Averting heavy taxation in EAC with lessons from past bloody tax protests: A 2025/26 Pre Budget Analysis brief

Authors: Moses Kulaba, Governance and Economic Policy Centre

This analysis focuses on assessing the 2025/26 prebudget proposals with a view of determining the extent to which the governments in East Africa have learnt from the previous chaotic budgeting experiences that were marred with blood and deadly citizens protests. Based on the government budget framework papers already presented before parliament, the analysis highlights potential controversial areas that have remained perpetual features in our budgeting and may be of concern in 2025/26 budget proposals and the future.

Budgeting across East Africa has generally been at a center of controversy and criticism for being insensitive to the pressing economic concerns of citizens. Every budget is viewed as a litany of taxes imposed on poor citizens to finance every expanding government bureaucracy.  Moreover, with aid cuts to vital sectors such as agriculture and health by the US government, it is likely that East African governments will continue to pursue aggressive tax measures to cover the gaps. Lessons from the past budget cycles have showed that this obsession to taxing of limited sources to finance a bludgeoning public sector, amidst rising unemployment and costs of living can be counterproductive.

The 2024/2025 budgets faced a lot of concerns and resistance over heavy taxation. In Uganda there were protests by small scale traders over VAT while in Kenya there was a violently bloody and deadly uprising by the youth under the umbrella of the Gen-Z.  The protests forced the Ugandan government to negotiate with the traders while in Kenya the finance bill was withdrawn after a bloody confrontation between the youth protestors and security that left many injured and dozens killed. 

The Kenyan government however re-introduced some of the controversial sections of the finance bill such as the controversial housing levy and it was likely that these will remain a permanent feature in the forthcoming budgets as the government pushed on with its ambition to deliver on low-cost housing. In South Sudan the budget was not passed and the country’s economic fundamentals remained hanging on a balance in a country already affected with civil war.

As governments embark on to the next budget cycle, it is important to look back and see what lessons have been learnt. We make this assessment based on the proposed budget estimates and tax measures for 2026/2027, with a firm recommendation that lessons must be learnt and mistakes avoided.

Overview of priority sectors and proposed tax measures in EAC countries for 2025/26
Tanzania

Based on the government statements presented before parliament early this year, Tanzania’s budget ceiling for the 2025/2026 financial year was planned to increase to 57.040trn/-, with the government planning to allocate 19.471trn/-, or 34.1 percent of total estimates, for development expenditure.

According to the finance minister Dr Mwigulu Nchemba the proposal represented a significant increase from the 15.959trn/- or 31.7 percent of the 50.291trn/- allocated for fiscal 2024/2025.

Out of the development budget funds 13.320trn/- will be mobilised from domestic sources, while 6.150trn/- will be sourced externally. The government further intends to enhance private sector participation in financing development projects via public-private partnerships (PPP)

The minister cited that government’s priority expenditure areas were servicing the government debt, public service salaries, strengthening peace, stability and security, as well as preparations for the 2027 continental soccer tournament.

The budget is expected to be financed through revenues amounting to 40.9trn/- and loans from domestic and external sources totaling 16.07 trn/-.  The revenues from taxes were projected at 31.8trn/-, non-tax revenues of 6.2trn/-, local government revenues of 1.6trn/- along with bilateral and multilateral grants of 1.24trn/-.

Domestic revenues are expected to cover 69.7 percent of the entire 2025/26 budget as part of the government’s strategy to reduce dependence on unpredictable or high-cost and conditional sources,” the minister stated. Expected loans include 6.2trn/- from domestic sources and 9.79 trn/- from external sources.

From these estimates, the government plan to raise and spend an increased budget, with almost ¾ of its budget raised from domestic sources. This is quite commendable. However, it still not clear as to where the final tax burden will fall so as to raise such an amount without exerting further pressure on the ordinary low-income citizens.  

Moreover, it is not evident yet the extent to which the projected budget has factored in the forecast global economic slowdown due to Trump’s tariffs and uncertainty of global trade and investment. Further, the scheduled General elections later in 2025 could equally have a dampening effect on Tanzania’s economic growth for 2025 as potential investors keep a ‘wait and see’ stance holding back major investment decisions until 2026.

Large strategic projects such as the LNG are yet to kick off and this is holding back significant foreign direct Investment and anticipated revenue inflows into Tanzania’s economy. The country’s debt portfolio has been rising and this could eat up a significant share of the increased budget and thereby undermining its anticipated social-economic outcomes. 

Kenya

Kenya plans to spend an expected budget of Ksh 4.23 trillion in 2025/2026 financial year compared to 3.99Trillion that was planned for 2024/25. Out of this an estimated Ksh 2.49 trillion will be allocated to the National Government (The Executive, Parliament and Judiciary), Ksh1.36 trillion will be allocated to the consolidated fund and Khs405bln allocated to the Counties as per the equitable County share framework.

The government expects to raise Ksh.3trln in revenues with grants contributing Ksh46.9bln leaving a deficit of Ksh876bln to be covered through borrowing. The income taxes will account for Ksh1.28 trillion, VAT will generate Ksh772bln, import duties will contribute Ksh3bln, excise duties bringing in Ksh335bln, other taxes will generate Ksh202bln and 560bln collected from appropriations in aid (which includes fees and levies)

Out this Ksh1.1trillion will be spent on debt servicing with about Ksh851bln spent on domestic debt and Ksh246blin spent on foreign debt.  Even with the current plan, Kenya still faces a deficit of Ksh876bln which will be covered with Ksh284.2bln (32%) from net foreign sources and 591.9bln (68%) from net domestic borrowing.

Almost all income taxes collected for 2025/26 will be spent on paying interests on debts. The public debt has been increasing with domestic debt projected at 5.1trln by end of May and the foreign debt at Ksh5trln by end of December.

The experience for last bloody tax riots has influenced Kenya’s 2025/26 budgeting process to an extent. With last year’s hindsight Kenya increased public participation, including conducting of extensive consultations across the counties and town hall meetings in major cities such as Kisumu, Nakuru, Nairobi and Mombasa. Special interest group meetings with the private sector, civil society, the youth and digital content creators.

Based on the views collected from the public participation meetings and world bank projections, the Kenyan government addressed issues around fiscal consolidation with realistic tax basing and economic growth projections. For example, the government revised its GDP targets downwards.

In terms of expenditures, the Kenyan government was modest and alert to the realties and lessons last year’s tax protests.  The government has revised its budget projections, revenue collection targets and made some cuts to expenditures allocated to various ministries and departments. For example, allocation to parliament was reduced from Ksh42.5blnin 2024/25 to Ksh42.4bln in 2025/26 financial year.

The government is verifying and paying off all valid pending bills, plans to making appropriate expenditures, improving quality of procurement, saving unnecessary expenses of about 10-18% of the procurement budget which can support expenses elsewhere.

Despite these measures, Kenya’s budget still faces extreme pressures which may overshadow its performance. According to the Cabinet Secretary for Treasury, Mr John Mbadi, Kenya’s economy is not performing very well. The economy is yet to recover from the aftershocks of COVID 19 and the violent tax protests in 2023 and 2024. The Kenya Revenue Authority has persistently missed on its tax collections and the government has resorted to using supplementary budgets to cover the budget funding gaps.

The IMF and world bank further warn that Kenya is among the African countries with a high risk of defaulting on its debt due to revenue under performance and constrained fiscal gap[1]. Moreover, in August 2024, the global credit ratings agency Standard & Poor’s downgraded Kenya’s long-term sovereign credit rating to B- from B due to weaker fiscal consolidation and increasing public debt.

While this rating was revised in early 2025 from negative to positive, the rating is still below its previous B position and Kenya is still in the junk category with Caa1 rating[2]. This means that any future borrowing will still be expensive for Kenya to pay.

Funding of political offices still consumes a large percentage of Kenya’s budget to the extent that Okoa Uchumi civil society network, has described the Budget as ‘Budgeting for political survival’ Okoa notes that political offices such as the Presidential advisors received a large increase in budget allocation compared to essential services such as education.

A good budget is one which leaves enough money for people, prioritise expenditures on social-economic sectors such as agriculture, education and devolved services, be balanced with reduced over expenditure on financing debt.

Uganda

Uganda’s Parliament approved a 72.4 trillion-shilling national budget estimates for the 2025/2026 financial year, with a strong focus on financing economic growth and infrastructure development. This represents a modest increase from Ush 72.1 Trln passed last financial year.

According to government, the budget was aligned to the National Development Plan IV blue print, which aims at increasing household incomes, strengthening Uganda’s economy through agriculture and industrialization. The priority expenditures include financing of the Parish Development Model (PDM), Emyooga and construction of the Standard Gauge Railway as part of government’s transport infrastructure plans.

According to the National Development Plan IV, it aims at increasing household income, full mobilization of Uganda’s economy through agriculture and more among others. Within the proposed budget, it contains budget priorities such as the PDM and Emyooga. For this purpose, parliament approved 1.03 trillion for PDM and 100 billion for Emyooga; 3 billion has been earmarked for Juakali (Artisanal sector) A further 414 billion was approved as capitalization for the Uganda Development Bank to help grow local businesses.

Despite this increments, Uganda’s budgeting has increasingly become a budget for paying debts. Within the approved budget estimates also contains domestic debt arrears that seem to be crippling down the economy, that stand at Ush 13.8 trillion as per the last Auditor General’s report. A balance of Ush. 5.2 trillion is also included and with a deduction of 1.4 trillion embedded in the new budget, the remaining amount is payable within the next 3 years. Over the last years, payment to national debt consumes almost half of Uganda’s national budget.

Consistently lawmakers have called for accountability in government spending, combating of corruption and nugatory expenditures unaccounted such as the 774 billion shillings allocated to the Lubowa Hospital project. This stalled project has become an expensive cost center for years, with recorded cost over runs under minimum oversight.

Moreover, classified expenditures on security and financing the increasing local government structures have become permanent futures in the national budget, diverting a significant amount of funds away from development expenditure.

The taxman is yet to show where the resources will come from, however, it is anticipated that the perennial sources such as VAT, Excise duties etc. will remain the major victims of taxation.  This approach to taxation has its own risks as earlier indicated of rising costs of living and worsening the economic conditions of ordinary citizens.

Moreover, with the US Trump tariffs, Uganda will experience some disruptions in its trade and forex flows, given that agricultural crops such as coffee are among Uganda’s exports to the US and among its leading foreign exchange earners.

Rwanda’s budget proposals 2025/26

According to Rwanda’s presented Budget Framework Paper (BFP) the government planned to allocate Frw 7,032.5 billion for the 2025/26 fiscal year, representing a 21% increase from the Frw 5,816.4 billion approved in the revised budget of FY 2024/25[1].

This increase mainly reflected the desire to increasing expenditure on strategic investments in projects such as the New Kigali International Airport construction, located in Bugesera, and RwandAir expansion, as well as ongoing recovery efforts from crises, including COVID-19, inflation, the May 2023 floods, and the Marburg disease outbreak.

The projected total resources for the 2025/26 fiscal year, comprised of domestic revenues of Frw 4,105.2 billion—of which Frw 3,628.0 billion was from tax revenue and Frw 477.2 billion from other revenues—external grants estimated at Frw 585.2 billion and external loans amounting to Frw 2,151.9 billion.

On the expenditure side, the budget was projected at Frw 7,032.5 billion, including Frw 4,395.1 billion for recurrent spending, including salaries, while Frw 2,637.4 billion would be allocated to capital spending.

Guided by national economic policies over the medium term, the budget for fiscal year 2025/26 will align with the medium-term fiscal consolidation path, supporting the implementation of the National Strategy for Transformation (NST2) goals while maintaining public debt at sustainable levels.

Under NST2, the 2025/26 national budget will prioritise: increasing crop and livestock productivity, promoting private investment, job creation and exports, accelerating industrialisation with a focus on manufacturing, promoting sports and creative arts, expanding generation and access to electricity, scaling up access to water, sanitation and decent housing.

The government plans to strengthen its transport system, leverage ICT and innovation to improve service delivery, deepen financial inclusion and enhance resilience to climate change through mitigation and adaptation.

According to the Ministry of finance, Rwanda’s economy has remained resilient despite various setbacks, posting a robust growth rate of 8.9% in 2024, exceeding the previously projected 8.3%. This growth was driven by strong performances in the services and industry sectors and increased food crop production.

Based on its fundamentals, Rwanda expects a strong economic out turn in the midterm, despite a challenging environment caused by climate change effects, global inflation, geopolitical tensions, trade wars, among other factors.  The government planned to maintain macroeconomic stability and fostering inclusive growth by investing in key areas such as agriculture, manufacturing, healthcare, social protection, and education.

Like its other EAC member states the government was yet to pinpoint where the exact tax pinch points would be placed and who shoulders the largest tax burdened would be placed.  Rwanda has traditionally generated revenues from income taxes such as VAT and Corporate taxes. It is anticipated that with the current economic forecasts; Rwanda’s tax base will remain relatively the same.

Moreover, Rwanda faces potential disruptions caused by the ongoing conflicts in eastern DRC, targeted sanctions over alleged support for the M23 rebels, contractions caused by the US Tariffs and an erratic climatic condition affecting Rwanda’s agricultural sector and its coffee export products. All these will exert pressures on the economy and likely influence the final budget out turn.

South Sudan

The latest budget for South Sudan, as approved by parliament in November 2024, is estimated to be 4.2 trillion South Sudanese Pounds (SSP). This budget includes a significant fiscal deficit of 1.9 trillion SSP, which is approximately 45% of the proposed expenditure. The budget for 2024/25 approval was delayed and faced concerns regarding a fiscal deficit of 1.9 trillion SSP, which is 45% of the proposed expenditure[2].

This budget approval followed a significant delay, as South Sudan’s previous fiscal year ended on June 30, 2024. According to the November 2024 IMF debt sustainability analysis, South Sudan’s overall and external debt remains sustainable but with a high risk of debt distress. The present value of public debt to GDP was estimated at 38.3% in 2023/24 and projected to reach 48.6%[3].

Over the past years South Sudan has faced significant budgeting challenges which include maintaining a stable macro-economic performance, raising of stable revenues and passing of the national budgets through its legislative organs.

The world bank reported that between July 2024 and January 2025, the gross revenue collection increased by 107.48 % from SSP 187.42 billion to SSP 388.86 billion compared the same period in the FY2023- 2024. It however noted that despite this performance, this outcome was 52.73% below the estimated target of SSP 559.5 billion (an average of SSP 94 billion monthly).

The key tax types contributing to these revenues were Personal Income tax (39.30%), customs taxes and duties (27.87), business profit tax (7.26%) and excise taxes (5.81%). The World Bank urged Swift and Sustained Reforms to Accelerate Economic Recovery and Inclusive Growth[4]

In its 7th Edition of South Sudan Economic Monitor (SSEM) titled “A Pathway to Overcome the Crisis” released in March the World Bank assessed that South Sudan’s economy was projected to contract by 30 percent in FY24/25, but with a projected rebound in FY25/26, if there was a resumption in oil exports of the country’s Dar Blend Oil. The SSEM further noted that South Sudan’s economy had declined for five consecutive years and projected that Gross Domestic Product (GDP) per capita was estimated to decline to around half of FY20 levels.

The report indicated that the projected contraction was primarily due to the disruption of oil production which had led to a significant decline in export revenues, estimated at $7 million per day. This had strained public finances, contributing to salary arrears and reduced spending on essential services like health and education.

The world bank further reported that South Sudan’s socio-economic outcomes have worsened over the past decade due to recurrent conflicts, fragility, and macroeconomic mismanagement compounded by global economic and climate shocks. Even before the oil shock of early 2024, per capita gross domestic product had dropped by 18 percent relative to its 2015 level, with prices rising 93-fold over this period. The erosion in living standards has left three in four people in poverty as of 2022.

Additionally, hyperinflation and widespread food insecurity affect nearly 80 percent of the population, while poverty was calculated to have risen to 92 percent based on available data. Weak governance, poor management of oil revenues, and ineffective fiscal policies had contributed substantially to these issues. Furthermore, the underdeveloped financial sector limited economic diversification and access to credit.

Without addressing these significant political and governance challenges, South Sudan’s budgeting exercise would largely remain theoretically on paper, with minimum trickle-down effects to its development ambitions and tangible benefits felt by the citizens.

Budget Trends of Select EAC Countries 2023/24-2025/26

Country

2023/24

2024/25

2025/26

Kenya

Ksh3.7trln

Ksh 4.0Trln

Ksh 4.23 trln

Tanzania

Tsh44.3Trln

Tsh49.3Trln

Tsh 57.0trln

Uganda

Ush52 Trln

Ush72.1trln

Ush72.4trln

Rwanda

Frw5.0Bln

Frw 5,8 bln

Frw 7,032bln

Burundi

BIF3.9Bln

BIF 4.4trln

BIF5.2Trln

South Sudan

SSP 2.1Trln

SSP 4.2trln

 

Source:  Multiple publicly available data analyzed by GEPC Researcher

Key lessons from previous budget cycles

The trend shows that some countries have learnt from previous years’ experience and taken some measures to avert the pit falls from the past while others still pursue a Business-as-Usual approach. For example, the Kenyan government conducted extensive public consultation, proposed a modest budget by making some cuts to expenditures for Ministries, Departments and Agencies including parliament. Uganda proposed a modest increase in its budget compared to last year when the government increased its budget by more than 14% compared to the previous year.

On the contrary Tanzania and Rwanda have taken a Business-as-Usual approach by proposing a large spike in their budget size by 13% and 21% respectively compared to last year. This is within the context of an evolving perilous geopolitical context, with disruptions that may affect regional and global economic growth, thereby having a dampening effect on Tanzania’s national growth projections. Moreover, the ongoing political unrests related to the 2025 general elections may equally have an impact on economic growth, investment and aid inflows into the country. Performance of key sectors such as tourism could be affected.

# Regressive taxation of consumption and essential services such water and communication are still prominent in the national budgets despite their distortionary effects and resistance from the citizens

As governments tabled their Budget Framework Papers, so far what is not very clear across all the countries at that stage was the tax measures that governments will implement to raise the domestic tax revenues required to support the budget estimates.  Lessons from previous budgeting cycles indicated that taxation to finance the budgets has been concentrated on limited sources and attempts to diversify these sources by taxing essential commodities such as bread and milk met resistance, violence and boycotts in Kenya, Uganda and Tanzania. It is imperative that governments avoid a replay of the same approaches to taxation.

# Tax to finance debt. The debt burden has constantly accumulated exerting pressure on national budgets to pay off. Countries such as Kenya are on the brink of default.  Almost half of taxes revenues collected by governments in the EAC will be used to finance debt. Governments are borrowing to pay off debts.

# Taxation to finance huge nugatory public expenditure, such as a large number of unconstitutionally mandated litany of political advisors and assistants. Okoa Kenya civil society network described Kenya’s 2025/26 budget estimates as a budget for political survival. According to Okoa Kenya’s budget analysis, despite significant cuts to some essential sectors such as education, funding for political advisors increased significantly. For example, funding for Government Advisory services under the Executive Office of the President increased by Ksh200 million from Ksh1.1bln to Ksh1.3bln in 2025/26[1].

# Increasing trend of over expenditure on security and classified votes. While expenditure for classified accounts is a common feature in budgets across the world, when this becomes a prominent vote of the national budget such as the case of Uganda, it becomes a major lacuna of concern in undermining the national budget processes as classified accounts can be also conduits for abuse and nugatory expenditures.

Moreover, there is an increasing trend of resources being diverted away from essential long-term social services such as education and health towards financing short term politically attractive initiatives such as PDM, Emiyooga and Hustler Funds, whose repayment trends are not sufficient enough to recycle the funds to other beneficiaries. While these initiatives are commended for channeling funds to reach directly to poor citizens who need them, they are thinly spread and low repayments undercut their concertation and momentum against poverty.

According to Susan Mangeni, Kenya’s Permanent Secretary for Small, Micro and Medium Enterprises report 51% of all hustler funds totaling to Ksh 5bln-11bln could not be recovered and the Non-Performing Loans were soaring at 21% of the total fund[1].

# Perennial supplementary budgets have become a common feature in most governments budget execution cycles. While supplementary budgets are useful as a short-term cure of budget shortfalls, on the flipside, supplementary budgets are expenditures executed outside the traditional budget process and can be subject to abuse as expenditures incurred are only approved by parliamentary oversight retrogressively after they have been spent. Supplementary budgets can therefore be effectively be used by the executive as a mechanism for avoiding parliamentary scrutiny and oversight.

# There is a geopolitical development aid switch from the West towards the East with the UAE and China becoming major aid donors. With dwindling aid from the western capitals such as the US and the EU, Governments in the EAC countries are now courting and embracing new donors with the UAE becoming a prominent new donor. These new donors have strategic interests to pursue whose effects may be equally repugnant to EAC’s member states economic aspirations in the long run. For example, China’s strategic security and resource interests in the region are known but the UAE’s interests in East Africa and the terms for its aid packages are not clearly known.

# Economic distress and such as conflicts and political polarization remains a persistent feature in East Africa’s fragile states such as South Sudan, Somalia and the Democratic Republic of Congo, delaying approval or causing disruptions in planned government expenditure plans.

Recommendations

# Continuously expand the tax base by consistently seeking for new tax revenue sources. These includes reviewing and remodeling of existing tax policies by easing stress on taxation of sectors that affect ordinary citizens.

# Consistently reduce dependence on foreign aid and switch towards mutually beneficial public private sector partnerships to finance large infrastructure projects. The terms for such partnerships must be transparent and subject to public participation so as to avoid exploitative contracts.

# Persistently reduce political structures and cut excessive and bludgeoning expenditure on political processes and positions whose direct contribution to economic growth and wellbeing of the country is negligible

# Increase public participation and respect of citizens views on budget matters and alignment of budgets to citizens demands, interests and concerns. Legislation of meaningful citizen participation in budget process can go far in expanding the quality and citizen’s trust in national budgets

# Constantly review resource taxation to ensure natural resources such as minerals, oil, natural gas, tourism, fisheries and forestry benefit the country and communities where they are located.

# Curb tax evasion and aggressive tax avoidance measures by corrupt individuals and multinational companies that are still chronically contributing and abetting large illicit capital outflows from the countries

Select resources for further reading

Africa Development Bank (AfDB); South Sudan Non-Oil Revenue mobilization and accountability in South Sudan, available at https://www.afdb.org/sites/default/files/documents/projects-and-operations/south_sudan_-non-oil_revenue_mobilisation_and_accountability_in_south_sudan_-_p-ss-kf0-004_-_ipr_february_2025_.pdf

World Bank (March 2025); 7th Edition of South Sudan Economic Monitor (SSEM) titled “A Pathway to Overcome the Crisis”  available at https://www.worldbank.org/en/news/press-release/2025/03/13/world-banks-afe-south-sudan-economic-monitor-urges-swift-and-sustained-reforms

[1] https://www.parliament.gov.rw/news-detail?tx_news_pi1%5Baction%5D=detail&tx_news_pi1%5Bcontroller%5D=News&tx_news_pi1%5Bnews%5D=45429&cHash=0f532483c470ea74ca980e0387f0e5a6

[2] https://www.afdb.org/sites/default/files/documents/projects-and-operations/south_sudan_-non-oil_revenue_mobilisation_and_accountability_in_south_sudan_-_p-ss-kf0-004_-_ipr_february_2025_.pdf

[3] ibid

[4] https://www.worldbank.org/en/news/press-release/2025/03/13/world-banks-afe-south-sudan-economic-monitor-urges-swift-and-sustained-reforms

[5] https://www.businessdailyafrica.com/bd/economy/over-half-of-hustler-fund-borrowers-default–4755528

Assessing Implications of Trumps Tariffs on Intra East Africa’s Regional and International Trade

By Moses Kulaba, Governance and Economic Policy Centre

Effective 5th April 2025 (with a pause of 90 days) the US President Donald Trump slapped a global tariff of 10% on all exports to the US. The US tariffs has caused a lot of turbulence and uncertainty about the future of the WTO rules based global trade as we knew it. The future of EAC -US trade is unknown and during this period loses will be counted particularly in the agriculture, textiles, apparel and handcrafts sector. However, in the midst of turbulence, the EAC has an opportunity of re-inventing its intra-regional and international trade, and perhaps emerging stronger.  This policy brief analyses the implications of the US tariffs on EAC intra-regional trade and what options the member states can take.

Background on EAC -US Trade Relations and Trade Flows

The East African Community (EAC) and Sub-Saharan Africa generally have been major trading partners with the United States for decades and so far, the fastest growing markets in the world according to the International Monetary Fund.  The US has signed multiple trade agreements allowing smooth trade flows across the two regions, with the US enjoying an overwhelming trade surplus for decades. In 2008 the U.S. signed Trade and Investment Framework Agreements (TIFA) with the EAC regional economic block in 2008.

The purpose of the TIFA was to strengthen the United States-EAC trade and investment relationship, expand and diversify bilateral trade, and improve the climate for business between U.S. and East African firms. Earlier in 2000 the US had passed the African Growth Opportunity Act (AGOA), a trade preference program that allowed selected goods from EAC duty free market entrance into the United States. AGOA had helped expand and diversify African exports to the United States, while at the same time fostering an improved business environment in many African countries through the application of eligibility requirements.  In 2015, the U.S. Congress extended AGOA through 2025. 

According to the Office of US Trade Representative data the U.S. goods exports to East African Community in 2022 were $1.1 billion, up 2.0 percent ($22 million) from 2021 and up 15 percent from 2012. U.S. goods imports from East African Community totaled $1.3 billion in 2022, up 40.4 percent ($367 million) from 2021, and up 121 percent from 2012. The U.S. trade balance with East African Community shifted from a goods trade surplus of $211 million in 2021 to a goods trade deficit of $135 million in 2022[1].Although the US suffered a goods trade deficit in 2022, it has continued to enjoy trade surpluses with individual EAC member Countries as reported by the US trade Administration.

Table of US-EAC Trade flows and Surplus for 2023-2024

Country

Total Goods Trade with US 2024 (USD)

US Exports

(2024)

US Imports

(2024)

Surplus (2024)

% Increase in Surplus compared to 2023

Kenya

1.5Bln

782.5Mln

737.3Mln

45.2Mln

110 (454.6Mln)

Tanzania

778.1Mln

573.4Mln

204.7Mln

368.7Mln

45.8 (115.8Mln)

Uganda

238.9 Mln

106.3 Mln

132.6 Mln

26.3Mln

574.3 ($31.9Mln)

Rwanda

75.0Mln

44.8Mln

30.2Mln

14.5Mln

4,060 (($14.2Mln)

Democratic Republic of Congo

576.4Mln

253.3Mln

323.1Mln

69.8M

20.9 ($18.4 Mln)

Burundi

$10.4Mln

$6.6Mln

$3.7Mln

$2.9Mln

224.3 (5.2Mln)

South Sudan

$60.1Mln

$59.3 Mln

$0.8Mln

$58.5 Mln

16.0(8.1Mln)

Somalia

$51.6Mln

$49.1 Mln

$2.5 Mln

$46.6Mln

0

Source: Office of US Trade Representative data analyzed and presented by GEPC researcher

Over the years, through its trade diplomacy, the US had cemented long lasting relations paving way for other strategic economic, political and security relations, with the EAC member states including defense. With the new tariff wall, if not changed, this long-term relationship could be bound for a new trajectory.

Knock-on Effects of Tariffs

Tariffs have knock offs whose effects can trickle down the goods and services value chain in many ways, affecting both producers, exporters and consumers down the trade supply chain.

A tariff is a duty imposed by a national government, customs territory, or supranational union on imports of goods. Besides being a source of revenue, import duties can also be a form of regulation of foreign trade and policy that burden foreign products to encourage or safeguard domestic industry[1]. At their core, tariffs are simple: they raise the domestic price of imported goods. But their effects ripple through the economy in complex ways – altering prices, wages, exchange rates and trade patterns.

Simply put, a tariff is a tax on imported products. It creates a difference between the world price and the domestic price of a product. Tariffs raise the price of imported goods relative to domestic goods (good produced at home).  For example, if a US Tarif of 10% is applied on world price of coffee of USD200, the domestic price of coffee in the US market becomes USD 220 per kilogram. The government collects the difference of USD20 dollar as tariff revenue to finance other public expenditures.

Tariffs can also affect the world price of a product, particularly when they are imposed by a large economy. The logic is that higher domestic prices reduce domestic demand, which in turn lowers world demand, and thus world prices. In our example, the world price might fall to $150 after the tariff is imposed, resulting in a domestic price of $165. In this case, part of the tariff is effectively paid by foreign producers[2].

This cost-shifting creates incentives for large economies to unilaterally impose tariffs. However, this so-called optimal tariff argument overlooks the possibility of retaliation. If country A imposes tariffs on country B, country B has an incentive to respond in kind. The end result is a trade war that leaves both sides worse off[3].

With the current US tariffs, the prices of goods entering into the US market will increase by 10%. For example, the price of coffee will increase by 10% making it more expensive for Americans to afford. Similarly, the costs for other agricultural products, textiles and handcrafts will suffer the same fate. The resultant effect of this will be a low demand for these goods in the US markets affecting EAC farmers and exporters. We can further illustrate this with a simple of the effects of the tariffs on handicrafts from the EAC. 

Because of increased tariffs and a decline in demand for the Makonde carvings, the exporter of Makonde Carvings and paintings will buy less. The Makonde carver and painter in Mtwara and Mwenge will lose business and sell less. The transporter of Makonde carvings will have little business and therefore send a few trucks to collect and deliver the carvings to Dar es Salaam. The exporter will send a few containers and therefore the port handlers and clearing firms will have no business. The Makonde artist may completely close and ultimately the transporter and port handler may lay off staff. A similar experience can be the same for the Coffee producer in Uganda and Kenya, whose knock off effect of the US tariffs will trickle down the supply chain in a similar manner.

Tariffs in the Context of WTO and GATT rules

In the World Trade Organisation (WTO) rules-based system, when countries agree to open their markets for goods or services, they “bind” their commitments. A country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade[1].

Under the WTO (GATTs, GAT and TRIPs agreements) international trade and commerce is run based on a rule-based system and principles. These include;

  1. Most-Favoured-Nation (MFN), which requires treating other people equally. Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members[2]
  2. National Treatment of foreigners and locals equally where by imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. This also applies to services, trademarks, copyrights and patents. (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS) although there can be some variations in applications depending on an existing arrangement such as a Regional Economic block or once a product, service or item of intellectual property has entered the market can be a subject to customs duty or any other applicable duties.
  3. National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.
  4. Freer trade gradually through negotiations and reducing of trade barriers such customs duties (tariffs), import bans or quotas, selective restriction on quantities, bureaucracy and exchange rate policies.
  5. Predictability of trade through binding commitments and transparency. This encourages investment, job creation and consumers can enjoy the benefits of competition
  6. Promotion of fair competition, with an allowance of a limited. number of tariffs for limited protection, allowing thriving of domestic industry and protection against entry of harmful products.
  7. Generally, encouraging development and economic reforms aimed at increasing global trade flows and particularly allowing less developed countries to equally enjoy benefits of the global trade system.
    Tariffs as Tools for Trade Policy and Geopolitical Statecraft

    Tariffs are not universally banned from trade policy. Tariffs can be a useful tool for protecting domestic industries, generating revenue, and supporting economic development, especially in developing countries. They can equally be used as a foreign policy instrument to advance economic diplomatic ties between nations.

    According to the WTO, tariffs must not be used as weapon for trade distortion, carry the risk of increased costs for businesses and consumers, potentially stifling economic growth and competitiveness. However, the recent US Trump measures reorganize the rules on International Trade. Tariffs are now used as a political tool for advancing geopolitical and national security interests, including cajoling other trading partners and WTO member states into curving in to pressure aimed at achieving domestic political gains.

    There are contending views (including from the US Council on Foreign Relations) that according to the WTO rules, the US Trump tariffs are illegal, arbitrary, based on a wrong formular, not reciprocal, distortionary[1] and must be fought either at the WTO or through reciprocal measures taken by affected Countries. Poor application of tariffs can spark a contagion effect of tariffs wars across nations.

    Implications on EAC Trade and economic growth
    1. Rise in prices of EAC Export products in the US market by a commensurate percentage in response to the tariff charges unless the EAC exporters absorb or the US government cushions the consumers in someways
    2. Decline in export volumes EAC goods to the US by a commensurate percentage decline, depending on the tariff elasticity of the good affected by the US imposed tariffs
    3. Increase in import driven inflationary pressures in the EAC causing on the already current inflationary pressures in the EAC region
    4. Potential slow down in the regional economic growth in line with the IMF projected global economic slowdown of 2.8% in 2025 due to disruptions in global trade
    5. Shortage in supply of US dollars due to declining inflow from trade with the US. This could exert some depreciation of domestic currencies, as the dollar demand to purchase imports increases.
    6. Incentivize the rise in the use of Tariffs and blockades by countries in the region as tools for trade policy and coercion to achieve specific strategic interests, as countries mimic US behavior
    EAC Response options for Trade Creation and Diversion to new markets

    To date the EAC as a regional block has remained silent while its respective member states have decided to individually not to retaliate.  Uganda’s Ministry of Finance, clearly stated that it had taken a decision not to retaliate[2].  Similar statements were made by Kenya’s Ministry of Trade[3].

    Uganda’s trade volumes with the US were small and the US was a major beneficiary of this trade relationship, enjoying a goods trade surplus, while its nationals enjoyed cheap high quality agricultural exports such as coffee, tea, fruits and handcrafts from the EAC.

    The AGOA partnership agreement was bound to expire at the end of 2025 and the US and EAC were already on the road towards negotiating new trade arrangements, if AGOA was not extended. Moreover, some Countries such as Uganda, Burundi, South Sudan and Somalia were not eligible for AGOA in 2024 due to among others sanctions imposed by the US for various reasons (including conflicts, human and political rights violations) and were already searching for markets elsewhere.

    The EAC as a regional block was pushing for increased intra-regional trade. The East African Business Council, an apex body of businesses and companies, has always been concerned with low volumes of intra EAC trade as compared to other economic regions. 

    This has been widely linked to existence of tariff and non-tariff barriers, including stringent rules of origin, Stay of Applications which allows member states to charge or exempt different tariffs on some specific goods different from the Common External Tariff, differences in taxes such VAT, Income Taxes and Exercise duties. It was further concerned with the bilateral negotiations of trade deals with third parties. The East African Business Council (EABC) advocated and has been pushing the EAC to continue negotiating the EAC-EU Economic Partnership Agreements (EPA) and the EAC-UK EPA as a region to avoid creating mistrust and distortion of the EAC Common External Tariff (CET)[4]

    The new US tariffs therefore offer the EAC and Sub-Saharan Africa region with a window of an opportunity to disconnect itself from the US markets by deepening intra-regional trade, diversifying and diverting its trade to other regions such as Africa via Africa Continental Free Trade Area (AfCFTA), the EU, the Middle East and China.

    AFCTA offers flexible rules and unfettered free access to a market population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion[5]. The AfCFTA aims to eliminate trade barriers and boost intra-Africa trade. In particular, it is to advance trade in value-added production across all service sectors of the African Economy[6]. There are a lot of opportunities in the AfCFTA for the Private sector in the EAC as it offers a larger and diversified market for goods and services. According to President Museveni Uganda will now focus on African markets[7]

    The EU has been a major trading partner and EU trade in goods (imports and exports) with the EAC has risen steadily comparatively to 2007 volumes[8]  In 2023 the EU trade in goods and services with the EAC region amounted to EUR106Bln. The EU trade in services amounted to EUR 5.9bln. If compared to 2022 the EU trade in goods with the EAC region reached EUR 5.7bln while imports from the EAC were EUR4.9bln. Exports in services were valued at EUR3.0Bln compared to EUR2.9 bln imported from the EAC[9]. The major exports to the EU from the East African Community are mainly coffee, cut flowers, tea, tobacco, fish and vegetables. Imports from the EU into the region are dominated by machinery and mechanical appliances, equipment and parts, vehicles and pharmaceutical products[10].  Kenya and Tanzania were the leading EU trade partners.

    China is already a major trading partner with the EAC and had surpassed the EU and the US. In 2023, China was the largest source of imports for the East African Community (EAC), with imports valued at $11 billion. The EAC’s exports to China in the same year were valued at $15.8 billion. China is closely followed by the United Arab Emirates (UAE) at US$6.4 billion in 2023[11].

    From the statistics, the EAC already enjoys a trade surplus with China. Although there are concerns over unethical business conducts, including the risk of stifling industrial growth by flooding the EAC with cheap substandard goods, China remains a huge market of about 1billion people, it is the second largest economy in the world and the largest one in RCEP with a GDP of 16,325 billion USD in 2022 (World Bank, 2023).  Chinese demand for EAC products is enormous and projected to grow.

    The EAC also has an opportunity of benefiting from arbitrage practices, whereby producers from highly US tariffed countries set up business to produce, buy, sell or reroute their products via the EAC to take advantage of the tax and price differences. In this case highly taxed countries such as China and Lesotho would be interested in setting up business in EAC.  Kenya has already made a move with President Ruto’s visit to Beijing to attract Chinese businesses to set business in Nairobi.

    Recommendations

    For this to happen, the EAC and its member states will have to

    1. Diversify, Divert and Create trade. This happens when new or existing regional economic grouping (Free Trade Areas or Customs Unions) leads to creation of new trade that never existed before or leads to shifts in trade flows from efficient nonmember exporters to non-efficient member exporters among others due to preferential tariffs charged amongst member states.
    2. Invest in processing and industrial production of agricultural products and raw materials into finished products that can be sold or consumed locally and in the new markets
    3. Address existing tariffs and non-tariff barriers to trade such as VAT, Excise duties, income taxes, bureaucracy and infrastructure which have been an obstacle to intra-regional trade.
    4. Revive old economic partnerships with the EU and explore new partnerships with the EU, South America, Middle East and China
    5. Establish linkages between the farmers and manufacturer so as to create value and sustainable supply chains of quality products for the market
    6. Address political differences, instability and conflicts affecting cordial economic cooperation and free flow of goods across EAC and African borders.

     References 

    European Commission: Trade and Security available at https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/east-african-community-eac_en

    Ralph Ossa; Views of the Chief Economist, World Trade Organisation, available at: https://www.wto.org/english/blogs_e/ce_ralph_ossa_e/blog_ro_11apr25_e.htm accessed 14 April 2025

    The New Times (May 02, 2025) available at https://www.newtimes.co.rw/article/21152/news/africa/eabcs-adrian-raphael-njau-advocates-for-stronger-eac-market

    WTO; Principles of the Trading system available at: https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm#:~:text=In%20the%20WTO%2C%20when%20countries,the%20case%20in%20developing%20countries.

    [1] https://www.cfr.org/blog/five-things-know-about-trumps-tariffs

    [2] Mr Ramadhan Ggobi , Permanent Secretary for Treasury made these remarks while addressing a press conference at the Ministry of Finance

    [3] Mr Lee Kinyanjui, PS for Trade, Kenya in an Interview with  Citizen TV available on Citizen digital via https://www.citizen.digital/news/what-it-means-for-kenya-after-us-imposes-10-export-tariff-trade-cs-kinyanjui-n360379

    [4] https://www.newtimes.co.rw/article/21152/news/africa/eabcs-adrian-raphael-njau-advocates-for-stronger-eac-market

    [5] https://au-afcfta.org/about/

    [6] ibid

    [7] https://eastleighvoice.co.ke/african%20markets/140091/museveni-says-uganda-to-focus-on-african-markets-amid-us-tariff-hike

    [8] https://www.europarl.europa.eu/RegData/etudes/BRIE/2024/766228/EPRS_BRI(2024)766228_EN.pdf

    [9] ibid

    [10] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/east-african-community-eac_en

    [11] https://www.eac.int/trade/79-sector/trade#:~:text=China%20is%20the%20dominant%20source,US%246.4%20billion%20in%2020

Webinar Series: Assessing Implications of Trumps Tariffs on Intra East Africa’s Regional and International Trade

The rules of world trade are being redefined. We are delighted to invite you to plug and join in as we explore and discuss this interesting topic on regional economic cooperation, trade and investment. 

The East African Community (EAC) and Sub-Saharan Africa generally have been major trading partners with the United States for decades and so far, the fastest growing markets in the world according to the International Monetary Fund.   Since 2001, the US has signed multiple trade agreements (including AGOA in 2001 and TIFA in 2008) allowing smooth trade flows across the two regions, with the US enjoying an overwhelming trade surplus for decades. Under AGOA EAC selected products had duty free access to US markets. US trade relations with EAC member states were booming.  For instance, in 2024 the US trade surplus with Rwanda increased more than 4000% compared to 2023.

Effective 5th April 2025 the US President Donald Trump slapped a global baseline tariff of 10% on all exports to the US. The US tariffs have caused a lot of turbulence and uncertainty about the future of the WTO rules based global trade as we know it. The future of EAC -US trade is unknown and during this period loses will be counted particularly in the agriculture, textiles, apparel and artifacts sector. However, in the midst of this turbulence, the EAC may have an opportunity of re-inventing its intra-regional and international trade, and perhaps emerging stronger by looking elsewhere. 

This webinar will enable stakeholders and the public understand the issues at play and the potentially new World Trade Order that we could moving towards. Expert speakers at this webinar will analyze the implications of the US tariffs on EAC intra-regional and international trade and what options the EAC block and member states can take.

The Governance and Economic Policy Centre (GEPC) is a regional governance and development policy organization, based in Tanzania, interested among others in promoting economic and fiscal governance, with a national and regional focus on East and Africa Great Lakes Region.

The webinar is organized as part of GEPC’s project on promoting regional economic cooperation, trade and investment implemented in collaboration with the Africa Economic Diplomatic Study Circle (AEDSC), a loose network of practicing professionals, students of economic diplomacy, international relations and development based on the African continent, working to promote Africa’s position in the global space.

Our distinguished speakers will be;

Ms McDowell Juko, Chairperson East Africa Business Network (EABN): Elsa Juko-McDowell, a native of Uganda, is a remarkable individual with a deep passion for people and business. Her journey began in 2015 when she joined the East Africa Chamber of Commerce (EACC), an 18-year organization devoted to fostering trade and investments between the United States and East Africa, currently known as the East Africa Business Network. owns multiple businesses, including real estate development, investments, and consulting ventures. Additionally, Elsa serves as a North Texas District Export Council member.  Can be reached via: info@eabn.co or chairman@eabn.co

Mr. Adrian Njau, Ag. Executive Director, East African Business Council: Adrian Njau is the Executive Director of the East African Business  Council (EABN), the apex advocacy body of private sector associations and corporates from the 7 East African Community (EAC) Partner States (Kenya, Democratic Republic of the Congo, Tanzania, Rwanda, Burundi, Uganda and South Sudan). Adrian holds a Master’s Degree in International Trade and a Bachelor’s Degree in Economics, both obtained from the University of Dar es Salaam. His academic background is complemented by professional certifications and specialized training in trade, investment, policy and regional integration from Switzerland, Singapore, and Sweden, among others. With over two decades of experience, Adrian has been instrumental in research and policy at the Chamber. Can be reached via: Email: info@eabc-online.com

Mr Robert Ssuna, International Trade and Tax Expert, Researcher and Consultant, Governance and Economic Policy Centre:  Robert is an Independent Consultant on Tax Trade and Investment. He is Chartered Economic Policy Analyst (CEPA), a Fellow of the Global Academy of Finance and Management with over 15 years of experience in economic policy analysis focusing on tax, trade, and investment at national, regional, and global levels. He is also a member of the Base Erosion Profit Shifting (BEPS) Monitoring Group. Prior to this, he served as a Supervisor Research Statistics and Policy Analysis in the Research and Planning Division of the Uganda Revenue Authority. Can be reached via: ssuunaster@gmail.com

Hon: Dr Abullah H Makame, Member of East Africa Legislative Assembly (EALA):  Dr Makame, is a distinguished member of the East African Legislative Assembly (EALA) based in Arusha, Tanzania, where he is a commissioner and a former Chairperson of the Standing Committee in Agriculture, Environment, Tourism and Natural Resources. Dr Makame has served in various senior capacities in both the Government of United Republic of Tanzania and Zanzibar; academically, his docorate is from Birmingham UK and MSc from Strathclyde – Scotland, he holds a Professional Certificate in International Trade from Adelaide and has published both locally and internationally. Dr Makame serves in various boards across the EAC region. Can be reached via email: abdullah.makame@gmail.com

Mr Moses Kulaba, Executive Director & Convenor, Governance and Economic Policy Centre: Mr Moses is a political economist, tax and economic diplomat with more than 20 years of active service in international public, private and civil society sector.  Prior to joining GEPC he served as the East Africa Regional Manager for the Natural Resources Governance Institute, where he worked with various stakeholders including governments to advance fiscal policies and governance of the extractive sector. Has served on the international board of the EITI and in consultancy roles for UN, DFID and the EU. Can be reached via : moses@gepc.or.tz or mkulaba2000@gmail.com

Webinar Date: Tuesday, 6th May, 2025

Time: 10:30AM-12:30 PM (Nairobi Time)/ 9:30AM (CAT)/ 7:30AM (GMT)

Online Participation via Google meet video link: https://meet.google.com/odd-ysgh-dtf

How Tanzania Government plans to leap jump mining to the future

 

Tanzania’s mining sector has been a mix of sweet and sour, with of economic progress and injustices at the same time. In an earlier brief that we published, we traced, from an investors perspective, Tanzania’s mining history, the key reforms and pitfalls that have befallen this remarkable sector making it the most loved and hated at the same time, with a conclusion, that despite the progress made, government needs to do more to restore its past glory. In this article the government of Tanzania responds to stakeholders, reassuring confidence that the mining sector is destined for the better.

By Tanzania Ministry of Minerals

The mining sector is one of the key sectors in Tanzania, contributing significantly to the country’s GDP, employment, and social development. The minerals available in Tanzania include Metal Minerals such as Gold, Copper, Iron, Silver, Nickel; Industrial Minerals such as Graphite, Gypsum.

Other Minerals include Energy Minerals such as Coal, Uranium; Gemstones such as Diamond, Ruby, Emerald, and the unique Tanzanite found only in Tanzania; Rare Earth Elements such as Neodymium, Lanthanum, Cerium; and Construction Minerals such as gravel, sand, marble, and limestone.

Therefore, the government has been implementing various strategies to ensure these abundantly available resources benefit the nation and its citizens as a whole.

We will continue to improve our legislation and business environment to make sure that the available mineral resource trajnhmki0nsform Tanzania to a developed country while proactively minimizing constraints and challenges that might affect the investment- President Samia Suluhu Hassan while speaking at the Ming Conference 2024

Contribution of the Mining Sector to GDP

According to the 2023/2024 financial year report released by the Ministry of Minerals, the mining sector contributed approximately 9.1% of Tanzania’s GDP by 2022. In the 2023/2024 financial year, the mining sector’s contribution reached TZS 6.4 trillion, showing rapid growth due to the government’s efforts to enhance revenue collection and improve the investment environment.

Employment in the Mining Sector

Employment is one of the crucial areas where the mining sector has brought significant changes. By March 2024, the mining sector had created approximately 19,356 jobs, with 97% of these jobs going to Tanzanians. This equates to 18,853 jobs for Tanzanians and 505 jobs for foreigners. The government has established laws and regulations prioritizing Tanzanians in job opportunities arising from mining activities to ensure citizens gain employment and income.

Investment and Mining Economy

Investment in the mining sector has continued to grow rapidly, with the government encouraging both local and foreign companies to invest in exploration, mining, and value addition. In 2023, Tanzanian companies sold goods and services worth USD 1.48 billion (over TZS 3.75 trillion) to mines, accounting for 90% of all sales made to mines. This demonstrates the importance of the private sector in boosting the mining sector and the economy overall.

The United States International Trade Administration estimates that the sector will reach $6.6 billion in value in Tanzania by 2027[1].   In addition to mining the minerals, this emerging sector provides opportunities to capture more value from critical minerals before exporting, by establishing mineral processing centres within the country

Government Strategies

Given the sector’s importance, the Tanzanian government has implemented various strategies to enhance the mining sector to increase productivity and growth through Vision 2030: Minerals are Life and Wealth. The government plans to conduct comprehensive geoscientific surveys (High-Resolution Airborne Geophysical Survey) for at least 50% of the country, up from the current 16%, by 2030. This survey aims to identify new mineral-rich areas and encourage further investment. Other strategies include:

  1.  Improving Infrastructure: The government has invested in improving road and electricity infrastructure in mining areas to facilitate the provision of essential services and attract investment.
     
    2.    Training Small-Scale Miners: The government, in collaboration with educational and training institutions, has initiated training programs for small-scale miners to enable them to use better technology and improve production.

  2.  Promoting Value Addition: The government encourages companies to establish value addition industries for minerals within the country rather than exporting raw minerals. This includes the production of refined gemstones and other valuable products.
  3.  Technology Support for Small-Scale Mining: Through the State Mining Corporation (STAMICO), the government has acquired five rig machines to assist small-scale miners, saving them time and production costs. Another 10 machines are expected to arrive soon, bringing the total to 15.

  4.  Addressing Capital Challenges for Small-Scale Miners: Through the Ministry of Minerals and STAMICO, the government has facilitated access to loans and capital for small-scale miners in collaboration with financial institutions. Banks like CRDB, KCB, and NMB have started offering low-interest loans to these miners, enabling them to purchase modern equipment and conduct their activities more efficiently. From July 2023 to March 2024, TZS 187 billion was loaned to small-scale miners.

Success Stories

  1.  Buckreef Gold Mine: Located in Geita region and owned jointly by STAMICO and TANZAM2000, this mine produced 13,577.43 ounces of gold from July 2023 to March 2024, contributing USD 1,943,180.94 in royalties, inspection fees, and taxes.
  2.  Corporate Social Responsibility (CSR) Projects: Various mining companies in the country have invested TZS 17,084,055,359.58 in community development projects around their mining sites, including the construction of schools, hospitals, roads, and water infrastructure.

Future of the Mining Sector

Courtesy Photo: Clean Nickel

The future of the mining sector in Tanzania looks promising due to the strategies set by the government in collaboration with stakeholders and ongoing investments. Key areas showing great potential include Strategic and Critical Minerals such as lithium, nickel, graphite, and cobalt, essential for producing electric vehicle batteries and other modern technology devices.

Conclusion

Overall, the mining sector in Tanzania has significantly contributed to economic and social development. The achievements of recent years highlight the sector’s considerable potential in increasing the national GDP, providing employment, and improving citizens’ livelihoods. However, the government, through the Ministry of Minerals, continues to establish sustainable strategies and foster partnerships with the private sector and other stakeholders. These strategies will enable Tanzania to continue reaping more benefits from its mineral resources and ensure sustainable development for future generations.

[1] https://www.trade.gov/market-intelligence/tanzania-rare-earth-and-critical-minerals#:~:text=It%20is%20estimated%20that%20the,processing%20centers%20within%20the%20country.

Assessing the Impact of the EU’s Carbon Border Tax Adjustment Mechanism on Tanzania’s LNG plans and industrial exports

 The European Union’s (EU) proposed Carbon Border Tax Adjustment Mechanism (CBAM) aims to mitigate carbon leakage by imposing a carbon tax on imports of certain commodities that are not taxed internally within the exporter’s country at a comparable level. This policy brief evaluates the potential impact of the CBAM on Tanzania’s promising liquefied natural gas (LNG) project and fossil powered industrial exports. It offers strategic recommendations for mitigating adverse effects and enhancing Tanzania’s export competitiveness.

Author: Dr Lulu O’lang, Researcher and consultant, Governance and Economic Policy Center

Background:

Effective January 2026 the EU Carbon Border Adjustment Mechanisms (CBAM) will come into full force. As it stands, this carbon adjustment mechanism, which seeks to reduce the incentives for firms to outsource their carbon emissions and promote a more generalised low-carbon transition, might disproportionately impact some non-EU economies. Fossil based goods from a non-EU country will be required to pay a carbon fee before entering the EU. Because many of the potentially impacted economies have a low capacity to adapt their productive structure to shift to less-emitting industries or to adopt low-emission cutting-edge technologies(Magacho et al., 2024).

The EU Carbon Border Adjustment Mechanism (CBAM) is the EU’s landmark tool to prevent carbon leakage and support the EU’s increased climate ambitions. It works by putting a price on carbon emitted during the production of carbon-intensive goods entering the EU to incentivise cleaner industrial production in non-EU countries.  Carbon leakage refers to the process of shifted production and/or emissions to other jurisdictions with less stringent emission constraints. It is one of the key obstacles for the EU to reach its climate commitments. The CBAM was designed to specifically address this risk.

Carbon leakage can occur when a domestic carbon price negatively impacts the competitiveness of an entity operating in this domestic context.

This increased cost might result in the entity shifting its production to another country with a lower carbon price to reduce production costs. For example, a steel producer might consider relocating its production outside of the EU to avoid paying for the carbon it emits. Another possible instance of carbon leakage occurs when non-domestic producers that are not subject to the price of carbon enjoy significant competitive advantages compared to domestic producers, resulting in a shift of production abroad[1]. 

The CBAM is also intended to promote more environmentally friendly production methods in third countries. However, the implementation of the CBAM will have far-reaching implications for countries worldwide. Policymakers on both sides of this initiative must carefully consider a multitude of factors, including its impact on EU trade, its potential effects on the well-being of domestic populations, the influence it might have on public opinion, and broader economic relations with the EU. Some early studies indicate that middle and lower-income countries will be more impacted by CBAM. Hence, these countries may need more action from the EU(Sabyrbekov & Overland, 2024).

How it will work: Illustration below courtesy of  Ulla Wenderoth; Let me ship:https://www.letmeship.com/en/the-eu-carbon-border-adjustment-mechanism/

Goods covered

The CBAM will initially only be applied to goods with a high potential for carbon leakage: Aluminum, iron, steel, fertiliser, electricity, hydrogen and cement. The CBAM takes into account both greenhouse gas emissions that occur directly in the production of products and indirect emissions that arise from the manufacture of intermediate products or the electricity required for production.3 Both certain intermediate products and some downstream products such as liquefied natural gas, petrol, heating oil, synthetic rubber, plastics, lubricants, antifreeze, fertilisers and pesticides are affected. It is expected that all products that are also subject to intra-European emissions trading will be added in the coming years[1]. From 1 January 2026, only authorised CBAM declarants will be able to import the corresponding goods. 

General Effects of CBAMs

The effects of the Carbon Border Adjustment Mechanism:2

  • The import of these goods becomes more expensive due to the pricing of CO2 costs.
  • Potential additional revenues from CO2 pricing of imports are to be invested in climate protection.
  • Incentive for other countries to introduce CO2 pricing so that they can continue to trade freely with the EU.

Tanzania is on the verge of leveraging its significant natural gas reserves through an LNG project expected to substantially boost exports, particularly to the world market. The LNG is not being directly targeted in the first phase of CBAM. The EU’s CBAM in the first phase targets iron & steel and aluminum, in the next phase, it is cement, fertilisers, electricity, and hydrogen.  

The potential challenge to Tanzania’s LNG is primarily through the EU’s influence on global trade norms and expectations regarding carbon emissions. The broader implications for energy exports and the evolving scope of CBAM necessitate proactive measures from Tanzania. Tanzania’s engagement in carbon trading, as formalised by the Environmental Management (Control and Management of Carbon Trading) Regulations, 2022, signals a commitment to carbon reduction and trading practices.

Potential Impact on LNG plans

Competitiveness: The main issue that most developing countries are concerned about CBAM is the competitiveness of their products (Magacho et al., 2024; Perdana et al., 2024). Despite the initial phase of CBAM not directly affecting LNG, the trend towards global carbon pricing mechanisms may influence the competitiveness of Tanzania’s LNG. The naturally low CO2 content of Tanzanian gas, however, positions it favourably against competitors, potentially offering a competitive edge in a carbon-sensitive market.

Market Access: Tanzania’s LNG market is predominantly Asian countries, data shows that the export of Intermediate goods, food and vegetables dominates the export products to the EU. There is no clear plan for exporting LNG to the EU however should the plan include it in its expansion plan, the CBAM could set precedents affecting market access for energy exports by encouraging stricter carbon intensity benchmarks in the EU. Tanzania’s current carbon trading framework underlines its readiness to engage in carbon reduction initiatives, which could facilitate smoother market access. However, the means to determine the carbon content/ carbon accounting system of traded commodities is crucial  for export goods is still lacking.

Investment Climate: The uncertain trajectory of global carbon pricing policies, including the CBAM, may impact investment decisions related to the LNG project. If highlighted and leveraged, the project’s inherently low CO2 footprint could attract investment by showcasing its commitment to sustainable energy production.

Effects on Tanzania’s Industrial Export products:

CBAM will likely have impacts on industrial export products fired by fossil-based power sources such as Natural gas.

Although, natural gas is still considered a cleaner fossil, the debate is still out there whether it should be excluded from the list of carbon emitters. Depending on how this debate is concluded in the EU, Tanzania’s natural gas power fired industrial product could likely fall into this category and thereby jeopardizing Tanzania’s domestic LNG market and national gas to power plans.

Policy Recommendations

Strategic Engagement: Tanzania should pursue active dialogue with EU policymakers to understand evolving CBAM regulations and advocate for fair treatment of low-carbon intensity projects like Tanzania’s LNG.

Enhanced Carbon Mitigation: Leveraging its low CO2 emitting LNG, Tanzania should continue to invest in renewable energy integration and carbon capture technologies to further decrease the carbon footprint of its LNG exports.

Market Diversification: Given the LNG market’s tilt towards Asia, Tanzania should bolster efforts to diversify its export destinations, thereby reducing dependency on any single market and mitigating risks associated with CBAM. However, it is possible that in the near future CBAM would incentive Asian EU partners to adopt a carbon price mechanism because the amount charged as part of the CBAM deduces the current carbon price applied in the country of origin and these countries may impose tax on their imports to cover for the carbon tax when producing goods for export to EU.

Policy Development: There is no one-size-fits-all approach to designing and implementing CBAM to tackle competitiveness and carbon leakage; policy design and characteristics of the economy matter(Zhong & Pei, 2024).Tanzania should continue to develop and refine its carbon policy and trading regulations to align with international standards and practices, thereby enhancing the attractiveness of its export products including LNG in a carbon-conscious global market. This includes technical support for carbon accounting and regulatory compliance.

Conclusion:

While the CBAM presents challenges, it also offers Tanzania an opportunity to position its LNG project as a leader in low-carbon energy production. By engaging proactively with international partners, investing in carbon mitigation, and diversifying markets, Tanzania can enhance the resilience and competitiveness of its LNG exports in the face of evolving global carbon pricing mechanisms.

References

Magacho, G., Espagne, E., & Godin, A. (2024). Impacts of the CBAM on EU trade partners: Consequences for developing countries. Climate Policy, 24(2), 243–259. https://doi.org/10.1080/14693062.2023.2200758

Perdana, S., Vielle, M., & Oliveira, T. D. (2024). The EU carbon border adjustment mechanism: Implications on Brazilian energy intensive industries. Climate Policy, 24(2), 260–273. https://doi.org/10.1080/14693062.2023.2277405

Sabyrbekov, R., & Overland, I. (2024). Small and large friends of the EU’s carbon border adjustment mechanism: Which non-EU countries are likely to support it? Energy Strategy Reviews, 51, 101303. https://doi.org/10.1016/j.esr.2024.101303

Zhong, J., & Pei, J. (2024). Carbon border adjustment mechanism: A systematic literature review of the latest developments. Climate Policy, 24(2), 228–242. https://doi.org/10.1080/14693062.2023.2190074

[1] Let Me Ship, https://www.letmeship.com/en/the-eu-carbon-border-adjustment-mechanism/

[1] https://tracker.carbongap.org/policy/carbon-border-adjustment-mechanism/

For more about this work and valuable resources visit our website via: www.gepc.or.tz

How AI can be leveraged to power Africa’s sustainable energy systems

The evolution of energy production and consumption has undergone significant transformations over the decades, particularly in the context of Africa, where energy poverty remains a formidable challenge. This policy brief discusses how AI can be leveraged to  Africa’s power future.

By Evans Rubara*, Guest Expert, Governance and Economic Policy Centre

Featured image: Africa Energy portal, AfdB

Historically, the continent has grappled with inadequate infrastructure, unreliable power supply, and reliance on traditional biomass, hindering socio-economic development. As the global narrative shifts towards sustainability, the advent of power-to-energy technologies offers a promising solution. These innovative systems can convert surplus renewable energy into storable forms, such as hydrogen, potentially revolutionizing energy access in Africa. This article explores the intersection of Artificial Intelligence (AI) in powering energy and the unique socio-economic landscape of the continent, highlighting both the opportunities and challenges that lie ahead.

Understanding Energy Poverty in Africa

Energy poverty is defined as the lack of access to reliable, affordable, and sustainable energy services, which severely impacts individuals’ quality of life and economic opportunities. Energy poverty is a critical issue that affects millions across the African continent. According to the International Energy Agency (IEA, 2021), about 600 million people in Africa lack access to electricity, which accounts for nearly 46% of the population. This problem is especially severe in rural areas, where the lack of electricity can reach up to 80%. Even in regions with electrical infrastructure, power outages are common, forcing many families to rely on traditional biomass for cooking and heating. This reliance poses significant health risks and contributes to environmental degradation.

The consequences of energy poverty extend beyond mere inconvenience; they stifle economic growth, limit educational opportunities, and exacerbate health issues.

Without reliable power, businesses struggle to thrive, and families often resort to expensive and unhealthy alternatives. The World Bank (2020) estimates that the lack of access to electricity costs African countries around $5 billion annually in lost productivity. Therefore, addressing energy poverty is not only a moral imperative but also essential for broader socio-economic development across the continent.

The Role of Power-to-Energy Systems

Power-to-energy systems can play a crucial role in alleviating energy poverty in Africa. These technologies convert excess electricity into storable and transportable forms of energy, helping to manage the intermittent nature of renewable energy sources like solar and wind. In regions where energy production fluctuates seasonally, power-to-energy systems can provide a buffer, ensuring a more consistent energy supply.

For example, during sunny days, solar panels can generate surplus electricity that can be converted into hydrogen through a process known as electrolysis. This hydrogen can then be stored and used later for electricity generation or as fuel for transportation. Such flexibility allows energy supply to align more closely with demand, which is vital in areas where consumption patterns can be unpredictable.

The African Continental AI Strategy

 Artificial intelligence (AI) is technology that allows machines to simulate human intelligence and cognitive capabilities. AI can be used to help make decisions, solve problems and perform tasks that are normally accomplished by humans[1].

The African Continental AI Strategy is an initiative by the African Union aimed at leveraging artificial intelligence (AI) for socio-economic development across the continent. This strategy recognizes the transformative potential of AI (African Union, 2019) and seeks to address critical challenges in sectors such as healthcare, agriculture, education, and energy. By encouraging collaboration among member states and investing in AI research and infrastructure, the strategy aims to position Africa as a competitive player in the global AI landscape.

One of the key implications of this strategy is its potential to enhance the integration of power-to-energy systems. With nearly 600 million people affected by energy poverty, the incorporation of AI into energy systems can optimize the generation, distribution, and consumption of energy.

Power-to-energy technologies, which convert surplus renewable energy into storable forms like hydrogen, can benefit from AI-driven analytics that manage energy flow, predict demand, and improve efficiency.

Additionally, the strategy emphasizes the importance of building local capacities and skills. Investing in education and training will enable African nations to develop a workforce proficient in AI applications specific to the energy sector, ensuring that innovations are tailored to local contexts. The strategy also promotes ethical AI use, which aligns with the need for transparent and responsible implementation of technologies that impact communities and the environment.

Advantages of Power-to-Energy Systems in Africa

Power-to-energy systems offer several advantages for Africa. They can increase energy security by diversifying energy sources and enabling local fuel production, reducing reliance on imported fossil fuels. This diversification is particularly important for many African countries that are vulnerable to fluctuations in global energy prices.

These systems also create jobs. Establishing power-to-energy facilities can generate employment in construction, operation, and maintenance, thereby supporting local economies and fostering skills development. Furthermore, power-to-energy technologies facilitate the integration of renewable energy into the grid, which is essential for transitioning to a low-carbon economy. By maximizing the use of local renewable resources, countries can enhance their energy independence.

Moreover, these systems have environmental benefits. By decreasing reliance on fossil fuels and promoting cleaner energy sources, power-to-energy systems can help reduce greenhouse gas emissions, contribute to global climate goals, and improve local air quality.

Challenges and Considerations

Despite their potential, adopting power-to-energy systems in Africa is not without challenges. One major barrier is the initial investment required for these technologies. Many African nations operate with limited budgets, and the high upfront costs of establishing power-to-energy facilities can deter investment. Additionally, the absence of existing infrastructure for energy storage and distribution presents significant logistical hurdles.

The regulatory environment poses another challenge. In many African countries, energy policies are still evolving, and the lack of clear regulations can create uncertainty for investors, hindering the deployment of new technologies. Comprehensive energy policies are urgently needed to support innovation while ensuring equitable access to energy resources.

There is also the risk of creating energy inequities. If access to power-to-energy technologies is limited to urban areas or wealthier populations, rural communities may be left behind, exacerbating existing disparities. Prioritizing inclusive energy strategies is crucial to ensuring that all populations benefit from new technologies.

Power Security Issues

Transitioning to power-to-energy systems carries specific risks, particularly concerning power security. Key issues include the reliability of renewable sources, which can lead to vulnerabilities during periods of low production. For instance, solar energy generation drops significantly at night and can be affected by weather conditions. If not managed properly, power-to-energy systems could lead to an over-reliance on stored energy, compromising supply during peak demand.

Cybersecurity risks are also a significant concern. As energy systems become more interconnected and dependent on digital technologies, the threat of cyberattacks increases. Many developing nations may lack the resources and expertise to secure their energy infrastructure, making them vulnerable to disruptions that could have far-reaching economic consequences.

Furthermore, infrastructure vulnerabilities can exacerbate the challenges faced by power-to-energy systems. The physical infrastructure required, such as storage facilities and distribution networks, may be underdeveloped in many regions. Natural disasters or political instability could further disrupt energy supply.

Market volatility is another issue. As power-to-energy technologies expand, the markets for energy carriers such as hydrogen may become more unstable, creating uncertainty for investors and consumers alike.

Power-to-Energy AI and Cybersecurity

Cybersecurity threats to power-to-energy systems in Africa are complex (Cybersecurity Africa, 2021) and can pose significant risks to the stability and reliability of energy infrastructure. The increased digital interconnectivity of these systems creates vulnerabilities that can be exploited by cybercriminals. If not adequately secured, power-to-energy systems may become targets for attacks that could disrupt energy supply or compromise sensitive data.

Many African countries are still in the process of developing their cybersecurity frameworks. Existing measures may be insufficient to protect critical energy infrastructure, making power-to-energy systems more susceptible to attacks. Cyberattacks on these systems can have severe consequences, including power outages, economic disruptions, and threats to public safety.

Insider threats also pose significant risks. Employees or contractors with access to power-to-energy systems can unintentionally compromise security protocols or act maliciously. Additionally, ransomware attacks are increasingly common in various sectors, including energy, where cybercriminals can encrypt critical data and demand ransom for its release.

Moreover, the vast amounts of data generated by power-to-energy systems for operational efficiency and decision-making are at risk. Cyberattacks could compromise the integrity of this data, leading to incorrect operational decisions, inefficient energy distribution, or even equipment damage.

Enhancing Power-to-Energy AI Systems Cybersecurity

Public-private partnerships (PPPs) are vital for strengthening cybersecurity efforts in the energy sector. These collaborations leverage the strengths of both sectors to create robust cybersecurity frameworks. By facilitating resource sharing and expertise, public and private entities can collaborate on threat intelligence and capacity building, enhancing situational awareness and effective incident response.

In the event of a cyber incident, PPPs can form coordinated response teams, ensuring a rapid and effective response to minimize damage and restore services. Joint initiatives in policy development can lead to the creation of cybersecurity standards that apply across sectors, providing a consistent framework for protecting critical infrastructure.

Investment in cybersecurity infrastructure can also be bolstered through PPPs. By mobilizing resources and sharing responsibilities for security measures, both sectors can contribute to the overall security landscape. Public awareness campaigns and training programs can educate stakeholders about cybersecurity risks, fostering a supportive environment for investment.

Research and development efforts can drive innovation in cybersecurity technologies, while regulatory compliance guidance can help ensure that regulations are met without imposing undue burdens on businesses. Continuous improvement through collaboration will allow both public and private entities to assess and adapt their cybersecurity measures to the evolving threat landscape.

Incentivizing Power-to-Energy Investments in Africa

A comprehensive set of policies addressing financial, regulatory, and infrastructural challenges is essential to encourage power-to-energy investments in Africa, Financial incentives, such as tax breaks or subsidies for companies investing in power-to-energy technologies, can make projects more financially viable. Establishing government-backed loan programs with favourable terms can also support businesses and communities looking to invest in power-to-energy infrastructure.

Clear regulatory frameworks outlining the permitting process and compliance requirements for power-to-energy projects can build investor confidence. Streamlined permitting processes will reduce bureaucratic delays, while technical standards ensure safety and reliability.

Investment in grid infrastructure is crucial for accommodating new power-to-energy projects. Additionally, fostering public-private partnerships can share risks and resources in developing these projects. Creating targeted support for rural areas, such as funding for projects that enhance energy access, will also be important.

International cooperation is vital for engaging with global funding sources and facilitating knowledge sharing with countries that have successfully implemented power-to-energy technologies. Establishing innovation hubs focused on renewable energy and power-to-energy technologies will encourage research and development, paving the way for new solutions and business models.

Strong regional economic cooperation can be a strong driver. While power-to-energy systems present significant opportunities for addressing energy poverty in Africa, careful planning, investment, and collaboration are essential to navigate the challenges. Regional Economic Communities (RECs) have the potential to play a pivotal role in addressing energy poverty. For instance, the Southern African Development Community (SADC, 2019) has launched initiatives to enhance energy access through the Southern African Power Pool (SAPP), which aims to optimize energy generation and distribution. Similarly, the East Africa power pool have all suggested the imperative for cooperation. However, the implementation of these has remained at snail pace and thus missing out on the potential dividends of a regionally integrated power and energy system

Addressing energy poverty is essential for improving livelihoods and fostering economic resilience in Africa. Collaborative efforts among RECs, governments, and international organizations are crucial to overcoming the challenges posed by energy poverty (World Bank, 2020). By fostering an inclusive approach that emphasizes capacity building and innovation, Africa can harness the potential of these technologies to create a sustainable and equitable energy future.

*Evans Rubara is an experienced Natural Resource Management specialist with a deep focus on extractive geopolitics, environmental politics and Sustainability. He can be reached through evans@africatranscribe.co.tz.

Further Reading

  • African Union. (2019). African Continental AI Strategy.
  • Cybersecurity Africa. (2021). Cybersecurity Threats in Energy Systems.
  • Government of Kenya. (2020). National Cybersecurity Strategy.
  • (2021). World Energy Outlook.
  • (2019). National Cybersecurity Policy.
  • Rwanda Government. (2020). National Cybersecurity Policy.
  • (2019). Southern African Power Pool Initiatives.
  • South African Government. (2020). Cybersecurity Policy Framework.
  • World Bank. (2020). The Impact of Energy Poverty on Economic Development.

[1] https://builtin.com/artificial-intelligence

Understanding of Thermal power, opportunities and limitations for power generation in East Africa.

 

In this brief we focus on geothermal as source of energy, shading some perspectives on what it is, the potential and why it may be an attractive source of energy but also point out the downside factors that may limit its exploitation in East Africa.

By  Moses Kulaba, Governance and Economic Policy Centre

Globally, there is an increasing focus on mitigating climate change by gradually transiting to clean energy sources. With its location along the equator and various volcanic plates, Africa is considered as a sleeping giant of renewable energy sources. Despite this abundancy, Africa lags behind in energy access and investment in renewables generally. If deliberate efforts are not taken, Africa will remain perpetually in Energy poverty. The disparity in East Africa is even worse, with countries facing significant energy shortages and a very small investments in Geothermal power.

According to scientists, geothermal energy is largely heat flowing from the core of the earth’s crust to the top surface, which is trapped and transformed into energy.

The Earth is generally a block of solid rock and molten surfaces. At about 3000km deep into the earth there is a transition from solid rock to an inner molten core comprising of liquid iron, nickel and a mixture of other substances.  The amount of heat within 10,000 meters of the earth’s surface contains 50,000 times more energy than all the oil and natural gas resources in the world.

At this depth, the temperatures raise up to around 5700 Kelvins, which is almost the same on the sun.  These temperatures ordinary do not reach to the surface of the earth because the solid rock between the earth’s surface and its molten core are heat conductors. 

However, the molten rock can escape to the earth surface through an eruption and the heat can reach the earth surface through fissures or cracks. This is trapped and harnessed to generate power as illustrated below:

Where does the heat come from?

Geothermal comes from the Greek word, where ‘Geo’ refers to Earth, and ‘Therme’ refers to Heat. The heat comes from beneath the earth’s crust. Generally, it is found distantly far below the earth’s burning molten rock ‘Magma’ and stored in the rocks and vapour in the earth’s centre. The heat comes from two major sources.

  1. Residual heat, which is heat left over largely when the earth formed during the gravitation aggregation phase when the solar system formed. Small bodied such as asteroids which existed before and collided to form the earth and cooled still exits and emit the heat from their bodies
  2. Decay process of radioactive elements in the earth’s mantle. It is estimated that since the earth formed over 4.5billion years ago, there are significant radio active materials, largely radium, radioactive potassium and others in tiny quantities but the decay of these generated enough materials to keep the earth warm

Geothermal energy resource at the surface is therefore the rate of heat flowing through the earth’s surface at any given location.

The rate of this heat flow is to surface is highly variable and depends on the local geological settings and on the types of rocks directly beneath the surface at any given location.

The heat generated from the earth’s surface is measured in the same way as we measure solar energy (Watts per Meter Square). The hottest points on the earth’s surface are ironically the deep ocean basins where magma is always welling up and creating an undersea chain of volcanic mountains.

These actually create new crusts in the ocean basins.  Continents are relatively cool although there are hot spots on the margins such as in the North America where there are occasional heat flows with rates ranging between 20 milliwatts per square meter to 50,000 milliwatts per hour.

Key Features of Geothermal Power

The key feature of geothermal power is (electricity generation) is the rate at which temperatures increases with depth, which is the Local Geothermal gradient. i.e How far deep you have to reach the rocks that is hot enough to create steam.

An average gradient in the crust is about 25 degrees centigrade per km. i.e if you dig by 1 km deep the temperature at that point will be 25 degrees Celsius and constantly at that rate as you go deep and deeper.

The local gradient and thermal conductivity of the rocks the surface determine the local heat. In the mountain areas where the rocks are relatively recently formed the temperatures are hotter and well suited for geothermal.

Geothermal gradients are important because they determine how deep one has to dig to reach to a rock hot enough to produce steam by exposing water to the hot surface. Even in areas with low gradients, geothermal systems can be used for residential and commercial heating and cooling.

Geothermal power basics

To date geothermal power is still a very small tinny part of the overall electricity generating capacity of the world. The total geothermal capacity was approximately around 15 GW by 2018 and was projected to increase to 18 GW by 2021, compared to 600GW of solar and 400 GW of hydro. Asia had the largest installed capacity of around 4.8GW closely followed by the United States with around 3.5GW.

Types of Geothermal systems

There are largely two types of geothermal systems.  The Hydrothermal systems (Hot wet rock) and the Enhanced Geothermal Systems (EGS).

The Hydrothermal systems account for nearly all installed and commercial systems. These are systems where natural ground water or injected water is heated at a depth. It is either its natural depth or deep boreholes and circulated through an exchange system to create steam to drive a conventional steam turbine. Hydrothermal systems must have enough natural permeability of rocks to support enough water circulation without high pressure pumping or fracturing of the rocks.

The Enhanced Geothermal System (EGS) is also referred to as the dry rock system, whereby water is circulated through a hot dry rock so the rock itself is hot but doesn’t naturally have water present because it is largely impermeable.

EGS are considered quite revolutionary in the geothermal energy sector as they can be easily installed in multiple places around the world through available engineering methods. Practically, everywhere around the world it is possible to drill and reach enough depth to generate an Engineered Geothermal System.

Why it is attractive

Geothermal has the lowest carbon foot print of any energy system types and the cheapest in dollar terms per megawatt hour produced and therefore quite competitive compared to other sources. Moreover, it can operate at high capacities of around 70% capacity compared to 20% to 30% for solar and wind respectively. Geothermal systems can also easily support other associated economic activities such as tourism in the hot water springs and spurs.

East Africa’s Geothermal potential

Kenya

In East Africa  so far Kenya has the largest geothermal energy systems network located within the Rift Valley with an estimated potential of between 7,000 MW to 10,000 MW spread over 14 prospective sites.  Kenya generates at least 47% of its energy geothermal with a substantive portion of this being generated from the expansive Olkaria station in Naivasha, generating up to 800MW of Kenya’s geothermal power.

Figure 2: Olkaria Geothermal Project in Kenya, Courtesy Photo of Shutterstock

According to Kenya power, so far, the Country sources up to 91% of its energy from renewables with 47% geothermal, 30% hydro, 12% wind and 2% solar. Kenya hopes to transition fully to renewables by 2030, with KenGen saying the country has the potential to increase its capacity to as much as 10,000MW of geothermal energy.

A report by the Geothermal Energy Association noted Kenya as “one of the fasted growing geothermal markets in the world.” The country is fortunate to have great geothermal energy potential, offering a cost-effective alternative to expensive fossil fuel power. In 2017, installed geothermal capacity in Kenya stood around 660 megawatts (MW); the government has established a target of 5,000 MW by 2030[1].

With more than 14 high temperature potential sites occurring along the Rift Valley, Kenya has an estimated potential of more than 10,000 MWe. Other locations include Chyulu, Homa Hills in Nyanza, Mwananyamala at the Coast and Nyambene Ridges which have equally good potential for additional geothermal generation.

As a result, it is predicted that “Kenya will lead the world with substantial additions to their geothermal infrastructure over the next decade and become a center of geothermal technology on the African continent.”

Geothermal has numerous advantages over other sources of power. It is not affected by drought and climatic variability, has the highest availability (capacity factor) at over 95 %, is green energy with no adverse effects on the environment, and is indigenous and readily available in Kenya, unlike most thermal energy that relies on imported fuel. This makes geothermal a very suitable source for baseload electricity generation in the country[2], putting Kenya in clean energy terms, a step ahead of the others in the region.

Tanzania

Tanzania is endowed with a huge geothermal potential which has not yet been used, and has only been explored to a limited extend. According to Tanzania Geothermal Development Company Limited (TGDC), a 100% subsidiary company of Tanzania Electric Supply Company Limited (TANESCO), in 2013 Tanzania had a geothermal power potential of 650 Mw. However given its location along the East African Great rift valley system, it is likely that these figures are conservative and geothermal potential could be higher with some estimates putting it up to the range of 5000 MW.

Most of the identified geothermal resources occur in three regions: in SW Tanzania in the Rungwe volcanic field, where the project site Songwe-Ngozi, is located, in northern Tanzania at the southern end of the eastern branch of the East African Rift system and in eastern Tanzania (e.g. Rufiji Basin) along the Proterozoic mobile belt around the Tanzanian Craton.

The Deputy Prime Minister and Minister for Energy, Dr Dotto Biteko said Tanzania would start drilling by April 2024. This was to be a major first step in establishing the resource potential before starting energy production.

However, to date, very limited information is available on the progress of these projects and the actual dates when geothermal power could flow into Tanzania’s energy system are uncertain.

Geothermal power is a reliable, low-cost, environmentally friendly, alternative energy supply and an indigenous, renewable energy source, suitable for electricity generation. With an increasing demand for power amidst outages and uncertain future of the LNG gas to power projects, investment and development of geothermal, could be a major boost to Tanzania’s power needs.

Uganda

The main geothermal areas are Katwe-Kikorongo (Katwe), Buranga, Kibiro and Panyimur located in Kasese, Bundibugyo, Hoima and Pakwach districts respectively. According to available data Uganda geothermal resources are estimated at about 1,500 MW[3].  Currently, the government has ambition to develop up to 100 MW in geothermal power generation capacity in the country, as reported by Afrik21[4].

Uganda’s geothermal potential lies primarily within the western part of the country, with the most prominent prospects found in the Panyimur and Kibiro regions. Geological studies indicate that the East African Rift System, which traverses through Uganda, provides favorable conditions for geothermal reservoirs. The estimated geothermal capacity in the country is substantial, and tapping into these resources could significantly contribute to the nation’s energy mix.

The main geothermal resources of Uganda are centered around Lake Albert and Lake Edward in the districts of Kasese, Hoima, Bundibugyo and Nebbi. This area lies along the Western Branch of the East African Rift System (EARS)[5]

But despite the considered geothermal potential, challenges remain in the development and utilisation of the resources. Uganda’s geological complexity poses challenges for geothermal drilling operations. However, advancements in drilling technologies, such as slim-hole drilling and directional drilling, have the potential to overcome these obstacles. Investing in research and development specific to Ugandan conditions is considered a major factor that will improve drilling efficiency and reduce costs[6].

Obstacles to peaking of Geothermal in East Africa

Despite being the cleanest and most efficient energy source, scaling up geothermal generation in East Africa faces significant obstacles.

  1. The resources are site specific. Globally, hydrothermal systems with wet hot rocks are rare in the world and can only be found in very special locations. Similarly in East Africa these resources are located largely along the Great Rift Valley belt such as Western Uganda, Along the Rift Valley in Kenya and Tanzania
  1. Relatively long lead time of between 5-7 years from conception to production of electricity. Heavy investment in transmission and other support infrastructure due to long distances to existing load centers.
  1. High upfront investment costs. In East Africa, the initial investment costs in geothermal is still expensive compared to other forms such as hydro. According to published data indicate that installation costs range between 2.5 to 6.5 million US$ per MWe. Kenya average installation cost is about 3.6 million US$ per MWe[7]. Geothermal exploration demands money upfront – one well costs about 500 million USD[8]. With a few private investors so far, the governments have to borrow expensive loans to build geothermal power plants.
  1. High resource exploration and development risks. In East Africa there is limited updated knowledge of the geology and geodata about the resource potential. Most of the data was collected in the 1970s and 80s and has been upgraded slowly. For example, McNitt (1982) estimated resource potential for Kenya at 1,700 MW, whereas the latest estimates have revised the potential to 7,000-10,000 MW and similarly in Tanzania the latest resource estimate is about 5000 MW, up from 650 MW in 1982.
  1. Inadequate geothermal expertise. Unlike other power options, it requires highly skilled technicians. In a developing country such as in East Africa, geothermal training programs are hard to come by and local experts are limited.
  1. Land use conflicts. Geothermal power stations require substantive large chunks of free land to develop. In this process there can be potential risks for land conflicts between the government or investors and local residents.
  1. Risks for natural disasters. EGS systems have to deal with induced seismicity, or fracturing of rocks to high depth of about 10km or deeper, which risks induced earth quakes due to injected fluids through fracturing. This technology despite being revolutionary in nature is yet to become readily and cheaply available in East Africa.

Key policy recommendations

  1. Conduct and update the existing geodata on the resource potential and feasibility. Experts confirm the only way forward for scaling up geothermal might be for the “government to carry out feasibility studies and exploration to attract private sector development. Once areas with geothermal energy capacity are well mapped out, (…) it will be easier to attract investment in this sphere.”
  1. Scale up investment in existing geothermal projects. Given its huge initial investment costs, the government can reduce this burden by developing projects through Private Partnerships (PPPs) structured investments. Moreover, the government must continue to support and fund geothermal resource assessment and development so as to manage the geothermal exploration risk and attract investors.
  1. Reduce administrative barriers and corruption in the energy sector, by among others, adequate financing of dedicated Geothermal departments, streamlining licensing and allocation of geothermal blocks with incentives and sanctions in order to accelerate geothermal development.
  1. Promote research, development and capacity building for geothermal development by providing fiscal and other incentives. Investment in training can reduce on the current specialized skills gap required for Geothermal development and operations.
  1. Increase marketing of East Africa’s Geothermal potential and its value as a clean energy source. This can be further ramped up by the government packaging and offering multiple incentives through attractive pricing to promote and encourage direct uses of geothermal resources such as utilization of heat, water, gases and minerals. In other words, investment in Geothermal is not only an investment in the energy sector but also in associated productive ecosystem around it, including tourism. A good example is the Olkaria hot spur in Naivasha.
  1. Promote early geothermal generation through implementation of efficient modular geothermal technologies. This is essential in cutting back on the long lead time from conception to production by more than half.
  1. Enforce proper compliance to mitigate possible occurrence of disasters such as man induced earth quakes from fracturing for geothermal power with the regulatory requirement to utilize the best available technologies that optimize the resource and conserve the reservoir.

[1] https://ndcpartnership.org/knowledge-portal/good-practice-database/geothermal-energy-powering-kenyas-future-menengai-geothermal-field-development#:~:text=The%20country%20is%20fortunate%20to,of%205%2C000%20MW%20by%202030.

[2] https://renewableenergy.go.ke/technologies/geothermal-energy/

[3] https://www.thinkgeoenergy.com/uganda-targets-geothermal-development-of-up-to-100-mw-by-2025/

[4] https://www.thinkgeoenergy.com/uganda-targets-geothermal-development-of-up-to-100-mw-by-2025/

[5] https://www.carbon-counts.com/uganda-geothermal-resources

[6] https://www.linkedin.com/pulse/geothermal-energy-engineering-uganda-harnessing-earths-enyutu-elia/

[7] https://rafhladan.is/bitstream/handle/10802/6070/UNU-GTP-SC-17-1201.pdf?sequence=1#:~:text=The%20installation%20cost%20is%20also,3.6%20million%20US%24%20per%20MWe.

[8] https://www.euronews.com/business/2022/11/14/cheap-and-eco-friendly-the-huge-potential-of-geothermal-power

Tanzania’s Mining Investment Climate: Reforms that government should take to attract and retain new mining investors

According to the Ministry of Minerals, government stands ready to facilitate investor meetings and explore potential business ventures in Tanzania. However, investors operating under the current mining regime in Tanzania still face challenges which require a thorough regime review and fix, for the challenges to go.

Author:  Governance and Economic Policy Centre

Tanzania is endowed with a variety of mineral resources and has been successful in attracting large mining investments. However, over the past few years, this investment curve stagnated and has zigzaged out, as potential new investors stayed away in fear of a potentially unpredictable regulatory mining regime.  In order to attract and retain new large-scale projects, investors suggest, that pertinent reforms must be made.

This brief traces Tanzania’s mining history and from an investor perspective, shows how the country started losing the momentum and its share as a leading mining destination. It proposes some actions and reforms that could be made to reclaim its glory while at the same time achieving a win-win regime for sustainable mining and development.

Tanzania’s mining in a historical context

Mining and minerals trading has a long history in Tanzania, dating back to 18th century when Arab traders plied the Tanzanian coastal towns bringing spices from the Arabian gulf in exchange for gold, copper, iron and other minerals.  Records show that the German colonialists discovered gold in Geita and Sekenke (Singida) where the first gold mine was established in 1909.

In 1940 a Canadian Geologist Dr. John Williamson discovered the Mwadui Kimberlite pipe and established a diamond mine there.  After his death in 1958 his heirs sold the mine to De Beers (50%) and the British colonial government (50%).

In 1971 the government of Tanzania nationalised all mines.  The State Mining Corporation (STAMICO) took ownership of the Diamond mine and run it between 1974 to 1993 when years of ill maintenance took their toll to cause an urgent need of recapitalisation and equipment overhaul.  This need came at a time when the country was going through a tough economic situation that it was not possible to accommodate the need.  A decision was made to invite De Beers to the rescue. They agreed to recapitalise the company and in return acquired a 75% stake in the mine in 1994.  In 2009 DE Beers sold their 75% stake to Petra Diamonds.

Following economic troubles of the seventies, raising fuel prices, geopolitical tensions between ‘east and west’, the 1978/79 war between Tanzania and Uganda, low commodity prices for the country’s backbone agriculture produce (cotton, coffee & sisal) exports, the Tanzanian economy continued to deteriorate to the extent that the country was left with no other option but to embrace free market economic policies advocated by the Bretton Woods Institutions. 

With advice and guidance from the World Bank and IMF, Tanzania liberalised its mining sector and invited foreign investors.  This was during the 3rd phase government of H.E. Benjamin William Mkapa (RIP). The shift to free market economy and liberalised mining industry required new policies, laws and regulations.

New Mining Reforms and knock off effects

A Mineral Policy was formulated in 1997.  The policy gave way for private sector to take the lead in mineral exploration, development, mining, beneficiation and marketing.  Instead of being an active participant, the government would become the facilitator, the regulator and the administrator. This policy was complimented by the Mining Act 1998.

The Mineral Policy 1997 and accompanying Mining Act 1998 together with personal efforts by the late President Benjamin William Mkapa resulted in foreign mining investors in their multitudes flocking the country.  In a span of about eleven years (1998 – 2009) six large scale gold mines were opened.  These are:

  • Golden Pride Mine in 1998, owned by Resolute Mining Limited of Australia
  • Geita Gold Mine in 2000, owned by Anglogold Ashanti of South Africa
  • Bulyanhulu Gold Mine in 2001, owned by Barrick Gold of Canada
  • North Mara Gold Mine in 2002, owned by Sutton Resources of Canada and later the mine was acquired by Barrick Gold of Canada
  • Tulawaka Gold Mine in 2005, owned by Pangea Minerals – a wholly owned subsidiary of Barrick Gold of Canada
  • Buzwagi Gold Mine in 2009, owned by Barrick Gold

Despite the many benefits that the new mines brought, including improved balance of trade realised by increased gold exports, increased government revenue collection through import & employment taxes, the multiplier effect that was created by new business opportunities to local suppliers and contractors, there was still a public outcry that the country was not getting enough.

It deemed necessary to form various committees and task them with reviewing the country’s policy, law, regulations and public views on the mining industry and compare the findings to the practice in other African countries.  The aim was to improve the playing field to achieve a win-win situation.  Four committees were formed for the cause at different times between 2002 and 2009:

  • General (Rtd) Robert Mboma Committee in 2002
  • Kipokola Committee in 2004
  • Lau Masha Committee in 2008
  • Judge Mark Bomani (RIP) Committee in 2009

Observations and opinions collected from the various committees led to the formation of a new Mineral Policy in 2009 and enactment of the (new) Mining Act 2010.

Vision of the Mineral Policy 2009 was to attain an effective mineral sector that contributes significantly to the acceleration of socio-economic development of the country, through sustainable development and utilization of mineral resources by the year 2025.  This included attaining a GDP contribution of 10%.  Note that the GDP contribution of the mining sector was 2.7% in 2010 (BOT Annual Report June 2011). Focus of the Mineral Policy 2009 was to integrate mining with other sectors of the economy.

It’s interesting to note that:

  • After establishment of the Mining Act 2010 and its accompanying regulations, only one ‘medium scale’ gold mine was constructed – the New Luika Mine in 2012.
  • Thereafter, there have been a limited number of medium scale mines (smaller in size and production capacity than New Luika) which have been constructed, but not a single large scale mine has been built ever since.

Following the change of government in 2015, the Mining Act 2010 was further overhauled in 2017 and led to the current version of the act – Mining Act CAP 123 R.E. 2019.  This overhaul was complemented by two new acts:

  • The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017
  • The Natural Wealth and Resources Contracts (Review and Renegotiation of Unconscionable Terms) Act, 2017

The Mining Act CAP 123 R.E. 2019 introduced new clauses which imposed more control of natural resources by the government.  It banned export of mineral concentrates and put more emphasis on local refining of extracted minerals.  It revoked retention licenses and introduced new clauses to govern local content and corporate social responsibility.  The intent was to see more participation of Tanzanians in management of the foreign owned mining companies and in the value chain of the mined minerals.  Instead of exporting raw minerals the companies were required to beneficiate locally before export. The Government was also enabled by the law to acquire at least 15% un-dilutable free carried interest in Mining Licenses and Special Mining Licenses.

Key takes from the new law on ‘permanent sovereignty’ were introduction of clauses which mandated for:

  • Arbitration of commercial disputes in local courts and using Tanzanian law
  • Review by Parliament of agreements entered on natural resources
  • Local beneficiation of mined minerals
  • Retention of earnings in local banks

The ‘review and renegotiation of unconscionable terms’ act gave mandate for the Parliament to review any agreement on natural resources previously entered by the government, to be reviewed and renegotiated if the terms entered appeared to be unconscionable.

In a 2017 commentary, titled: Tanzania Overhauls Mining Laws, Fines Investor US$190 Billion: Is Your Investment Protected?  the JonesDay, a leading commercial law firm wrote; ‘The new laws heighten the government’s role and power in investment contracts, increase the costs of foreign investment, and substantially reduce investment protections, including international arbitration. Investors should take immediate action to mitigate the risks associated with the Tanzanian government’s actions pertaining to the mining industry[1]. Despite current government reassurances, to date these fears have continued to revibrate among risk averse investors, who remain uncertain of Tanzania’s future investment climate. For these laws have never been repealed.

Factors driving mining investment decisions

To put matters in context, one crucial criterion that attracts mining investors to a country is rich geology that has a scientific potential to host high grade orebodies. Tanzania is among the African countries blessed with such geology.  But to attract mining investors rich geology cannot stand on its own.  Rich geology must be complemented by:

  1. A conducive business environment
  2. A stable fiscal/mining regime
  3. Security of tenure
  4. Political stability and peace in the country
  5. Skilled artisans
  6. Good infrastructure – roads, rails, power, etc.

Over the years until in the recent past the country managed to do well in the list above on items 4 to 6.  Items 1 to 3, however, have been a challenge.

 Wins and missed opportunity

When the first large scale mine was established in 1998 at Lusu ward, Nzega district, Tanzania had a challenging road, rail and power infrastructure.  Some important mining skills were lacking.  But the country was politically stable, mining companies owning Special Mining Licenses had their fiscal issues stabilised by the Mining Development Agreements (MDA) signed with the government, there was security of tenure and a good business environment.  Over time, good progress continued to be made in some areas, but there was deterioration of circumstances in other areas as noted by  investors. 

Frequent and unilateral changes to laws and regulations led to breach of mine development agreements (MDAs).  Some concessions given to investors through the signed Mine Development Agreements were not honoured by the Tanzania Revenue Authority because they were not gazetted, and despite requests from concerned investors the Ministry of Finance avoided gazetting the MDA’s.

Significant improvement and upgrade made to road and power infrastructure; and skills development was defeated by unnecessary red tape brought about by introduction of a multiplicity of regulators who appeared to be more focused in raising revenue through hefty fines rather than providing oversite and regulating the sector.

Security of tenure was put at risk by uncontrolled gold rushes and haphazard trespassing by unlicensed artisanal miners. Investors who had invested millions of US Dollars in green field exploration witnessed invasion of their tenements by unlicensed artisanal miners with no serious intervention by authorities to rescue the situation, allowing the invasions to be politically concluded at the demise of the investor.

In summary, the current mining industry in Tanzania has been a mixed grill of successes and failures. Despite the many ups and downs over the years, several ‘wins’ have been witnessed by the sector following revision of the Mining Act CAP 123 R.E. 2019 and enactment of the laws on sovereignty in natural resources and renegotiation of unconscionable terms on agreements entered by the government on natural resources:

  • Renegotiation of the Mining Development Agreement entered between the Government of Tanzania and Barrick Gold Corporation which led to Acquisition of a 15% un-dilutable free carried stake by the Government in Barrick Gold mining projects in Tanzania (Bulyanhulu & North Mara Gold Mines) and signing of a Framework Agreement between the Government and the company.
  • Acquisition of a 15% un-dilutable free carried stake by the Government of Tanzania in the Kabanga Nickel project (Tembo Nickel Corporation).
  • Acquisition by the Tanzanian Government of a 15% un-dilutable free carried stake in the Ecograph Epanko graphite project
  • Acquisition by the Tanzanian government of a 15% un-dilutable free carried stake in the Peak Resources Ngualla REE project (through Mamba Minerals)
  • Acquisition of a 15% un-dilutable free carried stake by the Government in the Strandline Resources Heavy Minerals Sands project through Nyati Resources
  • Acquisition by the government of a 15% un-dilutable free carried stake in the Evolution Energy Chilalo Graphite project through Kudu Graphite Limited
  • Acquisition of a 20% un-dilutable free carried government stake in the Perseus Mining Nyanzaga Gold Project through Sota Mining Ltd.
  • Increased royalty collections following increase of the royalty on gold to 6% from the previous 4%
  • Increased gold revenue collections through the introduction of 1% inspection fee on gold exports
  • Construction of 3 gold refineries in Mwanza, Geita and Dodoma which have not only facilitated purchase of refined gold by the Bank of Tanzania but have also created employment opportunities to Tanzanians.
  • Enforcement of local content regulations which have in turn facilitated the participation of Tanzanians in the mines supply chain.
  • Enforcement of new local content regulations have made it possible for several Tanzanians to take over senior management positions in foreign mining companies investing in Tanzania
  • Enforcement of new CSR regulations have enabled CSR projects to be managed in a fair and transparent manner, ensuring value for money of the projects.
  • Introduction of the online Mining Cadastre system has revolutionised the licensing process by modernising it. The ‘first come first served’ approach in license application is working fine and fairly.  So long as they have all the required supporting documents in soft / electronic form, applicants are now able to lodge license applications from wherever they are in the world. They just need to be connected to the internet.
  • Significant improvements in power generation and transmission capacity have enabled connection of major mines to the national electricity grid. It was heartwarming to witness connection of the Geita Gold Mine (Anglogold Ashanti) to the national power grid.  This event shall not only save the company millions of US Dollars in energy cost, but it will also increase Tanesco’s revenue.  The Geita mine used to consume about 8 million litres of diesel every month to generate electricity using a rented thermal plant.

But, have the country now achieved a win-win situation? How is this goal going to be realised?

In the business world the investors would always want to maximise their profits and governments would always want to maximise their tax and fees collections to support socioeconomic development.  An attractive and well researched mining regime that involved stakeholder participation in its making is the only one that will manage to at least strike a delicate balance between the profits anticipated by the investors and the taxes and fees anticipated by the Government.

Obstacles that Tanzania Mining investors face

Courtesy Photo: Tanzania Minerals Minister, Anthony Mavunde speaks to stakeholders in Dar es Salaam

According to the Ministry of Minerals, government stands ready to facilitate investor meetings and explore potential business ventures in Tanzania. This unwavering commitment to attracting foreign investment underscores the nation’s dedication to unlocking the full potential of its mining sector. Tanzania Mining industry is highly important since it accounts for a significant share of the country’s export revenues. The Government plans to have this sector contribute 10% of GDP by 2025.

However, investors operating under the current mining regime in Tanzania still face challenges which require a thorough regime review and fix, for the challenges to go.

  • Several advanced mining projects including the ones in Graphite, REE, Heavy Mineral Sands and Gold have continued to struggle in raising project finance due to some clauses in different laws governing the mining sector in relation to the ownership of won minerals as well as banking of mineral sales proceeds
  • Extended negotiations on the making of framework agreements have been one area that frustrates many investors whose projects have reached that stage in their development
  • If left the way they are, some local content procurement tendering procedures have the potential to cause costly delays during the construction phase of the advanced projects
  • If left as currently reads, some wording on Section 56 of the Income Tax Act CAP 332 R.E. 2006 will end up ‘taxing’ capital of exploration companies when shareholding changes. Triggering imposition of Section 56 will cause a 30% capital gain tax on a junior exploration company when part of whose shares are acquired by another company for the intent of capitalising the junior company.  It should be noted here that exploration companies are not operating mines and instead of making money they normally burn money trying to find a mineable mineral deposit.  Trying to tax a non-trading company is weird and unheard in the mining industry.  The only way we can generate new mines to replace closed ones is by promoting exploration – not discouraging, investors say
  • The Income Tax Act CAP 332 R.E. 2006 disallows deduction of Royalty costs when calculating taxable income of a mining entity. This is a concern because no company is allowed to export minerals unless it has paid Royalty, meaning that royalty is part and parcel of the costs incurred to generate revenue of the company and should therefore be an allowable deduction

The above listed are only a few issues of concern to mining investors and something that the Government needs to have another look about or even conduct a study to see their quantitative impact in discouraging mining investment in Tanzania and what will be the impact (pro or cons) if some of the clauses will be amended to reflect investor’s proposals.

Proposed remedial actions and reforms that government should take

 There is a raft of measures that government can take. These include;

  1. Asses the current investment climate with a view to determine whether the 2017 mining reforms achieved any significant dividend to the mining sector
  2. Re-examine the current laws, particularly those passed in 2016 and 2017 to see if there are any remaining clauses that may be of concern to the mining investors. Some changes were made , however government should evaluate and see if there are any areas that need further review, without losing the core purpose of securing maximum value for Tanzania.
  3. Re-evaluate Tanzania’s mineral geology and mining potential in the current context and future mining investments trends, with a view of keeping aligned and on course to attract and retain new large-scale investors
  4. The final approach would be to form yet another task force made of representatives who are experts in the field of mining business and mining taxation, from the government and the mining private sector, to mutually consult and come up with a proposal that would attain a level play field balancing the profit anticipation of the investors and the tax and fees anticipation of the Government.

Minerals will always be a finite resource. Value can only be derived from them when they are extracted from underground and used to the benefit of the country.

The opportunity is still there to exploit minerals in Tanzania for the fair benefit of both the Government of Tanzania (on behalf of its people) and the investors. With tweaks to some of the current mining laws, bolstered with stability and government confidence building measures, the Tanzania can recapture and retain its glory as the prime mining investment destination in Africa.

While contemplating on the next move, the government should also make a thorough assessment of mark-timing mining projects – public (like the Liganga iron ore and Mchuchuma coal) and private ones (like the Kabanga Nickel, Mkuju River Uranium and Nyanzaga Gold), to see how such projects can be fast tracked and brought to production stage. With the speed at which technology is developing in the world, Tanzania faces the big risk of having some of its mineral deposit being stranded.  The coal deposits at Mchuchuma are faced with the highest risk with the current push for the world to go green and stop the use of fossil fuels.

With determination and the right people and policies at the forefront, the government can profitably and timely exploit the country’s minerals for the social economic development of its people.

[1] https://www.jonesday.com/en/insights/2017/08/tanzania-overhauls-mining-laws-fines-investor-us190-billion-is-your-investment-protected

Enhancing Implementation of East Africa’s Nationally Determined Contributions (NDCs) for Climate Resilience: Is it an Exercise in futility?

The Paris Agreement in 2016 set targets to cut global cut global emissions and keep temperatures below 2 degrees Centigrade by 2030 and total net zero by 2010. But so far, we doing so badly, that these targets are largely likely to be missed. In the last few years C02 emissions have been hitting record new high levels ever recorded in billions of years.

Author: Nader M. Khalifa, Governance & Economics Policy Centre, Tanzania, October 2024

  1. Introduction

East Africa faces increasing climate risks, including unpredictable rainfall patterns, severe droughts, and flooding. These climate challenges threaten livelihoods, economic development, and environmental sustainability across the region. Under the Paris Agreement, East African nations have committed to ambitious Nationally Determined Contributions (NDCs) aimed at reducing greenhouse gas (GHG) emissions and enhancing resilience to climate impacts. This policy paper explores the state of NDCs in East Africa and offers a comparative analysis of Kenya, Tanzania, and Uganda’s NDCs, emphasizing recommendations to increase funding, strengthen climate adaptation and mitigation efforts.

  1. Context of NDCs in East Africa

Countries in East Africa are committed to reducing emissions and adapting to climate impacts. Kenya, Tanzania, and Uganda have outlined ambitious NDCs centered on expanding renewable energy, promoting climate-smart agriculture, and building climate-resilient infrastructure. However, significant challenges hinder the implementation of these targets, including financial constraints, limited technical capacity, and political and social barriers. Addressing these challenges is essential to achieve East Africa’s climate resilience goals.

  1. Comparative Analysis of East African NDCs: Emission Targets and Key Factors

East African countries exhibit varied commitments and approaches within their Nationally Determined Contributions (NDCs) based on their unique socio-economic contexts, vulnerability to climate impacts, and institutional capacities. Below is a detailed comparison of emission targets, adaptation and mitigation efforts, financial requirements, and implementation challenges among Kenya, Tanzania, and Uganda.

  • Emission Reduction Targets

  • Kenya: Kenya has committed to reducing its GHG emissions by 32% by 2030 compared to the Business-as-Usual (BAU) scenario. Kenya’s mitigation efforts focus primarily on the energy sector, which includes an ambitious plan to expand renewable energy (particularly geothermal) and enhance energy efficiency across industries.
  • Tanzania: Tanzania’s NDC commits to reducing emissions by 30% by 2030 relative to its BAU scenario. Tanzania’s mitigation focus is on increasing the share of renewable energy, combating deforestation, and improving energy efficiency in industries.
  • Uganda: Uganda aims for a 22% reduction in emissions by 2030. Like Kenya and Tanzania, Uganda’s mitigation strategy heavily emphasizes renewable energy, particularly hydropower, and afforestation efforts, along with energy efficiency improvements in households and industry.

These are quite high targets. For these to be achieved EAC will have to plant so many trees and decarbonize to zero emission in so many sectors such as manufacturing, transportation, agriculture and construction.

Adaptation Strategies

  • Kenya: Kenya is highly vulnerable to climate change, particularly in agriculture, water resources, and human settlements. Its adaptation strategies include promoting drought-resistant crops, improving irrigation and water management systems, and investing in climate-resilient infrastructure (such as flood-proof buildings and early warning systems for extreme weather events). Kenya’s NDC prioritizes ecosystem-based adaptation (EBA) practices to enhance resilience in both rural and urban areas.
  • Tanzania: Tanzania’s adaptation efforts center around sustainable agriculture and forestry, recognizing the importance of these sectors for food security and livelihoods. The country prioritizes improving water resource management, soil fertility restoration, and expanding agroforestry. Adaptation initiatives also target improving the health sector’s ability to cope with climate change-induced diseases.
  • Uganda: Uganda’s adaptation strategies are focused on improving agricultural productivity, increasing resilience in water resource management, and developing sustainable forestry practices. A major component of Uganda’s adaptation plan is strengthening community-based adaptation, particularly in regions vulnerable to extreme weather events like floods and droughts.

Renewable Energy and Mitigation

  • Kenya: Kenya is one of Africa’s renewable energy leaders, with over 90% of its electricity generated from renewable sources, predominantly geothermal, hydropower, and wind. The country aims to further increase its share of clean energy, making it central to its mitigation strategy. The government’s expansion plans include increasing solar installations and expanding geothermal capacity.
  • Tanzania: Tanzania’s renewable energy sector is less developed compared to Kenya. However, the country plans to expand its reliance on hydropower and solar energy, with targeted investments in rural electrification projects powered by renewables. Tanzania’s NDC also prioritizes improving energy efficiency in both industrial and domestic sectors.
  • Uganda: Uganda’s energy mix is primarily hydropower-based, and its NDC targets further expansion of this sector. The country is also exploring solar energy as part of its rural electrification strategy. Uganda’s mitigation efforts also focus on reducing emissions from deforestation and promoting sustainable land management practices.

Financial Requirements and Challenges

NDC is proving  too expensive for EAC Countries to achieve. The cumulative estimated mitigation and adaptation  funding requirement for Uganda, Tanzania and Kenya is about USD109.3Bln 

  • Kenya: Kenya has estimated that it will need $62 billion to implement its NDC by 2030, of which 87% is expected to come from international climate finance. Financial constraints, particularly in securing adequate international support, remain a critical challenge for implementing large-scale renewable energy projects and climate-resilient infrastructure.

 

  • Tanzania: Tanzania’s NDC estimates the need for $19.2 billion by 2030 to meet its mitigation and adaptation targets. Securing adequate financing from both domestic and international sources is a major hurdle, especially for funding long-term initiatives like reforestation, energy efficiency programs, and renewable energy development.
  • Uganda: Uganda’s NDC implementation is projected to cost $28.1 billion, with a significant portion expected from external sources. Uganda’s challenges revolve around mobilizing sufficient funds for rural electrification projects, water management systems, and agricultural resilience initiatives.

 

Implementation Barriers

  • Kenya: While Kenya has strong institutional frameworks for implementing its NDCs, challenges include weak local capacity in monitoring, reporting, and verification (MRV) systems, as well as difficulties in attracting consistent international funding. Political stability in the country helps foster a more conducive environment for climate action, but there are gaps in integrating climate policy across sectors.
  • Tanzania: Tanzania faces significant barriers in terms of technical expertise and capacity for implementing its NDCs. Limited access to data and modern technologies, particularly in rural areas, hampers the effective rollout of renewable energy and agricultural adaptation strategies. Political commitment is strong but often challenged by competing development priorities.
  • Uganda: Uganda’s main implementation challenges include a lack of technical capacity and institutional coordination. While Uganda has ambitious NDC targets, the limited financial and technical resources available for adaptation, especially in agriculture and water management, slow down progress. Moreover, the country struggles with integrating climate action into local governance structures.

The global total emissions is over 50 bln tones annually shared out per sector as follows

No Sector % Co2 Emissions
1 Manufacturing (Oil, Gas, Steel, Cement, Chemicals & Mining) 29%
2 Electricity (Coal, Natural Gas, Oil) 29%
3 Agriculture (Landuse, Waste, Crops & Livestock) 20%
4 Transportation 15%
5 Building (Cooling, Heating) 7%

Source:  Netflix Documentary; What is Next? The Future with Bill Gates

 

The long-term trend is that are not seeing any decline in Co2 emissions in the next future. The last time the planet was this hot was about 20,000,000 years ago. To get to net zero requires netting out to zero by sectors for each Country and this is a gigantic task.

  • Regional Cooperation and Potential Solutions

There is potential for stronger regional cooperation among East African countries to address common climate challenges, particularly around renewable energy development, cross-border water resource management, and shared capacity-building efforts. This includes:

  • Joint Renewable Energy Projects: Collaborative renewable energy initiatives, such as regional geothermal or hydroelectric projects, can reduce costs and improve energy access across borders.
  • Capacity Building through Regional Bodies: Institutions like the East African Community (EAC) and African Union (AU) can help facilitate knowledge sharing, technical training, and the development of MRV systems tailored to regional needs.
  • Shared Climate Finance Mechanisms: Establishing a regional climate fund or enhancing existing ones could help streamline the mobilization of climate finance to meet the collective NDC ambitions of East African countries.
  1. Recommendations for Enhancing East African Countries’ NDCs and Climate Resilience

East African countries like Kenya, Tanzania, and Uganda have made significant strides in formulating their Nationally Determined Contributions (NDCs) to combat climate change. However, to effectively meet their climate goals and enhance resilience, the following strategic recommendations are essential:

  • Increase Climate Financing Access

Recommendation: Establish a more structured approach to accessing international climate finance and improve domestic resource mobilization.

  • Actionable Steps:
    • Strengthen partnerships with international financial institutions such as the Green Climate Fund (GCF), Global Environment Facility (GEF), and bilateral climate finance partners.
    • Develop and refine national climate finance strategies to better align with donor priorities and global climate funding criteria.
    • Encourage private sector participation by developing incentives such as tax breaks, green bonds, and public-private partnerships to fund renewable energy and adaptation projects.
    • Enhance Regional Cooperation

Recommendation: Foster collaboration among East African countries for shared climate solutions, leveraging regional strengths and resources.

  • Actionable Steps:
    • Establish regional climate action platforms under the East African Community (EAC) to facilitate joint renewable energy projects, share best practices, and coordinate climate adaptation measures.
    • Promote cross-border initiatives like regional renewable energy projects (e.g., geothermal, wind, and hydroelectric plants) that can serve multiple countries and reduce costs.
    • Strengthen regional bodies for coordinated action on shared ecosystems, such as the Nile Basin Initiative, to ensure joint management of water resources affected by climate change.
    • Strengthen Technical Capacity and MRV Systems

Recommendation: Develop and improve Monitoring, Reporting, and Verification (MRV) systems to ensure more accurate tracking of NDC implementation and climate progress.

  • Actionable Steps:
    • Invest in training programs for local technical experts on MRV systems, GHG inventory, and data management, with support from international partners.
    • Collaborate with international organizations like the Initiative for Climate Action Transparency (ICAT) and UNEP to implement best practices in MRV across sectors.
    • Develop a regional MRV framework within the EAC to allow for collective data tracking, knowledge sharing, and standardization of methods for measuring progress on NDCs.
    • Focus on Climate-Resilient Agriculture

Recommendation: Prioritize climate-smart agriculture to safeguard food security, livelihoods, and ecosystem health.

  • Actionable Steps:
    • Expand the adoption of climate-smart agriculture (CSA) practices, such as promoting drought-resistant crop varieties, efficient water use systems, and agroforestry.
    • Increase investment in agricultural research and development to identify crops and farming techniques that are more resilient to changing climate conditions.
    • Provide capacity-building support to smallholder farmers through training programs on sustainable agricultural practices and offering financial mechanisms (e.g., microloans) for adopting these methods.
    • Develop Green Infrastructure and Urban Resilience

Recommendation: Promote the development of climate-resilient infrastructure to adapt to future climate risks in urban areas.

  • Actionable Steps:
    • Invest in green urban planning that includes building flood-proof structures, expanding public green spaces, and improving waste and water management systems in urban centers.
    • Encourage the adoption of eco-friendly public transportation systems, such as electric buses or improved public transport infrastructure, to reduce emissions from the transport sector.
    • Create urban climate resilience strategies that incorporate natural solutions, such as restoring wetlands and reforestation to serve as buffers against climate impacts like flooding and heatwaves.
    • Promote Renewable Energy Development

Recommendation: Expand renewable energy initiatives to reduce reliance on fossil fuels and enhance energy access.

  • Actionable Steps:
    • Fast-track the development of large-scale solar, wind, and geothermal projects to increase renewable energy capacity.
    • Provide incentives for both local and international private investments in clean energy infrastructure, including tax reliefs, subsidies, and regulatory reforms that encourage clean energy deployment.
    • Integrate renewable energy initiatives with rural electrification programs to provide off-grid renewable energy solutions to rural areas, improving both energy access and climate resilience.
    • Integrate Climate Adaptation into National Development Plans

Recommendation: Ensure climate resilience is mainstreamed across all sectors of national development policies and strategies.

  • Actionable Steps:
    • Align national development goals (e.g., poverty eradication, healthcare, and education) with climate action priorities to foster sustainable development pathways.
    • Develop sector-specific adaptation plans (e.g., in agriculture, water, health, and infrastructure) and ensure these are supported by legislation and long-term budget commitments.
    • Promote community-based adaptation strategies that empower local communities to develop localized solutions to climate impacts, such as improved land management or water conservation techniques.
    • Support Gender-Responsive Climate Action

Recommendation: Ensure that NDCs are gender-responsive and include strategies to protect vulnerable populations, particularly women and children.

  • Actionable Steps:
    • Mainstream gender considerations into all climate action projects, ensuring that women, who are disproportionately affected by climate change, are included in decision-making processes.
    • Develop gender-specific programs that focus on building women’s resilience to climate impacts in areas like agriculture, water resource management, and entrepreneurship.
    • Collaborate with women-led organizations and networks to amplify their role in climate adaptation and mitigation efforts.
    • Promote Innovation and Climate Technology Transfer

Recommendation: Accelerate the deployment of climate technologies to enhance adaptation and mitigation efforts.

  • Actionable Steps:
    • Establish a regional climate technology hub to facilitate the transfer and development of clean technologies tailored to East Africa’s unique climate challenges.
    • Create a favorable policy environment that incentivizes innovation, such as offering grants or tax credits for start-ups and businesses that develop climate solutions.
    • Encourage collaboration with international partners for access to cutting-edge technologies, including in renewable energy, early warning systems, and agricultural resilience technologies.
    • Strengthen Institutional Governance and Policy Coordination

Recommendation: Improve governance frameworks and inter-sectoral coordination to enhance the implementation of NDCs.

  • Actionable Steps:
    • Establish national climate task forces to oversee the integration of NDCs across various government departments, ensuring climate policies are effectively coordinated and implemented.
    • Improve policy coherence between climate action, agriculture, energy, and economic development sectors to avoid conflicts and inefficiencies in NDC implementation.
    • Ensure strong participation from civil society, local governments, and the private sector to promote inclusive climate governance.

 

Conclusion

Kenya, Tanzania, and Uganda have demonstrated strong commitment to their NDCs, yet significant challenges—such as financial constraints, technical capacity gaps, and implementation barriers—continue to hinder their climate ambitions. Overcoming these obstacles will require enhanced regional cooperation, dedicated capacity-building efforts, and innovative financing solutions, with support from the international community playing a crucial role. By embracing these strategies and recommendations, East African countries can strengthen their resilience to climate impacts, close the gap between climate goals and actions, and contribute substantially to sustainable development and global climate efforts, ultimately improving the quality of life for their citizens.

 

 

 

 

  1. References:
  1. African Development Bank (AfDB) (2020). African Economic Outlook 2020: Developing Africa’s Workforce for the Future. AfDB, Abidjan.
  1. Africa NDC Hub, https://africandchub.org/
  1. East African Community (EAC) (2021). EAC Climate Change Policy and Strategy. EAC, https://www.eac.int/environment/climate-change/eac-climate-change-policy-framework
  2. IPCC (2022). Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press.
  1. IPCC Sixth Assessment Report – Chapter 9, https://www.ipcc.ch/report/ar6/wg2/chapter/chapter-9/
  1. Kenya Ministry of Environment and Forestry (2020). Kenya’s Updated Nationally Determined Contribution (NDC). Government of Kenya, Nairobi.
  1. NDC Partnership Knowledge Portal, https://ndcpartnership.org/climate-finance
  1. Uganda Ministry of Water and Environment (2022). Uganda’s Nationally Determined Contribution (NDC). Government of Uganda, Kampala.
  2. United Nations Framework Convention on Climate Change (UNFCCC) (2015). The Paris Agreement. United Nations, Bonn, Germany.
  3. Tanzania Vice President’s Office (2021). Updated Nationally Determined Contribution of Tanzania. Government of Tanzania, Dodoma.

 

Youth in Climate Change and Energy Transition: How Tanzania Government can repurpose youth for SDGs, NDCs and a fossil free future

Young people are the majority of Tanzania’s population ,  destined to inherit the future yet are seriously at a risk of climate change. Many are actively engaged in mitigation measures such as tree planting campaigns with limited focus on the policy and practical measures that are required to ensure or determine a fossil free future is achieved. Effective youth participation in SDGs and NDCs is a goal that is still far from reach.

Author: Arafat Bakir Lesheve, SDG Ambassador and Junior Associate, Governance and Economic Policy Centre

# Featured photo image source: African Climate and Environmental Centre-AFAS

# Click here to register for the forthcoming webinar on implementation of SDGS and NDCs in Africa scheduled for 31st October 2024 via the Link: https://us06web.zoom.us/meeting/register/tZYodOCsqTsuEt1URomW6I9uz6IjSyzq5S96

The transition to a fossil-free future is crucial for Tanzania to achieve sustainable development and combat climate change. The United Nations has set several targets for achieving a fossil-free future by 2030 and 2050. These targets aim to enhance international cooperation in the fight against climate change, promote clean energy research and technology, reduce reliance on fossil fuels, reduce greenhouse gas emissions and speed up the transition to clean and renewable sources of energy.

In 2021 Tanzania developed its Nationally Determined Contributions (NDCs), which spells out how the government plans to build resilience against climate change and contribute to clean future. The NDC is anchored on delivering a fossil free future by 2050 yet the document and its implementation has remained largely a technical exercise with limited knowledge and participation of young people.

Many young people are actively engaged in mitigation measures such as tree planting campaigns with limited knowledge, focus, engagement and participation in the policy and practical measures that are required to ensure or determine a fossil free future is achieved.  With the youth comprising over 65% of Tanzania’s total population, engaging and empowering young people will be crucial to the success of these national and global targets.

This short brief exposes the opportunities , gaps and the need for an intentional repurposing of Tanzania’s youth in climate change and the implementation of the NDC along with the Sustainable Development Goals (SDGs) so as to achieve a fossil free future by 2030 and 2050.

Climate Change and a fossil free future in Tanzania 

Despite being among the least polluters, Tanzania is seriously affected by climate change. The country has experienced irregular rainfall patterns, extended droughts, floods and deforestation. Currently, a significant proportion (about 70%) of all types of natural disasters in Tanzania are climate change related and are linked to recurrent droughts and floods.

The most recent projections for climate change in Tanzania (Future Climate for Africa, 2017)9 show a strong agreement on continued future warming in the range of 0.8°C to 1.8°C by the 2040s, evenly distributed across Tanzania. The warming trend leads to a corresponding increase in the number of days above 30°C by 20-50 days in the central and eastern parts and up to 80 additional days in the coastal area of Tanzania.  Warming until 2090 is projected in the range of 1.6°C to 5.0°C depending on the level of greenhouse gases in the atmosphere[1]

Moreover, climate change’s impact on Tanzania’s forest cover and sensitive ecosystems has been increasing.  According to reports, Tanzania’s forest cover has reduced by at least one third over the past decade, thereby reducing the coverage of the natural carbon sink that has protected us for generations.  Annually, almost 38% of Tanzania’s forest cover is being lost at the rate of about 400,000 ha annually and should this continue, the country would deplete its forest cover in the next 50-80 years[2].

Figure 1: Map of forest loss in Tanzania during 2010–2017 and location of ground survey points

The extreme weather patterns affect National Economic growth due to large dependence of Tanzania’s Growth Domestic Product (GDP) on Climate sensitive activities such as agriculture. The recent floods affected crops and farmland while the extended droughts in some regions have increased food insecurity and poverty by almost half. Sensitive ecological and biodiversity systems hosted within from forests and wooded areas are affected and climate related diseases such as malaria in previously cold and less malaria prone regions such as Moshi, Arusha, Lushoto, Iringa and Mbeya are on the increase.

According to medical reports, malaria is a major public health problem in mainland Tanzania and a leading cause of morbidity and mortality, particularly in children under five years of age and pregnant women.  Moreover, the climate condition has become favourable for transmission throughout almost the entire country, with about 95% of mainland Tanzania at risk.

Over the past few years Tanzania now has the third largest population at risk of stable malaria in Africa after Nigeria and Democratic Republic of the Congo[1]. Clearly, there is a nexus between climate change and the social-economic and public policy challenges that Tanzania faces.

Figure 2: Malaria Prevalence in Mainland Tanzania 2017-2019: Source: Research Gate

The UN’s perilous search for a fossil free future

The UN under the Agenda 2030 targets to achieve a fossil free future by reducing global greenhouse gas emissions by half by 2030 and to achieve net zero by 2050.

For this to be feasible the world has to gradually transit from the use of fossil-based fuels towards renewables and clean energy sources.  Fossil fuels, such as coal, oil and gas, are by far the largest contributor to global climate change, accounting for over 75 percent of global greenhouse gas emissions and nearly 90 percent of all carbon dioxide emissions.

Therefore, ramping up investment in alternative sources of energy that are clean, accessible, affordable, sustainable, and reliable offers a way out of the enormous climate change challenges that we face. To achieve this requires a radical shift in global energy system but equally collective participation.  The UN has encouraged countries to develop and implement Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDCs), as road maps towards a sustainable cleaner future, yet many countries like Tanzania face a bumpy road ahead. The underfunding and limited meaningful participation by the youth is holding back success.

Climate Change, SDGs and the Nationally Determined Contributions (NDC) in Tanzania

In line with the UN Paris Agreement and call to climate action, the Tanzanian government set targets for climate change response and achieving a fossil-free future. The government aims to accelerate mitigation and adaptation measures, cutting Green House Emissions and contributing towards a transition to cleaner and renewable sources of energy.

These targets are clearly stipulated in Tanzania’s National Adaptation Plans (NAPs), National Climate Change Response Strategies (NCCRS) and most recently the Nationally Determined Contributions (NDC) in 2021.  The NDC provides a set of interventions on adaptation and mitigation which are expected to build Tanzania’s resilience to the impacts of climate change and at the same time contribute to the global efforts to reduce greenhouse gases.

According to the NDC, the government commits to reduce greenhouse gas emissions economy-wide between 30- 35% relative to the Business-As-Usual (BAU) scenario by 2030. The NDC further indicates that about 138-153 million tons of Carbon dioxide equivalent (MtCO2e)-gross emissions is expected to be reduced depending on the baseline efficiency improvements, consistent with its sustainable development agenda.

The NDC goals are aligned to the UN Sustainable Development Goals (SDCs) 2015, in particular SDG13 and other closely related goals such as SDG (1.7,12,14,15.16 &17). They further in synchrony with the Agenda 2063 on the Future of Africa We want and the Sendai Framework on Disaster Risk Reduction (2011).

To achieve these targets, the government commits to consider the impacts of climate change in development planning at all levels and to pursue adaptation measures as outlined in the NDC. Despite these efforts, many SDG targets are off course and NDC’s implementation has been slow. The NDC implementation is faced with financial, governance, institutional and participation gaps, which are delaying or may ultimately thwart its successful achievement of a climate safe and fossil free future.

Gaps in Climate Change, NDC and SDG implementation

The Economics of climate change and implementation of SDGs and the NDC for a climate safe and fossil free future is proving to be an expensive affair.

According to The Economics of Climate Change reports for Mainland Tanzania (2011) and Zanzibar (2011) , an initial cost estimate of addressing current climate change risks is about USD 500 million per year[2].  These reports provide indicative costs for enhancing adaptive capacity and long-term resilience in Tanzania.  This cost is projected to increase rapidly in the future, with an estimate of up to USD 1 billion per year by 2030[3].

Further, the net economic costs of addressing climate change impacts are estimated to be equivalent to 1 to 2% of GDP per year by 20305. Similarly, Tanzania would require an investment of approximately USD 160 billion for mitigation activities aimed at achieving 100% renewable energy for electricity, buildings, and industry by 2050[4]. In total the NDC estimates that USD19,232,170,000 is required for its full implementation.

Moreover, Tanzania is facing several challenges related to weak institutional, financial constraints, poor access to appropriate technologies; weak climate knowledge management, inadequate participation of key stakeholders, and low public awareness have significantly affected effective implementation of various strategies, programmes, and plans[5]

The government has identified an institutional and governance framework for implementation. This includes the National Steering Committees and National Technical Committees for Mainland Tanzania and Zanzibar.  It further mentions the need for mainstreaming intervention but conspicuously, misses listing or identifying the youth as key stakeholders in this implementation.

With tweaks to its current policy and practice landscape, by purposefully targeting involvement of more young people, we believe, Tanzania’s achievement of its SDGs targets and climate change and energy transition goals as elaborated in the NDCs and overall National Development Plans could be faster

Tanzania’s road towards a fossil free future

In 2014 the per capita emissions of the United Republic of Tanzania were estimated at 0.22 tCO2e[1] . This was significantly below global average of 7.58 tCO2e[2] recorded in the same year. However, given the disproportional effect of climate change, adaptation to the adverse impacts continues to be a topmost priority in the implementation of the NDC.

Tanzania underlines the importance of harnessing opportunities and benefits available in mitigating climate change through pursuing a sustainable, low-carbon development pathway in the context of sustainable development. Thus, the NDC takes into account global ambition of keeping temperature increase well below 2°C as per the Paris Agreement.

Moreover, Tanzania is aiming for a greater use of natural gas and harnessing renewable energy sources to reduce on emissions. There are an estimated 57 trillion cubic feet of discovered reserves of which to-date over 100 million cubic feet have been exploited to produce 527 MW10. The government acknowledges that whilst natural gas is a fossil fuel, and therefore contributes to increasing climate change, it results in half the CO2 emissions as charcoal

Currently the government of Tanzania aims to shift away from biomass and increase the share of renewable energy sources such as hydro, wind, and solar in its energy use mix. Tanzania’s energy sector is currently dominated by traditional biomass; accounting for more than 82% of the total energy consumption as of 2019. As of 2022 energy usage in households, charcoal and wood represented 87% of the energy used, Liquefied Petroleum Gas (LPG) accounted for 10%, and other sources such as electricity accounted for about 3%[3].

Secondly, Tanzania has an estimated hydro potential of up to 4.7GW. However, as of 2021, only 573.7 MW (around 12%) of hydro capacity had been installed. The government plans to further develop its hydro capacity to increase the share of renewable energy.

Thirdly, while Tanzania aims to increase its renewable energy generation, there are also plans to ramp up investment in natural gas and coal. The government aims to reach 6700MW (33%) from natural gas and 5300MW (26%) from coal by 2044. However, further investments or reliance on fossil fuels such as coal and natural gas is considered as an energy transition risk as the country may lock itself into a high carbon-intensive pathway and thereby running contrary to achieving the NDC goals.

Furthermore, Tanzania has significant deposits of critical minerals that are considered essential for the clean energy transition. These minerals include nickel, graphite, copper, lithium, and others. The demand for these minerals expected to increase as clean energy technologies develop. This presents an opportunity for Tanzania to benefit from their extraction to value addition hence powering the global transition to a green economy.

The youth dividend and missed opportunities for climate change, NDCs and SDGs in Tanzania

Globally, the youth represent a significant portion of the population and their active involvement and engagement in supporting government and UN targets are essential. According to Tanzania’s 2022 census reports, the youth (under 35 years) constitute significant proportion (over 60%) of Tanzania’s population.  They account for the largest active labour force of the population and no doubt have potentials   to bring about economic growth and development of the country. Moreover, the demographics and dynamics of youth have changed substantially over the last decade. Many young people are highly educated and technologically exposed and skilled.  They are a dividend waiting to be utilized in many respects.

The implementation of Tanzania’s NDC is supposed to be guided by the principles of the UNFCCC, particularly the principle of equity and that of common but differentiated responsibilities and respective capabilities. Furthermore, the implementation is supposed to be implemented in a transparent and participatory manner in accordance with the provisions of the Paris Agreement. Despite these principles, the youth are yet to be fully engaged and harnessed for climate change and a fossil free future.

Since 2006 government has made efforts by developing the National Climate Adaptations Programs and the National Climate Change Strategy. However, Tanzania does not have a climate change policy and its practical engagement of youth despite the numbers has been quite fragmented.

Despite the major progress made, very limited deliberate and structured youth engagement opportunities have been created. For example, there is a government initiative on clean cooking targeting women but is not clear what role the youth can play in this campaign. Moreover, the Youth Policy is not aligned with the Climate Change and Energy policy. The NDC for example is very silent on youth and mentions these in generic terms lobed together under the gender considerations. Governance challenges and weak intra-government coordination exists. There is weak insufficient capacity and resources for youth to engage.

To date, this potential of Tanzania’s youth participation, in the context of the global climate change is largely limited or focused on climate mitigation while engagement in energy transition discourse towards a fossil free future has been substantively low.

How can youth be repurposed for climate change, SDGs and NDC implementation for a fossil free future? 

There are collective actions that Tanzanian youth can uptake to support government plans and UN targets for SDGs, NDCs and a clean future by 2030 and 2050. These includes actions such as creating a facilitative environment,  investment in advocacy, awareness creation, skills development, creating of innovations, movement mobilization, partnership and collaboration for the goals. Tanzanian youth possess the energy, innovation, and sense of urgency required to drive the transition to a fossil-free future. By leveraging their skills and passion, young people can play a vital role with multiple entry points as below.

1. Promote education amongst youth on SDGs and NDCs in Tanzania

As indicated, despite the good intentions and targets set in the Sustainable Development Goals (SDGs and the Nationally Determined Contributions (NDCs), these goals and documents remain largely unknown to youth and young people in Tanzania. Deliberate efforts to popularize them can ramp up youth uptake and support in their implementation.

2. Raise Awareness and Advocate for Renewable Energy:

Towards achieving this, the youth and other stakeholders, including the government should organize awareness campaigns and workshops to educate youth about the benefits of renewable energy and the negative impacts of fossil fuels. As the population continues to grow, so will the demand for cheap energy, and an economy reliant on fossil fuels is creating drastic changes to our climate; Investing in solar, wind and thermal power, improving energy productivity, and ensuring energy for all is vital if we are to achieve SDG 7 by 2030.

 Tanzania Youth led organizations must be supported to amplify the voices of Tanzanian youth in advocating for a transition to renewable energy. Engage in advocacy efforts to promote renewable energy policies and initiatives at the local, national, and international levels; 

2. Promote Energy Efficiency and Conservation

Tanzanian youth can organize campaigns and workshops to raise awareness about the importance of energy efficiency and conservation. They can educate their peers and communities about the benefits of using energy-efficient appliances, reducing energy consumption, and adopting sustainable practices.

Dr. Samia Suluhu Hasan the President of the United Republic of Tanzania is a global champion of clean cooking solutions that aims to address over reliance on toxic biomass, gender inequality against women as well as reduce impact of climate change.  Tanzania’s youth should be in frontline to promote clean cooking solution with the country.

For the government to support youth roles is key to encourage energy-efficient practices among youth by promoting energy-saving habits in households, schools, and communities. Youth and youth led organizations should be supported to advocate for the implementation of energy-efficient infrastructure and appliances in public spaces and buildings.

NGOs, and government agencies must collaborate with energy experts to develop engaging and interactive training materials that cater for the needs and interests of young people towards promoting energy efficiency.

3. Advocating for policy changes

Advocating for policy changes is a crucial step in promoting renewable energy and climate action. Tanzanian youth have the opportunity to actively engage with local and national government representatives to push for policies that support renewable energy and discourage the use of fossil fuels.

Through outreach to their government representatives, youth can express their concerns about climate change and the need for renewable energy policies. They can request meetings or participate in public forums to discuss the importance of transitioning to renewable energy sources and highlight the benefits it can bring to the environment and the economy. By sharing their knowledge and experiences, youth can help policymakers understand the urgency of taking action on climate change and recognize the potential of renewable energy.

Additionally, youth-led organizations and initiatives focused on climate action must provide a platform for young people to come together and advocate for sustainable policies.

4. Engage in Sustainable Agriculture and Land Use

Tanzania youth must be supported to engage in sustainable agriculture and land use. Engaging in sustainable agriculture is of paramount importance in promoting environmental conservation and reducing reliance on fossil fuel-based inputs in farming practices. Tanzanian youth have a significant role to play in actively supporting and advocating for sustainable farming methods that prioritize organic techniques, agroforestry, and permaculture.

5. Foster Entrepreneurship and Innovation in Renewable Energy

Support young people to engage in entrepreneurship and renewable energy. Participating in green entrepreneurship presents Tanzanian youth with exciting prospects to contribute to the sustainable energy sector while establishing their own businesses. By developing innovative solutions for energy efficiency and conservation, young entrepreneurs can make a positive impact on the environment and contribute to the country’s economic growth.

6. Engaging in waste management practices

Promoting environmental sustainability and mitigating the harmful effects of waste necessitate active engagement in waste management practices. Tanzanian youth can play a vital role by championing recycling, composting, and waste reduction initiatives within schools, communities, and households.

By raising awareness about recycling’s significance and providing resources for proper waste separation, the youth can redirect recyclable materials away from landfills, thus fostering a circular economy. Moreover, they can advocate for composting as an effective means of minimizing organic waste while generating nutrient-rich soil for gardening and agriculture. Through their enthusiastic involvement in waste management, Tanzanian youth can contribute significantly to creating cleaner and more sustainable communities and a brighter future for the environment.

Conclusively, Tanzania’s road towards a fossil free future has so far been bumpy and marked with commitments and challenges. Tanzania however has opportunities amongst its youthful population and can turn up the tide to ride faster towards net zero.

References

[1] National Climate Change Strategy, Vice President’s Office, United Republic of Tanzania.

[2] Emissions Database for Global Atmospheric Research (EDGAR), Joint Research Centre (JRC).

[3] ibid

[1] https://web-archive.lshtm.ac.uk/www.linkmalaria.org/country-profiles/tanzania.html

[2] The Economics of Climate change in the United Republic of Tanzania, January 2011

[3] Ibid

[4] URT; Tanzania’s Nationally Determined Contributions, 2021

[5] URT; Tanzania’s Nationally Determined Contributions, 2021

[1] URT: Tanzania Nationally Determined Contribution, 2021

[2] https://dicf.unepgrid.ch/united-republic-tanzania/forest