Over the past two decades, as seen from my previous post here, Tanzania’s economy has followed a clear pattern. When electricity consumption increases, and freight moves smoothly through ports, railways, and roads, growth speeds up. But when power use slows and transport gets stuck, the economy weakens.
Twenty years of economic data have vividly shown that 70 per cent of Tanzanian economic growth is explained by power and freight. These trends point to something even bigger: Tanzania’s location is its biggest unused strength.
Tanzania has a unique spot in East, South and Central Africa. We border the Indian Ocean with deep ports and natural routes to landlocked neighbours like Zambia, the Democratic Republic of Congo (DRC), Rwanda, Burundi, Malawi, and Uganda. This makes us the natural entry point for trade in the Great Lakes area. Few other African countries offer this mix of peace, sea access, and inland links.
Right now, transit trade (goods passing through Tanzania) brings in up to US$3 billion a year in foreign exchange. A 2013 World Bank report, Opening the Gates, says this could grow to US$16 billion annually with the right steps and in sequence.
Our neighbors’ plans show the promise: Zambia wants to triple its copper output to three million metric tonnes a year, the DRC is boosting cobalt production, and a Chinese company, Zijin Mining, is commissioning on a huge lithium mine in the eastern DRC town of Manono in Tanganyika province, aiming for 5.6 million tons of exports through Kigoma and Dar es Salaam ports each year.
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In Musongati, Burundi, one of the largest nickel deposits in the world is being developed, with a new railway line connecting it to Dar es Salaam through Uvinza – Kigoma.
Smart action
But location alone doesn’t create growth—it needs smart action. This fits with ideas from New Economic Geography, from economists like Paul Krugman. It explains how business gathers where transport is cheap, markets are easy to reach, and energy is reliable. When ports, railways, and power work together, companies group up, work better, and growth builds on itself.
For Tanzania, this means infrastructure doesn’t just help growth—it multiplies it. More trade brings more investment, which raises the need for power and transport, leading to even more upgrades. Our ports, power system, and regional spot give us everything needed to become the main growth centre for the Great Lakes.
Tanzania is already making changes with recent investments in ports, railways, and roads. Faster port operations, better rail connections, and improved routes are increasing goods flow.
Cargo through our ports has nearly doubled to 30 million tons in the last five years. Transit goods at Dar es Salaam have risen from 4.5 million to 9 million tons since 2020. The DRC makes up 45 per cent of this, Zambia 24 per cent, and Rwanda at third place, at 18 per cent.
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Uganda’s use of Dar es Salaam dropped 61 per cent from 2020 to 2024, now just 0.7 per cent of transit goods through our ports—even though Uganda’s total trade in goods was US$21 billion last year. Hopefully, President Museveni’s recent visit to Dar es Salaam would address this issue of Uganda not using our ports.
Every container passing through Tanzania creates revenue to government, jobs for our people, and supports services like transport, storage, banking, and insurance. This should be in the heads of each Tanzanian, and especially those making and executing policies. In the short term, we can double transit earnings to US$8 billion a year.
The need for power
But transport needs power to succeed. Electricity is also tied to our location. With the new Julius Nyerere Hydropower dam, Tanzania has extra power for now. Our installed capacity is just over 4,000 MW now, but the peak demand recorded is 1,900 MW.
We connect two regional power pools: the East African Power Pool (EAPP) and the Southern African Power Pool (SAPP). This links countries with extra power, like Ethiopia, to those needing it, like the DRC.
Our grid reaches Kenya, where power costs more than anywhere nearby. However, surplus power that can be generated in Tanzania can not be sold to neighbours nor consumed locally due to transmission and distribution challenges. It is a waste!
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Tanzania shall pull great lakes power pools. Instead of wasting extra power (producing without transmitting or distributing or shutting off the plants), we can sell it to neighbours with high demand, especially mining areas in Zambia and eastern DRC, or even Kenya.
Exporting 1,000 MW from the current installed capacity could bring in nearly US$ 1 billion a year in forex and revenues to TANESCO. This money can be used fund more power plants and address transmission and distribution challenges at home.
Doubling power generation as envisaged by 2030 is possible if we use our location strategically by selling extra to neighbours and using the cash to grow for local and regional needs.
To put it simply, power exports can pay for more power.
This changes how we develop. Instead of depending on loans or aid, we can use our own resources—rivers, gas, and geography—to expand. By 2030, with 8,000 MW installed capacity, we could export a quarter, 2,000 MW, and keep 6,000 MW for our industrialisation drive, with enough for reserve power.
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Power sales could add US$2 billion a year in foreign exchange. The long-term perspective plan, the implementing arm of our vision 2050, directs that Tanzania must have an installed capacity of 70,000MW by the year 2050. To reach this goal, our approach should be regional and avoid inward looking orientation. Geography has positioned us exactly where we should be.
More productive capacity
Why does this help everyday Tanzanians? Real, lasting growth—around 10% a year—comes from building more productive capacity of our economy, not just spending.
That needs steady, cheap electricity; quick, low-cost goods movement; and strong ties between ports, factories, and regional markets.
There’s a bigger picture, too. Providing power and transport to neighbours builds shared interests. It strengthens ties, boosts our influence, and helps peace. Energy and logistics become tools for both growth and good relations.
Tanzania then has a choice to make; it had this choice for decades. One way leads to slow, limited progress due to infrastructure problems. The other is bolder: invest heavily in power and transport sectors to make us the clear leader in the Great Lakes.
Our geography isn’t just where we are; it’s how we can grow.
Zitto Ruyagwa Z. Kabwe is a Tanzanian politician and the former Party Leader of ACT Wazalendo. He served as a Member of Parliament and Shadow Finance Minister, and Chairperson of The Public Accounts Committee of Tanzanian National Assembly (Bunge). He is available at zitto_kabwe@outlook.com. These are the writer’s own opinions and do not necessarily reflect the viewpoints of The Chanzo. Do you want to publish in this space? Contact our editors at editor@thechanzo.com for further inquiries.
