The goal of this research was to provide ICT policy makers in Tanzania with an analysis of the relationship between Tanzania’s ICT policies and the country’s economic development.
Evidence from this study shows that Tanzania’s population has normal connectivity levels for an East African country, but its online services sector lags the region’s. A comparison with Kenya, a neighbor with broadly similar demographics and connectivity levels, illustrates Tanzania’s lag. Kenya’s services sector accounts for approximately 55% of GDP compared to Tanzania’s 29%, and Kenya’s ICT sector contributes 2.4% of GDP using a narrow definition, substantially more than Tanzania’s 1.5 to 1.6%. Broader industry estimates place Kenya’s digital economy at up to 9% of GDP when mobile money, fintech, and platform commerce are included; no comparable estimate exists for Tanzania. Further, the analysis suggests that poor public governance is the primary reason for this gap. The Tanzanian government has taken three wrong turns in ICT policy. They are:
● Digital sovereignty mandates. Data localization requirements and local
ownership caps raise operating costs and deter investment without delivering
their stated privacy or security benefits.
● Censorship and connectivity restrictions. Content licensing, VPN
registration, platform blocking, and internet shutdowns suppress economic
activity and impose direct losses. The October 2025 election shutdown and
prolonged restrictions on the X platform cost an estimated US$250 million
according to TMC (2026).
● Cronyism. The foundational problem: regulatory authority is fused with private
commercial interests. Sovereignty and censorship policies are downstream
instruments of a patronage system.
These policy errors are not based on misunderstandings or mistakes. They are the product of an interlocking set of political alliances between Tanzania’s ruling political party, the Chama Cha Mapinduzi (CCM), crony capitalists in the telecom sector, and government regulatory agencies. Data localization, censorship, connectivity restrictions and cronyism are all self-reinforcing parts of the political institutions. This explains why incremental reforms under President Hassan have not altered the sector’s trajectory. In light of these findings, the report recommends legal and regulatory reforms that would eliminate data localization, content licensing, and ownership caps, and broaden wholesale infrastructure access. These are designed to be politically survivable: a more dynamic ICT sector would expand the tax base and attract investment, offsetting the perceived loss of control with long-term gains for all stakeholders, including the state. A more independent digital economy would also lower the stakes of political competition, making transfers of power safer and less disruptive.
This research was sponsored by the Tech & Media Convergency. The analysis and recommendations are those of the Internet Governance Project.
