Tanzania’s online market is characterized by dynamic growth, primarily propelled by a mobile-first population and the increasing adoption of digital financial services. As of the first quarter of 2025, internet subscriptions have climbed to 49.3 million, with mobile connections constituting over 99% of this access. This mobile-centricity is further underscored by the mobile money ecosystem, which saw subscriptions reach 66.5 million in Q1 2025 and transaction volumes surge, indicating its foundational role in the burgeoning digital economy.
The e-commerce sector, though still nascent with an online retail share of 0-5%, generated approximately US$461 million in revenue in 2024 and is projected to maintain a robust growth trajectory of 15-20% into 2025. Electronics currently lead online sales, but social commerce, particularly via platforms like Instagram and WhatsApp, represents a significant and rapidly expanding facet of online transactions, often driven by small and medium-sized enterprises (SMEs).
The Tanzanian government has signaled strong commitment to fostering this digital transformation through its Digital Economy Strategic Framework (DESF) 2024–2034. This framework is supported by substantial investments in critical digital infrastructure, notably the National ICT Broadband Backbone (NICTBB) and the National Postcode Project, both aimed at enhancing connectivity and logistical efficiency crucial for online market development. The NICTBB, for instance, has already contributed to significant reductions in international bandwidth costs.
Headwinds Exist
Despite these positive indicators, the market faces considerable headwinds. A persistent urban-rural digital divide limits the reach of online services, with broadband penetration remaining low in many areas. While internet subscriptions are rising, a slight recent decline in smartphone penetration to 35.29% in Q1 2025, alongside a still-significant base of feature phone users, suggests that access to the full spectrum of online services is not universal. This indicates that simpler internet access methods and feature phones continue to play a vital role, particularly for basic e-commerce interactions and mobile money usage, highlighting a need for inclusive digital solutions.
Logistical complexities, the ongoing need for enhanced digital literacy across the population, and concerns around consumer trust and cybersecurity also temper the growth trajectory. Internet disruptions, such as those experienced in 2024 which led to an estimated $1.4 million in economic losses, further undermine investor confidence and market stability.
Government Dependent
Nevertheless, the opportunities within Tanzania’s online market are substantial. The large underserved population, coupled with the government’s strategic focus and infrastructure development, lays the groundwork for significant expansion in e-commerce, digital financial services, and emerging online sectors like agritech and edtech. The pervasive mobile money system provides a unique and robust platform for digital transactions, a key enabler for online commerce. The long-term outlook for Tanzania’s online market is positive, but is contingent on sustained efforts to address existing challenges and effectively leverage its inherent strengths in the mobile domain.
In short, Tanzania is facing the same challenges the UK and Europe faced with the arrival of the digital age 10 years ago, it will overcome them, but will probably take considerably longer.
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