Electricity access is a critical factor in Tanzania's economic development

Access to electricity is a critical issue in many African countries, including Tanzania. The lack of reliable electricity has far-reaching implications for economic growth, education, healthcare, and overall quality of life. Focusing on Tanzania, comparing it with other African nations struggling with electricity access.

While Tanzania has made strides in making electricity more affordable through government subsidies, the challenge of extending access to the entire population remains daunting. Continued investment in infrastructure, coupled with targeted policies to increase affordability and reach, will be essential to reduce the number of people living without electricity

1. Population Without Access to Electricity in Tanzania

Tanzania ranks fourth in Africa for the largest population lacking access to electricity:

• Population without electricity: 36 million people
• Total population: Approximately 64 million (as of 2023 estimates)
• Percentage without access: Around 56% of the population

2. Comparative Analysis of Electricity Access in Africa

The top 10 African countries with the largest populations lacking access to electricity, in order, are:

3. Electricity Costs and Government Subsidies in Tanzania

Tanzania's government has implemented subsidies to ensure that electricity remains affordable, despite the high number of people without access.

• Subsidized electricity rate: Sh100 per unit for ordinary users for up to 75 units per month.
• Unsubsidized rate: Sh292 per unit, meaning the subsidy cuts the cost by nearly 66%.
• Regional comparison: Tanzania has the cheapest electricity tariff in East Africa due to these subsidies. Without the subsidy, consumers would pay Sh320 per unit.

4. Challenges in Expanding Electricity Access

Despite having one of the lowest electricity tariffs in East Africa, Tanzania faces significant challenges in expanding electricity access, including:

• High infrastructure costs: Building the necessary infrastructure to reach remote and rural areas is expensive.
• Economic constraints: Many Tanzanians, particularly in rural areas, have low incomes, making it difficult to afford even subsidized electricity.
• Investment shortfalls: Historical underinvestment in the energy sector has left large parts of the country without electricity.

5. Tanzania's Future Plans

Tanzania aims to address its electricity challenges through several initiatives:

• Julius Nyerere Hydro Power Project: Expected to significantly increase electricity production and reduce costs further.
• Diversification: Plans to become a leading manufacturer of electrical equipment, although this is more focused on economic diversification rather than directly improving access to electricity.

6. Global and Regional Implications

The lack of electricity in Tanzania and similar African countries has global implications. It hampers development, limits educational opportunities, affects health services, and restricts economic growth. Globally, over 600 million people in Africa are without access to electricity, with Tanzania contributing significantly to this figure.

Electricity access in Tanzania, significant challenges and implications for the country's economic development

Electricity access is a critical factor in Tanzania's economic development. The current lack of access for a significant portion of the population poses major challenges to industrialization, SME growth, education, healthcare, and overall economic equality. However, addressing these challenges through targeted investments in infrastructure, energy diversification, and policy reforms could unlock substantial economic benefits, driving Tanzania toward sustainable growth and development.

1. Barrier to Industrialization and Economic Growth

• Limited Industrial Expansion: The lack of electricity access for 36 million Tanzanians hampers industrialization efforts. Reliable electricity is essential for operating machinery, manufacturing goods, and supporting industries like mining, agriculture, and processing. Without sufficient electricity, industries cannot operate efficiently, leading to lower productivity and economic output.
• Investment Deterrent: Potential investors may be discouraged by the unreliable power supply, as consistent electricity is a key factor in business operations. The cost of alternative power sources, like generators, increases operational costs, making Tanzania less attractive for foreign and local investments.

2. Impact on Small and Medium Enterprises (SMEs)

• Business Operations: SMEs, which are critical to Tanzania’s economy, particularly in the informal sector, struggle without access to reliable electricity. Limited power availability can restrict operating hours, increase production costs, and reduce competitiveness. This constraint limits their ability to scale, innovate, and contribute meaningfully to economic growth.
• Digital Economy Constraints: As Tanzania moves towards digitalization, the lack of electricity access poses a significant barrier to adopting digital tools and platforms, especially in rural areas. This restricts the growth of e-commerce, digital services, and financial inclusion, which are crucial for modern economic development.

3. Educational and Health Sector Impacts

• Education: Limited electricity affects educational facilities, particularly in rural areas, where students may lack proper lighting for evening studies, and schools may lack access to digital learning tools. This gap can lead to lower educational outcomes, ultimately impacting the country’s human capital development.
• Healthcare: The health sector is similarly affected, with clinics and hospitals in areas lacking electricity unable to provide essential services, like refrigeration for vaccines or operating medical equipment. This limitation affects public health, productivity, and economic potential as a healthy population is vital for economic development.

4. Urban-Rural Disparities

• Development Imbalance: The disparity in electricity access between urban and rural areas exacerbates economic inequality. Urban areas, which are more likely to have electricity, benefit from economic opportunities and infrastructure, while rural areas lag, contributing to uneven economic development across the country.

5. Potential Economic Gains from Electrification

• Increased Productivity: Expanding electricity access could lead to significant productivity gains in agriculture, manufacturing, and services. Electrification would enable more efficient irrigation, processing of agricultural products, and extension of working hours in various sectors, leading to higher economic output.
• Job Creation: Infrastructure development required for expanding electricity access can create jobs, both in construction and in maintenance. Additionally, increased electricity access can spur the growth of new businesses and industries, further contributing to job creation and economic diversification.

6. Energy Sector's Role in Economic Diversification

• Hydropower and Renewables: Tanzania's focus on projects like the Julius Nyerere Hydro Power Project indicates a potential shift towards using the energy sector as a driver of economic diversification. Reliable and affordable electricity from such projects could support the growth of energy-intensive industries and help the country reduce its reliance on traditional sectors like agriculture.
• Manufacturing Electrical Equipment: Plans to become a leading manufacturer of electrical equipment could boost industrialization, create jobs, and stimulate exports, contributing positively to economic growth.

7. Government Policy and Economic Stability

• Subsidy Impact: While government subsidies make electricity affordable, they also represent a significant financial commitment. If not managed properly, these subsidies could strain public finances, affecting economic stability. However, if the subsidies successfully stimulate economic activities and broaden the tax base, they could be justified as a strategic investment in economic development.