Tanzania: Leading East Africa's Green Transformation

Tanzania stands at the forefront of Africa's green economy revolution, with the country demonstrating remarkable momentum in renewable energy adoption and climate resilience investments. While specific data for Tanzania wasn't detailed in the World Economic Forum's report, the broader African context reveals extraordinary opportunities that Tanzania is actively capturing. Read More: Tanzania’s Vision 2050 transitioning from Vision 2025 to sustainable growth through PPPs

Africa's Solar Revolution: Tanzania's Growing Role

According to the WEF report, solar panel imports have surged across 20 African countries over the past 12 months, highlighting the extent of growth across the continent. Tanzania has been a significant contributor to this trend, driven by several factors:

Energy Access Imperative: With Tanzania's electricity access rate still developing, the country has leapfrogged traditional fossil fuel infrastructure by embracing distributed solar solutions. Rural communities and businesses are increasingly adopting solar photovoltaic systems, creating a multi-billion-dollar market opportunity.

Cost Competitiveness: The report reveals that solar PV costs have fallen by approximately 90% since 2010. This dramatic cost reduction has made solar energy economically viable in Tanzania, where sunshine is abundant year-round. The levelized cost of energy (LCOE) for solar now competes directly with traditional fossil fuels, making it an attractive option for Tanzania's growing industrial and residential sectors.

Tanzania's Position in Africa's $84 Billion Clean Energy Investment

The WEF report shows that Africa invested $84 billion in clean energy in 2024, up from $43 billion in 2019 – representing an impressive 11% compound annual growth rate (CAGR). While this figure remains modest compared to China's $659 billion or Europe's $410 billion, the growth trajectory is exceptional.

Tanzania contributes to this growth through several major initiatives:

1. Grid-Scale Renewable Projects: Tanzania is developing significant solar and wind farms to supplement its hydroelectric capacity, which has been vulnerable to climate-related droughts.
2. Mini-Grid Revolution: Distributed energy solutions are expanding rapidly across Tanzania's rural areas, addressing the adaptation and resilience market segment that now accounts for $1.1 trillion globally and is expected to grow at over 6% annually.
3. Regional Energy Hub: Tanzania is positioning itself as an energy exporter within the East African Community, with potential to supply clean electricity to neighboring countries.

The African Opportunity: A $5+ Trillion Market

Renewable Energy Growth Projections

The report projects that renewable electricity capacity in Africa (categorized within "Rest of World") will grow significantly, though specific regional breakdowns show Africa needs dedicated focus. Global renewable capacity is set to grow from 4.9 TW in 2024 to 9.5 TW by 2030, with renewable generation growing at 9% annually worldwide.

For Africa specifically, the growth rate of 11% CAGR in clean energy investment (2019-2024) suggests the continent is outpacing many developed regions in percentage terms, even if absolute investment levels remain lower.

Tanzania's Renewable Energy Baseline and Potential

While the WEF report doesn't provide Tanzania-specific capacity figures, we can contextualize Tanzania's opportunity:

Current State: Tanzania has substantial hydroelectric capacity (approximately 600 MW) but faces climate vulnerability as changing precipitation patterns affect water availability. The report's climate projections show that in a 3°C warming scenario, precipitation patterns will shift dramatically, with some areas experiencing droughts (11-33% annual likelihood) while others face increased flooding.

Solar Potential: With Tanzania located near the equator and receiving high solar irradiation year-round, the country has theoretical capacity for tens of gigawatts of solar generation. The 84-fold increase in global solar PV capacity projections from early 2000s estimates to 2023 demonstrates how rapidly markets can scale when costs decline and policies align.

Wind Resources: Tanzania's coastal regions and highlands offer substantial wind resources, contributing to the diversified renewable portfolio needed for energy security.

Deep Decarbonization: Tanzania's Industrial Opportunity

Green Hydrogen and Biofuels

The report highlights that global demand for low-carbon hydrogen will reach 102 million tonnes per annum (Mtpa) by 2030, up from 51 Mtpa in 2025. Africa, including Tanzania, has exceptional potential for green hydrogen production due to:

• Abundant renewable energy resources for electrolysis
• Strategic location for export to Europe and Asia
• Growing domestic industrial demand

Similarly, biofuels demand will grow to 179 Mtpa by 2030, with significant potential in Africa given the continent's agricultural resources. Tanzania's agricultural sector, particularly sugarcane production, positions the country well for sustainable biofuel development.

Carbon Capture and Storage

While CCUS (Carbon Capture, Utilization and Storage) demand will reach 160 Mtpa by 2030 globally, Africa's role in this market is still emerging. However, Tanzania's cement and industrial sectors present opportunities for carbon management technologies as these markets mature.

Climate Adaptation: Tanzania's $1.1 Trillion Market Opportunity

Why Adaptation Matters for Tanzania

The WEF report emphasizes that adaptation and resilience solutions now account for more than one-fifth of all climate-related investments globally, with the market standing at $1.1 trillion today. For Tanzania, this represents critical opportunities across several sectors:

1. Agriculture and Food Resilience ($1.8 trillion globally by 2030, growing at 14% CAGR)

Tanzania's agricultural sector, which employs over 65% of the population, faces increasing climate risks. Solutions include:

• Climate-adapted agricultural inputs: Drought-resistant seeds, climate-resilient crop varieties
• Precision agriculture: Smart irrigation systems leveraging Tanzania's water resources more efficiently
• Controlled environment agriculture: Greenhouse systems protecting crops from extreme weather

The report notes that companies like Bayer invest over €2 billion annually in agricultural R&D, developing innovations such as short-statured corn (resilient to drought and extreme winds) and direct-seeded rice (cutting methane emissions and reducing water use by almost half). Tanzania can attract similar investments and deploy these technologies.

2. Infrastructure Resilience ($1.9 trillion globally by 2030, growing at 5% CAGR)

Tanzania faces both flood and drought risks according to the report's 3°C warming projections. The country needs:

• Climate-resilient construction materials: Waterproofing, insulation, pervious concrete for flood management
• Built flood defence structures and drainage solutions: Protecting coastal cities like Dar es Salaam
• Storm-proof building components: Essential for coastal regions facing changing storm frequencies

3. Water Resilience

The report's climate projections show significant changes in precipitation patterns for East Africa. Tanzania requires:

• Water storage infrastructure and technology: Capturing rainfall during wet periods
• Water purification and treatment systems: Ensuring safe drinking water
• Agricultural water efficiency: Drip irrigation and smart water management
• Desalination technology: For coastal areas facing water stress

4. Energy Resilience ($600 million to $1 billion segment growing at 6% CAGR)

• Distributed energy solutions: Microgrids ensuring power continuity
• Grid backup and energy storage: Battery systems providing resilience
• Smart grid management: Optimizing Tanzania's electricity distribution

Tanzania's Competitive Advantages in the Green Economy

1. Strategic Geographic Position

Tanzania's location provides several advantages:

• Equatorial solar resources: Consistent year-round generation
• Coastal wind resources: Indian Ocean wind patterns
• Regional energy hub potential: Supplying East African Community markets
• Port infrastructure: Facilitating green technology imports and hydrogen exports

2. Young, Growing Population

Tanzania's population of over 60 million people, with a median age under 18, represents:

• A growing consumer base for green products
• A workforce for green economy jobs (solar and wind accounted for 16.2 million jobs globally in 2023)
• Entrepreneurial energy for distributed energy businesses

3. Natural Resource Base

• Agricultural land: Biofuel feedstock production
• Water resources: Hydroelectric baseload complementing solar/wind
• Minerals: Potential for battery materials and green technology manufacturing

4. Policy Momentum

Tanzania's commitment to expanding electricity access and developing industrial capacity aligns with green economy growth patterns observed globally.

The Economic Case: Why Tanzania Should Act Now

Revenue Growth Potential

The WEF report's analysis of 6,500+ companies shows that green revenues grew at 12% annually between 2020-2024 – twice as fast as conventional business lines. For Tanzanian companies entering green markets:

• Energy sector: Green revenues grew at 33% CAGR, over twice as fast as conventional revenues
• Industrials: Green solutions grew at 10% CAGR even in mature markets
• Consumer sectors: Green products achieved 25% CAGR in consumer discretionary categories

Capital Access Advantages

Companies with green revenues secure capital at an average of 43 basis points less than companies without green revenues. For Tanzania:

• Lower cost of capital for renewable energy projects
• Attraction of international climate finance
• Access to green bonds and concessional financing from development banks

The report highlights that development finance institutions (DFIs) like British International Investment provide concessional financing that lowers capital costs, using examples from India's ReNew Power that achieved 18-20% compound annual growth rates.

Valuation Premium

Companies with green offerings enjoy 6-15% higher valuations depending on the share of green revenues:

• 20% green revenue = 6% higher P/R and EV/R multiples
• 60-70% green revenue = 12-15% higher valuations

For Tanzanian businesses and startups, this means higher investor interest and better exit valuations.

Sector-Specific Opportunities in Tanzania

1. Transportation and Mobility ($1.5 trillion globally in 2024)

Tanzania's urban centers, particularly Dar es Salaam, face severe traffic congestion and air pollution. Opportunities include:

• Electric vehicle charging infrastructure: Supporting the emerging EV market
• Electric buses and public transport: Reducing urban emissions
• Sustainable logistics: Route optimization for Tanzania's freight sector
• Electric motorcycles and tuk-tuks: Already gaining traction in East African markets

The report notes that passenger electric vehicles are already cost-competitive in most geographies, with EV battery costs falling 90% since 2010.

2. Financial and Enabling Solutions ($500 million globally, growing at 12% CAGR)

Tanzania's financial sector can capture growth in:

• Carbon measurement and accounting: Helping companies track emissions
• Sustainable finance solutions: Green bonds for infrastructure projects
• Climate insurance: Protecting farmers and businesses
• ESG investment funds: Mobilizing capital for green projects

3. Circularity and Waste Management ($600 million globally, growing at 12% CAGR)

With rapid urbanization, Tanzania needs:

• Sorting technology: Processing municipal solid waste
• Plastics recycling: Addressing plastic pollution
• Organic waste to energy: Converting agricultural waste to biogas
• E-waste recycling: Managing electronic waste from growing technology adoption

4. Food, Agriculture and Land Use ($1.4 trillion globally, growing at 14% CAGR)

As noted earlier, this represents Tanzania's largest opportunity:

• Green fertilizers: Reducing import dependence and costs
• Farming technologies: Climate-smart agriculture platforms
• Alternative proteins: Processing local crops into value-added products
• Supply chain efficiency: Reducing food waste

Implementation Roadmap for Tanzania

Phase 1: Foundation (2025-2027)

Policy Framework:

• Set clear renewable energy targets (Tanzania could aim for 2-3 GW of solar/wind by 2030)
• Establish feed-in tariffs and power purchase agreements
• Streamline permitting for renewable projects (the report notes permitting delays of 3.5-7 years in Europe as a cautionary tale)

Early Investments:

• Grid-scale solar farms (100-500 MW projects)
• Mini-grid deployment in 1,000+ rural communities
• Electric vehicle charging infrastructure in major cities
• Climate-adapted seed distribution programs

Projected Investment: $2-3 billion (following Africa's 11% CAGR trajectory)

Phase 2: Scale-Up (2027-2030)

Market Development:

• Green hydrogen pilot projects for industrial use
• Biofuel production facilities
• Climate-resilient infrastructure standards
• Circular economy waste management systems

Projected Impact:

• 3,000-5,000 MW renewable capacity
• 30% reduction in agricultural climate vulnerability
• 50,000+ green economy jobs
• $5-7 billion annual green economy market value

Projected Investment: $8-12 billion cumulative

Phase 3: Leadership (2030-2035)

Regional Hub:

• Green hydrogen export facility
• Regional renewable energy trading
• Climate technology manufacturing
• Sustainable finance center

Projected Impact:

• 10,000+ MW renewable capacity
• Carbon-neutral industrial sectors
• $15-20 billion annual green economy market value
• 150,000+ green economy jobs

Key Success Factors: Lessons from Global Winners

The WEF report analyzed successful companies in the green economy. Tanzania can apply these lessons:

1. Bold Vision with Clear Metrics

Schneider Electric achieved 90% of revenues aligned with EU green taxonomy by embedding sustainability in core strategy. Tanzania needs clear, quantified green growth targets.

2. Cost Efficiency Focus

Holcim achieved 30% revenue growth and 60% EBIT growth by making sustainability profitable through innovation. Tanzanian companies must prioritize cost-competitive solutions, not just "green premiums."

3. Smart Capital Access

India's ReNew Power diversified financing sources (equity partners, DFIs, operational asset sales) to achieve rapid growth. Tanzania should leverage:

• Development bank concessional finance
• Green bonds
• Public-private partnerships
• International climate funds

4. Ecosystem Partnerships

The report emphasizes that "collaboration isn't a nice-to-have; it's the engine of innovation." Tanzania should:

• Partner with technology providers (Chinese, European, Indian firms)
• Engage development partners (World Bank, AfDB, bilateral agencies)
• Foster public-private collaboration
• Join regional initiatives (East African green energy market)

5. De-Risk with Offtake Agreements

Successful companies secure early customers. Tanzania's government can use public procurement ($6.5-8.5 trillion annually in OECD countries) as a model, committing to purchase renewable energy and green products.

The Climate Imperative: Why Tanzania Cannot Wait

The report's climate analysis shows Tanzania faces severe risks under current trajectories:

Precipitation Changes: Extreme variability with both severe droughts (11-33% annual likelihood in some regions) and increased flooding in others

Temperature Increases: Global temperatures exceeded 1.5°C for the first time in 2024; Tanzania will experience above-average warming in East Africa

Economic Impact: The report notes that climate inaction could cost ~3 times more than the $4 trillion needed annually for climate action globally

For Tanzania, inaction means:

• Collapsing agricultural productivity
• Failed hydroelectric generation
• Coastal infrastructure damage
• Mass climate migration
• Lost economic opportunities

Conversely, action means:

• Energy independence (critical for the report's observation that "energy security is an increasing driver of low-carbon investments")
• Economic growth (clean energy accounted for 10% of global GDP growth in 2023)
• Job creation
• Climate resilience

Conclusion: Tanzania's $20 Billion Green Economy by 2035

Based on the WEF report's global projections and Africa's 11% growth trajectory, Tanzania can realistically achieve:

2025: $2 billion green economy market value 2030: $7-10 billion green economy market value
2035: $15-20 billion green economy market value

This represents:

• 200,000+ jobs by 2035
• 5-10% of GDP from green sectors
• Energy independence through 50%+ renewable electricity
• Regional leadership in climate adaptation
• Reduced climate vulnerability for 60+ million Tanzanians

The report's conclusion is clear: "The green economy is no longer a distant promise: it is here, expanding fast and already creating trillions in value." For Tanzania, the question is not whether to participate, but how quickly the country can mobilize to capture its share of this multi-trillion-dollar opportunity.

The time to act is now. As the report warns: "Leaders cannot afford to wait. Building green businesses takes time and those who delay run a growing risk of falling behind as the market accelerates."

Tanzania has the resources, the need, and the opportunity. What's required is bold leadership, smart partnerships, and immediate action to transform this potential into prosperity for current and future generations of Tanzanians.