Dar es Salaam – The Tanzanian government has announced plans to sell a portion of its national gold reserves to finance infrastructure projects, as it confronts a potential suspension of development aid from international partners.
The decision, confirmed by Minister of State in the President’s Office Kitila Mkumbo in late January 2026, comes in the aftermath of a violent government crackdown on youth-led protests, which coincided with the disputed October 29, 2025, presidential election, which resulted in hundreds of deaths and thousands of injuries.
The move has ignited a nationwide debate about the country’s economic future, its relationship with development partners, and the legitimacy of using strategic reserves to fund development.
While the exact amount to be sold remains undisclosed, the decision reflects the government’s determination to pursue its development agenda despite the international pressure and aid reductions it now faces.
Tanzania’s relationship with gold reserves extends back decades. The Bank of Tanzania first established a gold reserve in 1990, though this practice was discontinued in 2002.
The initiative to rebuild the reserve gained momentum in June 2021, when President Samia Suluhu Hassan signalled the government’s intent by launching a gold refinery in Mwanza. The formal process to re-establish the reserve began in April 2023, when the central bank started purchasing gold, having acquired 400 kilogrammes by that time.
By the end of December 2025, the accumulation had grown significantly. The Bank of Tanzania’s gold reserves stood at approximately US$1.3 billion, equivalent to about 18.9 tonnes of gold, according to Bloomberg.
This represents a substantial asset, comprising approximately 36 per cent of the nation’s total foreign assets. The growth of the reserve reflects the government’s commitment to building a buffer against economic shocks and strengthening the country’s financial position.
Strategic importance
Gold holds considerable strategic importance to Tanzania’s economy. The country is among Africa’s leading gold producers, with production estimated at 52 tonnes in 2023.
Gold was a significant component of Tanzania’s economy in 2023, representing 22.5 per cent of national exports, valued at about US$3.05 billion, according to an Ecofin Agency analysis. Furthermore, the mining industry was a key economic driver, contributing nearly 9.9 per cent to the gross domestic product and approximately 15 per cent of tax revenues.
In 2025, the sector achieved record performance, with gold exports generating approximately USD 4.4 billion, an increase of nearly 36 per cent from the previous year.
The sale of national gold reserves to fund development is not unprecedented, though it remains relatively uncommon. Central banks and governments may liquidate portions of their gold holdings for various strategic reasons, including diversifying reserve portfolios, managing currency fluctuations, or investing in critical infrastructure projects.
READ MORE: Why Bank of Tanzania’s Boost to Gold Reserves Is Crucial Now More Than Ever
A contemporary example is Ghana, which in early 2026reduced its gold reserves by 51 per cent, reallocating the proceeds into foreign-currency assets. According to reports, the Bank of Ghana’s decision was driven by the need to diversify its reserves, as gold had comprised 40 per cent of the nation’s total reserves, exceeding the conventional range of 20 per cent to 25 per cent.
Historically, Zambia sold its gold reserves approximately 25 years ago due to severe dollar shortages following decades of nationalisation and slumping copper prices. These examples demonstrate that, whilst not routine, the liquidation of gold reserves is a tool that countries employ when facing particular economic pressures.
Development aid crisis
Tanzania’s decision to sell gold reserves must be understood within the context of a dramatic decline in development assistance. The country has historically been heavily dependent on foreign aid, according to an analysis by Tanzania Investment and Consultant Group Ltd.
For example, Official Development Assistance (ODA) peaked at US$761 million in 2013, before gradually declining to US$389 million in 2024 and a projected US$118 million in 2025—representing an 84 per cent collapse from the peak.
In 2024, ODA accounted for 8.55 per centof Tanzania’s Gross National Income, indicating that a significant portion of the country’s economy remains dependent on foreign assistance.
The major donors have historically been the World Bank (USD 1.095 billion) and the United States (USD 429.5 million). However, recent geopolitical shifts have disrupted these relationships.
Aid suspensions and threats
The European Union has taken the most formal action. The European Parliament voted on November 27, 2025, to adopt a non-binding resolution calling for the suspension of EUR 156 million in EU aid to Tanzania. This resolution was adopted by 539 votes in favour, none against, and 27 abstentions.
READ MORE: EU Parliament Committees Object to €156 Million Funding for Tanzania Amid ‘Democratic Backsliding’
However, the European Commission has not yet officially suspended the aid. Instead, it has frozen the funds pending further assessment and dialogue with Tanzanian authorities. The Commission has indicated that it is continuing dialogue with the Tanzanian government without announcing a final decision.
The United States took action earlier, though not in response to Tanzania’s situation. The US government initiated a freeze on all new foreign aid in January 2025, which was followed by the closure of USAID—an agency that had been one of the country’s main instruments of bilateral cooperation for more than sixty years. This freeze has had cascading effects across multiple sectors in Tanzania.
Except for the U.S., the suspension of aid is linked to the government’s response to protests following the October 29, 2025, presidential election. The European Parliament condemned the use of violence by Tanzanian authorities against protesters, citing reports of hundreds killed.
President Samia Suluhu Hassan was declared the winner with 98 per cent of the vote, though observers from the African Union said the elections failed to meet democratic standards. The EU resolution specifically cited state-sponsored political repression, targeted abductions, and manipulation of the electoral process.
Govt response
The Tanzanian government has responded to the potential aid suspension with determination and defiance. Foreign Affairs Minister Ambassador Mahmoud Thabit Kombo stated that the country “will not starve,” and has its own budget and revenue sources.
Prime Minister Dr Mwigulu Nchemba has provided a detailed defence of the gold sale strategy. He explained in the Parliament on January 31 that the sale is a normal central bank operation for managing foreign exchange reserves and that the government has multiple pathways to fund development projects, including through public-private partnerships and private sector investment.
President Samia Suluhu Hassan acknowledged in November 2025 that the October 29 unrest could undermine confidence among development partners.
“Previously, financing was readily available because there was trust,” the Head of State remarked. “What happened in our country has tainted our image, and this is likely to reduce our resource base. We must therefore use the resources we have to attract more funding so that promised projects are delivered with speed.”
Concerns
However, the government’s plan has generated significant debate among economists and policy analysts. Zitto Kabwe, a prominent opposition politician and economist, has raised legal concerns about the proposal.
Writing on X, formerly Twitter, he warned that selling the central bank’s gold for government projects could violate the Bank of Tanzania Act, specifically sections 51 and 52, which govern the use of foreign currency reserves.
Kabwe suggested that the government should instead focus on supporting small-scale and medium-scale miners by providing incentives, capital, and technology to increase gold production.
He proposed that the government purchase gold from these miners using local currency and use the accumulated gold to pay off foreign debt, thereby creating fiscal space for development projects.
Godbless Lema, a former Member of Parliament and Central Committee member of the opposition CHADEMA party, has criticised the modest size of the current gold reserve. He questioned whether a reserve of US$1.3 billion represents an adequate strategic asset for a nation of Tanzania’s size and economic importance, suggesting that the government should pursue more ambitious accumulation targets.
BoT’s clarification
Following the public debate surrounding the gold reserve sale announcement, the Bank of Tanzania issued an official clarification through its Manager of the Foreign Markets Department, Emmanuel Akaro, who told a press conference on January 32 that “the purchase and sale of the mineral is part of the Bank of Tanzania’s statutory duties.”
READ MORE: Bank of Tanzania Boosts Gold Reserves with New Agreements to Strengthen Gold Purchase Programme
He said as of January 29, 2026, the Bank’s foreign currency reserves totalled US$6.52 billion, with monetary gold comprising US$1.188 billion (approximately 18 per cent of total reserves). The Bank clarified that it continues to purchase gold daily as part of its reserve management strategy.
The total gold accumulated by the nation, including refined gold not yet converted to monetary gold, stands at US$3.24 billion, equivalent to 18.9 tonnes. This represents approximately 36 per cent of Tanzania’s total foreign assets of US$8.5 billion.
The Bank’s statement stressed that the management of foreign currency reserves—including the buying and selling of gold—is a routine central banking operation conducted by central banks worldwide.
