Tanzania's Budget 2025/26: Watts and Shillings: Powering Tanzania's Future

Despite the magnificent landscape, diverse culture, amazing coffee, and tasty cuisine which makes it among the most favorable tourist and investment destinations, Vietnam’s light did not always shine so bright. Only recently did the country unlock a stunning achievement of 99% electrification of its population and 95% in the rural areas. Vietnam is now one of the most electrified developing countries with its diversified energy sources using solar and wind on top if its grid electricity; and rapidly scaling up its clean energy production. Vietnam’s electrification was significantly boosted by its strategic investment in renewable energy, a pathway Tanzania can adopt. This can accelerate energy access and position energy as driver of economic growth, improving the overall quality of life.

Like Vietnam, Tanzania has many attractions, but sometimes perceived as a dark village to some. But that is a perception and not reality. Similar to Vietnam, Tanzania has geared up to change this narrative. For the past few years, the government has taken initiative to improve the electrification across the country aiming to achieve 75% electrification by 2035 and 50% renewable energy by 2030. Several projects have been initiated in line with this, including upgrading and constructing power distribution networks in rural areas, and concluding the negotiations of the $42 billion Liquified Natural Gas (LNG) project which is expected to unlock 47 trillion cubic feet of natural gas deposits. One of the strategic priorities for the year 2024/2025 was completion of the MW 2,115 Julius Nyerere Hydro Power Project which has been achieved and is currently up and running since March 2025. These efforts demonstrate the government's commitment to enhancing energy access nationwide, empowering communities, and supporting the nation's socio-economic development.

While this is all is exciting, by the end of 2023, only 46% of households in Tanzania were connected to electricity. The question remains how fast can we get to the 75% electrification target? While the on-going projects are commendable, a more aggressive approach may be required. Tanzania is blessed with diversified energy sources, however we are currently highly reliant on hydro power and natural gas, with lesser focus on renewable sources such as solar and wind. Therefore, to achieve our aspiration in electrification we can not ignore the need for a well diversified energy source contributions. To enhance energy security and sustainability, more investments need to be done on the other renewable sources such as solar, wind and natural gas. Renewable energies offer decentralized alternatives, are more attractive to ‘green investments’ and proven to be cheaper. Vietnam unlocked these benefits through implementing supportive investment policies such as waive of import duties on renewable energy equipment and relied on Public-Private Partnerships (PPPs).

The current power generation projects have proven to be capital intensive and a stretch from project funding perspective if reliance is made to the government alone. On the other hand, this can be solved by well established PPPs in reducing the government burden in driving these projects, allowing them to focus on driving the economy on other sectors.

Through partnerships Tanzania can have a more resilient energy supply. A more simplified regulatory process will have to be adopted to reduce existing regulatory hurdles. For instance, coordination of project funding and donor inputs through a single task force may help alignment and more central planning for all energy sector initiatives. In addition, with will allow us to streamline technical assistance from local and global institutions to the developers of these renewable projects for developing bankable energy projects, and equipping them with the technical skills to manage the project. Lastly, having more data driven planning and leveraging technology to develop the tools to track the electrification process that can be linked to the strategy in place, will give room for continuous improvement of the vision on the energy sector.

In conclusion, its thought that access to funding is encouraging and resources are available, improving process efficiency may help accelerate electrification. By marrying, Vietnams discipline, with our abundant sun, substantial natural gas reserves, a wealth of other natural resources Tanzania can not only match Vietnam’s 99% plus access milestone but will redefine the Tanzania’s future of watts and shillings.

Rebecca Nnungu is a Consulting manager with Deloitte Consulting Limited. The views presented are her own and not necessarily those of Deloitte. She can be reached at rnnungu@delotte.co.tz