security and access to social protection remain limited. The argument emerged during the launch of the World Bank's Tanzania Economic Update report 2026, Making Jobs Work, on Friday, October 2, 2026, where business leaders and development experts called for stronger private investment, improved access to finance and better alignment between skills development and employment opportunities. Closing the discussion, World Bank Group's Division Director for Tanzania at the International Finance Corporation (IFC), Ms Mary-Jean Moyo, said education and skills development were essential but could not independently address the country's employment challenges without the creation of enough productive formal jobs. "The one thing that stayed with me from the panel is that while education and skills are essential, they are only part of the solution. The bigger challenge is creating enough productive formal jobs for the growing number of young people entering the labour market," she said. Ms Moyo argued that Tanzania's employment challenge was largely connected to the productivity and growth of businesses, noting that approximately 95 percent of employment in the country was informal. She said quality jobs offering decent pay, written contracts, social security and stability were largely created by formal businesses that had grown sufficiently to sustain such employment arrangements. "The job question is, to a large extent, a firm question. If we want more and better jobs, we need more good employers," she said. According to her, Tanzanian businesses continue to face productivity challenges compared with regional competitors, with the gap estimated at about half in services and considerably wider in manufacturing. She said improving the business environment and enabling companies to become more competitive and investment-ready would be critical to expanding employment opportunities. Ms Moyo also identified limited access to finance as a major obstacle preventing promising businesses from expanding and employing more people. She called for increased mobilisation of private capital to support businesses with the potential to expand, innovate and create jobs, arguing that public resources alone could not finance Africa's development ambitions. As an example, she cited IFC's inaugural Tanzanian shilling offshore bond, which raised Sh265 billion to expand local currency financing through NMB Bank, connecting international investors with businesses seeking capital for growth. She said IFC wanted to support businesses beyond their immediate survival needs through long-term financing, equity investment, working capital and advisory services. Ms Moyo further stressed the importance of coordination between government and development finance institutions, saying reforms must go hand in hand with investment. "Reform without capital is a policy paper. Capital without reform is a single transaction. Together they build a market," she said. Her observations reflected concerns raised by panellists, including Chairman of the CEO Roundtable of Tanzania, Mr David Tarimo, who identified regulatory uncertainty, slow decision-making and high business compliance costs as constraints to private investment. Mr Tarimo said senior executives in Tanzania spent about 14 percent of their time addressing regulatory matters, almost twice the sub-Saharan African average cited in the discussion. He further pointed to the cost of social security contributions, the Skills and Development Levy and other statutory obligations, saying the combined burden could discourage smaller businesses from formalising and expanding. "At the end of the day, the investment will create the jobs," he said, calling for faster execution of investment decisions and a more predictable business environment. Founder and Managing Director of Niajiri Platform, Ms Lilian Secelela, highlighted another dimension of the challenge: the mismatch between the skills employers need and what jobseekers can offer. “Recruitment for specialised technical positions has become difficult, with employers sometimes finding suitable candidates but struggling to meet their salary expectations,” she pointed out. She called for sector-specific training linked directly to employment opportunities, arguing that young people needed more than certificates from programmes that did not lead to jobs or income. World Bank Practice Manager Ms Loli Arribas-Banos said Tanzania also needed to recognise that informal employment was the reality for a large proportion of workers across East Africa. “Employment interventions should meet people where they were, rather than assuming that everyone would immediately transition into formal wage employment,” she argued. This would involve improving the productivity of small farmers, street vendors, retailers and micro-entrepreneurs while connecting them to wider markets and value chains. She also called for targeted short-term training, better labour mobility and stronger partnerships with the private sector.