Transforming
Tanzania’s
Cities
Harnessing Urbanization
for Competitiveness,
Resilience, and Livability

June 2021
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Table of Contents

Preface ........................................................................................................................................................ 4

Acknowledgements ................................................................................................................................... 4

Abbreviations ............................................................................................................................................. 5

Executive Summary .................................................................................................................................... 6

1 Tanzania’s Cities: Booming Urban Population with Limited Agglomeration Economies ................. 10

1.1 Rapid urban growth, but slow urbanization ....................................................................................... 11
1.2 Urbanization, but limited benefits of urban growth ........................................................................... 15

2 The Urban Challenge: Crowded, Disconnected, and Costly Cities ................................................... 18

2.1 Cities are crowded with people, but not livable ................................................................................ 19

2.2 Urban sprawl disconnects people from jobs and hampers productivity ............................................ 27

2.3 Getting around, living, and doing business are expensive ............................................................... 36

3 Cities are Struggling to Finance Sustainable Urban Growth ............................................................. 42

3.1 A shift toward more centralized service delivery ................................................................................ 42

3.2 Limited local fiscal autonomy .. .......................................................................................................... 45

4 The Way Forward: Harnessing Urbanization for Competitive, Resilient, and Livable Cities ........... 49

4.1 Plan for competitive, resilient, and livable cities ................................................................................ 51

4.2 Connect cities, people, and neighborhoods ...................................................................................... 53

4.3 Strengthen institutions to manage and finance urban development at scale .................................... 55

References .................................................................................................................................................. 58

Tanzania Urbanization Review 1
Figures

Figure 1: Average Annual Urban Population Growth (2005–2015) ............................................................ 11

Figure 2: Urbanization Trends in Tanzania (1967–2019) ............................................................................. 11

Figure 3: Share of Urban Population .......................................................................................................... 13

Figure 4: Variation in Annualized Urban Growth Rates (2002–2012) .......................................................... 13

Figure 5: Urban Change Resulting from Natural Growth and Migration (2002–2012) ............................... 14

Figure 6: Total Population and Poor Population (2007, 2012, and 2018) .................................................. 15

Figure 7: Urban and Rural Population and Poverty Distribution (2018) ..................................................... 15

Figure 8: GDP per Capita vs. Urbanization Rate ........................................................................................ 16

Figure 9: Jobs Are Concentrated in Agriculture and Informal Services ..................................................... 16

Figure 10: Production Mix in Selected Cities ............................................................................................. 17

Figure 11: Budget per Capita vs. Own-Source Revenues in Selected Municipalities ................................ 20

Figure 12: Percent of Urban Population Living in Areas with Slum Characteristics ................................... 21

Figure 13: Relationship between Urban Growth and Environmental Quality ............................................ 23

Figure 14: Flood Events in Dar es Salaam (1961–2018) ............................................................................. 25

Figure 15: Accessibility to jobs and amenities by public transport in four cities ........................................ 27

Figure 16: Status of Master Plan Development in Primary City and Medium-Sized Cities ......................... 28

Figure 17: Road Density in Planned and Unplanned Areas of Selected Cities .......................................... 29

Figure 18: Road Network in Planned and Unplanned Areas in Makurumla, Dar es Salaam ...................... 29

Figure 19: Change in Population Density in Dar es Salaam (1988 to 2012) and Bangkok (1988) .............. 32

Figure 20: Minimum Plot Size in High-Density Residential Areas (m2) ....................................................... 33
Figure 21: Paved Roads in Selected Sub-Saharan African Capital Cities ................................................... 33

Figure 22: Household Expenditure on Transport in Urban Areas other than Dar es Salaam ..................... 37

Figure 23: Housing Consumption and Affordability in Dar es Salaam ....................................................... 39

Figure 24: Homeowners and Tenants by Wealth Quintile .......................................................................... 40

Figure 25: Tanzanian Firms Struggle to Find Workers with the Right Skills Profile (% of firms) .................. 40

Figure 26: Female Urban Employment by Sector in 2006 and 2014 (% total employment) ...................... 41

Maps

Map 1: Relative Populations of Major Urban Areas ................................................................................... 12

Map 2: Growing Out, Not Up – the Expansion of Dar es Salaam (1947–2012) ......................................... 27

Map 3: Current Land in Olasiti Area, Planned as Industrial in 1985 Arusha Master Plan ........................... 30

Map 4: Trunk Road Network Conditions (2010–2020) ................................................................................ 34

Map 5: Approximate Travel Time by Bus from Dar es Salaam ................................................................... 35

Map 6: Regional Trade Corridors ............................................................................................................... 35

Map 7: Market Access to Urban Areas in Tanzania and Poverty Rates by District ..................................... 36

Map 8: Metropolitan Fragmentation in Dar es Salaam .............................................................................. 45

2 Tanzania Urbanization Review
Tables

Table 1: State of Infrastructure and Services for Households in Selected Cities (2018) ............................. 19

Table 2: Own-Source Revenue Collected against Recurrent Expenditures ................................................ 45

Table 3: Capital Development Grants ........................................................................................................ 46

Table 4: Own-Source Revenue Collected ................................................................................................... 46

Table 5: Summary of Detailed Recommendations ..................................................................................... 50

Boxes

Box 1: The complexity of flooding requires integrated solutions .............................................................. 25

Box 2: A planning approach to fostering small-scale manufacturing: Zongomela Industrial Area ............. 31

Box 3: Prospects for sustainable urban mobility in Tanzania’s secondary cities ......................................... 37

Box 4: Barriers to affordable housing: the perspective of a property developer in Dar es Salaam ........... 39

Box 5: Decentralization in Tanzania ............................................................................................................ 43

Box 6: Property tax collection in Tanzania .................................................................................................. 47

Box 7: Local Government Revenue Collection Information System (LGRCIS) ........................................... 48

Photos

Photo 1: Aerial Views of Selected Urban Areas .......................................................................................... 12

Photo 2: Comparison of Building Materials in Informal Settlements of Mwanza and Nairobi ................... 21

Photo 3: Solid Waste Dumping in Natural Drains ...................................................................................... 23

Photo 4: Flooding in Informal Settlements ................................................................................................ 24

Photo 5: Informal Settlement in Mwanza ................................................................................................... 29

Tanzania Urbanization Review 3
Preface
This report is part of a series of analytical studies under a global product, the Urbanization Review, developed by the Urban,
Resilience, and Land Global Practice at the World Bank. The objective of the overall analytical program is to provide diagnostic
tools to inform policy dialogue and investment priorities on urbanization. Urbanization Reviews have been initiated in several
countries. These Urbanization Reviews share similar objectives but are tailored to the specific challenges of each country.

This Tanzania Urbanization Review comes at an opportune time, as Tanzania has recently graduated to Lower-Middle-
Income Country status and aims to achieve Middle-Income Country status by 2025. The role of cities in enabling the
country’s transformation to an industrial economy cannot be overemphasized. It is crucial that Tanzanian cities urbanize and
industrialize in a way that overcomes the challenges of poverty, inefficiency, congestion, pollution, and climate vulnerability
that African cities face, which are often compounded by weak institutions and resource limitations.

This report provides a diagnostic of the current situation regarding urbanization nationally, conditions at the city level, and
the policy and finance issues underpinning urban management. It identifies key constraints and bottlenecks restricting
urbanization’s ability to catalyze the country’s development, and provides key policy recommendations for competitive,
resilient, and livable cities. This report is not intended as a strategic plan, implementation plan, or feasibility study, but
rather a basis for discussion between the Government of Tanzania and the World Bank on the topic of urbanization to inform
potential future investments and technical assistance.

Acknowledgements
The Tanzania Urbanization Review was prepared by a core team led by Andre Bald (Lead Urban Specialist, Task Team Leader,
SEAU1) and consisting of MaryGrace Lugakingira (Urban Planning Consultant, SAEU2), Hannah Kim (Urban Specialist,
SAEU2), Amy Faust (Senior Urban Resilience Consultant, SAEU2), Kate Owens (Urban Planning Consultant, AFCE1), Rodrigo
Deiana (Urban Analyst Consultant, SAEU2), John Morton (Senior Urban Specialist, SAEU2), Yohannes Kesete (Senior Disaster
Risk Management Specialist, SAEU2), Kirsten Hommann (Senior Economist, SAWU1), and Juliana Aguilar (Urban Transport
Economist Consultant, SMNDR).

The team is grateful to Mara Warwick (Country Director for Tanzania, Malawi, Zambia, and Zimbabwe), Bella Bird (Senior
Adviser, AFWVP), Bernice K. Van Bronkhorst (Global Director, SCCDR), Yutaka Yoshino (Lead Country Economist, ESADR),
Somik Lall (Lead Urban Economist, SURDR), Eric Dickson (Senior Urban Specialist, SAEU3), and Mussa Natty (Senior Urban
Resilience Specialist, SAEU2) for their guidance throughout the preparation of the report.

The team worked under the guidance of Meskerem Brhane (Practice Manager, SAEU2). The report was enriched by thoughtful
peer review and advice by Judy Baker (Lead Economist, SURDR), Peter Ellis (Practice Manager, SAEU3), Ellen Hamilton (Lead
Urban Specialist, SCAUR), and Madhu Raghunath (Sector Leader, SEADR).

The Urbanization Review benefitted greatly from discussions and close collaboration with the Government of Tanzania. The
team would like to express its sincere gratitude to Professor Riziki Shemdoe (Permanent Secretary) and Engineer Humphrey
Kanyenye (Project Coordinator of World Bank Urban Projects) at the President’s Office – Regional and Local Government
(PO-RALG), as well as their respective technical teams.

The report was edited by Devan Kreisberg (Editor Consultant, SAEU2), Wayne Banks (Graphic Design Consultant, SAEU2) managed
the design process, and Chris Morgan (Senior Digital Engagement Specialist Consultant, SAEU2) contributed photographs.

The work in this report was made possible thanks to the generous support from the Foreign, Commonwealth and
Development Office of the Government of the United Kingdom. The Bank team thanks Jane Miller (Development Director,
Head of FCDO Tanzania), Tim Green (Prosperity and Growth Team Leader, FCDO Tanzania), and Tim Bushell (Trade and
Infrastructure Adviser, FCDO Tanzania) for their contributions and technical inputs.

4 Tanzania Urbanization Review
Abbreviations
BRT Bus Rapid Transit
CAG Controller and Auditor General
CBD Central Business District
D by D Decentralization by Devolution
DART Dar es Salaam Rapid Transit
DAWASA Dar es Salaam Water Supply and Sanitation Authority
DAWASCO Dar es Salaam Water and Sewerage Authority
DLA Dar es Salaam Local Authorities
DMDP Dar es Salaam Metropolitan Development Project
EWURA Energy and Water Utilities Regulatory Authority
GDP Gross domestic product
GIS Geographic information systems
GNI Gross national income
ICT Information and communication technologies
ILMIS Integrated Land Management Information System
LGA Local government authority
LGCDG Local Government Capital Development Grant
LGRCIS Local Government Revenue Collection and Information System
LMIC Lower-Middle-Income Country
MEM Ministry of Energy and Minerals
MIT Ministry of Industry and Trade
MLHHSD Ministry of Lands, Housing, and Human Settlements Development
MOA Ministry of Agriculture
MOE Ministry of Education, Science, and Technology
MOF Ministry of Finance
MOW Ministry of Water
MTEF Medium-Term Expenditure Framework
MWT Ministry of Works and Transport
NBS National Bureau of Statistics
NHC National Housing Corporation
NIDA National Identification Authority
NSSF National Social Security Fund
OSR Own-source revenues
PPP Public–private partnerships
PO-RALG President’s Office – Regional Administration and Local Government
RAI Rural Access Index
RAS Regional Administrative Secretariat
SSA Sub-Saharan Africa
TANROADS Tanzania National Roads Agency
TARURA Tanzania Rural and Urban Roads Authority
TRA Tanzania Revenue Authority
TSCP Tanzania Strategic Cities Project
ULGA Urban Local Government Authority
ULGSP Urban Local Government Strengthening Program
URT United Republic of Tanzania
VAT Value-added tax
WDI World Development Indicators

Tanzania Urbanization Review 5
Executive Summary

Tanzania’s growth and poverty reduction aspirations hinge on shifting from a reliance on agriculture toward greater
productivity. Cities’ key role in generating a more competitive economy is already apparent: in 2012, just four Tanzanian
cities produced more than half of the country’s GDP, and they are expected to represent almost 60 percent of the country’s
GDP in 2030 (Worrall et al. 2017). Urban areas also account for the majority of the country’s physical, financial, human,
academic, and technological capital.

Cities are integral for shaping Tanzania’s development, but what shape are cities in now and where are they heading
based on current trends? This report analyses the state of Tanzania’s urbanization process and the condition of its cities
and institutions through the lens of three main challenges that constrain the contribution of Tanzania’s towns and cities to
economic diversification and growth, reduce their resilience to shocks, and limit their livability and inclusivity. The report
then offers a set of recommendations to guide policies and investments that will promote urban planning for inclusive
and resilient urban development, stronger connections between cities and neighborhoods, and institutions and financing
mechanisms that are well placed to scale up sustainable urban development.

Challenge #1: Tanzania’s cities are experiencing rapid population growth,
but with slow urbanization and limited agglomeration economies.
Tanzania’s urban population is growing rapidly and is expected to increase even faster, from just over 30 percent of the
population today to 49 percent in 2040 (UN-DESA 2018). This is one of the fastest urban population growth rates among
ten Sub-Saharan African countries with comparable growth trends. Despite this strong population growth, urbanization –
the process in which workers move from rural to urban areas in search of better paid and more productive jobs, and which,
over time, creates cities – has been slow. In Tanzania, natural population growth tends to drive the growth of cities, with
rural-to-urban migration less of a factor. Between 2002 and 2012, 5.4 million people were added to urban areas, of which an
estimated 3 million are attributed to increases from natural population growth and the rest to migration and administrative
changes to expand municipal boundaries.

While cities are growing fast, they are doing so with limited resources for capital investment. When East Asian countries
were at Tanzania’s current urbanization rate of about 30 percent, their average GDP per capita was US$2,600, compared to
Tanzania’s average GDP per capita of US$500. All other regions, even Sub-Saharan Africa, had, on average, higher GDP per
capita than Tanzania at this point, and this gap has only widened over time. Tanzania is therefore urbanizing while poor –
strikingly poorer than other developing regions with similar urbanization levels.

Tanzania’s structural transformation from an economy reliant on agriculture to one based on productive sectors is in the early
stages, though trends suggest cities are growing as consumption rather than production centers, and urban jobs are growing
in sectors with low value-added. This too is in contrast with the cities of East Asia, where growth is driven by industrialization
(Collier and Jones 2015). In Tanzania, urban job opportunities are still dominated by informal employment: in Dar es Salaam,
for example, 47 percent of heads of households work in low-value-added services (World Bank 2019c).

Challenge #2: Cities are crowded, disconnected, and costly, and therefore
risk falling into a low development trap.
Urban areas are critical for Tanzania’s economy and for job creation, but, to date, the benefits of agglomeration economies
have yet to materialize. The interaction of factors contributing to agglomeration – the clustering of firms and the overall size
and diversity of the urban economy – is limited. Rapid urbanization and increased population density have not translated to
increases in economic density. Instead, low-density development and urban sprawl have prevailed, and there is poor connectivity

6 Tanzania Urbanization Review
between people, industries, and markets. Cities in Tanzania, similar to other African cities, share three features related to urban
form that limit their potential agglomeration benefits and perpetuate a “low urban development trap” (Lall, Henderson, and
Venables 2017), meaning that the economy continues to rely on non-tradable goods and services. These three features are:

• Sprawling urban form disconnects people from jobs and hampers productivity: Tanzania’s cities have developed and function
as a collection of small and fragmented neighborhoods. Urbanization benefits people and businesses by increasing economic
density, but urban sprawl and fragmentation exacerbate poor connectivity within Tanzania’s cities. Historically, with the absence
of strong planning and enforcement controls, cities have expanded (rather than densified), with low-cost land becoming the
key consideration for locational choices. Thus, there are long distances between neighborhoods, and transportation networks
do not facilitate quick travel. Spatial fragmentation of urban areas is problematic because it disconnects people and firms:
workers have more limited (geographic) access to job opportunities, with longer and more expensive commutes, while firms
are prevented from reaping the scale and agglomeration benefits associated with urbanization.

• Getting around, living, and doing business are expensive: The sprawl that characterizes Tanzania’s cities results in
costly inefficiencies, and locks cities into an energy-intensive growth pattern that is expensive for service provision
and unattractive for business. Good transportation networks are critical to match job seekers and employers, but high
transportation costs, heavy congestion, and slow commuting speeds mean that jobs are not easily accessible, especially
for the poor. Formal housing is also out of financial reach for the majority of Tanzanians, with limited action by both public-
and private-sector developers to increase the supply of affordable housing. Businesses suffer from inefficient urban form
as well: firms need to pay higher nominal wages to remunerate workers for the high living costs (food, commuting, etc.),
and must compensate for scarce services and amenities.

Challenge #3: Tanzania’s shift toward centralized service delivery and
fiscal authority may complicate cities’ ability to meet urban needs.
Since before Tanzania’s independence in 1961, the country has had a history of promoting decentralized service delivery.
However, recent years have seen a shift in responsibilities from local to central government. Since the 1990s, the
decentralization of urban functions, such as planning, infrastructure, and services, has been accompanied by formula-based
intergovernmental fiscal transfers and the harmonization of tax and revenue guidelines across local governments. Recent
policies and practices suggest an approach with a stronger central government role in revenue collection and service delivery.
For example, in recent years, functions such as roads, water, sanitation, health, urban planning, and land administration have
been transferred from local governments to central agencies. Central agencies still recruit and allocate core staff in local
government authorities, which suggests limitations on local government decision making and autonomy.

While implementation has traditionally been a local matter, financing of service delivery responsibilities has historically
been centralized. Even though local government authorities have the ability to levy taxes, fees, and charges, the majority of
local authorities’ revenues come in the form of transfers from the central government. Property tax collection has improved
over the past decade due to measures to improve the efficiency, transparency, and performance of not just property taxes
but also other own-source revenues. Yet responsibility for revenue collection has transitioned between national and local
governments over the past few decades; most recently, authority was returned to local governments in 2021.

The rapid growth of Tanzania’s cities – with villages expanding to small towns, towns to cities, and cities into metropolitan areas –
highlights the need to reevaluate and enhance existing institutional arrangements for urban management. While a more national
approach could yield improved efficiencies in service delivery in the short term, it could also pose potential challenges, particularly
for revenue collection and policy implementation. As the network of Tanzanian cities expands, it is important to ensure that
institutional, planning, and delivery models fit the growing and complex needs of a country that is rapidly urbanizing.

Tanzania Urbanization Review 7
Harnessing urbanization

To overcome these challenges and harness the potential of urbanization, a national agenda for urban development must
include policy initiatives and investment priorities that focus on the following three key areas:

1. Plan for competitive, resilient, and livable cities. Strengthening planning systems is crucial in helping Tanzania’s cities
to keep up with urbanization while improving their ability to be competitive for businesses and trade, resilient to climatic and
other shocks, and an attractive place to live and work.

Formalize land markets and strengthen urban planning. Improving the productivity of Tanzania’s cities will boost
competitiveness and catalyze economic expansion – especially in Dar es Salaam, the country’s growth engine. Improving
land administration and tenure systems can unlock the potential of land markets. Effective land-use regulations and
enforcement are needed so that urban plans are translated into realities. Cities require improved resources and capacity for
urban planning and enforcement, but also the ability to devolve some enforcement duties to lower levels of government.
Cities will also need capacity to develop and implement local economic development initiatives.

Build resilience through integrated development and the protection of natural assets. Disasters such as floods or
health emergencies are cross-sectoral and inter-jurisdictional in nature. To reduce the vulnerability of cities to climatic
and other shocks, urban governments will need to develop integrated solutions and implement them through clearly
defined institutional and financial mechanisms. Improving urban resilience to floods will require not only a combination
of investments in drainage, but also the adoption of green infrastructure solutions such as wetlands, buffer zones, green
roofing, detention ponds, street-side swales, rain gardens, and porous pavements.

Invest early in infrastructure and clearly demarcate public land resources. By prioritizing early infrastructure, cities can
direct investments in basic services, housing, and industry, and shape urban development. Investments in connectivity
infrastructure within and between medium-sized and small cities will determine the urban form for decades to come.
“Sites and services” schemes, in which infrastructure is laid out in advance of development, are one tool used in the past
that could be promising. Encroachment into hazardous areas and needed future infrastructure reserves can be avoided by
protecting environmentally sensitive lands, reserving needed land and infrastructure rights-of-way early, and demarcating
and enforcing no-build areas. Where unplanned development has already taken place, cities need fair, transparent, and
clear processes to handle resettlement, or should work with communities to develop alternatives like in-situ upgrading to
mitigate hazard risk. Cities are a natural location for industrial clusters given their proximity to services and access to labor
and markets. A concerted effort is therefore needed to plan and protect industrial areas – not least because strategically
located industrial clusters can promote economic diversification.

2. Connect cities, people, and neighborhoods. Integrated transport and land-use planning supported by strong systems
for management and accountability can improve urban mobility and allow cities to take advantage of proximity to encourage
economic development and livability. In addition, construction and improvement of priority roads will support industrial
growth and job creation by addressing the skills gap in urban centers, thus increasing the supply of skilled labor and
supporting economic opportunities for informal workers.

Better connect people to services, workers to jobs, and buyers to sellers. The construction and improvement of priority
transport infrastructure – local and feeder roads in the urban core, as well as non-motorized transport infrastructure –
accompanied by improved traffic management and public transport systems, will help alleviate congestion hotspots and
support public transit, mobility, and access to opportunities for all, especially low-income communities. In Dar es Salaam,
investments in local roads have improved connectivity, alleviated congestion, and enhanced livability. Dar es Salaam’s Bus Rapid
Transit (BRT) system also offers lessons for other Tanzanian cities: early investments in integrated transport can improve urban
mobility and encourage sustainable development patterns, but they must be supported by strong systems for management
and accountability, and be implemented in coordination with land-use policies. In addition to physical measures, cities can
support industries with high potential for growth and job creation by addressing the skills gap in urban centers. More can be
done to formalize and foster the informal sector, which makes up a significant portion of the local economy in many Tanzanian
cities. Cities can support economic opportunities for informal workers, including by making infrastructure investments,
upgrading and rehabilitating markets and small industrial areas, and building workers’ skills.

8 Tanzania Urbanization Review
Strengthen rural–urban linkages, including by enhancing trade and commuting flows. As the country’s urban centers
evolve to be the future drivers of national growth, Tanzania can accelerate inclusive economic growth in rural areas by
better connecting them to domestic markets and beyond. Small cities can connect farmers to input and output markets,
and medium-sized cities serve as logistical and transport hubs and host larger consumer markets. Supporting urbanization
in small and medium-sized cities is thus central to improving agricultural output.

3. Strengthen institutions to manage and finance urban development. To keep up with the rapid growth of Tanzania’s
cities, municipalities need to be empowered to mobilize and manage their budget for the infrastructure and services they
provide. Enhanced vertical and horizontal coordination among development actors will result in stronger development
control, enabling cities to build out public service extensions before unplanned urban expansion takes place.

Reimagine institutional structures for Tanzania’s expanding cities. Given the rapid growth of Tanzania’s cities,
institutional arrangements for urban management must be carefully evaluated. The practice of sub-dividing urban areas
into separate municipal councils complicates coordination mechanisms, and tends to duplicate services, driving up
inefficiencies and costs. The trend of centralization may reflect the perception and reality of the shortcomings of local
government delivery. Nevertheless, as Tanzania’s cities change and develop, municipalities need to be empowered to
mobilize and manage their budget for infrastructure and services they provide. Strong coordination mechanisms among
governments (at the district, city, and regional level) and other urban development actors are also critical for ensuring
efficient urban infrastructure and land use, so that service extensions do not continue to chase unplanned development.

Enhance own-source revenues and leverage markets to finance urban infrastructure. The mandate for collection
of property taxes and billboard fees was recently returned from the Tanzania Revenue Authority to local government
authorities, presenting an important opportunity for local governments to bridge the gap between the cost of providing
services and their income from intergovernmental transfers. Property taxation, while not historically a large source of local
own-source revenue, has the potential to be a significant and dynamic source of revenue for urban areas, as it is directly
linked to the local economy. If local governments can improve valuation and taxing systems for urban land (and the
incentives for collection), they can unlock a major source of financing for municipal infrastructure and services. To enhance
their own source revenue collection, local governments will also require a good understanding of the policy environment,
current practices, and incentive structures surrounding revenue generation. Public-private partnerships offer an additional
opportunity to mobilize financing for municipal infrastructure, although these arrangements are complex and require
municipalities to have expert advice and additional capacity.

Tanzania Urbanization Review 9
1 Tanzania’s Cities:
Booming Urban Population with
Limited Agglomeration Economies

Tanzania experienced strong and rapid economic growth prior to the COVID-19 pandemic, with GDP growth
averaging around 6 percent in the last decade while inflation remained modest. Tanzania is among the top-three
growth performers in East Africa: between 2013 and 2018, its average GDP growth (6.5 percent) was behind only Ethiopia
(9.5 percent) and Rwanda (6.7 percent). In 2019, Tanzania’s GNI per capita reached US$1,080, surpassing the US$1,035
threshold for lower-middle-income status. This is a substantial achievement, reflecting sustained macroeconomic and
political stability as well as the country’s rich natural endowments and strategic geographic position.

The coronavirus pandemic has dramatically undercut Tanzania’s growth outlook and has resulted in increasing poverty.
Tanzania’s real GDP growth rate fell from 5.8 percent in 2019 to 2.0 percent in 2020, and per-capita GDP growth turned
negative for the first time in over 25 years. The annual GDP growth rate is projected to rise to 4.5 percent in 2021, but this
forecast hinges on a strong and consistent recovery in global economic activity (World Bank 2021a). Following a decade
of slow income growth among low-income households, a large share of Tanzania’s population is close to the poverty line.
Based on the current data, the COVID-19 crisis could increase Tanzania’s poverty rate by 2.5 percentage points or more
(World Bank 2021a).

Poverty reduction has been low, with approximately 14 million people still living below the poverty line in 2018.
Despite Tanzania’s strong economic performance between 2011 and 2018, almost half the population remains below the
international poverty line of US$1.90 per day (World Bank 2019a). Poverty declined by 0.25 percentage points per year,
compared to a Sub-Saharan African average of 0.72 in recent years. As a result of rapid population growth, the number of
poor in Tanzania rose from 12.3 million in 2011 to about 14 million in 2018.

Tanzania’s urban population is growing rapidly, and urban areas are critical to national economic growth and poverty
reduction. The national population, currently around 59 million, is expected to exceed 102 million by 2040 (UN-DESA
2019). The urban population is expected to increase even more quickly, from just over 34 percent of the population in 2018
to 49 percent by 2040 (UN-DESA 2018). In 2012, four Tanzanian cities produced more than half of the country’s GDP, and
are expected to represent almost 60 percent in 2030 (Worrall et al. 2017). Urban areas also account for the majority of the
country’s physical, financial, human, academic, and technological capital.

However, Tanzania’s institutional systems and infrastructure have not kept pace with urban population growth. Service
delivery and the management of related infrastructure requires that the responsible local institutions develop sufficient
capacities and systems to take on these roles effectively. The infrastructure investment needs of urban areas are significantly
higher than those of rural areas, particularly in sectors like transport and sanitation. However, Tanzania does not have a
governmental program that targets these needs effectively. Rapid urbanization and increased population density have not
translated to increases in infrastructure and economic density. Tanzanian cities are therefore dense with people but not with
capital. There is a growing risk that a poorly managed urbanization process may begin to constrain growth and worsen,
rather than improve, social and service delivery outcomes in Tanzania’s cities.

10 Tanzania Urbanization Review
1.1 Rapid urban growth, but slow urbanization
Tanzania’s urban population growth is the second-fastest among eleven Sub-Saharan African countries with comparable
urbanization trends. In terms of population growth, Tanzania outperformed countries such as Kenya and Mozambique
(Figure 1). However, urbanization – the process in which people move from rural to urban areas in search of better-paying
and more-productive jobs, and which, over time, creates cities – has been relatively slower in Tanzania. The share of the
urban population was found to increase from 23 percent to 35 percent between 2002 and 2019 (Figure 2).

Average Annual Urban Population Growth
Figure 1: Figure 2: Urbanization Trends in Tanzania
(2005–2015)* (1967–2019)

70 35% 40%
7%
60 29% 35%

P o p u la tio n (m illio n s )
6%
50 30%
23%

U rb a n iz a tio n
5%
25%
40 18%
4%
14% 20%
3% 30
15%
2% 20 6% 10%
1% 10 5%
0% 0 0%

1967

1978

1988

2002

2012

2019
n
o

ia
e
e

am a
os

a
i

so
r
in

ca
ne
bw

ny
da

qu
th

an
or

Fa
at

as
so

Ke
ui
Su

nz
ba

a
G
Le
Es

in
m

Urban (left axis)
rk
Zi

Bu
M
M

Rural (left axis)
Urbanization rate (right axis)
Source: World Development Indicators Database (World Bank 2021c).
* Sub-Saharan African countries with urbanization between 25 percent and 40 percent

Tanzania’s cities include Dar es Salaam and medium-sized and small cities with high growth rates (Photo 1). Tanzania’s
urban areas currently consist of a primary city of Dar es Salaam, seven medium-sized cities with populations between 250,000
and 1 million, and 37 smaller urban areas (referred to throughout this report as small cities or towns).1 Dar es Salaam has
been Tanzania’s largest city since before Tanzania’s independence in 1961 and continues to dominate the urban landscape
today. As of the most recent census (NBS 2013), Dar es Salaam’s population was 4.4 million and it is currently estimated at
over 6 million. If historic growth trends continue, Dar es Salaam is expected to reach megacity status of more than 10 million
residents by 2030.2 The development of one very large city, or primary city, while other cities and towns remain much smaller
by comparison is a prevalent trend in Sub-Saharan Africa. Dar es Salaam’s population is over six times larger than that of
Mwanza, Tanzania’s second-largest city.

Unlike in other parts of the world, the distribution of the urban population across Tanzanian cities has been very
stable. In other regions and countries, the predominance of large cities as population centers has reduced with the growth
of medium-sized cities. In contrast, Dar es Salaam’s share of the total urban population has remained relatively constant: from
32 percent in 1978, it decreased slightly to 28 percent in 1988, and increased again to 31 and 32 percent in 2002 and 2012,
respectively. The share of the total urban population in medium-sized cities has also remained stable over the same period,
hovering around 22 percent. The share of total urban population in small cities and towns fluctuated more: from 50 percent
in 1988 to 41 percent in 2002 and 45 percent in 2012 (Map 1). Urban areas are growing in number as well as size. According
to the President’s Office – Regional Administration and Local Government (PO-RALG), urban areas have increased from just
11 in 1978 to more than 50 by 2021.3

1
The definition of “urban” used in this report is that of PO-RALG (President’s Office – Regional Administration and Local Government), which is responsible
for classification of local government authorities. Population data is from National Bureau of Statistics from 2012, the year of the most recent Population
and Housing Census.
2
Original calculation for this publication, using 2012 Population and Housing Census population statistics and the 2002–2012 growth rate for Dar es Salaam.
3
Some cities are divided into multiple municipal councils (Dar es Salaam – 5, Zanzibar Town – 2, and Mwanza – 2, as of April 2021).

Tanzania Urbanization Review 11
Map 1: Relative Populations of Major Urban Areas

Local
2012
Government
Population
Authority
Primary City Dar es Salaam 4,279,032
Mwanza 706,453
Zanzibar 586,882
Arusha 416,442
Medium
Dodoma 410,956
Cities
Mbeya 385,279
Morogoro 315,866
Tanga 273,332
Kahama 242,208
Tabora 226,999
Kigoma 215,458
Sumbawanga 209,793
Kasulu 208,244
Songea 203,309
Geita 192,707
Moshi 184,292
Shinyanga 161,391
Bariadi 155,620
Iringa 151,345
Singida 150,379
Vwawa 140,536
Musoma 134,327
Njombe 130,223
Bukoba 128,796
Kibaha 128,488
Mtwara 108,299
Small Cities Nanyamba 107,060
& Towns Ifakara 106,424
Mpanda 102,900
Masasi 102,692
Tunduma 97,562
Makambako 93,827
Babati 93,108
Handeni 79,057
Lindi 78,841
Bagamoyo 74,788
Korogwe 68,308
Tarime 66,346
Bunda 58,390
Chato 52,443
Mafinga 51,902
Mbulu 48,976
Mbinga 46,419
Nzega 41,832
Kondoa 27,383
Newala 26,402

Source: Original analysis for this publication, based on data from the 2012 Census (NBS 2013) and classification
of local government authorities provided by PO-RALG.

Photo 1: Aerial Views of Selected Urban Areas

Primary city: Dar es Salaam

Medium city: Mwanza

Small city: Mpanda

Photos of Dar es Salaam and Mwanza by Chris Morgan. Photo of Mpanda by PO-RALG.

12 Tanzania Urbanization Review
Figure 3: Share of Urban Population

100%

80%

60%
Small cities and towns (pop. below 250k in 2012)

Medium cities (pop. above 250k in 2012)
40%
Dar es Salaam

20%

Source: Original figure for this publication, based
0% on National Bureau of Statistics data from various years.
1978 1988 2002 2012

Urban growth rates vary widely between cities (Figure 4). Dar es Salaam and Zanzibar City experienced higher-than-
average growth between 2002 and 2012; however, several small cities and towns had even higher growth rates than Dar es
Salaam’s rate of 5.6 percent. Rapidly growing towns included Geita (a mining boomtown in the Lake Victoria region), Lindi
(a coastal town which experienced a boom following the discovery of offshore natural gas), and Tunduma (an agriculture and
trading center near the Zambian border). Variation in growth rates is largely explained by migration rates: Dar es Salaam
and most medium-sized cities experienced net in-migration between 2002 and 2012. Tanga and Dodoma experienced net
out-migration over the same period (although it is anticipated that this trend will have since reversed for Dodoma, which has
grown rapidly in the last several years – as of 2018, most central government functions have moved from Dar es Salaam to
Dodoma). Small cities and large towns that experienced out-migration of young people included Kasulu, Babati, Njombe,
Shinyanga, Tabora, Musoma, and Singida. Out-migration, particularly of young people, implies that these urban centers may
not be able to provide productive jobs or sustainable livelihoods.

Figure 4: Variation in Annualized Urban Growth Rates (2002–2012)

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

Primary City Dar es Salaam 5.6%
Zanzibar 6.2%
Mwanza 3.7%
Mbeya 3.5%
Medium Cities Morogoro 3.1%
Arusha 2.7%
Dodoma 2.1%
Tanga 1.0%
Geita 8.4%
Lindi 6.6%
Tunduma 6.3%
Bariadi 5.7%
Kibaha 4.9%
Bukoba 4.6%
Songea 4.2%
Mpanda 4.0%
Kigoma 3.9%
Kahama 3.8%
Mafinga 3.8%
Sumbawanga 3.5%
Small Cities Handeni 3.5%
and Towns Nzega 3.2%
Iringa 3.2%
Makambako 2.9%
Singida 2.3%
Korogwe 2.1%
Moshi 2.0%
Musoma 2.0%
Shinyanga 1.5%
Tabora 1.4%
Njombe 1.1%
Mtwara 1.1%
Babati 0.7%
Kasulu 0.7%

Annualized Population Growth Rate (2002–2012)

Source: Original calculations for this publication, based on census data from the National Bureau of Statistics, 2002 and 2012 (NBS 2006, 2013).
Note: Growth rate for the Vwawa, Nanyamba, Ifakara, Masasi, Bagamoyo, Tarime, Bunda, Chato, Mbulu, Mbinga, Kondoa, and Newala local governments
unavailable due to absence of 2002 population data. These local governments were carved out from rural districts, and 2002 census population figures are not
disaggregated according to the urban boundary.

Tanzania Urbanization Review 13
In Tanzania, natural population growth largely drives the growth of cities; rural-to-urban migration is also a growth
factor, though to a lesser extent. There are three sources of urban growth: changes in the administrative boundaries,
natural population growth, and rural–urban migration. Between 2002 and 2012, 5.4 million people were added to urban
areas, of which an estimated 3 million can be attributed to natural population growth and the rest to migration and changes
in municipal boundaries. For cities with more than 200,000 inhabitants, natural urban population growth contributes around
70 percent of total urban growth (Figure 5).

Figure 5: Urban Change Resulting from Natural Growth and Migration (2002–2012)

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Lindi 19,123 17,470
Dar es Salaam 888,270 903,474
Geita 38,210 52,047
Kibaha 20,050 27,654
Tunduma 14,648 28,809
Bariadi 5,821 13,715
Bukoba 13,229 32,216
Mafinga 3,751 11,506
Songea 15,312 50,455
Iringa 8,168 31,641
Mbeya 21,918 88,275
Morogoro 13,573 66,410
Zanzibar 43,508 220,563
Kigoma 9,241 58,100
Mwanza 28,241 182,102
Nzega 1,378 9,650
Mpanda 2,527 30,120
Kahama 5,500 68,514
Arusha 5,451 88,145
Handeni (209) 22,830
Sumbawanga (2,873) 63,004
Moshi (2,936) 35,205
Makambako (2,208) 24,629
Korogwe (2,161) 14,679
Dodoma (19,927) 95,914
Singida (9,839) 39,394
Musoma (12,921) 36,018
Shinyanga (17,889) 39,242
Mtwara (9,551) 20,424
Tabora (25,780) 54,343
Njombe (16,330) 29,758
Tanga (30,853) 55,485
Babati (15,155) 21,717
Kasulu (50,758) 63,852

Source: Original calculations using census data from the
Net migration Natural growth National Bureau of Statistics, 2002 and 2012 (NBS 2006, 2013).

Dar es Salaam is an exception: the city’s population increase of 1.8 million between 2002 and 2012 was driven evenly
by net migration and natural population growth. Economic opportunities are more diverse and abundant in Dar es
Salaam than in any other Tanzanian city. Data from the 2014/15 Statistical Business Register Report (NBS 2016) shows 18.8
percent of business establishments are concentrated in Dar es Salaam. These economic opportunities helped attract almost
900,000 migrants between the 2002 and 2012 censuses. This was by far the largest flow into one single urban destination,
and among the highest as a share of urban population increase (Figure 5 above).4 Among the other towns and cities, Lindi
is the only urban areas for which net migration is estimated to be larger than natural growth.5 No city or town had declining
population numbers, though some (Kasulu, Babati, and Tanga) experienced slower gains than would have been expected
from natural growth projections (which account for birth and death rates) due to out-migration.

While urbanization has been accompanied by a faster increase in the urban population, and consequently the
number of urban poor, over 80 percent of Tanzania’s poor are still rural (World Bank 2019a). From 2007 to 2018, the
urban population increased by about 7 million (70 percent) and the number of urban poor grew by 600,000 (34 percent)
(Figure 6). The increases are the result of both urbanization and the slow pace of urban poverty reduction.6 Most of the changes occurred
outside Dar es Salaam, where the population has gone up by nearly 5 million (72 percent) and the number of poor by nearly 700,000
(45 percent). Over 80 percent of Tanzania’s poor (11.3 million) continue to live in rural areas, where 3.5 million of them suffer from extreme
poverty; in urban areas, 2.6 million live in poverty and 745,000 in extreme poverty.

4
The finding of significant migration into small towns is supported by Christiaensen et al. (2017), which concluded that focusing public investments on these small
towns could more significantly reduce poverty. Moreover, Wenban-Smith (2015) confirms urban growth outside of the main urban centers and explains the
extent of administrative changes over the various census periods.
5
Prior to 2002, Lindi actually experienced negative population growth, with strong out-migration toward other cities in the country (IGC 2014). The discovery of
gas reserves was expected to attract investments and an inflow of people, but the project for the liquefied natural gas export facility in Lindi has been held up
and is now set to begin in 2022 (Ng’wanakilala and Dausen 2019).
6
The urbanization rate rose from 26 to 32 percent from 2007 to 2018.

14 Tanzania Urbanization Review
Figure 6: Total Population and Poor Population (2007, 2012, and 2018)

52.7
50
43.6
40 38.3
Population (millions)

35.9
31.0
30 28.4

20
16.8
12.6
9.9
10

1 3 .2 1 2 .3 1 3 .9 1 1 .2 1 0 .4 1 1 .3 2 .0 1 .9 2 .6
0
2007 2012 2018 2007 2012 2018 2007 2012 2018 Source: World Bank 2019a, based
on HBS 2011/12 and 2017/18 (NBS
Tanzania Mainland Rural Urban 2014, 2019).

Poor Population Total Population

Figure 7: Urban and Rural Population and Poverty Distribution (2018)

Geographic Distribution of Total Population (%) Geographic Distribution of Poor Population (%)

19.0
31.8

6 8 .2
81. 0

Rural Urban Rural Urban Source: World Bank 2019a.

1.2 Urbanization, but limited benefits of urban growth
Urbanization is key to accelerating structural transformation – the transition of an economy from low productivity
and labor-intensive economic activities to higher productivity and skill-intensive activities. By enabling agglomeration
economies, cities can be instrumental in structural transformation by enhancing productivity, spurring innovation, and
promoting economic diversification. One of the benefits of agglomeration economies is reduced costs due to greater
density (e.g., more efficient transport of goods and people). The density and size of cities can also create markets for
specialized services, including legal support, advertising, logistics, and management consulting. The larger the cluster, the
more specialized the service providers can be. Cities are also instrumental in matching skills with job opportunities, and their
density allows for a larger and more integrated labor market. Skills-matching will gain much more importance in coming
years as the current generation of Tanzanian children achieve higher educational attainment and search more intensively for
jobs that fully reward their skills. Greater economic agglomeration in urban areas increases the “pull” forces that accelerate
rural–urban migration.

While Tanzanian cities are urbanizing fast, they are doing so with limited resources for capital investment. When the
East Asian countries reached urbanization levels comparable to Tanzania’s current rate (approximately 30 percent), their
average GDP per capita was US$2,600, compared to Tanzania’s US$500 (Figure 8). All other regions, even Sub-Saharan
Africa, had, on average, higher GDP per capita than Tanzania, and the gap has only widened over time. Tanzania is therefore
urbanizing while poor – strikingly poorer than other developing regions with similar urbanization levels. Thus, Tanzania will
need to make strategic use of its finances and balance the costly ‘fixes’ to address existing problems, with forward-looking
investments to ensure future urban areas are developed economically.

Tanzania Urbanization Review 15
Figure 8: GDP per Capita vs. Urbanization Rate

LAC
80 2013

70
Urbanization (% total population)

MNA
2013
60
EAP
2013 Latin America & Caribbean (LAC)
50 LAC
1960 East Asia (EAP)
MNA Middle East North Africa (MNA)
40 1968
South Asia (SA)
SA
TZ SSA EAP Sub-Saharan Africa (SSA)
30 1984
Tanzania (TZ)

10
Source: Original calculation based on
World Development Indicators data from 2014.
0
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Note: GDP per capita in constant 2005 US dollars.

GDP per capita (constant 2005 USD)

There are encouraging trends in Tanzania’s agricultural transformation, which is an important catalyst for structural transformation
(World Bank 2019b). Tanzania is experiencing a labor shift away from agriculture, which is consistent with the early stages of
structural transformation. From 2008 to 2014, the share of households engaged in agriculture activity fell from 82 to 73 percent.
Household income portfolios are also increasingly leaning away from agriculture, with the average share of income derived from
on-farm production falling from 47 to 37 percent (World Bank 2019b). These trends are associated with agricultural transformation,
as farms become more specialized and food markets more reliable, with growing demand for consumption in cities. Until 2016,
agricultural productivity had grown marginally, mostly due to a reduction in agricultural employment (World Bank Group 2019a).
Boosting the sector’s productivity growth remains key to stimulating the rural nonfarm economy through local multiplier effects.
This will raise the demand for nonfarm jobs and spur a shift toward nonfarm employment, particularly within the agri-food system.

However, rural workers remain largely concentrated in agriculture, with jobs gradually moving from low-productivity
agriculture to low-productivity services. The majority of these low-productivity jobs are within the informal sector, producing
only locally traded goods and services, with limited returns to scale. Given the high levels of agricultural employment in the
cross-sectional data, a key question is the extent of structural change taking place over time. Agri-processing activities have
the potential to absorb rural migrants into jobs that provide value-added to raw commodities, but the available data does
not show agri-business yet being established at significant scale (Figure 9).

Figure 9: Jobs Are Concentrated in Agriculture and Informal Services
Agriculture, food crops and forestry
Mtwara
Njombe Fishing, hunting, livestock, and other
Lindi Mining and quarrying
Kigoma
Rukwa Manufacturing
Ruvuma Electricity, gas, and steam
Morogoro
Tanga Clean water, sewage, and environment services
Kagera Construction
Iringa
Raw food sales (uncooked food)
Simiyu
Dodoma Trade and commerce
Geita Haulage and storage
Katavi
Mara Food, hotel, and lodging services
Tabora Information and communication
Mbeya
Pwani Financial institutions and insurance
Mwanza Public administration and security services
Singida
Shinyanga Education services
Kilimanjaro Health and social welfare services
Manyara
Domestic services
Arusha
Dar es Salaam Other activities not listed

0% 20% 40% 60% 80% 100% Source: Original analysis based
Percent of total employment on 2012 census data (NBS 2013).

16 Tanzania Urbanization Review
In Tanzania, firms and urban jobs are highly concentrated in low-value-added services. The growth of locally consumed,
or non-tradable, goods and services limits the scale of economic benefits of urban areas. The consumer base of one city,
however large, is much smaller than a regional or global market. Specializing in non-tradable products for local consumption
leads to diminishing returns, because prices are set locally and decline as supply increases. In contrast, export markets are
key to a dynamic industrial sector. The price of imports is set largely by the possibility of supply from the rest of the world
(Lall, Henderson, and Venables 2017). In Tanzania, 57 percent of firms in the formal sector and 52 percent of firms in the
informal sector are engaged in wholesale or retail trade. This percentage rises to almost 75 percent when food service is
included (NBS 2012). Manufacturing accounts for only 6 percent of formal-sector firms and 1 percent of micro and small
firms. In Dar es Salaam, the plurality of heads of households (47 percent) work in low-value-added services, followed by
high-value-added services (28 percent), but manufacturing barely accounts for 7 percent of total jobs (World Bank 2019c).

In Dar es Salaam, less than half of firms are in tradable sectors, compared to 70 percent in many South and East Asian
cities (Lall, Henderson, and Venables 2017; Figure 10). In Tanzania, as in much of Africa, the natural-resource sector has
grown rapidly, in part due to new discoveries of minerals such as gold and rare-earth metals.7 This expansion has attracted
workers into the sector from both agriculture and manufacturing. Meanwhile, the income generated from the resource
sector has been spent disproportionately on manufactured goods that are imported and services that cannot be exported
(i.e. non-tradable goods and services). These services are produced in Tanzania’s cities and account for the rapid urban
growth. Tanzanian cities are therefore growing as consumption rather than production centers, essentially catering to
consumer demand generated by the success of the resource sector, rather than generating productivity. This is in contrast
with the cities of East Asia, where growth is driven by industrialization (Collier and Jones 2016).

Figure 10: Production Mix in Selected Cities

Luanda
Luanda
Gaborone
Gaborone
Dar Salaam
Eses
Dar Salaam
Kampala
Kampala
Kigali
Kigali
Bamako
Bamako
Accra
Accra
Nouakchott
Nouakchott
Nairobi
Nairobi
Dakar
Dakar
Addis Ababa
Addis Ababa
Kinshasa
Kinshasa
Lagos
Lagos
Niger
Niger
Mombasa
Mombasa
Lusaka
Lusaka
Harare
Harare
Bangkok
Bangkok
ZhengzhouCity
Zhengzhou City
Dhaka
Dhaka
ShenzhenCity
Shenzhen City
Delhi
Delhi
Chittagong
Chittagong

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Nontradable
Nontradable (SSA Cities) Tradable
Tradable
Nontradable (Asian Cities)

Source: Lall, Henderson, and Venables 2017.

7
See, for example, Ng’wanakilala 2020.

Tanzania Urbanization Review 17
2 The Urban Challenge:
Crowded, Disconnected, and Costly Cities

Urban areas are critical for Tanzania’s economy and for job creation, but the benefits of agglomeration economies
have yet to materialize. The interaction of factors contributing to agglomeration – the clustering of firms and the overall
size and diversity of the urban economy – is limited. Rapid urbanization and increased population density have not translated
to increases in economic density. Instead, low density development and urban sprawl has prevailed, and there is poor
connectivity between people, industries, and markets. The challenge for policymakers is to harness the growth potential
of cities and transform them into more livable, resilient, and competitive environments. But cities in Tanzania have shared
characteristics that limit their potential. This chapter outlines these existing city-level constraints.

Like other African cities, Tanzania’s cities are crowded, disconnected, and therefore costly. These three features of
the urban form limit potential agglomeration benefits and perpetuate a “low urban development trap,” meaning that the
economy continues to rely on non-tradable goods and services (Lall, Henderson, and Venables 2017). More specifically:

• Cities are crowded with people, but not livable: Despite increased population growth and density, Tanzania’s cities
are not economically dense – that is, investments in infrastructure development, industrial and commercial structures,
protecting natural assets, and affordable housing have not kept pace with the concentration of people. Urban areas
still offer residents low access to most basic services; moreover, because cities are not “dense with amenities,” their
livability is also limited. Environmental degradation is occurring at a largely unchecked and rapid pace, and cities are also
vulnerable to disasters and climate-related hazards such as floods, which are increasing in frequency. The ability of cities
to adapt to, mitigate, and learn from acute shocks and chronic stresses resulting from climate change will be critical for
their ability to prepare for and respond to rapid urban growth.

• Sprawling urban form disconnects people from jobs and hampers productivity: Urbanization benefits people and
businesses by increasing economic density, but urban sprawl and fragmentation exacerbate poor connectivity within
Tanzania’s cities. Historically, with the absence of strong planning and enforcement controls, cities have expanded (rather
than densified), with low-cost land becoming the key consideration for locational choices. Thus, there are long distances
between neighborhoods, and transportation networks do not facilitate quick or affordable travel. Spatial fragmentation
of urban areas is problematic because it disconnects people and firms: workers have more limited (geographic) access
to job opportunities, with longer and more expensive commutes, while firms are prevented from reaping the scale and
agglomeration benefits associated with urbanization.

• Getting around, living, and doing business are expensive: The sprawl that characterizes Tanzania’s cities results in
costly inefficiencies, and locks cities into an energy-intensive growth pattern that is expensive for service provision and
unattractive for business. Formal housing is out of financial reach for the majority of urban Tanzanians, and especially the
poor, who also struggle to access jobs through transportation systems that are expensive, congested, and scarce for non-
motorized commuters. Businesses suffer from these inefficiencies, as well: not only do their employees live far from work,
but the high cost of living and scarcity of services drive up nominal wages.

18 Tanzania Urbanization Review
Tanzania risks falling into a low urban development trap because its economy is largely limited to non-tradable
goods and services that are consumed locally – and the current urban form keeps it that way. As discussed above,
natural resource–led growth has created high demand for non-tradable goods and services, which can crowd out demand
for manufacturing (Lall, Henderson, and Venables 2017). But another cause of Tanzania’s predominantly “local urban
economies” is related to urban form. The configuration of Tanzanian cities raises significant barriers (inefficient land markets,
unclear property rights, poor planning, and zoning enforcement, etc.) to achieving the dense, connected, and efficient
concentration of structures that reaps agglomeration benefits.

Without density and mobility, urban areas cannot offer firms the cost efficiencies and job-matching advantages that
can enable regional and international trade – which is sub-optimal even for local producers. Ultimately, this deters most
types of investment. Urban form is not the only constraint on international competitiveness, however. The business climate,
access to finance, low agricultural productivity, and the general macroeconomic context also play a role.

Crowded, disconnected, and costly: this narrative sheds light on Tanzania’s urbanization story to date, but also on
how the country can reverse these trends. To avert the low development trap, cities will need to improve urban planning
practices, address the informality of land markets, coordinate more effectively, sequence investments, maximize financing
sources, improve mobility, and increase resilience.

2.1 Cities are crowded with people, but not livable
Increased population growth and density have not translated into increased capital investment to improve the
livability of cities. Tanzania has urbanized at lower GDP per capita compared to other countries. Investments in infrastructure
development, industrial and commercial structures, protecting natural assets, and affordable housing have therefore not
kept pace with the concentration of people. Environmental degradation is occurring at a largely unchecked and rapid pace.
The ability of cities to adapt, mitigate, and learn from acute shocks and chronic stresses resulting from climate change will
be critical for their ability to prepare for and respond to rapid urban growth.

2.1.1 Low access to basic services constrains livability

Access to services in urban Tanzania has not kept pace with population growth. Service levels in cities are generally higher
than in rural areas; however, household access to improved drinking water, electricity, improved toilet facilities, and solid
waste collection varies considerably across municipalities (Table 1). As cities grow, they need to implement appropriate
expansions of service networks to close the gap and keep up with rapid urbanization.

Table 1: State of Infrastructure and Services for Households in Selected Cities (2018)

Access to improved Access to electricity Access to improved Access to solid waste
Municipality water sourcesa as primary source of toilet facilities collection
(%) lighting (%)b (%) (%)c
Arusha 80.5 33.0 30.2 60.0
Dodoma 73.3 22.7 23.0 12.6
Kigoma 83.2 19.2 25.8 25.5
Mbeya 87.7 34.7 32.1 28.0
Mtwara 59.9 22.4 28.4 14.8
Mwanza 73.8 31.4 22.6 20.8
Tanga 58.7 27.8 25.4 26.9
National urban 87.6 63.7 41.2 24.7
average
National 73.0 29.0 25.3 8.3
average

Source: Household Budget Survey 2017/18 (NBS 2019); 2012 census (NBS 2013).
a
Figures refer to access to improved water during the dry season, which tends to be lower than during the rainy season. “Improved drinking water sources”
refers to piped water on premise, such as: piped water into dwelling, piped water into yard/plot, public taps/standpipes, tube wells/boreholes, protected dug
wells, and protected springs.
b
Does not include solar energy.
c
“Solid waste collection” refers to both regular and irregular collection of refuse disposal. Figures are for 2012.

Tanzania Urbanization Review 19
Local governments have limited resources to finance basic services. Even when own-source revenue collection,
central government transfers, and donor contributions are aggregated, Tanzania’s seven largest urban local government
authorities (LGAs) have only US$23.70–US$157 per capita to spend (Amani et al. 2018). Relative to, for example, the city
of Johannesburg, which can spend US$950 per capita, the municipal budget range in Tanzania makes it difficult to invest
adequately in master plans, service delivery, or curtailing urban sprawl (TULab 2019).

Figure 11: Budget per Capita vs. Own-Source Revenues in Selected Municipalities

$180
$157.6
Arusha
$160

$140
Total budget per capita

$120

$87.7
$100
Mtwara

$80

$60
$54.3
$40 Mwanza $26.3
Mbeya $23.7
$4.4
Dar es Salaam
Dodoma
$20

$0
0 % 10% 20% 30% 40% 50%

Percentage of city budget comprised of own revenue

Source: TULab 2019 using data from Amani et al. 2018.

Unplanned development results in neighborhoods that are perpetually without basic infrastructure, translating
into lower living standards. Formal planning and development in Tanzania’s cities have not kept pace with population
growth, leaving booming urban populations with infrastructure networks designed for much smaller cities. Unplanned and
un-serviced development is the norm. While statistics vary by city, on average, unplanned neighborhoods account for over
70 percent of the land in urban areas (Lupala, Namangaya, and Mbogoro 2013). A close examination of the changes in
planned and unplanned settlements in three case cities – Arusha, Dodoma, and Kigoma – between 2005 and 2015 showed
that all saw significant expansion of unplanned areas (the largest being in Arusha, where such areas grew by around 30
percent, followed by around 25 percent in Dodoma and 18 percent in Kigoma). There is observable expansion in planned
settlements as well, but only significantly so (around 13 percent) in Dodoma (Huang et al. 2018).

More than half of Tanzania’s urban population resides in settlements that lack one or more of the following conditions:
access to improved water, access to improved sanitation, sufficiency of living space, and durability of housing stock
(Lall, Henderson, and Venables 2017). This share compares relatively favorably to the Sub-Saharan African average
of 60 percent, though in South Africa and Zimbabwe only a quarter of the urban populations live in such conditions
(Figure 12). In African countries outside the Sub-Saharan region, an average of only 31 percent of the urban population
resides in slums. It should be noted, however, that the quality of the housing stock in Tanzania’s unplanned settlements
differs from that of typical squatter settlements in other Sub-Saharan African cities. Areas characterized by highly insecure
land tenure are rare; and even in unplanned settlements where most residents lack official forms of land tenure, the majority
of homes are constructed with cement block, as opposed to the impermanent materials (such as tarps or scraps of sheet
metal) that characterize informal settlements in other cities in the region (Photo 2). Recent research confirms this observation:
there is not a significant difference in mean roof size (used as a proxy for property size) between houses that are on formally
versus informally owned land (Panman and Lozano-Gracia 2021b).

20 Tanzania Urbanization Review
Figure 12: Percent of Urban Population Living in Areas with Slum Characteristics

100
90
80
70
60
50
40
30
20
10
0

Burundi
Malawi

Djibouti

Mali

Congo
Guinea-Bissau

Cote d'Ivoire

Zambia
Sudan

Somalia

Uganda

Cameroon
Gabon

Namibia
South Sudan

Mauritania

Ethiopia

Non-SSA (Av)
Niger

SSA (Av)

Swaziland
STP

Comoros
DRC

Senegal
Burkina Faso

Togo
Lesotho

Nigeria

Guinea

Ghana

Zimbabwe
CAR

Mozambique

Sierra Leone

Kenya
Equatorial Guinea

Angola

Rwanda

Tanzania

Gambia

South Africa
Madagascar
Chad

Source: Original figure using data from UN-Habitat 2014.

Photo 2: Comparison of Building Materials in Informal Settlements of Mwanza and Nairobi

Informal settlement in Mwanza, Tanzania (left), constructed of more permanent cement bricks, versus informal settlement in Nairobi, Kenya, constructed of semi-
permanent materials. Photo of Mwanza by Chris Morgan. Photo of Nairobi by St. Aloysius Gonzaga High School Journalism Club.

While access to piped water in Tanzania’s cities has improved, access is unequal across income groups and service is
unreliable. Overall, all-season improved water access in urban areas of Tanzania currently stands at 87.6 percent, far above
the national average of 73 percent and higher than many other countries in the region (NBS 2019). The dominant source
of drinking water is piped water (26.3 percent); those without connections rely on sources including neighbors, protected
wells, or a public tap or standpipe (DHS 2016). A relatively small percentage relies on other sources, both improved (e.g.,
boreholes or tube wells, 5 percent) and unimproved (e.g., unprotected wells, 4.4 percent). While the coverage gap between
rich and poor households narrowed between 2005 and 2016, as of 2016, households in the top 60 percent of the income
distribution have three times the coverage of the bottom 40 percent, with poorer households relying mostly on sources
such as public standpipes and protected and unprotected wells (World Bank 2018a). For those who do have piped water,
service continuity is poor, so households often rely on multiple sources, including tanker delivery and digging their own wells.

Demand for water is outstripping supply, and water quality is at risk. Larger cities like Dar es Salaam, Arusha, and
Morogoro extract water from stressed rivers that do not yet have adequate source protection in place. Dodoma, the rapidly
expanding capital, currently relies almost entirely on groundwater for its supply. Most aquifers in Tanzania are not sufficiently
mapped, so planners are uncertain if groundwater extraction is occurring at a sustainable pace (World Bank Group 2017b).
Water scarcity issues are compounded by surface and groundwater pollution, which is steadily impacting water quality
across the country. Concentrations of sediment, salinity, fecal matter, and chemicals are increasing in rivers and aquifers. For
example, less than half of Dar es Salaam’s population has access to the main water network and instead use private and
unlicensed boreholes; the resulting overuse of shallow aquifers has led to contamination due to sea water intrusion and
infiltration of sewage (2030 WRG 2014). Reliance on storage due to unreliable piped water supply poses additional risks of
contamination, as do unregulated water vendors.

Tanzania Urbanization Review 21
Sanitation coverage has also improved but remains low, which comes at a staggering cost to public health. Between
2005 and 2016, Tanzania’s urban areas have seen a 30 percent increase in access to improved and unshared sanitation
facilities. However, the distribution of better sanitary options is skewed toward better-off households even more drastically
than water supply: more than half of the bottom 40 percent of urban households still use some form of unimproved pit
latrine or open defecation (World Bank 2018a). Less than 2 percent of urban households are connected to sanitary sewer
systems, and what is collected is often not treated; even a primary city like Dar es Salaam does not yet have wastewater
treatment facilities operating at scale. Lack of sanitation is a major underlying cause of poor ground and surface water
quality due to direct discharge and leaching of fecal matter from septic tanks and toilet facilities. In 2013, health-related
costs associated with unsafe water and sanitation in Tanzania were estimated to be about US$10 billion and US$7.6 billion,
respectively (Roy 2016).

Facing increasingly severe flood events, cities are working to improve drainage infrastructure to capture, treat, and
drain stormwater. Tanzania’s climate features intense rainfall during one or two rainy seasons, depending on the region.
Natural drainage courses, such as rivers and streams, and stormwater attenuation areas, such as wetlands and forests, are
highly degraded.8 Drainage infrastructure in Tanzania tends to be old or non-existent, and due to the minimal coverage of
wastewater infrastructure, stormwater mixes with untreated sewage and other pollution, resulting in highly contaminated
flood events. This situation has improved in recent years: in Dar es Salaam, more than 67 kilometers of primary and
secondary drainage systems around the Sinza, Yombo, and Msimbazi river basins are being improved (including through
bank stabilization, channel lining, and stormwater detention ponds). Drainage and sanitation master plans for Dar es Salaam
and eight other medium-sized cities (Arusha, Dodoma, Kigoma, Ilemela, Mbeya, Mtwara, Mwanza, and Tanga) have been
developed to help prioritize future secondary and tertiary investments, develop operations and maintenance schemes and
budgets, and plan capital works for the next 20 years. The Zanzibar Urban Municipal Council has also completed its first
major upgrade of the drainage system, mostly in informal areas, constructing approximately 20 kilometers of stormwater
drains. These efforts have significantly reduced flooding for nearly 3,600 households, provided savings in maintenance and
health costs by reducing flooding, and raised home values.9

Solid waste management is poised for improvement but will require significant commitments from local governments.
Improving municipal solid waste management is critical both to fostering sustainable urban development and to
minimizing risks related to poor solid waste services, including disease outbreaks and environmental health challenges.
Waste generation in Tanzania is increasing exponentially. Forecasts indicate that by 2030, 26 million tons of solid waste
will be generated daily in urban areas, compared to 2020 estimates of 12.1 to 17.4 million tons (Vice President’s Office
2020). Currently, an estimated 90 percent of waste is collected and disposed of in urban areas across Tanzania (NBS 2017).
The remaining waste is burned, buried, and thrown into rivers or drains, or into the environment (MétaSus and BreAd B.V. 2016;
Photo 3). Waste blocks drains and waterways that are already insufficient, exacerbating flooding and the prevalence of
vector-borne diseases. In the Msimbazi River Valley in Dar es Salaam, extreme upstream erosion and illegal littering and
dumping are major contributing factors to downstream sedimentation and sub-optimal flows at road crossings. Reducing
erosion, managing litter, and reducing the overall amount of waste that is prone to entering rivers, streams, and stormwater
drains is key to the restoration of functional drainage systems. Inadequate solid waste management service provision also
contributes to coastal and marine plastic pollution. As one of the leading threats to marine biodiversity, tourism, and the
fisheries sector, such pollution puts the livelihoods of millions of people at risk (World Bank 2016). This situation is starting
to change: as of January 2021, Tanzania’s first eight sanitary landfills are operational in medium-sized cities and Zanzibar.10
While landfill operations and management plans are in place at most of these landfills, it will be important to set aside
sufficient budget for regular operations, maintenance, monitoring, and reporting, in addition to continued capacity building
for solid waste and landfill staff.

8
The implications of this degradation in terms of climate change vulnerability will be discussed in the next section.
9
Initial findings from World Bank 2021d, forthcoming.
10
As of January 2021, landfills have been constructed in Arusha, Dodoma, Mbeya, Mwanza, Mtwara, Kigoma, Tanga, and Zanzibar Town.

22 Tanzania Urbanization Review
Photo 3: Solid Waste Dumping in Natural Drains

Solid waste dumped in natural drainage systems results in environmental degradation, obstructs drainage channels, and poses health risks to communities.
Photo by Chris Morgan.

Access to electricity from the grid has improved in urban areas but has not reached poor households. In urban areas,
access to electricity from the grid increased from 48 percent in 2012 to 64 percent in 2018. However, access is available to
only 7 percent of poor households. Gains have been made in diversification toward solar energy, particularly in rural areas
– 33 percent of rural households use solar energy for lighting, compared to 14 percent in urban areas in 2018. Despite
improvements, about 45 percent of households still rely on inefficient lighting sources such as torches and kerosene. Use
of efficient energy sources for cooking has also improved slightly, but over 80 percent of all households, and more than 90
percent of rural and poor households, continue to rely on firewood and charcoal (World Bank 2019a).

2.1.2 A loss of natural capital results in low resiliency to natural hazards

Urbanization is negatively impacting Tanzania’s environmental assets and ecosystem services – nudging the country
towards a “grow dirty now, clean up later” development path. While Tanzania’s cities are rich in natural assets – including
freshwater and marine resources, hardwood and mangrove forests, and relatively good ambient air quality – degradation
is occurring rapidly. Cities in Tanzania are on a negative trajectory (Path C in Figure 14). As cities on this trajectory grow,
environmental quality is declining, which can be a difficult trend to reverse (White, Turpie, and Letley 2017).

Figure 13: Relationship between Urban Growth and Environmental Quality

High
A1

Environmental
A
quality
B
C
Low C1

Small City growth Large

Source: White, Turpie, and Letley 2017.

Tanzania Urbanization Review 23
Environmental degradation is largely unchecked and occurring rapidly. Over the last three decades, rapid and unplanned
growth has progressively encroached upon riverbanks and buffers and has contributed to an increase in flood levels every
year. Public spaces and green areas are scarce, and city centers comprise largely hard surfaces lacking green cover or tree
canopy. In some cities, the quality of the green spaces in the wetlands and river basins are degraded due to urban pressure,
unplanned building activities, solid waste dumping, toxic industrial effluents, and largely untreated sewage. The quality and
quantity of fresh water is at serious risk in Dar es Salaam, Dodoma, and Arusha. A 2012 study in Dar es Salaam found that
seven once-perennial rivers originating in protected areas on the urban periphery are now seasonal (Lupala et al. 2014).
In Dar es Salaam alone, forest reserves have declined more than 30 percent in 30 years as a result of encroachment and
charcoal production (World Bank Group 2016a). The combination of deforestation, sand mining for building materials, and
uncontrolled building development results in extreme soil erosion that causes sedimentation of natural watercourses and
drainage infrastructure, reducing their capacity to handle stormwater. Air pollution is most severe indoors, largely due to
burning of charcoal and/or wood as cooking fuel; women and girls, traditionally the most involved in household tasks, are
particularly exposed to smoke and particulate matter (World Bank Group 2019b). In 2013, over 68,877 premature deaths
were attributed to air and water pollution nationally, at an estimated economic cost of over US$28.7 billion (Roy 2016).

Tanzania’s cities are already vulnerable to disasters and climate-related hazards, which are expected to increase
based on climate change projections. Tanzania is already the most flood-affected country in East Africa (UN-Habitat 2014).
Nearly all Tanzanian cities are impacted by intense rainfall events during rainy seasons, given the lack of adequate drainage
infrastructure and encroachment of built areas on riverbanks and wetlands (Photo 4). Of the 62.5 percent of residents
in informal settlements (Ministry of Lands, Housing, and Human Settlements Development 2016), many are occupying
hazardous land prone to landslides or flooding. Low-lying cities such as Dar es Salaam and Zanzibar City experience floods
with standing water for long periods of time, raising the risk of water-borne diseases such as cholera and dysentery. Floods
also destroy available infrastructure, obstruct pedestrians and bicyclists’ paths, and creates major disruptions in traffic,
seriously compromising access to jobs and amenities (Ochoa et al. 2021). Cities with rugged terrain and steep slopes, such
as Mbeya and Mwanza, are affected by landslides in addition to river floods. Climate models project that, by the 2080s,
mean annual and seasonal temperatures for East Africa will increase by 3.2oC, and by 2100, the region will see an increase in
mean annual rainfall of up to 18–28 percent (World Bank Group 2019b). Precipitation is projected to become more volatile,
and flooding is expected to increase in frequency and severity. Projections for Dar es Salaam indicate that mean rainfall
could increase during the longer rainy season by up to 6 percent by 2100 (Matari et al. 2008). The ability of cities to adapt,
mitigate, and learn from acute shocks and chronic stresses resulting from climate change is therefore critical.

Photo 4: Flooding in Informal Settlements

Flooding in Buguruni ward after heavy rain in Dar es Salaam (2019). Photo by Chris Morgan.

24 Tanzania Urbanization Review
Dar es Salaam’s flooding situation exemplifies how environmental degradation and climate vulnerability can drain
the city economy, impact infrastructure, and disproportionately burden the poor. Consistent with climate change
predictions, flooding has become increasingly severe over the past decade. Major flood events were experienced in seven
out of the last 10 years (World Bank Group 2019c). Exposure is widespread: at least 39 percent of the city’s population,
or 2 million people, have been impacted either directly or indirectly by floods. A single flood event in April 2018 affected
between 900,000 and 1.7 million people. Poor and vulnerable households are over-represented among those affected by
floods in Dar es Salaam, and female-headed households, which are less equipped with the tools to cope with disasters,
are more likely than others to be affected (World Bank Group 2019b). A strategic assessment of the climate resilience of
the city’s transport infrastructure found that the transport system is highly exposed to rainfall events even of low intensity
(2–6 millimeters per hour). The economic cost to users of the transport system from disruptions due to flooding ranged
from US$5.6 to US$25 million for a 2-millimeter-per-hour event, which has a return period of one year (World Bank, ICF and
COWI 2019d). To build resilience to flood hazards and other shocks, cities will require integrated solutions that combine
infrastructure with the restoration of natural assets (Box 1).

Figure 14: Flood Events in Dar es Salaam (1961–2018)

12,000,000

10,000,000 ‘83 Year of flood event
‘18
‘17 3 or more flood events
‘16
‘15
8,000,000 ‘11 2 flood events
Population size

‘10
‘09 1 flood event
‘06
6,000,000 ‘02 Population data taken from
‘98
‘97 source documents
‘95
‘89
4,000,000 ‘83

Source: World Bank Group 2019c.
2,000,000
Note: Chart depicts flood events
in the Msimbazi Valley flood plain
in Dar es Salaam.

1950 1960 1970 1980 1990 2000 2010 2020 2030
Year

Box 1: The complexity of flooding requires integrated solutions

Dar es Salaam’s Msimbazi river basin covers one-fifth of the city’s land area (271 km2) and is home to 27 percent of
the city’s total population (an estimated 1.6 million people). From its headwaters in the Pugu forest reserve, the
basin extends eastward along an increasingly urbanized stretch as the river approaches the heart of the city. The
lower basin is a wide floodplain and wetland in the heart of Dar es Salaam, once a robust mangrove forest estuary.

The riverbanks and parts of the lower floodplain are densely populated, despite prohibitions on building
there.11 Environmental degradation in the basin is severe due to deforestation, sand mining, industrial pollution,
and waste dumping. Some 50,000 people throughout the basin are exposed to flooding, with between 8,000
and 10,000 households living in areas considered unsafe and unsuitable for human settlement. A recent study
modelled the economic losses caused by flooding in April 2018, which heavily impacted the Msimbazi Valley. The
study found that households lost an estimated US$100 million, or 2 percent of Dar es Salaam’s GDP, from direct
losses (houses and assets) and indirect losses (health and labor costs) (Erman et al. 2019). Two out of four of Dar
es Salaam’s main traffic arteries, including the Bus Rapid Transit (BRT) system that serves an estimated 100,000 city
residents per day, cross the main flood plain near the river’s discharge to the sea, and are regularly closed during
flood events.

11
The 1979 masterplan designated the lower valley as no-build hazard land, and the Environmental Management Act prohibits building within 60 meters of
each riverbank.

Tanzania Urbanization Review 25
1 – Upstream deforestation in Pugu Hills, 2 – Riverbank erosion, 3 – Solid waste dumping, 4 – Flooding of Morogoro Road BRT corridor
5 – Solid waste damming Jangwani bridge, 6 – Pollution and mangrove forest at the river outlet

Sources: Map: World Bank 2019c. Photos 1,2, 5, 6 World Bank 2019c. Photos 3-4 by Chris Morgan.

A durable solution to flooding in the Msimbazi requires an integrated approach involving a multitude of sectors,
institutions, and stakeholders, and must occur amid a challenging institutional context where there is currently
no clear ownership over city-level river-basin management. The “Msimbazi Opportunity Plan,” developed in 2018,
was a multi-stakeholder process that involved more than 200 people from 59 institutions12 and communities. The
Plan was backed by significant technical work for flood modeling, and combines drainage infrastructure, resettlement
of at-risk households, environmental restoration, open space, commercial development, and institutional reforms.

This approach is expected to pay off. An earlier study examining the potential benefits of “green urban
development” measures, such as upstream reforestation and a wetland park, found that these measures would result
in average annual cost savings between 21 and 54 percent of the present expected annual losses from flooding in the
lower Valley (Turpie et al. 2017). The plan for the lower basin would establish a framework that coordinates investments
from various sources, including the government, the private sector, and development partners, to turn the flood plain
area into a valuable city asset that includes mixed-use, mixed-income development and a city park. Based on projected
cash flows from different economic activities within the valley, cost recovery on capital expenditures would be
reached over a period of 12 years and at an expected internal rate of return of 18 percent.13

2.2 Urban sprawl disconnects people from jobs and hampers productivity
In the absence of strong planning and adequate enforcement, Tanzanian cities are growing inefficiently, and without
reserving land for basic infrastructure and the industrial activities critical for development. The result is isolated dense
areas, poor connectivity, and rapid, unguided horizontal expansion, which limits the ability of urban areas to provide the
benefits that dense cities offer. Informal land markets and stringent regulations are encouraging sprawl and challenging
urban management. People are disconnected from jobs, businesses, services, and one another, lengthening commutes and
making it difficult for transportation networks to facilitate mobility. Reserving land for infrastructure, especially roads, pays
off for cities in the long run, but in urban areas, development has outrun planning and management. As land is snatched
up for residential purposes, economic activity is pushed to the urban periphery, resulting in spatial fragmentation that is
constraining the development of Tanzania’s cities.

12
Government stakeholders include the President’s Office – Regional Administration and Local Government, Dar es Salaam City Council, Ilala Municipal
Council, Kinondoni Municipal Council, Wami Ruvu Water Basin Authority, DART, DAWASA, DAWASCO, Ministry of Lands Housing and Human Settlements
Development, Ministry of Water, Ministry of Works, National Environmental Management Council, Prime Minister’s Office – Disaster Management
Department, the Regional Administrative Secretariat, TANESCO, TANROADS, Ubungo Municipal Council, Vice President’s Office, and Ardhi University.
13
Cost estimates based on World Bank analysis carried out by PwC, “Supporting the Msimbazi Opportunity,” final report.

26 Tanzania Urbanization Review
2.2.1. Weaknesses in planning systems contribute to low urban density, inefficient transportation
networks, and inadequate space for economic uses

Tanzanian cities, like many in Sub-Saharan Africa, are affected by poor connectivity caused by high fragmentation
and low accessibility. High fragmentation means that population clusters of relatively high density are scattered – leapfrog
development is common, with isolated neighborhoods of newly developed land not bordering existing developments.
Fragmentation lengthens travel times between homes, jobs, and business (Lall, Henderson, and Venables 2017). Low accessibility
by public transport means that public transport systems available allow urban dwellers to access only a small share of jobs and
amenities, undermining the city’s potential to benefit from agglomeration economies. In Dar es Salaam, an average resident only
accesses 12% of the jobs available in the city in a one-hour commute by public transport (Peralta-Quiros et al. 2009) and in
Moshi only 9%. Though accessibility by public transport is larger in Arusha (34%), Mwanza (57%) and Dodoma (67%), fast
urban population growth and transport demand can easily compromise these results (Ochoa et al. 2021).

Map 2: Growing Out, Not Up – the Expansion Land-use inefficiencies, such as low levels of vertical
of Dar es Salaam (1947–2012) development and patches of undeveloped prime land in and
around city centers, increases pressure on land at the urban
periphery. Cities are “growing out, not up” (Map 2). The
resulting sprawling urban form makes infrastructure and basic
service provision costly. It can also trap cities in a vicious cycle
of car dependence: sprawl increases the demand for private
motorized modes of transportation, leading to more congestion,
pollution, and accidents; these effects in turn lead policy makers
to build more roads that push the urban fringe even further,
exacerbating the initial sprawl. In addition, transport systems are
inefficient. Infrastructure for non-motorized commuters, such
as bicycle users and pedestrians, is almost nonexistent, despite
these modes accounting for about 50–70 percent of trips in
intermediate cities. Public transport supply in intermediate
cities is unreliable and uncoordinated, increasing the time and
costs of using this transport mode, and road infrastructure has
missing links and poor traffic management, which make road
usage inefficient (Ochoa et al. 2021). As cities sprawl without
substantial improvements of transport systems, commuting
becomes slow and costly, the access of residents to jobs is
Source: World Bank 2018b. limited, and other agglomeration benefits are negatively
impacted.

Figure 15: Accessibility to Jobs and Amenities by Public Transport in Four Cities

100
90
80
70 Mwanza
Percent

60 Arusha
50 Dodoma
40 Moshi
30
20
10
0
Jobs Primary Schools Secondary Schools Health Centers Markets
Jobs accessible Population that can access Population that can access one amenity within 60 min
within 60 min one school within 40 min

Source: Ochoa et al. (2021) based on job locations from the Statistical Business Registry (SBR) (2014/15), location of primary and secondary schools from the
Ministry of Education, Science and Technology (MEST), location of health centers from the Ministry of Health, and markets from OpenStreetMaps. Population
distribution from WorldPop (2020 UN-adjusted population projections).
Note: Estimates for city agglomerations with at least 300 people per km2. Estimates assume a cycling speed of 12 km per hour and a walking speed of 5 km per
hour for adults. For children who attend primary school, speeds are 10 km per hour and 3.5 km per hour for cycling and walking, respectively.

Tanzania Urbanization Review 27
Inadequate coverage of planning instruments and implementation mechanisms means most
urban growth is unguided

The lack of master plans to guide land-use decisions and growth is a contributing factor to the current fragmented
form of Tanzania’s cities. Although most primary and medium-sized cities had master plans in the 1970s and 1980s, these
expired by the 1990s, and cities went decades without replacing them. A renewed push for master planning began in the
2010s, which has resulted in most major cities having a current master plan (Figure 16). Rapidly growing tertiary cities also
have urban master plans in place.14 However, many small cities and towns do not15 and are developing without any formal
plan. Adoption of master plans may not be practical in the near term given that the process typically takes several years and
requires budgets in the tens to hundreds of thousands of dollars, depending on city size and complexity.

Figure 16: Status of Master Plan Development in Primary City and Medium-Sized Cities

City 1970s 1980s 1990s 2000s 2010s 2020s
Dar es Salaam
Mwanza
Arusha
Dodoma
Mbeya
Tanga Source: Original update of
data previously published
Kigoma-Ujiji in Huang et al. 2018 and
Mtwara-Mikindani President’s Office Finance,
Economy and Development
Zanzibar Town Planning 2015.

Year master plan prepared in corresponding decade Master plan under preparation
Coverage by approved master plan Coverage by interim land-use plan No coverage by land-use plan

Having master plans is just the start – the critical next step is translating high-level planning documents into development
through neighborhood-level and sector plans, budgeting mechanisms, and institutions for enforcement. A recent World
Bank study (Huang et al. 2018) found that existing land uses conformed with the master plan less than half of the time.
One critical reason for the lack of effectiveness of master plans is the disconnect between economic plans, urban plans,
and sector or infrastructure plans. The economic plans are the three-to-five-year strategic documents, with the one-year
budgets summarized in Medium-Term Expenditure Frameworks (MTEFs), and work plans coordinated by each municipality’s
economics department. Urban plans comprise master plans and detailed planning schemes, and sector or infrastructure
plans cover utilities, roads, water, or electricity. Limited coverage of detailed planning schemes at the neighborhood level
effectively means that most of the land in cities is not zoned, making it difficult to apply the broad land-use recommendations
of the master plan in practice. The lack of effective development controls, planning review systems, and capacity or resources
for enforcement also contributes greatly to the ineffectiveness of plans. Additional planning instruments, such as sustainable
urban mobility plans, should also be considered as they provide a more comprehensive approach to urban transport that
goes beyond the provision of road infrastructure, and prioritizes coordination with land-use planning.

However, insufficient human resources are a constraint on planning and enforcement. Development control functions
are currently highly centralized at the municipal level, where staff are few: in 2011, Tanzania only had 158 registered planners,
which is just 0.34 planner per 100,000 people. This is in comparison to 38 per 100,000 people in the United Kingdom,
3.4 in South Africa, and 1.4 in Nigeria (UN-Habitat 2016). The devolution of monitoring and some enforcement duties
to ward and sub-ward levels is gaining consensus as a viable approach to strengthening development control (PO-RALG
2021a), but in order to support implementation of existing urban and sector plans and the participatory requirements that
would foster strong local ownership, it will be critical to ensure that there are adequately trained and registered planners in
towns and in small and medium-sized cities.

Babati, Bariadi, Bukoba, Geita, Iringa, Kibaha, Korogwe, Lindi, Morogoro, Mpanda, Musoma, Njombe, Shinyanga, Singida, Songea, Sumbawanga, and
14

Tabora all had approved master plans, and Moshi’s draft plan was pending approval by MLHHSD as of May 2021.
15
Some of the small cities and towns listed in Map 1 have master plans in place, while others do not, including Bagamoyo, Bunda, Chato, Handeni,
Ifakara, Kahama, Kasulu, Kondoa, Mafinga, Makambako, Masasi, Mbinga, Mbulu, Nanyamba, Newala, Nzega, Tarime, Tunduma, and Vwawa.

28 Tanzania Urbanization Review
Limited planning and low levels of enforcement result in an urban form without land reserves
for basic service infrastructure

Despite the economic advantages of doing so, cities have not adequately reserved land for future public investments,
especially roads, which results in technical, social, and financial challenges in keeping up with urban expansion. As
noted above, Tanzania’s cities already face a wide gap in basic-service provision. When no land is put aside for public
infrastructure through planning, cities must attempt to retrofit roads and other network infrastructure after unplanned
development has taken place, a problematic process that reduces future access (Photo 5). Analysis of road density in Dar es
Salaam and selected medium-sized cities (Figure 17) finds that access to roads is dramatically lower in unplanned areas than
in planned areas, as is illustrated in Makurumla Ward in Dar es Salaam (Figure 18).

Today’s congestion and service-delivery gaps are in part a product of past shortcomings in anticipating urban growth
and staking early claims on public land. Road rights-of-way allow space for urban transport, telecommunications, drainage,
water, and sewerage services as cities expand. Once unplanned areas with low density and irregular road patterns develop,
however, retrofitting often requires costly redesigns, compensation for structures and other assets that must be demolished,
or both. Retrofitting sometimes requires full relocation of households, which can affect the social fabric of communities.
It also adds considerable project costs: an analysis of Bank-financed urban projects found that resettlement compensation
accounted for up to 15 percent of total project costs.16 At times, due to technical, social, and financial constraints, critical
investments are not implemented at all.

Photo 5: Informal Settlement in Mwanza

Aerial view of an informal settlement in Mwanza. Settlements built without roads or any land reserved for infrastructure will face challenges when providing
services in the future, which in this case is further complicated by steep topography. Photo by PO-RALG.

Figure 17: Road Density in Planned and Unplanned Areas Figure 18: Road Network in Planned and Unplanned
of Selected Cities Areas in Makurumla, Dar es Salaam

7.2
Dar es Salaam 14.6

14.8
Mbeya 18.8

2.7
Mwanza 6.2

0.0 5.0 10.0 15.0 20.0 Area of Study
Roads
Road Density (km of roads/sq.km of land area)
Buildings in Planned Area
Buildings in Unplanned Area
Unplanned Area Planned Area

Source: Original analysis, using 2015 road network shapefile from PO-RALG. Source: Original analysis, using data produced by Ramani Huria.

This analysis was done by the Tanzania Urbanization Review team using data from Resettlement Action Plans and other official documents from the
16

Tanzania Strategic Cities Project (TSCP) and Dar es Salaam Metropolitan Development Project (DMDP). The projects were primarily road upgrades,
with some other civil projects such as the construction or upgrading of bus stands or the siting of landfills.

Tanzania Urbanization Review 29
Planning and establishment of road networks in advance of development pays off in the long run. Research for this
study examined the long-term impacts of sites-and-services projects that the World Bank financed in Dar es Salaam in the
1970s and 1980s, in which investments such as road alignments and basic infrastructure were made in greenfield areas
ahead of settlements (“de novo” development) (Regan et al. 2015). Many of these projects were undertaken with the idea
of preventing slum formation or setting up durable foundations for upgrading slums into formal neighborhoods. While
infill development did take time, the present-day benefits are clear. In these project areas, local gains in land value were,
at least in Dar es Salaam, no less than US$75 to US$100 per square meter of plot (in 2017 prices) (Michaels et al. 2017). In
Dar es Salaam, sites with “de novo” development projects have higher land values than land in other parts of city, including
wealthier neighborhoods, partly because the “sites and services”
areas have a higher building-footprint-to-plot-area ratio. These
Map 3: Current Land in Olasiti Area, Planned as
gains in land values far exceed the total project cost of no more
Industrial in 1985 Arusha Master Plan
than US$13 per square meter.
Olasiti planned industrial area

Land reservation should be done strategically to avoid
intensifying sprawl. Developing satellite towns to manage fast
urbanization has been proposed as a solution in many cities in
Tanzania. Of 14 recently updated Master Plans in medium and
small towns, 79 percent propose satellite towns as a solution to
congestion and urban population growth, but these areas are
unlikely to be an effective instrument to manage urbanization.
International experience shows satellite towns can promote sprawl
or result in deserted cities that do not attract businesses or
people (Ochoa et al. 2021).

Development in the absence of planning is pushing
critical economic activity out of the urban core

Urban planning systems are failing to preserve land not
only for infrastructure but also for critical economic uses,
particularly industry. Despite a directive from Ministry of Lands,
Housing, and Human Settlements Development that 20 percent
of urban land area should be slated for industrial uses, a desk
review of approved master plans for major cities found that, in Current land uses

practice, allocations are substantially less (Dar es Salaam – 2.8
percent, Mbeya – 3.0 percent, Dodoma – 5.1 percent, Arusha
– 9.3 percent, and Mwanza – 9.6 percent). A broader review of
master plans for all major cities and 18 smaller towns suggests
that some of the industrial areas that are planned may not be
strategically located, given poor transport connectivity and long
distances to population centers from which employers could
source labor.

Land uses in planned industrial areas are not well enforced,
and residential development is becoming the predominant use
of land that was intended for future industrial development.
An average of approximately 35 percent of industrial land that
was planned in the early master plans of major cities has since
been converted to residential uses (Huang et al. 2018). This trend
is illustrated in maps of the Olasiti area of the Arusha City Council
(Map 3), where the 1985 master plan designated an industrial
area. Today, the area is predominantly covered by residential
development (both planned and unplanned), with negligible
industrial use.
Source: Original analysis using land-use classification shapefiles from
the European Space Agency 2018.

30 Tanzania Urbanization Review
Limited availability of serviced industrial land in urban centers is pushing industries to the periphery, where there is
poorer access to basic services and a smaller labor pool. In Mkuranga (outside of Dar es Salaam), Mtwara, and Mbeya, this
trend results in a direct loss of revenue (from service levies) to urban local governments, and ultimately in higher servicing
costs to utility agencies when electricity, roads, and water connections follow private sector development in less dense and
spatially fragmented areas.

While Export Processing Zones may offer an attractive package for large manufacturers, cities should not overlook
the land needs of smaller-scale producers, many of whom are engaged in agri-processing and manufacturing of
goods that enable import substitution. Agri-processing accounts for 55 percent of total national formal manufacturing
output, and up to 65 percent of total formal employment; however, more than 80 percent of agri-processors are small and
serve only the domestic market (World Bank 2019b). Such firms are likely to have less start-up capital and smaller land
requirements than large firms. They are typically spatially dispersed – operating on small plots in mixed-use neighborhoods
– which limits potential agglomeration benefits and creates nuisances for area residents. Encouraging spatial clustering of
small manufacturers through right-sized plots in adequately serviced target areas can offer the dual benefit of minimizing
incompatible uses in residential neighborhoods while also enabling agglomeration benefits such as streamlining of supply
chains and incentivizing specialization, as has been demonstrated in Kahama’s Zongomela Industrial Area (Box 2).

Box 2: A planning approach to fostering small-scale manufacturing: Zongomela Industrial Area

In 2016, the Kahama Municipal Council allocated 1,029 hectares of industrial land located 3.4 kilometers
from the city for the Zongomela Industrial Area. The Council provided basic services, including water, electricity,
and a mix of earth and gravel roads. The area is intended to serve industries of all sizes, with 24 percent of the
land area set aside for small enterprises in particular. The Council issued a directive to manufacturers in mixed-
use neighborhoods to relocate, but provided them with titled land free of charge, which was agreed to in prior
consultations with stakeholders. The Shinyanga Region Investment Guide (PO-RALG 2020) reported that 1,692
entrepreneurs were doing business in this area by 2020. Economic activities include furniture making, gold
processing, and manufacturing of home construction materials (e.g., windows, timber, and roofing). Several
manufacturers interviewed for this report indicated that they are selling their goods to clients in neighboring
countries such as Burundi and Rwanda, in addition to other regions in northwest Tanzania. The Council projects
that its initial investment cost of Tsh 50 million (US$22,000) will be fully recovered within five to seven years.

Furniture manufacturer in newly expanded warehouse in the Zongomela Industrial Area, Kahama.
Photo by Tanzania Urbanization Review team during site visit in March 2020.

Tanzania Urbanization Review 31
2.2.2 Unclear property rights and overly stringent regulations encourage sprawl

Informal land markets are constraining the development of Tanzania’s cities. Urban land is a vital economic asset,
but asset transactions are viable only where purchasers can rely on enduring extra-legal documentation of ownership.
Clear rights to urban land are a precondition for formal land markets. A formal market both offers purchasers the protection
of the state and – because formal transactions are readily observable and recorded – generates the public good of accurate
valuation. Currently, most land transactions in Tanzania occur without review or approval. The result is unregulated land use,
and non-adherence to urban planning and building standards. The current mix of formal and informal systems poses barriers
to accessing land, consolidating plots, investing, and building at higher densities.

Tanzania’s parallel land tenure systems (formal and informal) challenge urban management, tenure security, and urban
development. Formal land administration procedures involve detailed steps to have the land surveyed and registered. In
parallel to this are robust informal procedures and systems, which create a de-facto ownership of the land and a sense of
security of tenure, but do not lead to a legal registration of the property. Only 5 percent of land in Tanzania is registered,
compared to 70 to 100 percent in Rwanda, 35 percent in Kenya, and 18 percent in Uganda (World Bank Group 2014). One
study found that 60 percent of landholders in Dar es Salaam lack any official and legally recognized documents of their
ownership17 (Panman and Lozano-Gracia 2021a). In large cities, around 80 percent of all buildings are located on unplanned
land (Kironde 2009).

Owning formal land has benefits but is not easy for most Tanzanians. A proper title can grant landowners access to credit
and security of tenure. However, registering a property is a lengthy process – it takes an average of 67 days, putting Tanzania
consistently into the lowest quartile of countries for this Doing Business indicator (World Bank 2020). Some transactions take
even longer: to transfer and register a property, MKURABITA18 reports an average of 380 days for valuation, planning, and
surveying, up to eight years for titling procedures, and seven years for land allocation for urban purposes on the mainland
(nine years in Zanzibar). While official costs are relatively low compared to other African countries, the formal fees together
with unofficial costs drive up the price of land registration and permitting processes, putting them out of reach for the
majority of Tanzanians, particularly the urban poor.

The inefficiency of formal land processes directly contributes to the sprawling networks of informal settlements. This is
illustrated through changes in the population density of Dar es Salaam from 1988 to 2012. Instead of the typical pattern seen
in major cities – in which density is highest within the inner core and then declines with distance (as in, for example, Bangkok)
– density increased slightly within 1 kilometer of the center and, by 2012, peaked at a distance of 6 to 7 kilometers, far away
from the central business district (Figure 19). Significant densification also occurred beyond a radius of 10 kilometers, areas
where there were few residents in the late 1980s. Informal settlements – typically characterized by lower building heights
and thus lower population density19 – are partly responsible for this type of sprawl. However, the areas within the inner core
are also more rigorously subjected to existing planning standards, and these standards require large minimum plot sizes and
maximum built-up-to-land-area ratios, creating an artificially low density.

Figure 19: Change in Population Density in Dar es Salaam (1988 to 2012) and Bangkok (1988)

Dar es Salaam Dar es Salaam Dar es Salaam Bangkok
Density Proﬁle (1988) Density Proﬁle (2002) Density Proﬁle (2012) Density Proﬁle (1988)
Density (people/hectare)

300
200 200 200
150 150 150 200
100 100 100
50 50 50 100
0 0 0 0
1 5 10 15 20 1 5 10 15 20 1 5 10 15 20 1 5 10 15 20
Km from CBD Km from CBD Km from CBD Km from CBD

Source: Original analysis, based on census data from 1988, 2002, and 2012 (for Dar es Salaam), and Bertaud 2010 (for Bangkok). Note: CBD – Central Business District.

Documents recognized by land officers include: Certificate of Right of Occupancy, Title Deed, Inheritance Letter, Traditional Right of Occupancy,
17

Settlement Permit, and Letter of Allocation.
18
Tanzania’s Property and Business Formalization Program, known as “MKURABITA” in Swahili, is an ambitious nation-wide initiative involving
property identification, land surveying, and preparation of cadastral plans and schemes of regularization.
19
In Tanzania, urban density ranges from 16 percent of the population in Tanga covering 85 percent of the land, to 40 percent of the population in
Mwanza covering 60 percent of the land. This information was drawn from official records from Town Planning Departments and spatial analysis
of aerial photographs in January 2013 (Lupala, Namangaya, and Mbogoro 2013).

32 Tanzania Urbanization Review
The restrictive land-use regulations of current planning standards discourage densification. The standards regulating
land use date from 2011; these are currently under revision, though expected changes are likely to be moderate in nature.
Among African countries (reviewed by Lall, Henderson, and Venables 2017), Tanzania has the highest minimum plot size for
detached housing in high-density residential areas (Figure 20). Planning standards require that built-up areas not exceed 40
percent of the land area and call for large building setbacks from property boundaries even in high-density neighborhoods.
These rules are justified in part by a requirement for plots to accommodate a pit latrine in the absence of a sewage
network (Kironde 2006). Another, more anecdotal, explanation is that plots need to include sufficient space for parking,
given that on-street parking is uncommon. Apart from generating low-density neighborhoods – thereby reducing the
efficiency of land use – the effect of these land-use regulations is to make land development and housing much costlier.

Figure 20: Minimum Plot Size in High-Density Residential Areas (m2)

350

300

250
Square meters

200

150

100

50 Source: Lall, Henderson, and Venables 2017.
*In Ethiopia, minimum plot sizes vary across
0 cities, ranging from 75 to 300 square meters.
Kenya Ethiopia* Uganda Tanzania Philadelphia

2.2.3 Limited transport infrastructure and underemphasis on public as well as non-motorized
transport are barriers to mobility

Paved roads occupy a smaller share of urban land in Dar es Salaam than in other African cities, where paved road
density is already low. Among the African cities with available data, Dar es Salaam shows the lowest paved-road density
within the inner city and virtually no paved roads beyond a 12-kilometer radius from the city center (Figure 21 - the white line
represents the city center). In most African cities, paved roads are concentrated within the city center; as the share of built-up
area falls with distance, paved roads almost disappear. In Dar es Salaam, the share of the built-up area is significantly larger
than in the other African capitals, but the share of paved roads is lower.

Figure 21: Paved Roads in Selected Sub-Saharan Africa Capital Cities

Dar es Salaam Kigali
100 100
80 80
60 60
Percent
Percent

40 40
20 20
0 0
-25
-22
-19
-16
-13
-10
-7
-4
-1
3
6
9
12
15
18
21
24

-25
-22
-19
-16
-13
-10
-7
-4
-1
3
6
9
12
15
18
21
24

Distance from city center (km) Distance from city center (km)

Nairobi Addis Ababa
100 100
Built-up area
80 80
Paved roads
Percent

60 60
Percent

Open space
40 40
20 20 Source: Lall, Henderson,
0 0 and Venables 2017.
-25
-22
-19
-16
-13
-10
-7
-4
-1
3
6
9
12
15
18
21
24

-25
-22
-19
-16
-13
-10
-7
-4
-1
3
6
9
12
15
18
21
24

Distance from city center (km) Distance from city center (km)

Tanzania Urbanization Review 33
Notable intra-urban road network improvements have been made in recent years, but expanding the road network
does not guarantee that people will be able to easily or safely reach jobs and services. Transport modes in Tanzanian cities
are dominated by non-motorized transport, because it is currently the only option for the poor – yet enabling infrastructure
is limited. Private vehicle ownership in Tanzania is still relatively low, with less than 10 percent of the population owning
private motorcycles or cars, but the motorization rate is increasingly rapidly (by 11 percent per year between 2013 and 2017)
(Ochoa et al. 2021). Dar es Salaam acutely experiences the negative effects of high automobile dependency: one-way trips
can take more than 2.5 hours in both private and public transport (Worrall 2017), and public transport enables the average
resident to access only 12.2 percent of jobs in 60 minutes or less (Peralta-Quiroz et al. 2019). Secondary and tertiary cities
are not yet locked into the cycle of car dependence, but estimates in four secondary cities show that worsening congestion
could reduce accessibility to jobs by as much as half (Ochoa et al. 2021). Road safety is a serious concern, as the World
Health Organization estimates there are 29.2 road traffic fatalities per 100,000 inhabitants in the country, placing Tanzania
20th globally for road fatalities (WHO 2018). To take full advantage of agglomeration economies, cities must embrace the
principles of people-centered, sustainable mobility: universal access, effectiveness and cost efficiency, safety, and resource
efficiency and climate resilience (Ochoa et al. 2021).

The regional and district road network is key to connecting rural economies to cities and markets, but existing road
conditions in Tanzania constitute a barrier to development. Tanzania’s national road network covers a total of 35,000
kilometers, of which 12,786 kilometers are trunk roads and 22,214 kilometers are regional roads. Of this total network, 75
percent remains unpaved (TANROADS “Chief Executive Message,” n.d.). The country’s district road network is composed
of 198,946 kilometers of roads, of which 98.7 percent is unpaved and 43.3 percent is reported to be in poor condition
(TARURA 2018). Tanzania’s rural access index (RAI), an indicator that measures the proportion of people who have access to
an all-season road within a distance of 2 kilometers, is 24.6 percent. This means that approximately 28 million rural people
lack access to all-season roads. In some parts of Western Tanzania, residents are more than 10 kilometers from the nearest
road, and it takes farmers an average of over two hours to reach the nearest city with a population of over 100,000. Despite
notable trunk improvements over the past decade (Map 4), travel times between cities remain long due to the substantial
geographic distances between cities (Map 5).

Map 4: Trunk Road Network Conditions (2010–2020)

Source: Original visualization using data from JICA 2010 and TANROADS 2020.

Arusha, Dodoma, Moshi and Mwanza
20

34 Tanzania Urbanization Review
Map 5: Approximate Travel Time by Bus from Dar es Salaam Weak physical connectivity and the lack of
integration between transport modes limit
economic integration within the country, within
regions, and across borders. As a coastal economy
bordering eight countries, six of which are nearly
or completely landlocked, Tanzania has strong
locational advantage to be a regional trade hub
and maritime gateway. The port of Dar es Salaam
is the port of entry and exit for two of the three
major corridors in Eastern Africa (the Central and
North South Corridors, respectively; see Map 6), and
handles 95 percent of Tanzania’s container traffic,
with approximately 35 percent of that traffic destined
for neighboring landlocked countries (Tanzania Ports
Authority, n.d.). Improving the efficiency of this key
maritime gateway is therefore a key element for the
regional transport network. Yet the port’s performance
and utilization are strained. Loading and unloading
times for ships are longer than those of, for example,
the port of Durban.21 Access to and from the port is
constrained as well, with accessibility from the sea
Source: Original visualization using 2016 data collected via interview
with travel agents at Ubungo Bus Terminal in Dar es Salaam. limited to smaller vessels and road capacity out of
Note: Anecdotal reports suggest that travel times are currently longer
the port inadequate to cope with a growing number
now due to increased regulation of bus travel speeds.
of vehicles. Railway infrastructure connects the port
to Lake Victoria and Lake Tanganyika;22 though these
lines are currently being improved, at present, they
Map 6: Regional Trade Corridors are not operating efficiently or close to their design
capacity.

Large swathes of the northwestern and southeastern
parts of Tanzania have limited access to markets,
and these areas are typically characterized by
higher levels of poverty. Areas surrounding Dar es
Salaam – the commercial and economic center of the
country – tend to have greater market accessibility.
That region benefits from a wider and denser road
network system, which allows people living near the
city to profit from its agglomeration economies. This
is reflected in Map 7, which illustrates market access
by presenting the population of major cities weighted
by their travel time from each point. Areas with limited
market access are more likely to suffer from a higher
rate of poverty, and travel distance to Dar es Salaam
is also positively correlated with poverty – the farther
areas are from the country’s commercial hub, the
Source: Original illustration using ESRI base map. greater their poverty incidence.

In 2014, transit containers in the port of Dar es Salaam recorded an average dwell time of 10.2 days, while domestic containers recorded an average dwell
21

time in port of 7.7 days, compared to four days in the port of Durban in South Africa.
In addition to being a coastal country, Tanzania is also unique in that it is the only country that shares part of all three of the major African Great Lakes –
22

Victoria, Tanganyika, and Nyasa.

Tanzania Urbanization Review 35
Map 7: Market Access to Urban Areas in Tanzania and Poverty Rates by District

Legend Legend
• Major Cities No data

Market access Poverty Incidence (2018)

High 0.36 - 0.45
Moderately High 0.36 - 0.45
Moderate 0.36 - 0.45
Low 0.36 - 0.45
No data 0.36 - 0.45 Source: World Bank 2019a.

2.3 Getting around, living, and doing business are expensive

Urban sprawl in Dar es Salaam is characterized by low-rise, low-value building stock, resulting in costly inefficiencies.
Low-density neighborhoods with detached single-story buildings predominate in the urban landscape and are associated
with low-capital-intensive construction. But, as discussed above, issues around security of tenure, incentives with planning
regulations and controls, access to finance, and the demand for low-cost land at the urban periphery perpetuate the cycle
of low-density expansion. This is locking Tanzanian cities into an energy-intensive growth pattern that is costly for service
provision and unattractive for business. A more compact urban form would achieve economies of scale, helping drive down
the cost of service delivery and improve connectivity.

2.3.1 Low density makes providing functional public transit systems more expensive

Good transportation networks are critical to match job seekers and employers, but high transportation costs, heavy
congestion, and slow commuting speeds mean that jobs are not easily accessible, especially for the poor. Given the
low incomes of urban residents and the high cost of food – which can account for up to 60 percent of total expenditure
for the bottom 20 percent of Sub-Saharan Africa’s urban households (Lozano-Gracia and Young 2014) – households cannot
afford motorized transportation. Daladala, local buses that are the cheapest motorized alternative, are still expensive for the
poorest households. Households in intermediate cities in Tanzania spend, on average, 5.4 percent of their total budgets on
transportation; however, to cover a daily round trip in daladala for one person (approximately Tsh 900), a household would
need to spend an average of 9.7 percent of its budget. Right now, the poorest households in Tanzania by wealth quintile
currently spend only 2.8 percent of their total budget on transport, which is less than other quintiles. But to cover a round trip
in a daladala, they would need to spend 16.7 percent of their budget – six times their current transport expenditure (Ochoa
et al. 2021; Figure 22). Poorer urban residents therefore get around on foot and can only seek jobs in those areas of the city
within walking distance of their homes. In Dar es Salaam, partially due to the unaffordability of transport, 70 percent of
people walk to work. Household heads travel short distances to work, less than 6 kilometers on average. This also reinforces
the narrative that in Dar es Salaam, a city with an estimated 6 million residents, transportation constraints result in labor
markets that are localized at the level of neighborhood clusters (Lall, Henderson, and Venables 2017).

36 Tanzania Urbanization Review
Figure 22: Household Expenditure on Transport in Urban Areas other than Dar es Salaam
% of total household monthly expenses (mean) 18

4 % of houeshold income spent
on transportation (actual)
2
% of household income required
0 for 60 daladala trips
1 2 3 4 5
(20% poorest (20% richest
households) Quintiles of expenditure households) Source: Ochoa et al. 2021.
per adult equivalent

Box 3: Prospects for sustainable urban mobility in Tanzania’s secondary cities

Tanzania’s intermediate cities are currently very accessible to the approximately 90 percent of their residents
who depend on non-motorized transport or public transport. Walking is the only mode of transport for 50–70
percent of residents of these cities. This is despite a notable absence of supportive infrastructure and services:
81 percent of road space is dedicated to motor lanes, and another 7 percent to on-street parking. Between
55 percent and 75 percent of downtown blocks have no sidewalks or sidewalks narrower than three feet, and there
are few marked pedestrian crossings or other protections for non-motorized transport. Public transport comprises
daladalas and bajajs, which operate largely without regulation or supportive infrastructure, and whose fares are
simultaneously too high for most residents to afford and too low to support a productive and sustainable industry.

These cities are therefore ill-equipped for rapid population growth, sprawl, and motorization driven by rising
incomes. These processes are already well underway. Tanzania has three times the income-related motorization
rate of a group of comparator countries, resulting in private car ownership growth of 11 percent per year between
2013 and 2017. Urban growth typically takes the form of low-density sprawl: Arusha, Dodoma, and Kigoma have
grown their footprints at 4–5 percent per year since 2000, despite population growth of only 2.4–4 percent
per year. This impedes accessibility by foot and undermines public transport economies, and will continue to
do so. Business-as-usual will result in increasing sprawl, increasing motorization, increasing congestion, falling
accessibility, and correspondingly greater costs (financial and otherwise) to residents, businesses, and growth.

There is therefore a small window of opportunity for intermediate cities in Tanzania to lay the groundwork
for sustainable urban mobility and reap the benefits it offers. Careful intervention now can direct urban growth
into sustainable, accessibility-supportive forms, and avoid the costs of retrofitting urban mobility systems after the fact.
Sustainable urban mobility is characterized by four broad attributes: universal access; effectiveness and cost efficiency;
safety; and resource efficiency and climate resilience. In practice, it involves focusing on maximizing accessibility of
jobs and amenities through high-quality densification, non-motorized transport, and public transport.

To achieve sustainable urban mobility in these cities, Tanzania needs to develop a new strategic vision
for urban mobility; reform its urban transport governance arrangements; establish appropriate levels and
mechanisms of financing; and improve management and operations. These can be achieved through a National
Program for Sustainable Urban Mobility. Tanzania is well placed to ensure its intermediate cities are ready for
their future growth and development. Through quick and decisive action, sustainable urban mobility is possible.
This will ensure Tanzanians have access to better job opportunities and amenities, with shorter, safer, and more
comfortable and environmentally sustainable commutes.

Tanzania Urbanization Review 37
Recommendations for sustainable urban mobility in intermediate cities in Tanzania

No Regrets: Increase awareness and knowledge among policymakers

A new strategic Catching Up: Formalize sustainable urban mobility principles within national transport policy
vision for urban
transport
Becoming a Champion: Institutionalize and prioritize sustainable urban mobility in all urban
transport planning

No Regrets: Align and coordinate across existing transport and urban governance institutions

Improve urban Catching Up: Formalize links between institutions and create specific urban mobility units
transport within institutions for pipeline of urban projects
governance
Becoming a Champion: Establish dedicated urban mobility institutions with a high level
of internal capacity

No Regrets: Improve efficiency of existing expenditure and revenue collection

Catching Up: Ring-fence sector resources and target most cost-effective, people-centered
Strengthen urban mobility interventions
transport finance
Becoming a Champion: Secure and diversify sufficient, predictable revenue for sustainable
urban mobility

No Regrets: Effectively gather and analyze data to understand urban mobility patterns
and needs
Improve
transport Catching Up: Actively manage infrastructure and mobility in the city
management
and operations
Become a Champion: Anticipate future urban mobility needs and proactively design
infrastructure and operations accordingly

Source: Ochoa et al. 2021

2.3.2 Inefficiencies in the urban form limit affordable housing

Formal housing is out of reach for the majority of Tanzanians, with limited action by both public and private sector
developers to increase the supply of affordable housing. In 2016, Tanzania’s average GNI per capita was about US$900;
houses offered by the National Housing Corporation (NHC) cost US$20,000, and those for sale by private developers cost
US$30,000. Given these figures, a Tanzanian household with an average income will neither be able to afford saving for
a formal house nor service a mortgage (Figure 23). In Tanzania, only the top 3 percent of income earners have access to
mortgage financing (CAHF 2013).23 While increasing access to mortgage finance is important, it is unlikely to be able to
solve the affordability problem for the average household in a market that caters to higher-end consumers. Even publicly
financed housing is priced far above the ability of most urban dwellers. Although public enterprises are a main proponent of
affordable housing projects, based on this analysis, less than 2 percent of Dar es Salaam’s residents would be able to afford
housing in “affordable” projects constructed by the NHC or National Social Security Fund. Figure 23 further illustrates that
the greatest share of housing demand comes from the low-income majority, who have limited financial capacity to expand
or improve their housing. Private housing developers, too, face a number of constraints in contributing to the affordable
housing supply, largely related to the prohibitive costs of developing residential areas for the low- and middle-income
markets (Box 4). However, a local NGO, WAT Human Settlements, builds a basic serviced unit that is affordable to 80 percent
of the population, demonstrating that low-income housing provision is feasible.

The bottom 54 percent of the population do not have access to any housing finance, while the next 43 percent (in the middle of the income distribution) enjoy
23

access to informal finance, with higher earners receiving microloans from microfinance institutions and banks.

38 Tanzania Urbanization Review
Figure 23: Housing Consumption and Affordability in Dar es Salaam

30 WAT Human Settlements Tsh 60, 000,000
4,500,000 Tsh

(18% interest, 25% down, 20 yrs)
20m2
25 NHC Tsh 50, 000,000
Percent of population

39,800,000 Tsh

Affordable House Price
20 56m2 Tsh 40, 000,000

15 Tsh 30, 000,000

10 Tsh 20, 000,000
NSSF
5 68,000,000 Tsh Tsh 10, 000,000
75m2
0 Tsh 0
Consumption (HBS 2011)

10 0
20 0
30 0
40 0
50 0
60 0
70 0
80 0
90 0
0
20 00
30 00
40 00
50 00
60 00
70 00
80 00
90 00
1, 000
1, ,00
1, ,00
1, ,00
1, ,00
1, ,00
1, 0,00
1, ,00
1, ,00
1, ,00
00
0
0
0
0
0
0
0
0 Affordable house price

0,
0,
0,
0,
0,
0,
0,
0,
0,
0,

0
0
0
0
0

0
0
0
00
10

Sales price affordable
Household consumption per month (Tsh) to consumption level

Note: In order to estimate affordability, this analysis assumed that households spend 30 percent of consumption on housing and are able to access a market-rate
mortgage. WAT: Women Advancement and Human Settlement Trust; NHC: National Housing Corporation; NSSF: National Social Security Fund.
Source: Original analysis, based on HBS 2011/12 (NBS 2012), prevailing mortgage terms 1Q15, and project documents.

Box 4: Barriers to affordable housing: the perspective of a property developer in Dar es Salaam

When asked, “What are your constraints to developing for the low- and middle-income markets?” a property
developer active in the housing market in Dar es Salaam replied:

“We face several barriers to build quality affordable housing. Foremost, the high price of land drives up
our cost and makes it difficult for us to offer products for even middle-income buyers. The key factor
for the high land costs is the very limited supply of serviced land with water, sewer, road, and power.
There are numerous large plots to develop in Dar es Salaam, especially in Kinondoni, but until they are
connected, it is too much of a risk.

Many vacant parcels exist in prime serviced land – but these seem to be held for speculation, or
government owned – so they are not on the market. Also, the 18 percent VAT is a significant barrier –
well-off buyers can afford this, but it is a prohibitive hit for middle-income consumers, and impossible for
low-income households. VAT should be waived for first-time buyers – I heard that worked well in India
and Malaysia to boost home ownership and affordability. There are also new manufacturing technologies
that can help us build houses much cheaper, but the equipment is very expensive – any relief from import
duties would help the private sector engage in the lower-income market.”

Source: Urbanization Review team interviews.

Compared to other urban areas and to the countrywide average, Dar es Salaam has low homeownership rates among
average-income households but especially among the poor. With housing costs exceeding what most Tanzanians can
afford, 57 percent of the residents of Dar es Salaam are renting property and another 4 percent pay rent to their employer
or to the government at subsidized rates. This rate is high compared to the national rate (19 percent) and the average across
all urban areas of Tanzania (47 percent). The opposite is true for homeownership rates, which, at 37 percent, is much lower in
Dar es Salaam than the national average of 74 percent, though only slightly below the urban average of 44 percent.24 Among
the lowest wealth quintile, the homeownership rate slips to a mere quarter in Dar es Salaam but remains high nationally and
across all urban areas, at 95 and 66 percent respectively (Figure 24). This is to be expected and essentially affirms the notion
that the poorest households reside in rural areas, where the probability of owning a house is significantly higher than in urban
areas, especially Dar es Salaam.

These statistics are derived from the sample Census 2012, and the percentages for Dar es Salaam coincide with a recent Living Standard Measurement
24

Survey conducted in 2015, which estimated owners and renters at 37 and 57 percent, respectively.

Tanzania Urbanization Review 39
Figure 24: Homeowners and Tenants by Wealth Quintile

Homeowners Tenants Renting from Private Owner

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5

Dar es Salaam Urban Country Dar es Salaam Urban Country

Source: Original analysis based on Sample Census 2012. Wealth quintiles are estimated using principal component analysis.

2.3.3 Doing business is costly in urban areas that are disconnected and experience skills constraints

Doing business becomes costly when urban areas are disconnected and crowded. Not only do businesses suffer from
inefficient urban form, but firms need to pay higher nominal wages to remunerate workers for the high cost of living
(food, commuting, etc.) and compensate for scarce services and amenities. Wages in Dar es Salaam are 20 percent
higher than in Dhaka, Bangladesh (Lall, Henderson, and Venables 2017). Tanzania ranks 141 out of 190 economies in ease of
doing business, trailing Rwanda, Kenya, and Uganda, and Sub-Saharan peers like Zambia, Malawi, and Mozambique (World
Bank 2020). Reforms are needed to enable a more favorable and predictable business environment, particularly in terms of
business regulation as per the government’s “Blueprint for regulatory reforms to improve the business environment.”

Urban enterprises – whether small, medium or large – also experience skills constraints, which can affect earnings,
business expansion, job creation and productivity, and, in the most extreme cases, business survival.25 Tanzania’s skills
gap is large, with 80 percent of the workforce of 26 million people categorized as unskilled. According to the 2015 Skills
Focused Enterprise Survey, for about 40 percent of employers, the skills in greatest need were English and information
technology (IT) skills (World Bank Group 2017a – Figure 25). Indeed, while general literacy rates and admissions to primary
schools have consistently been on the rise, the number of students transitioning into formal vocational and secondary
and tertiary levels have remained low in Tanzania’s medium-sized cities.26 Inadequate workforce skills are just one of many
constraints Tanzanian businesses face; others include lack of access to credit, burdensome tax rates, unreliable electricity,
and lack of geographical connectivity (as discussed earlier). These challenges, combined with a lack of bankable collateral
– partly due to the complex land ownership system (discussed later) – limit earning potential and give rise to millions of informal
businesses that are trapped in a low-productivity equilibrium. Average productivity of Tanzanian firms is 67 percent of that of
Kenyan firms and 22 percent that of South African firms – although firms in Dar es Salaam are still twice as productive as those in
Arusha or Zanzibar, and even more so compared to other cities within Tanzania (World Bank Group 2017a).

Figure 25: Tanzanian Firms Struggle to Find Workers with the Right Skills Profile

50
Percent of firms

40 High-skills firms

30 Low-skills firms

20
Source: World Bank Group 2017a,
10
using data from the Tanzania
0 Enterprise Skills Survey (2015).
on e lls lls g ng ing ic n
ati gu
ag ski ski lvin iti nk eth ica
tio
uc an IT ical so Wr thi rk n
Ed s hl chn ble
m
ica
l Wo mu
gli Te it m
En Pro Cr Co

Over 40 percent of firms in the 2013 Tanzania Enterprise Survey (TES) cited an inadequately educated workforce as a major or very severe obstacle to their
25

current operations, a much higher share than the Sub-Saharan African and world averages of 23 and 24 percent respectively. Similarly, 79 percent of firms
in the 2013 Small and Medium Enterprise Survey (SMES) indicated skills gaps as a constraint. Even more alarming is the high level – 63 percent – of failed
SMEs that identified a skills shortage as an important factor in their failure.
26
Findings from the Local Economic Development Strategies developed for Arusha, Dodoma, Kigoma, Ilemela, Mwanza, Mbeya, Mtwara, and Tanga in 2019–2020.

40 Tanzania Urbanization Review
Harnessing urbanization could increase opportunities for women’s empowerment, including access to land, education,
and finance. Reducing gender imbalances in skills-building and ensuring public services are available to support working
women are key components of boosting human capital in Tanzania’s cities and contributing to their economic transformation.
Female participation in the urban workforce is increasing (Figure 26), though women remain overrepresented in the informal
sector. Across Tanzania, women employed in nonfarm work are more likely to be in the informal sector than the formal sector,
which is not the case with men (Adams, de Silva, and Razmara 2013). Even within the informal sector, women are generally
relegated to more vulnerable and lower-paid occupations and face several barriers to formal-sector jobs and employment.
For example, gender stereotypes can hinder women’s access to training and apprenticeships in traditionally male-dominated
trades (Adams, de Silva, and Razmara 2013). While men’s time taken up by household chores has reduced in recent years,
women’s has not (Fox 2016).

Figure 26: Proportion of Female Urban Employment by Sector in 2006 and 2014

Other

Health and social work activities

Education

Administrative and support services

Accommodation and food service 2014
Transportation and storage
2006
Wholesale and retail trade

Construction
Source: Worral et al. 2017,
Manufacturing using data from the Tanzania
Labour Force Survey (2014).
1 2 4 6 8 10 12 14
% of total employment

Tanzania Urbanization Review 41
Photo by Chris Morgan as part of Ochoa et. al 2021.
3 Cities are Struggling to Finance
Sustainable Urban Growth

The rapid growth of Tanzania’s cities – with villages expanding to small towns, towns to cities, and cities into
metropolitan areas – highlights the need to reevaluate and enhance institutional arrangements for urban management.
Current institutional arrangements are often complex, and Tanzania’s approach to decentralization policy continues to
evolve, underscoring the need to balance oversight with responsiveness to local needs. If provided the opportunity, local
government authorities may be able to deliver services efficiently, but they are currently financially weak, with limited fiscal
authority. As the management of growing urban areas becomes increasingly complex, Tanzania has the opportunity to
reconsider, simplify, and strengthen institutional arrangements, and improve coordination between government actors.

As urban areas grow, they are sometimes subdivided into separate municipalities that coordinate to some degree
but lack institutional arrangements for effective metropolitan governance. Dar es Salaam, for example, was divided
from one district into three in 1984 (Kironde 1994), and from three municipal councils into five in 2016 (Map 8).27 A similar
division was made in Mwanza in 2012, when the city was divided from one council into two. While Dar es Salaam and
Mwanza have City Councils with coordination powers, these entities lack legal mandates empowering them to effectively
coordinate development actors, such as municipal councils (which are the land-use planning authorities), and centralized
roads authorities and state-owned enterprises (such as electric and water and sanitation utilities) (TULab 2019). Dividing
cities complicates coordination mechanisms, tends to be inefficient and costly (due to the inherent duplication of services),
and creates additional institutional layers.

Tanzania has a long and uneven history of local government administration, with significant gains in decentralization
in recent decades. Since the 1990s, the decentralization of urban functions, such as planning, infrastructure, and services,
has been accompanied by formula-based intergovernmental transfers and the harmonization of tax and revenue guidelines
across local governments. Recent policies and practices suggest an approach with a stronger central government role in
revenue collection and service delivery. In the short term, this approach could yield improved efficiencies in service delivery,
but it could also pose challenges, particularly for revenue collection. As the network of Tanzanian cities expands, it is
important to ensure that institutional, planning, and delivery models fit the growing and complex needs of a country that
is rapidly urbanizing.

3.1 A shift toward more centralized service delivery
Decentralization28 is fundamentally about the shifts in power, control, responsibility, resources, and accountability
from central to local levels. Decentralization by Devolution (D by D) was one of the core pillars of the Government

Ilala Municipal Council was upgraded to City Council in February 2021 and mandated to take over the coordination functions that had previously lain with
27

the Dar City Council. Although Dar City Council was in charge of coordination, the five municipal councils do not report to the Council but rather to the
President’s Office – Regional Administration and Local Government.
28
Decentralization is the transfer of authority and responsibility for public functions (political, administrative, fiscal, and market) from the central government
to subordinate levels or other entities.

42 Tanzania Urbanization Review
of Tanzania’s five-year national growth and poverty reduction strategy (2010/11–2014/15). Initiated in 1998, D by D is
the Government’s overarching decentralization policy. Although the degree of decentralization has fluctuated in Tanzania
(Box 5), historically, urban local government authorities have maintained a subordinate role to the center for most functions.
D by D gave local government authorities a wide range of responsibilities previously not seen in Tanzania. These
responsibilities included public-sector functions and services, such as the provision of primary and secondary public
education and public health services, as well as economic or municipal functions, including the construction and maintenance
of roads, access to markets, and the collection of solid waste. The financing of those responsibilities came from resources
provided by a limited number of own-source revenues and the Local Government Reform Program, which was enacted a
decade later.

Box 5: Decentralization in Tanzania

Tanzania has a long history of decentralization and administration through local governments, from the
pre-Independence era to the present day:

• Colonial period: Local governments in Tanzania were first established in 1926 during the British colonial
period through the Native Authorities Ordinance. Local authorities operated under a system of indirect
rule, and by the 1940s grew to become elected representative local bodies. As a result, the Municipalities
Ordinance was enacted in 1946, followed by the Local Government Act in 1953.

• Post-Independence: Significant gains in decentralization were only achieved well after the country’s
independence in 1961. Due to their weak financial and implementation performance, district and urban
authorities were abolished in the early 1970s and replaced by central government rule. Central and local
government functions were merged. Power was “decentralized” by directly involving citizens in centrally
coordinated planning.

• Re-establishment of local governments in 1982: The economic crisis of the late 1970s and the 1980s
resulted in the rapid decline of infrastructure and services in urban areas. In response, local governments
were re-established through a series of laws.29

• Decentralization by Devolution: This phase, taking place over the course of the 1990s, marked the
beginning of an ambitious local-government reform program and of new policy founded on the principle
of Decentralization by Devolution (“D by D”). D by D lays out the institutional framework for the devolution
of functional responsibilities and discretionary powers over planning, budgeting, administration, and
organization of service delivery (Venugopal and Yilmaz 2010). The central government also aimed to improve
central–local relations by moving from a top-down approach, in which the central government dictated what
municipal councils should do, to a partnership between both levels of government.

Colonial period Post-Independence

1946 1961 Late 1982
Municipalities Independence Re-establishment of
Ordinance local governments

1926 1953 Early 1970s 1990s
Local governments Local Government Act District and urban Decentralization
in Tanzania first authorities abolished by Devolution
established and replaced by central
government rule

Source: Huang et al. 2018.

The laws enacted in this period included: (i) The Local Government (District Authorities), Act 1982 (Act No. 7 of 1982); (ii) The Local Government
29

(Urban Authorities), Act 1982 (Act No. 8 of 1982); (iii) The Local Government Finance Act, 1982 (Act No. 9 of 1982); (iv) The Local Government Service Act,
1982 (Act No. 10 of 1982); and (v) The Urban Authorities Rating Act, 1983 (Act No. 2 of 1983). These laws were subsequently amended in 1992, 1993,
1999, 2002, 2004, and 2006.

Tanzania Urbanization Review 43
While there is no perfect model for decentralization, in the absence of capacity, governance, and resources, decentralization
can limit the ability and accountability of local governments to deliver services (LDP 2017). Decentralization’s advantages
can include more efficient service delivery, stronger local influence on policy, improved accountability of local leaders through
greater transparency and close citizen engagement, the development of locally elected leaders, and better matching of
service delivery (and limited resources) with local needs. Decentralization has also been shown to increase overall revenue
mobilization because local governments have a better understanding of local economies and can more easily identify a tax
base. However, in the absence of administrative and fiscal autonomy, the potential efficiencies and accountability that come
with decentralized and devolved functions can be lost.

Decentralization in Tanzania is premised upon localized spending and better outcomes going hand in hand. This was
the rationale for the D by D reforms in the late 1990s, which shifted fiscal decision-making and administration to urban local
government authorities. Under D by D, the policy role rested with the central government and local governments served as
the primary vehicle for service delivery; decision-making was structured to be closer and more accountable to citizens. The
functions for planning, infrastructure, and services were accompanied by formula-based intergovernmental transfers. These
efforts endowed local governments with resources and decision-making authority to improve service delivery, accountability,
and partnership across levels of government (Anosisye 2017).

Decentralization showed positive results in improving local government capacity and service delivery. In 2004, D by
D achieved a key accomplishment: the establishment of formula-based intergovernmental transfers and the harmonization
of tax and revenue guidelines across local government authorities. Decentralization efforts also helped increase citizen
participation in local elections, planning, and budgeting. Progress in local government capacity continues to be made: after
essentially growing organically for decades without functional plans, more than 25 cities and towns have recently adopted
new General Planning Schemes (or urban master plans) – efforts that were led by the Urban Local Government Authorities
(as planning authorities) and developed through participatory processes. Newly introduced ICT-based land administration,
planning, and revenue collection systems are enabling e-governance for better urban management, accountability, and local
government-led service delivery.

However, recent changes in the delivery of local government functions such as roads, water, sanitation, health,
urban planning, and land administration are moving away from decentralization policy and practice. The Tanzania
Rural and Urban Roads Authority (TARURA), established in May 2017, assumed local governments’ responsibility for the
development, rehabilitation, maintenance, and road reserve management of the rural and urban road network, which were
formerly with PO-RALG. The Water Supply and Sanitation Act of 2019 transferred water sector functions and responsibilities,
including accountability of officers for water service provision, from PO-RALG to the Ministry of Water. Urban Water Supply
and Sanitation Authorities, which are regulated by the Energy and Water Utilities Regulatory Authority (EWURA) and are
responsible for the provision of urban water supply and sanitation, report to the Ministry of Water (USAID 2020). In the
health sector, regional hospitals, formerly under the Regional Administrative Secretariat (RAS), are now centralized under the
Ministry of Health. In 2019, reporting lines for town planners and land officers were transferred from urban local government
authorities reporting to PO-RALG to the Ministry of Lands, Housing, and Human Settlements Development. The shift has
spurred complaints from municipalities that these staff are less available to serve their needs and less accountable when
they fail to perform their duties; improved coordination mechanisms will be needed to ensure effective planning and
implementation of general and detailed land-use plans.

Local government authorities currently have limited autonomy to decide on the number and quality of staff they need
to employ in their respective councils, which suggests limitations on the overall decision-making authority of local
governments. National agencies still recruit and allocate core staff in local government authorities. Staff rotations can also
happen as frequently as every two years in some cases, which leads to the loss of institutional knowledge within the local
government authorities. Institutional arrangements tend to be most effective when line ministries focus on policymaking,
capacity building, monitoring, and quality assurance. A more decentralized approach, combining local government
recruitment with central government review and validation, may enable better responsiveness to local needs while allowing
for oversight to ensure that hiring processes are characterized by transparency and result in capable and accountable hires.

44 Tanzania Urbanization Review
Tanzanian cities, regardless of size, have parallel, largely top-down governance structures. There is a Regional
Administrative Secretariat led by a Regional Commissioner, a District Administrative Secretariat led by a District Commissioner,
and a Municipal (or District, depending on urban classification) Council led by a Mayor (chairperson of the Council) and an
Executive Director. The municipal level is the only level which is elected by and directly responsible to citizens (Regional and
District Commissioners are Presidential appointees); however, District Executive Directors are appointed by the President’s
Office – Regional Administration and Local Government, not the District Council (Lugakingira, Faust, and Pomes-Jimenez 2020).

Map 8: Metropolitan Fragmentation in Dar es Salaam

Kinondoni Municipal Council Kinondoni Municipal Council
Ilala Municipal Council Ubungo Municipal Council
Temeke Municipal Council Ilala Municipal Council
Temeke Municipal Council
Kigamboni Municipal Council

Indian Ocean Indian Ocean

Source: Corridor Development Strategy for Bus Rapid Transit Corridor in Dar es Salaam (World Bank 2018b).

As Tanzania’s cities change and develop, institutional arrangements should also adjust in favor of decentralization and
the introduction of metropolitan governance models. Cities which stretch across multiple local government jurisdictions
require strong city councils (Map 8) having authority over the entire urban agglomeration and a strong coordination capacity
with surrounding regions. Governance models can provide municipalities broader remits for managing themselves and
enhance vertical coordination among municipal, district and regional authorities.

3.2 Limited local fiscal autonomy

Local government authorities have historically been very dependent on central government transfers. Even though
local government authorities have the ability to levy taxes, fees, and charges, the majority of local authorities’ revenues
come in the form of transfers from the central government. There are three categories of transfers: (i) personal emoluments,
(ii) other charges, and (iii) development funds. Personal emoluments and other charges are for recurrent expenditures, while
development funds are for discretionary expenditures and sector-specific investments. Local government authorities are
heavily reliant on these transfers and can only sustain 15 percent of total recurrent expenditure through own-source revenue
(OSR), local taxes, levies, and fees (Table 2).

Table 2: Own-Source Revenue Collected Against Recurrent Expenditures

FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19

Actual OSR collection (millions, Tsh) 409,100 482,898 523,564 566,729 639,401

Recurrent expenditure (millions, Tsh) 3,569,212 4,453,470 4,656,643 4,373,555 4,139,568

% of independence 11 11 11 13 15

Source: National Audit Office 2020.

Tanzania Urbanization Review 45
In 2004, the Government of Tanzania introduced the Local Government Capital Development Grant, a performance-
based mechanism for funding local governments. The Local Government Capital Development Grant (LGCDG) created
a formula-based, transparent, and predictable fiscal flow mechanism to disburse funds to all local government authorities
on the basis of institutional performance. The LGCDG consisted of two windows: (i) the Capital Development Grants,
for capital expenditure selected at the discretion of recipient local government authorities using their local planning and
budgeting systems, and (ii) Capacity Building Grants, for capacity building at the local level. According to the Controller
and Auditor General, in fiscal year 2018–2019, 157 local government authorities only received 53 percent of the budgeted
capital development grants, limiting their ability to plan and deliver basic services (Table 3).

Table 3: Capital Development Grants

FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19

Final budget (millions, Tsh) 752,832 1,010,650 1,034,123 977,228 1,185,489

Actual funds released (millions, Tsh) 363,123 390,525 501,908 497,282 628,636

Proportion under-released (%) 52 61 51 49 47

No. of local government authorities 147 151 167 156 157

Source: National Audit Office 2020.

The heavy reliance of local authorities on central government transfers limits the investment choices local
governments can make in the long run. Own-source revenue (OSR) has been an important source of funding to bridge the
gap between the costs of service provision and the limited revenue from transfers. Urbanization puts increased pressure on
municipal councils to provide basic services, and OSR provides an element of discretionary spending (in contrast to central
government transfers, which tend to have conditions on how funds can be spent). But the proportion of OSR in the overall
local government budget has remained low (Table 4). Local government expenditures as a percent of GDP (3.3 percent in
2015) are comparable to other countries – but the fact that most resources come from central transfers highlights the limited
fiscal autonomy of local governments in Tanzania.

Table 4: Own-Source Revenue Collected

FY FY FY FY FY FY FY FY FY FY FY Cumulative
(Millions, Tsh) 9/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 Increase

Mwanza CC 5,941 7,923 10,254 6,391 8,361 7,133 11,680 10,499 10,888 13,785 13,211 122%

Arusha CC 3,820 4,800 6,044 6,596 10,119 11,491 13,649 14,576 12,733 17,979 18,050 373%

Dodoma CC30 1,352 2,338 2,710 2,121 2,847 2,342 3,336 4,875 25,058 42,908 35,588 2,532%

Ilemela MC 1,913 3,150 3,557 6,012 4,646 5,197 8,059 10,296 438%

Kigoma MC 828 774 646 1,371 1,773 1,292 1,075 1,088 1,475 1,520 83%

Mtwara MC 471 742 2,388 2,340 2,132 3,026 4,227 3,976 5,053 3,369 4,777 914%

Tanga CC 2,295 4,020 3,449 6,153 5,433 6,697 6,458 9,623 11,574 12,705 3,097 35%

Mbeya CC 2,875 10,565 5,076 8,340 6,814 6,274 8,067 7,581 7,856 11,870 11,454 298%

Total 17,583 31,162 29,920 34,500 40,227 42,293 54,720 56,850 79,448 112,149 97,993 457%

% change
compared to 77% 70% 96% 129% 141% 211% 223% 352% 538% 457%
FY 9/10

Source: World Bank Group 2021b.

The drastic increase in OSR collection for Dodoma reflects the impacts of the city’s rapid growth, which has accompanied the relocation of national government
30

offices from Dar es Salaam to Dodoma and the fact that plot sales, which were a major source of revenue, are a component of its OSR.

46 Tanzania Urbanization Review
Property tax collection has transitioned between decentralized and centralized regimes over the past few decades
(Box 6). Prior to 2008, property tax was administered and collected by local government authorities. Performance was
mixed, but on average collections were low. After 2008, property tax collection was partially centralized through a pilot
arrangement in which the Tanzania Revenue Authority was responsible for property tax colletion on behalf of local
government authorities in Dar es Salaam. Revenue performance for Dar es Salaam did not change much initially, but
improved after 2012–2013. In 2014, property tax administration and collection was fully decentralized again, and revenue
performance improved. In 2016, responsibility for property taxes was re-centralized, and was decentralized again in 2021.

Box 6: Property tax collection in Tanzania

Tanzania has transitioned between decentralized and centralized property tax collection regimes:

• Pre-2008: Decentralized collection. Property tax administered and collected by local government authorities
but characterized by poor revenue performance due to low administrative capacity and political interference
in tax enforcement.

• 2008–2014: Dar es Salaam pilot of centralized collection. Tanzania Revenue Authority responsible for
collecting property tax on behalf of the Dar es Salaam local government authorities. There were challenges in
coordination and cooperation between Dar es Salaam local government authorities and the Tanzania Revenue
Authority; collection performance remained low from 2008 to 2012 (consistent with pre-2008 performance)
but improved slightly from 2013 to 2014. Outside of Dar es Salaam, property tax collection remained with
local government authorities, with collections initially characterized by poor revenue performance. The Local
Government Revenue Collection and Information System (LGRCIS) was piloted in Arusha, Dodoma, Ilemela,
Kigoma, Mbeya, Mtwara, Mwanza, and Tanga by PO-RALG in 2012–2013.

• 2014–2016: Decentralized collection. Property tax administration and collection was returned to local
government authorities. Major increases were seen in revenue performance in local government authorities.
Mass valuation and updating of property registers occurred (Fjeldstad, Ali, and Katera 2017). LGRCIS was
scaled up to all local government authorities in mainland Tanzania.

• 2016–2021: Centralized collection. Administration and collection of property taxes was transferred to the
Tanzania Revenue Authority. Major declines occurred in property tax collection in 2016–2017 in most local
government authorities.

• 2021: Decentralized collection. Property tax administration and collection returned to local government
authorities.

Pre 2008 Post 2008
2014–2016 2021
Decentralized Decentralized Decentralized
collection collection collection

2008–2014 2016–2021
Dar es Salaam pilot Centralized
of centralized collection collection

Source: Fjeldstad, Ali, and Katera 2017.

The improved performace of property tax collection over the past decade can be explained by a combination of policy
and administrative measures, both at local and central levels. In early 2014, many local governments conducted a mass
valuation of properties. This coincided with the transition from a manually administered own-source revenue system to the
Local Government Revenue Collection and Information System (LGRCIS). Based on Geographical Information System (GIS)
technology, the LGRCIS allowed local governments to use georeferenced satellite data to identify taxpayers and included
an electronic invoicing system that notified and tracked payments. These measures improved the efficiency, transparency,
and performance of not just property taxes but also other own-source revenues, although slow operationalization of GIS

Tanzania Urbanization Review 47
and legal challenges to mass valuation somewhat dampened anticipated outcomes. These initiatives provided a foundation
of improved capacity and results, finally positioning local government authorities to leverage the untapped potential of
property tax (Box 7).

Box 7: Local Government Revenue Collection Information System (LGRCIS)

The LGRCIS is a GIS-enabled, information technology–based system capable of linking and matching
physical entities, such as private- and public-owned residential properties, and businesses to data for each
location, such as property taxes and city service levies. It was developed, piloted, and then scaled up under
the Tanzania Strategic Cities Project (TSCP). As a result of the efficiency, accuracy, and transparency it enables
in identification, billing, and collecting processes, OSR has increased by 90 percent since the commencement of
TSCP for the eight local government authorities supported by the project: Arusha, Dodoma, Ilemela, Kigoma,
Mbeya, Mwanza, Mtwara, and Tanga.

The LGRCIS automates billing through bar codes on invoices. The bar code is used to pull up data, and taxes
are then collected or a past-due notice is sent. To complete the transaction, a receipt is provided and uploaded
to the information system database. This has eliminated the practice of “carbon slipping,” whereby a portion of
the amount paid is skimmed off. The system is in now utilized in all 185 local government authorities in mainland
Tanzania.

Source: World Bank 2021b.

The erosion of local governments’ autonomy to raise their own revenues and set their own tax rates can limit their
ability to deliver infrastructure and services, and their accountability for doing so. In 2003, the flat-rate development
levy and a range of nuisance taxes were abolished; in 2004, business licenses below a threshold turnover were abolished,
and above the threshold reduced to a flat-rate license fee (World Bank 2006). The agricultural cess, which varied from one
local government authority to another, was capped at 5 percent. The Finance Act of 2017 further reduced the agricultural
cess to 3 percent and abolished plying fees for crops. The Act also reduced the guest house levy from 20 to 10 percent, and
exempted hotels and guest houses that paid VAT from the levy. The maximum permitted service levy was set at 0.3 percent,
and collections attributed to land rent (legally established at 30 percent) began to be retained by the central government
(Huang et al. 2018). While the Finance Act contains provisions for the sharing of revenues with local governments, the
central government decides on when and how these resources should be deposited to local government accounts. The
result is uncertainty about the amount and predictability of the redistribution of revenues back to local governments. The
most responsible and accountable local governments are those that set their own revenues and set their own tax rates,
so that they can be held accountable for how those resources are used to improve the level of services. This has led local
government authorities to utilize service levies as their primary source of municipal revenue.

The recent return of responsibility for property tax collection to local governments has the potential to lead to
improved revenue performance. Local governments are well placed to build on the gains made through recent
improvements to LGRCIS. There has already been some integration between LGRCIS, internal systems within PO-RALG,31
and external systems of other government institutions.32 These steps have eliminated the need to manually exchange
information between systems and facilitated timely and accurate reports for informed decision-making. They have also
enabled taxpayers to make mobile money payments. PO-RALG is also leading the integration of other government systems
like those of the Tanzania Revenue Authority, the Integrated Land Management Information System (ILMIS), and the National
Identification Authority (NIDA) to ensure accuracy of taxpayer data. This will in turn enable accurate calculations of taxes and
enhance revenue collection. Other updates, such as integration with PO-RALG’s public dashboards to post quarterly revenue
collection reports, will also enhance transparency.

Internally, the system has been integrated with the Planning, Budgeting and Reporting System (PlanRep), the Integrated Financial Management Information
31

System (IFMIS-Epicor), and the Integrated Monitoring and Evaluation System (iMES) through Muungano Gateway.
Externally, the system has been integrated indirectly with Banks and Mobile Network Operators (MNOs) through the Government E-Payment Gateway
32

(GePG). This integration has provided more payment channels for taxpayers. Through MNOs, taxpayers are able to process payments via M-Pesa, Tigo-Pesa,
Airtel-Money, T-Pesa, Halo-Pesa, and Z-Pesa.

48 Tanzania Urbanization Review
4 The Way Forward:
Harnessing Urbanization for Competitive,
Resilient, and Livable Cities

Tanzania is at a crossroads, and its cities will be critical to the country’s development. Tanzania has one of Africa’s largest
populations and is slated to reap the dividends of a growing youth population. This population is increasingly concentrating
in cities, putting pressure on local governments to ensure cities can support a healthy economy and environment for business
and residents. The country’s urban population is led by Dar es Salaam and is further spread among a growing system of
medium-sized and small cities. If the urbanization process is managed well, tremendous economic, environmental, and
quality-of-life benefits could be captured from improved efficiencies. This is an opportune time for Tanzanian policymakers
to make urban investments that can catalyze the country’s structural transformation and achieve greater integration with
African and global markets.

Dar es Salaam is the engine of growth for the nation. Over the next decade, Dar es Salaam is expected to become a
megacity of more than 10 million. Already, its population is over six times larger than Mwanza, Tanzania’s second-largest
city. Dar es Salaam is home to 25 percent and 39 percent of medium-sized and large businesses respectively, including
most manufacturing firms, and hosts 21.2 percent of all jobs in the country (World Bank 2019a). Due to its strategic location,
Dar es Salaam is also a regional trading hub, providing access to the sea for six landlocked countries, and access to global
markets through its ports. Its growth will continue to propel the local, national, and regional economy. The city will also
continue to face demands to improve its attractiveness and inclusivity as a place to live and work.

Tanzania’s medium and small cities represent untapped potential. Tanzania’s medium-sized and small cities have the
potential to promote economic diversification and are a natural location for industrial clusters. Increasing the competitiveness
of the country’s medium-sized cities requires that tradable products and services have an international reach. Medium-
sized cities need export-oriented competitiveness strategies to identify and take advantage of economic diversification
opportunities while developing export plans for their tradable goods. Medium-sized cities can also serve as logistical and
transport hubs connecting smaller cities, improve their agricultural output, and incentivize agri-processing.

But cities will need to take active steps to ensure that urbanization delivers on the benefits it promises. Tanzania’s cities
will need to invest in infrastructure that promotes higher economic density, connecting workers with jobs and supporting
clusters of businesses. Cities must also protect economic assets, lives, and livelihoods from natural disasters, and become
more livable by offering services and amenities. Because land markets are constraining the development of Tanzania’s cities,
it will be critical to ensure that plans enable the best uses of land, and to strengthen land administration and tenure systems.

This study has highlighted three main challenges that Tanzanian cities need to address to leverage their potential.
Tanzania’s current patterns of urban development are characterized by: (a) rapid population growth, but with slow
urbanization and limited structural transformation; (b) crowded, disconnected, and costly cities, which limit agglomeration
benefits and risk a low development trap; and (c) limited fiscal autonomy, which complicates the ability to ensure that
service delivery models meet urban needs. Tanzania therefore faces challenges transitioning from local to global cities, from
urban sprawl to a more compact urban form, and toward more empowered municipalities that can take full advantage of
the benefits of agglomeration economies.

Tanzania Urbanization Review 49
This chapter outlines recommendations for a national agenda to overcome these challenges and harness urbanization
for competitive, resilient, and livable cities. If managed well, urbanization in Tanzania has the potential to transform cities
into dynamic economic centers that can offer more productive jobs; protect economic assets, lives, and livelihoods from
natural disasters; and provide basic services to elevate living standards. Policy initiatives and investments should focus on
the following three priorities (Table 5):

1. Plan for competitive, resilient, and livable cities. Strengthening planning systems is crucial in helping Tanzania’s cities
to keep up with urbanization while improving their ability to be competitive for businesses and trade, resilient to climatic
and other shocks, and an attractive place to live and work.

2. Connect cities, people, and neighborhoods. Integrated transport and land-use planning supported by strong systems
for management and accountability can improve urban mobility and allow cities to take advantage of proximity to
encourage economic development and livability. Cities should improve public transport infrastructure and services, invest
in traffic management, and improve priority roads with adequate consideration for the final user.

3. Strengthen institutions to manage and finance urban development at scale. To keep up with the rapid urban growth,
Tanzania’s cities need to be empowered to mobilize and manage their budget for the infrastructure and services they
provide. Enhanced vertical and horizontal coordination among development actors will result in stronger development
control, enabling cities to build out public service extensions before unplanned urban expansion takes place.

Table 5: Summary of Detailed Recommendations

Area Recommendations Key Institution(s)

Formalize land markets and strengthen urban planning to foster agglomeration economies MLHHSD, LGAs
Plan for competitive, Strengthen land-use regulations and enforcement to make urban plans into realities MLHHSD, LGAs
resilient, and livable
cities Improve capacity for urban planning PO-RALG, MLHHSD
Chapter 2, under Invest early in infrastructure, clearly demarcate public land resources, and promote LGAs, PO-RALG,
“Cities are crowded strategically located industrial clusters MWT, MIT
with people, but not
Increase resilience through integrated solutions with appropriate implementation mechanisms LGAs, PO-RALG
livable”
Adopt green infrastructure solutions to improve urban resilience to floods in addition to LGAs, PO-RALG,
investments in drainage MWT

DART, TANROADS,
Improve efficiency of the urban transport system in Dar es Salaam
TARURA
Maximize BRT’s potential impacts and create more sustainable development patterns by DART, PO-RALG,
integrating transport and land use planning DLAs
Connect cities, PO-RALG, LGAs,
people, and Connect people to services, workers to jobs, and buyers to sellers in Tanzania’s cities TANROADS, TARURA,
neighborhoods MLHHSD
Chapter 2, under MWT, TANROADS,
“Getting around, Improve public transport infrastructure and services, invest in traffic management, and
TARURA, PO-RALG,
living, and doing improve priority roads with adequate consideration for the final user.
LGAs
business are
expensive” Address skills gaps in urban centers to increase supply of skilled labor for industries with high
LGAs, MOE
potential for growth and job creation
LGAs, PO-RALG, MIT,
Invest in strategically located industrial clusters to promote economic diversification
SIDO
Strengthen rural–urban linkages in medium-sized cities and small towns through local LGAs, PO-RALG,
economic development initiatives MOA
Empower local government authorities by promoting service delivery models for an “urban PO, PO-RALG
Strengthen Tanzania” that improve the efficiency of local service delivery and accountability for public MOW, MEM, EWURA,
institutions to resources MWT
manage and finance
urban development Promote institutional arrangements that enhance vertical coordination (among levels of PO-RALG, Regional
at scale government) and horizontal coordination (between municipalities and development actors) Commissioner Offices

Chapter 3, under Increase own-source revenue collection and leverage markets to finance urban infrastructure LGAs, PO-RALG, MoF
“Policy and Finance: MOF, PO-RALG,
Ensuring Delivery Improve property tax valuation and administrative systems for urban land (and the incentives Regional
Models Meet Urban for collection) to unlock a major source of financing for municipal infrastructure and services Administrative
Needs” Secretariats, LGAs
Mobilize additional financing for municipal infrastructure through public–private partnerships MOF, PO-RALG

50 Tanzania Urbanization Review
Plan for competitive, resilient, and livable cities
4.1

Stronger planning systems will be crucial in helping cities improve their competitiveness for businesses and trade,
their resilience to climatic and other shocks, and their attractiveness as a place to live and work. Without the effective
development and enforcement of plans, cities are sprawling, fragmented, and unable to offer the benefits of agglomeration
and density. Land has not been adequately set aside for industry or for basic infrastructure, although doing so pays off in
the long run and can also help shape a more sustainable urban form. Obtaining a formal title is difficult and expensive,
incentivizing the informal market, and the current restrictive land-use regulations discourage densification. By building their
capacity for planning and enforcement, improving land administration and tenure, investing early in infrastructure, and protecting
natural assets, cities can boost their efficiency, competitiveness, and ability to foster productive economic activity.

4.1.1 Formalize land markets and strengthen urban planning to foster agglomeration economies

Improving the productivity and efficiency of Dar es Salaam will help cultivate businesses and create jobs in the
formal and informal sectors. Urban sprawl and low-density development – with limited clustering of firms, and limited
size and diversity of the urban economy – have affected Dar es Salaam’s efficiency and competitiveness, and reduced
its ability to provide an enabling environment to create productive jobs. To address these challenges, local authorities
require supporting strategies to increase city competitiveness. Dar es Salaam will need to improve urban infrastructure
and services, facilitate an improvement in the port–city interface, improve the local business environment and enhance
private-sector development, and strengthen the institutional and financial systems for planning, land management, and
development in the metropolitan area. In particular, the development of small industrial zones for businesses would
encourage agglomeration effects and address congestion costs. This can be achieved not only in Dar es Salaam, but also
in Tanzania’s medium-sized and small cities.

Informal land markets encourage urban sprawl and constrain the development of Tanzania’s cities. Tanzania’s parallel
land tenure systems (formal and informal) challenge urban management, tenure security, and urban development. Owning
formal land has benefits but is not easy for most Tanzanians. The inefficiency of formal land directly contributes to the
sprawling networks of informal settlements. Improving land administration and tenure systems through new technology and
approaches show promise in addressing Tanzania’s land tenure constraints by reducing the cost and increasing the speed
with which formal titles are issued. Delivering impact at scale will take time, significant resources, and an openness to new
approaches – including the use of new geo-spatial technologies, contracting with the private sector for service delivery, and
more flexible standards and regulations.

A drastic increase in the quality and coverage of urban plans is needed to get ahead of rapid informal development.
Land use planning and enforcement has not had a successful record in Tanzania, where most cities have grown organically
in the absence of coordinated and systematic development controls. The recent rollout of new master plans for cities across
the country provides reasons for optimism, as do renewed efforts to improve land administration and tenure systems.
However, the quality of master plans and the process of their formulation could be improved, while the coverage of detailed
plans could be increased. Cities should aggressively pursue densification of currently developed areas through infill,
regeneration, or redevelopment. Further, local governments should use the development of major roads and key utilities as
a strategic tool to lead and induce developments strategically, while discouraging sprawl.

Effective land use regulations and enforcement are necessary to make urban plans into realities. The key lesson
from the past is not on the failure of planning, but the failure of enforcement, which can be more effective when managed
at the local level. For cities to flourish, Tanzania will need to strike the right balance between top-down and bottom-up
efficiencies. More can be done to empower local authorities, and to increase the reliance on and leverage of wards and sub-
wards, as they have the keenest local knowledge of specific transactions and developments in their areas. This can be done
by devolving some development controls, but such steps would need to be coupled with measures to ensure accountability
and oversight by higher levels of government.

Capacity for urban planning should be improved. Devolution of monitoring and some enforcement duties to ward and
sub-ward levels is gaining consensus as a viable approach to strengthening development control. But this devolution will

Tanzania Urbanization Review 51
require capacity building and retooling, specifically: (a) training for councilors, council or ward (or sub-ward) staff, and utility
agencies on the importance and usability of land use plans; (b) training for municipal staff to support procedural and content
improvements to neighborhood-level plans; and (c) map reading and basic spatial data maintenance at the ward level, and
sensitization at the ministerial and council level to mainstream maps and spatial analysis as everyday decision-making tools.
Targeted skill building is needed among technical staff in key departments; GIS skills also require strengthening.

4.1.2 Invest early in infrastructure, clearly demarcate public land resources, and promote strategically
located industrial clusters

Given rapid urban growth, there is an urgent need to prioritize early infrastructure that can shape investments in basic
services, housing, and industrial structures and unlock underutilized urban land. With much of Tanzania’s urbanization
yet to come, planners need to identify cost-effective solutions to better manage settlement formation. Investing early in
basic infrastructure can ensure that people get to their jobs and live healthy lives, and firms can reach inputs, customers,
and reliable services such as water and electricity. Investments in connectivity infrastructure within and between medium-
sized and small cities will determine the urban form for the decades to come. “Sites and services” schemes, in which
infrastructure is laid out in advance of development, are one tool used in the past that could be promising.33 Indeed, “sites
and services” can save the space needed to scale up investments in network infrastructure, such as water and sanitation,
and guarantee space for accessible roads, instead of upgrading existing neighborhoods, which could disrupt private homes
and require more complex political processes.

Medium-sized cities can protect environmentally sensitive lands and can plan and reserve rights-of-way early – avoiding
the costly mistakes of Dar es Salaam. In smaller urban areas, unplanned development and sprawl have not yet reached
the scale that challenges Dar es Salaam’s fragmented development, but medium-sized cities are already experiencing
substantial encroachment in hazardous and sensitive areas, and within needed reserves for future infrastructure. For
example, in Mwanza, informal development is occurring on steep slopes that are at risk for landslides; in Zanzibar, wetland
encroachment has become a widespread problem as residents seek affordable housing opportunities.

Encroachment into rights-of-way and hazard lands, and lack of publicly owned land for future service and infrastructure
needs, is a challenge. Cities will need to be able to manage these issues to deliver services and protect the health and
safety of residents. Authorities will have to review and correct contradictions in legislation governing road rights-of-way, and
operationalize constant and consistent enforcement of development bans in rights-of-way and hazard lands. Comprehensive
demarcation campaigns that beacon off no-build areas are urgently needed. Cities will have to begin proactively banking
land needed for future development, and the central government may need to supply financing and monitoring.

Where unplanned development has already taken place, cities need fair, transparent, and clear policies and processes
to handle resettlement. Global experience has shown that mass evictions and demolitions – particularly in the absence of
community engagement, planning, compensation, and resettlement – are not sustainable, and rarely succeeding in clearing
land. Instead, municipalities need strategies, tools, and financing to address existing informal settlements. Resettlement from
hazard areas is expensive and complex, and given that the most at-risk residents are already in dense areas, resettlement
in close proximity to the livelihood means of the poor is challenging due to land scarcity. As an alternative, cities, with the
participation of communities, could develop strategies and technologies for in-situ upgrading to mitigate flood risk. Private-
sector solutions for land consolidation and housing have also been effective in urban contexts similar to Tanzania.

Urban areas are a natural location for industrial clusters, given their proximity to services and access to labor and
markets, but a concerted effort is needed to plan and protect adequate land. Planning should be mindful of the needs
of small-scale producers. All cities, but especially medium-sized cities, should incentivize agri-processing, which offers
strong forward and backward economic linkages and high potential for advancing women’s empowerment.34 Medium-
sized cities and small towns – with their proximity to farms, transportation connections to larger markets, economies of
scale for basic service infrastructure, and labor supply – are in many ways ideal locations for milling facilities, factories, and
packaging industries.

33
A recent study on the longer-term benefits of World Bank “sites and services” projects of the 1970s and 1980s demonstrates that laying out
infrastructure ahead of the growth of urban settlements can effectively guide future development (Regan et al. 2015).
34
Analysis by the World Bank found that women accounted for two-thirds of the employees of Tanzania’s 287 formal agri-processing companies
with 10 or more employees. This is compared to one-quarter in formal employment generally (World Bank 2019b).
52 Tanzania Urbanization Review
4.1.3 Increase resilience through integrated development and the protection of natural assets

To reduce the vulnerability of cities to climatic and other shocks, urban governments will need to develop integrated
solutions with appropriate implementation mechanisms. Disasters such as floods or health emergencies are cross-sectoral
and inter-jurisdictional in nature. For example, the integrated planning exercise for flood mitigation in Dar es Salaam’s
Msimbazi Valley involved 59 institutions, including sectors ranging from transport to water to environment, and governments
at the national, municipal, and local levels. Planning in this way is a good first step, but implementation will require clearly
defined institutional and financial mechanisms. For these types of complex urban problems, a clear institutional mandate is
needed, with cross-sectoral coordination and interdepartmental or multi-stakeholder convening powers. This is particularly
important in larger cities that encompass multiple municipalities and lack metropolitan governance. Urban governments can
adapt past approaches to integrated and participatory planning to tackle extreme flooding, environmental degradation,
and housing for the urban poor by prioritizing high-density and mixed-use development, focusing on the establishment
and protection of infrastructure rights-of-way, and combining public and private financing mechanisms for basic service
infrastructure.

Improving urban resilience to floods will require not only a combination of investments in drainage, but also the
adoption of green infrastructure solutions. Investments in roadside and standalone drains will help alleviate flood impacts
and improve public health and sanitation. To be most effective, designs for drainage improvements should consider climate
change impacts and explore the integration of green infrastructure solutions that can reduce financial and environmental
costs by increasing on-site infiltration. Green infrastructure design interventions can range from wetlands and buffer zones to
green roofing, detention ponds, street-side swales, rain gardens, and porous pavements. For example, the use of detention
ponds (i.e., attenuation ponds in low areas that are allowed to flood during extreme storms, and which can function as
public green spaces during non-storm periods) can reduce capital costs and minimize resettlement requirements. It is
important to strike a balance between practical considerations (e.g., cost-effectiveness and maintenance requirements) and
suitability for local context (e.g., selection of vegetation should consider local climate conditions).

Connect cities, people, and neighborhoods
4.2
Integrated transport and land use planning supported by strong systems for management and accountability can
improve urban mobility and allow cities to take advantage of proximity to encourage economic development and
livability. In addition, construction and improvement of priority roads will support industrial growth and promote job creation.
Addressing the skills gap in urban centers will contribute to increasing the supply of skilled labor and supporting economic
opportunities for the informal sector, which makes up a significant portion of the local economy in many Tanzanian cities.

4.2.1 Improve efficiency of the urban transport system in Dar es Salaam

The initial success of Dar es Salaam’s Bus Rapid Transit System can serve as a model for medium-sized cities to invest
and plan early around public transit. The first line of the Dar es Salaam Bus Rapid Transit (BRT) System showed immediate
impacts. Commuters saved approximately 16 days of travel time annually.35 The BRT freed up significant time for workers
and offered better quality service, while helping people connect with firms and services more effectively than before.
However, the BRT’s declining service performance and quality at the time of writing also offers a lesson that, irrespective of
how good the infrastructure is, it must be founded on strong institutions and systems for management and performance-
based accountability of the operators. Further, based on global experience, creating a competitive environment is critical.
This means both having multiple service providers to spread risks, and mobilizing the best service providers through open
and competitive procurements processes, which ultimately attracts more qualified firms.

Integrated transport and land-use planning is key to maximizing BRT’s potential impacts on urban mobility and
creating more sustainable development patterns. BRT can serve not only as transport infrastructure, but also as a
strategic urban development tool. Global experience suggests that taking this type of holistic, multi-sectoral approach
to BRT development would yield greater benefits and better results in shaping the urban form. Cities should also focus
on improving the feeder network and connectivity to low-income areas through motorized and non-motorized modes. By

See, for example, World Bank 2017.
35

Tanzania Urbanization Review 53
planning for non-motorized transport (e.g., cycling and walking linkages) and applying people-centric standards in transport
and land use planning, cities can improve safety, increase social interaction, and enhance livability.

4.2.2 Connect people to services, workers to jobs, and buyers to sellers in Tanzania’s cities

Construction and improvement of priority transport infrastructure – local and feeder roads in the urban core, as well
as non-motorized transport infrastructure – accompanied by improved traffic management and public transport
systems can help alleviate congestion hotspots, and support public transit, mobility, and access to opportunities for
all, especially low-income communities. In Dar es Salaam, investments in local roads have improved connectivity to the
main roads, alleviating congestion in completed road sections and enhancing livability by improving access to schools,
markets, and healthcare facilities. In Kinondoni and Temeke, upgraded roads have led to reported reductions in travel
times and fares. Investment in a Bus Rapid Transit Corridor in Dar es Salaam has increased urban mobility. Improvements in
primary and secondary drainage systems (bank stabilization, detention ponds, and connections to the secondary network)
will also reduce traffic congestion and delays, which become significantly worse during rainy seasons.

Urban transport is fundamentally different from rural transport and requires institutions that are responsive to the
specific mobility challenges of cities. Transport decision-making needs to be integrated with urban planning and non-
transport infrastructure. Strengthening coordination between relevant institutions will be critical to enable this. In the near
term, urban transport units could be established within existing transport institutions such as TANROADS and TARURA.
Over the longer term, a national Urban Transport Agency focused on sustainable urban mobility could be created to oversee
urban transport management and facilitate capacity building and coordination in local authorities (Ochoa et al. 2021).

Cities can increase the supply of skilled labor for industries with high potential for growth and job creation by
addressing the skills gap in urban centers. By conducting research on market needs and ensuring that education systems
are responsive to the requirements of the city’s economic development, urban governments could help to address the
mismatch between supply and demand in the labor market. It will be important to take a closer look at the entire chain of
skills for employability, from informal and alternative approaches to formal skills development. This includes apprenticeships,
entrepreneurship, pre-employment vocational and technical education and training, university education, and post-
employment upgrading of skills in the form of lifelong learning.

Investing in strategically located industrial clusters can promote economic diversification. Increasing the
competitiveness of the top medium-sized cities requires that tradable products and services have an international
reach. Medium-sized cities need export-oriented competitiveness strategies to identify and take advantage of economic
diversification opportunities while developing export plans for their tradable goods. For small-scale industrial clusters to be
successful, they need to be fully integrated into the economic strategy of the city. A strategically located industrial cluster
can also demonstrate the economic potential of a city (as shown in Kahama in Chapter 2).

More can be done to support the growth and formalization of the informal sector, which makes up a significant
portion of the local economy in many Tanzanian cities. Tanzanians in urban settings rely on self-employment and informal
or microenterprises. COVID-19 has disproportionally affected informal workers, who do not have enough savings and access
to credit, and for whom a decline in hours worked has led to a loss of disposable income. Urban planning and infrastructure
investments could be used to bring in the informal sector and improve the working environment of informal employees.
These efforts could include the upgrading and rehabilitation of roads, drainage, and other facilities near markets and other
small-scale industrial areas to provide better opportunities to vendors and traders. Such investments in basic infrastructure
could be complemented by the development of entrepreneurial skills, supporting informal business owners and providing
better economic opportunities in cities.

4.2.3 Strengthen rural–urban linkages in medium-sized cities and small towns

As the country’s urban centers evolve to be the future drivers of national growth, Tanzania can accelerate inclusive
economic growth in rural areas by better connecting them to these domestic markets and beyond. Urbanization
increases not only the demand for urban services, but also the demand for agricultural products, which in turn can

54 Tanzania Urbanization Review
contribute to reducing poverty in rural areas. Medium-sized cities therefore act as markets for agricultural and rural output,
as stimulators of rural nonfarm activities, as places for low-skilled job opportunities, and as facilitators of economies of scale
in healthcare services and post-primary education. Improving the competitiveness and efficiency of cities is therefore critical
to derive greater agglomeration benefits and create productive jobs.

Local economic development initiatives that can strengthen rural–urban linkages must be designed and coordinated
effectively. One way cities can ensure the effectiveness of development strategies is by developing a long-term partnership
with the private sector. Cities will also need to focus on building municipal capacity to implement local economic
development initiatives that leverage the more specialized economic base, such as agri-processing. Successful local
economic development strategies require strong leadership and a strategic vision, and should be supported by evidence-
based policies and detailed implementation plans. Local economic development strategies also need to be integrated into
urban plans (master plans and detailed planning schemes) and economic plans (strategic plans, medium-term expenditure
frameworks, and work plans coordinated by each municipality’s economics department).

Supporting urbanization in small and medium-sized cities is central to improving agricultural output. Small cities
connect farmers to input and output markets, and medium-sized cities serve as logistical and transport hubs and host
larger consumer markets, thereby contributing to improved agricultural output. Tanzania is in an early stage of urbanization,
so rural–urban migration will continue for many decades. Although Dar es Salaam accounts for one-third of the urban
population, small towns are also forming an increasing proportion of the urban population in Tanzania (Christiaensen at al.
2017). This spatial and demographic shift might even accelerate as agribusiness grows in the coming years, transforming
agriculture from labor-intensive to capital-intensive and requiring the consolidation of small rural properties. Smaller towns
face the largest rural–urban inflows but have the lowest capacity to raise own-source revenue. Supporting medium-sized
cities can also be an important policy vehicle for inclusive growth. Better transport access will support increased economic
and social activities, particularly in rural areas where the poverty rate is high.

4.3 Strengthen institutions to manage and finance urban
development at scale
To keep up with rapid urban growth, Tanzania’s cities need to be empowered to mobilize and manage their budget
for the infrastructure and services they provide. Simplified, adaptable institutional arrangements should enable cities to
effectively manage themselves and deliver services when they have capacity, and support them in growing their capacity and
addressing shortcomings when necessary. A key element is strong vertical and horizontal coordination among governments
and development actors.

4.3.1 Empower local government authorities

Service delivery models for an “urban Tanzania” are needed to improve the efficiency of local service delivery and
accountability for local public resources. The national-level construction and maintenance of district roads could boost the
efficiency of service delivery, especially in areas where local capacity is a bottleneck. However, a more centralized model of
service delivery may become challenging to execute efficiently as the network of cities grows and institutional demands for
effective metropolitan government become more complex. Accountability and service delivery can be effective in national
models, but there is an inherent risk that national priorities could trump those of local stakeholders, and that operations and
maintenance will become less responsive to local feedback. There is also an inherent risk that sectoral infrastructure delivery
will be siloed and not well coordinated amongst providers or with existing and planned land uses.

Revenue mobilization and local government finances must be managed carefully. If revenue is to be shared between
central and local government, it will be critical for policymakers to get the incentives right. If they do not, the absence of
revenue retention at the municipal, ward, and sub-ward level will limit the effectiveness of data collection and constrain
human resource–intensive revenue sources (collecting revenue requires “boots on the ground” and local knowledge)
(McCluskey, Slack, and Davis 2018). The reliability of central transfers to local government authorities is important, as is
some degree of local autonomy over budgeting; earmarked funds must be balanced with more flexible funds in order to
ensure that local government expenditures can be responsive to local development needs.

Tanzania Urbanization Review 55
4.3.2 Enhance vertical coordination (among levels of government) and horizontal coordination
(between municipalities and development actors)

As cities expand and service delivery and management become more complex, institutional arrangements must
empower local government authorities to deliver services efficiently and be responsive to local needs. The practice
of sub-dividing urban areas into separate municipal councils in Dar es Salaam and Mwanza complicates coordination
mechanisms, tends to be inefficient and costly (due to the inherent duplication of services), and creates additional
institutional layers.

Capacity is not uniform across cities, with some larger local government authorities demonstrating better
performance. Local government capacity is uneven: while some of the larger local government authorities have made rapid
advances in delivery and implemented sector policies, others are not performing at the same level. The local government
authorities that were targeted by the Urban Performance Grant showed considerable improvement, on average, in their
performance in: (i) urban planning systems, (ii) own-source revenues, (iii) fiduciary systems, (iv) infrastructure implementation
and operations and maintenance systems, and (v) accountability and oversight systems. However, financing amounts were
allocated using a per-capita formula that ensured that larger local government authorities could receive more financing than
smaller ones, regardless of incremental improvements in their scores (beyond reaching a certain threshold). As Tanzania’s
cities change and develop, institutional arrangements should adjust and keep pace to provide municipalities broader remits
for managing themselves, but the currently used uniform model may not be an ideal fit across all cities. In this context,
future models might look at Latin America’s experiences with asymmetric decentralization, which allows higher-capacity
sub-national governments to assume different functions, choosing from a menu of the responsibilities they can assume
based on abilities and needs.

Shortcomings in local government delivery need to be addressed. There have long been concerns around governance,
corruption, and accountability at the local government level, and about how this impacts project delivery and the effective
use of limited public resources. Regional and District Commissioners have often been tapped to provide oversight of project
implementation. Challenges have also been noted in the enforcement of completed urban plans; in the operations,
maintenance, and management of constructed urban infrastructure; and in the coordination (at the client, contractor, and
supervision consultant level) of community development and environmental officers to monitor social and environmental risks.

Efficient urban infrastructure and land use require strong coordination mechanisms among urban development
actors. These mechanisms include the review and approval of service network extensions by planning authorities.
Currently, service extensions tend to chase unplanned development; to get ahead of this trend, local governments need to
strengthen development control. In the immediate term, Regional Commissioner Offices could be playing a more active
role in ensuring that sectoral plans are closely following master plans. In primary and medium-sized cities, metropolitan
development authorities could play an important coordination role on transportation, water and sewerage, and solid waste.

4.3.3 Increase own-source revenue collection and leverage markets to finance urban infrastructure

With the recent devolution of property tax and billboard fee collection back to local government authorities, cities
have the chance to bridge the gap between the cost of providing services and revenue from intergovernmental
transfers. This is particularly important for rapidly growing cities where infrastructure demands are outstripping current
investment resources. Property tax offers the largest potential of revenue generation by local governments. It is also the
most difficult revenue source to administer. In the World Bank’s Doing Business Report of 2020, Tanzania was ranked 165 out
of 190 countries in terms of ease of paying taxes; and collecting taxes, fees, and charges is a challenge for both central and
local governments. There are significant complexities around the identification, measurement, and valuation36 of properties,
and difficulties in billing, collecting, and enforcing payment – tasks for which local governments are well positioned. Urban
governments will need to ambitiously apply mobile technology and GIS-enabled data management solutions37 to regain

36
The current practice of applying a flat rate on property taxes can expand the tax net radically and quickly, but can also reduce, instead of increase, tax revenues.
When choosing between a flat-rate and a classified-rate system, it is important to consider implications for the economic incidence of the tax burden.
37
One critical factor is the georeferencing of data concerning the payees of various taxes and fees (i.e., the mapping of businesses that would pay service levy,
hotel levy, and business license fees); another is capacity building for local government authority revenue departments to help staff understand how the GIS
function of LGRCIS can improve collection.

56 Tanzania Urbanization Review
momentum and establish an effective collection process. The recent return to decentralization of property tax administration
and collection coincides well with planned upgrades to the LGRCIS that will support improved accuracy of taxpayer data
through integration with other systems like TRA, ILMIS, and NIDA, and further promote transparency of own-source revenue
(OSR) collection.

Property taxation, while not historically a large source of local own-source revenue, has the potential to be an
important and dynamic source of revenue for urban areas, as it is directly linked to the local economy. The valuation
and rating of urban properies has historically been a local government mandate for several reasons: local authorities are
more knowledgeable about changes in ownership, and able to update systems which now require GIS capabilities; there
are beneficial links between property values and local services; and the tax can provide a stable and predictable yield
for local authorities (McCluskey et al. 2018). Property tax is also highly visible to citizens, and, in principle, strongly linked
to local service delivery. However, in a recent survey conducted in Dar es Salaam, only 15 percent of property owners
perceived that the tax they pay contributes to local service provision (Ali, Fjeldstad, and Katera 2018). These attitudes can
negatively affect the public willingness to pay, regardless of central or local collection – but local government can more
easily make the link between taxes and services.

Improving property tax valuation and administration systems for urban land (and the incentives for collection) can
unlock a major source of financing for municipal infrastructure and services. During periods of rapid urban growth, land
prices rise rapidly (as do infrastructure investment needs), creating the opportunity to generate significant revenue. Land
value ratings should be updated and reviewed frequently to reflect market values. Currently, land value ratings currently
cover entire sub-wards, and do not necessarily capture the higher values along major roads compared to lower values in less
accessible areas of the same ward; they are also recorded as tabular data and are not easily usable in GIS. Mapping land
values at a more precise geographic scale would enable value capture to support infrastructure cost recovery. Formalizing
land transaction fees – which are currently informally collected at the sub-ward level – could avail additional resources
that could be channeled toward local development needs. As the collection of property taxes is transferred back to local
governments, implementing the right incentives (per Chapter 3) will ensure that municipalities can effectively harness this
important revenue source.

Enhancing own-source revenue collection in local governments will also require a good understanding of the policy
environment, current practices, and incentive structures surrounding OSR generation. A better understanding of existing
approaches could inform opportunities to improve the effectiveness of revenue enhancement strategies. Cities should
acquire a better understanding of current practices for determination and collection of land rents, revenue forecasting and
budgeting, OSR collection, and local government budgeting reporting. A key source of this knowledge is the documentation
of current OSR collection methods in local government authorities, including staffing arrangements, logistical approaches
to collecting revenue, incentive structures for external staff assisting in the collection process, and the roles of agents. Local
government authorities will also need to improve coordination between various internal departments that work on revenue
collection, administration and management, or other related duties; support from Regional Administrative Secretariats and
PO-RALG headquarters would be important as well.

Public–Private Partnerships (PPPs) offer an opportunity to mobilize additional financing for municipal infrastructure.
PPPs should be pursued – but with caution, as they require municipalities to have capacity that is only newly emerging.
Existing municipal PPPs cover pay toilets, construction of municipal markets, bridges and roads, and operation of leased
facilities. Most of these PPPs are small in scale, and they have varying levels of success. In Arusha, the collection and
transport of solid waste is contracted out to the private sector, with solid waste fees shared 70/30 between the private sector
provider and Arusha City Council. The arrangement has reduced costs associated with solid waste management for the city
and has also led to an increase in revenues. PPPs can serve as a powerful tool to facilitate the development and improve
the quality of infrastructure. However, because the deals involve complex and commercial and financial structures, their
preparation, negotiation, and implementation will require expert advice from experienced advisors.

Tanzania Urbanization Review 57
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