The Tanzania Private Sector Federation (TPSF) has released a Strategic Policy Note calling for a structural reorientation of the domestic private sector away from trading and toward productive investment, framing the shift as a precondition for Tanzanian capital to participate meaningfully in the country's industrial base.

The note arrives against a backdrop of record-breaking foreign direct investment. FDI inflows into Tanzania reached USD 1.72 billion in 2024, a 28.3% year-on-year increase, with annual averages of USD 1.11 billion between 2016 and 2024 — up from USD 0.86 billion in 2016. Yet the Federation warns that the composition of that capital tells a more uncomfortable story. The top ten source countries accounted for 76.4% of total FDI in 2022, with the Cayman Islands retaining its position as the leading source for a third consecutive year, followed by the Netherlands, Canada and Mauritius. The document also reports a marked decline in Chinese FDI, attributed to reduced reinvestment of earnings in manufacturing and construction.

The Federation's central argument is that "while Tanzania has benefited from sustained FDI inflows over the past decade, the local private sector remains predominantly anchored in trading rather than industrial production, creating a structural imbalance in which foreign investors dominate capital-intensive production while Tanzanians concentrate on distribution and commerce." Authored by Policy Analyst Michael Kijavara and published in May 2026 under the title "Rethinking Tanzania's Path from Trade to Investment Towards Vision 2050 – Who Owns the Economy?", the note frames the dominance of importation and short-cycle commercial activity as a constraint on capital accumulation, domestic industrial capacity and long-term growth quality.

The policy prescriptions are concrete. The TPSF calls on domestic entrepreneurs to move beyond importation into local manufacturing and value addition, targeting agro-processing, textiles, construction materials and pharmaceuticals — sectors it identifies as having Tanzanian competitive advantage. It urges local capital to take equity participation in productive enterprises, including joint ventures with foreign investors, to expand Tanzanian ownership of the economy's productive base. And it asks financial institutions and development banks to evolve their products toward long-tenor investment financing, away from the short-cycle trade-finance instruments that dominate the market today.

The TPSF contrasts Tanzania's trajectory with China, Vietnam and India, where domestic capital underwrote the build-out of manufacturing capacity, exports and innovation. The note emphasises government's role in enabling the transition through long-term finance, joint-venture facilitation and technology-transfer platforms, but stresses that "even the most progressive policies will have limited impact without a corresponding shift in private sector ambition."