Despite Tanzania’s rapid recent growth, the vast majority of employment creation has
been in informal services. This paper addresses the role that different subsectors of formal and
informal services have played in Tanzania’s growth. It finds that subsectors such as trade services
contribute significantly to employment despite their relatively low productivity, while subsectors
such as business and transportation services display higher productivity and improve the
environment for other firms to operate. The paper also acknowledges the role of high-performing
small and medium-sized service firms and the tourism sector in contributing further to Tanzania’s
growth and structural change.