AfDB and ITFC Sign Partnership to Strengthen Tanzania’s Private Sector

In a significant move poised to transform Tanzania’s economic landscape, the African Development Bank (AfDB) and the International Islamic Trade Finance Corporation (ITFC) have aligned their strategies through a new partnership aimed at unlocking investment potential and driving sustainable development. This collaboration, formalized during a high-level meeting in late September 2025, underscores a shared commitment to empowering small and medium-sized enterprises (SMEs), enhancing food security, and promoting energy sustainability—key drivers for Tanzania’s private sector expansion. As East Africa’s largest economy continues to navigate post-pandemic recovery and global uncertainties, this alliance arrives at a critical juncture, offering fresh opportunities for inclusive growth and regional integration.

The partnership builds on Tanzania’s robust economic performance in recent years. According to the latest data, Tanzania’s GDP grew by 5.4% in the first quarter of 2025, with projections for the full year reaching up to 6%. This growth is fueled by sectors such as agriculture, mining, construction, and financial services, where private sector involvement plays a pivotal role. However, challenges like limited access to finance for SMEs, regulatory hurdles, and infrastructure gaps have historically constrained private sector dynamism. The AfDB-ITFC tie-up seeks to address these issues head-on, fostering an environment where businesses can thrive and contribute more effectively to national development goals.

Understanding the Key Players: AfDB and ITFC

To appreciate the significance of this partnership, it’s essential to delve into the backgrounds and mandates of the involved institutions.

The African Development Bank, established in 1964, is Africa’s premier development finance institution, with a mission to combat poverty and improve living conditions across the continent. Headquartered in Abidjan, Côte d’Ivoire, the AfDB provides loans, grants, and technical assistance to its 54 African member countries, including Tanzania. In Tanzania specifically, the Bank has been a steadfast partner, supporting infrastructure projects, agricultural modernization, and private sector initiatives. Its Tanzania Country Strategy Paper (CSP) for 2021-2025 emphasizes two main pillars: developing sustainable infrastructure to support integration and improving the private sector business environment for job creation and inclusive growth. This strategy aligns with Tanzania’s national priorities, such as the Tanzania Development Vision 2025, which envisions a middle-income economy driven by industrialization and private enterprise.

On the other hand, the International Islamic Trade Finance Corporation, a member of the Islamic Development Bank (IsDB) Group, was founded in 2008 to advance trade among Organization of Islamic Cooperation (OIC) member countries. Based in Jeddah, Saudi Arabia, ITFC has provided over $83 billion in trade financing to date, focusing on Sharia-compliant solutions that promote economic resilience. Its strategic pillars include private sector development, cooperation between member countries, Islamic trade finance solutions, and capacity building. In the context of this partnership, ITFC highlights three core areas: enhancing SMEs’ access to finance, strengthening food security via agricultural investments, and ensuring sustainable energy security. Tanzania, as an OIC member, stands to benefit significantly from ITFC’s expertise in trade facilitation and value chain development.

Together, these organizations bring complementary strengths—AfDB’s deep-rooted experience in African development and ITFC’s specialized trade finance tools—to create synergies that could accelerate Tanzania’s progress toward its ambitious economic targets.

The cornerstone of this collaboration was a pivotal meeting held on September 29, 2025, at the AfDB’s Tanzania Country Office in Dar es Salaam. The ITFC delegation, spearheaded by Senior Manager and Regional Head for East Africa and Latin America, Said Ibouroi, engaged in constructive dialogues with AfDB Country Manager Patricia Laverley and her team.

During the discussions, ITFC outlined its strategic portfolio, emphasizing alignment with Tanzania’s national development agenda. Key sectors identified for joint intervention include agriculture, petroleum, and gas—areas where Tanzania holds substantial untapped potential. Ibouroi highlighted Tanzania’s expanding international trade and the opportunities to empower SMEs by unlocking value chains that promote economic resilience and regional integration. Laverley described the engagement as a promising step towards deeper collaboration, noting that the partnership aligns with AfDB’s strategic priorities, particularly in unlocking Africa’s capital power through blended financing and rebuilding financial sovereignty via innovative partnerships. Both parties agreed that this alliance demonstrates strong potential for impactful cooperation, positioning Tanzania as a dynamic investment hub in East Africa.

While the exact terms of any signed agreement—such as specific funding commitments or project timelines—have not been publicly detailed yet, the meeting signals the start of joint initiatives. Follow-up actions may include co-financed projects, capacity-building workshops, and targeted financing facilities for Tanzanian businesses.

Tanzania’s Private Sector: Challenges and Opportunities in 2025

Tanzania’s private sector is a linchpin of its economy, contributing significantly to employment and GDP. However, it faces several hurdles that this partnership aims to mitigate.

Key challenges include a cumbersome regulatory environment, where firms spend considerable time navigating bureaucracy. Access to credit remains limited, though recent data shows improvement: private sector credit growth reached 17.1% in May 2025, up from 14.8% the previous month. Additionally, the government’s ideological leanings toward state-led growth sometimes create inconsistencies in investment policies. Infrastructure deficits, particularly in energy and transportation, further hamper productivity.

On the opportunity side, Tanzania’s young population, abundant natural resources, and strategic location offer immense potential. The country’s Development Vision 2050 envisions a private sector-led transformation, prioritizing inclusive opportunities and economic resilience. Sectors like agriculture, which employs over 65% of the workforce, could see boosted productivity through investments in value chains. The mining and gas industries are also ripe for growth, with recent discoveries attracting foreign interest.

Moreover, private sector participation in mega-projects is crucial, though local stakeholders have called for stronger legal frameworks to protect Tanzanian interests. The AfDB-ITFC partnership could catalyze this by providing blended finance models that de-risk investments and encourage local entrepreneurship.

This partnership extends beyond immediate economic boosts, aligning with regional and global agendas. It supports the African Continental Free Trade Area (AfCFTA) by enhancing trade finance and SME competitiveness, potentially increasing intra-African trade. For Tanzania, it could help achieve its goal of becoming a $1 trillion economy by 2050, requiring sustained 10% annual growth and a surge in private investments.

In the energy sector, joint efforts might focus on sustainable projects, addressing Tanzania’s reliance on hydropower amid climate vulnerabilities. Food security initiatives could modernize agriculture, reducing import dependencies and creating jobs for the youth.

Looking ahead, experts anticipate tangible outcomes within the next 12-18 months, such as new financing lines for SMEs and collaborative projects in key sectors. This could inspire similar partnerships across Africa, demonstrating how multilateral institutions can drive private sector-led development.

For investors and businesses, this signals Tanzania’s openness to international collaboration. Potential entrants should monitor upcoming announcements from AfDB and ITFC for opportunities in tenders, grants, and partnerships. Local entrepreneurs can benefit by engaging with these institutions through national chambers of commerce or SME support programs.

Related Initiatives and Broader Context

This is not the first collaboration between AfDB and ITFC; they have previously worked on trade finance in other African nations. In Tanzania, AfDB recently approved a $10 million trade finance guarantee for Exim Bank Tanzania to support SMEs. Similarly, ITFC has financed agricultural exports and energy projects in the region.

Complementing these efforts are initiatives from other partners, like the World Bank’s support for resilient growth and private investments. The IMF’s recent staff visit praised Tanzania’s robust activity but emphasized the need for private sector-friendly reforms.

In summary, the AfDB-ITFC partnership represents a beacon of hope for Tanzania’s private sector, promising enhanced financing, strategic alignment, and sustainable growth. As the country strides toward its development visions, such collaborations will be instrumental in realizing a prosperous, inclusive future.