Multiplier effects of natural gas extraction on GDP growth in Tanzania

Natural gas development is widely regarded as a potential catalyst for economic transformation in resource-rich developing economies, yet evidence on its economy-wide multiplier effects in Tanzania remains limited. In particular, existing evidence provides limited insight into the relative contributions of direct, indirect, and induced effects and the intersectoral linkages through which natural gas activity affects the wider economy. This study addresses this gap by estimating the economy-wide effects of natural gas development on value added and gross domestic product (GDP) using an input–output framework based on Tanzania’s Input–Output Tables and complementary national economic data. The results indicate substantial growth in natural gas-related value added between 2015 and 2020, with further expansion projected to 2025. Indirect effects account for approximately 58% of total natural gas-related value added, compared with 40% for direct and 2% for induced effects, indicating that the principal transmission mechanism operates through inter-industry supply-chain linkages. These effects are particularly evident across manufacturing, construction, agriculture, utilities, transport, trade, finance, and support services. Despite this expansion, the sector’s contribution to aggregate GDP remains modest, indicating considerable scope for greater domestic value addition and downstream integration. The study contributes to the resource-led growth literature by identifying the relative magnitude and transmission channels of natural gas multiplier effects within Tanzania’s domestic production structure. The findings highlight the importance of strengthening domestic supply capacity, local procurement, and downstream utilisation to enhance the economy-wide contribution of natural gas development.