The Deputy Governor of the Bank of Tanzania (BoT), Ms. Sauda Msemo, has urged governments in Sub-Saharan Africa to strengthen domestic resource mobilization in order to reduce heavy reliance on declining foreign aid.

Speaking on April 28, 2025, during a panel discussion organized by the International Monetary Fund (IMF) in Dar es Salaam at the launch of the 2025 Regional Economic Outlook for Sub-Saharan Africa, Ms. Msemo emphasized the importance of broadening financing avenues by seeking new partners and alternative ways of raising funds.

“Our governments must strive to increase domestic revenues and reduce dependence on aid from foreign nations. We must also explore new sources of income to enhance our financial resilience,” she said.

Ms. Msemo explained that abrupt changes in U.S. aid policies, including the withdrawal of support in critical sectors such as education, health, and infrastructure, have posed significant challenges for many Sub-Saharan African countries.

“Urgent measures taken have included reallocating budgetary resources to ensure the continuation of essential programs, while future budgets are being designed with a focus on the sustainability of projects in those key sectors,” she added.

On his part, the Chief Executive Officer of Stanbic Bank Tanzania, Mr. Manzi Rwegasira, stated that for the private sector to attract investment, it is crucial for governments to improve the business environment by reforming tax systems, offering credit guarantees, and engaging in joint investments in key projects.

Meanwhile, IMF’s Deputy Director of the African Department, Ms. Cathy Pattillo, noted that many Sub-Saharan African countries have the potential to increase domestic revenues, but current tax collection levels remain below expectations relative to capacity. She emphasized that domestic revenue is a reliable and sustainable source of development financing.

IMF’s representative in Tanzania, Mr. Sebastian Acevedo, stressed the importance of having a skilled workforce to harness Africa’s growing population in tackling emerging economic challenges.

According to the IMF report, economic activity in Sub-Saharan Africa grew by 4.0% in 2024, which is 0.4 percentage points higher than earlier projections. This growth was driven by public investment, export expansion, and efforts to diversify economies.

The report also showed a significant decline in inflation, averaging 4.5% in February 2025 compared to 6.5% at the end of 2023 and nearly 10% at the end of 2022. This improvement is attributed to sound monetary policies and falling global food and energy prices.