Tanzania’s electricity price, at $0.087 per kWh, positions it as a cost-effective choice within East Africa, balancing affordability and infrastructure development. Cheaper than Uganda, Rwanda, and Kenya, but higher than heavily subsidized Ethiopia and Sudan, Tanzania’s pricing supports industrial growth and investment while ensuring continued energy sector expansion. This competitive edge, coupled with ongoing improvements, strengthens Tanzania’s role as a regional hub for energy-intensive industries.

1. Tanzania's Electricity is Moderately Priced

• At $0.087 per kWh, Tanzania's electricity prices are in the middle range:
  • Lower than Uganda, Rwanda, and Kenya, making it more affordable for households and industries in the region.
  • Higher than Ethiopia and Sudan, which benefit from government subsidies or lower production costs.

2. Regional Competitiveness

• Tanzania is better positioned for industrial and economic activities compared to neighbors like Kenya ($0.255 per kWh) due to cheaper electricity.
• However, it may face competition from countries like Ethiopia ($0.003) and Sudan ($0.006), where extremely low prices could attract energy-intensive industries.

3. Balance Between Cost and Infrastructure

• The price reflects Tanzania's developing infrastructure and reliance on diverse energy sources like hydropower, natural gas, and renewables.
• While prices are not the lowest, they ensure a balance that supports ongoing investments in energy infrastructure.

4. Opportunities for Investment

• Competitive pricing makes Tanzania attractive for:
  • Energy-intensive industries like manufacturing and mining.
  • Regional exports of electricity to higher-cost neighbors like Kenya and Rwanda, if production capacity increases.

5. Challenges for Universal Access

• Though prices are moderate, Tanzania must ensure:
  • Reliable supply, as outages and access disparities persist in rural areas.
  • Continued efforts to expand the grid and improve efficiency without overburdening consumers.

6. Tanzania in the African Context

• Compared to DR Congo ($0.058) or South Africa ($0.182):
  • Tanzania offers better reliability than DR Congo, despite its higher price.
  • It remains cheaper than South Africa, giving it a competitive edge in attracting business.

Key Takeaways

1. Tanzania's moderate electricity prices strike a balance between affordability and development needs.
2. The country is regionally competitive, particularly compared to East African neighbors.
3. There is room for improvement in reliability, access, and cost-efficiency to boost economic growth further.

Electricity prices vary significantly across countries due to differences in energy sources, infrastructure, subsidies, and economic conditions.

Tanzania's Electricity Price (March 2024)

• $0.087 per kWh
  • Positioned in the mid-range globally.
  • Higher than some neighboring East African countries but lower than the global and many African averages.

Comparison with East African Countries

• Key Insights:
  • Tanzania's electricity is cheaper than Uganda, Rwanda, and Kenya.
  • Ethiopia and Sudan have the lowest prices, benefiting from subsidies and domestic production.

Comparison with Other African Countries

• Key Insights:
  • Tanzania's price is competitive compared to many African countries.
  • Nigeria and DR Congo have lower prices but face reliability and access challenges.
  • South Africa and Ghana, though more developed, charge higher prices.

Factors Affecting Tanzania's Prices

1. Energy Sources: Tanzania relies on a mix of hydropower, natural gas, and renewables.
2. Subsidies: Limited subsidies compared to countries like Ethiopia and Nigeria.
3. Infrastructure: Ongoing improvements in generation and distribution systems.
4. Economic Context: Mid-level prices align with the growing demand and economic expansion.

Regional and Global Context

• Cheapest Globally: Iran ($0.002), Ethiopia ($0.003).
• Highest in East Africa: Kenya ($0.255).
• Global Outlier: Denmark ($0.362), driven by renewable energy investments.

Implications for Tanzania

• Affordable Electricity: Helps in attracting investment and promoting industrial growth.
• Room for Adjustment: Potential to improve reliability and access without significant price hikes.
• Regional Competitiveness: Competitive pricing relative to East Africa positions Tanzania favorably for energy-intensive industries.