Beyond Bankability: Tanzania's Project Finance Capital Stack Structural Failure | TICGL Research
TICGL/TERI — Research Paper · June 2026 · Open Distribution
Beyond Bankability: Why Tanzania's Project Finance Capital Stack Structure is the Root Cause of Investment Failure
Reframing the policy debate from project documentation to structural financing architecture — the real reason USD 6 billion in registered FDI did not disburse in 2024.
Amran Bhuzohera — Managing Director & Chief Economist, TICGL
June 2026 · Version 1.0 Final
TICGL Economic Research & Policy Advisory
$6.0BFDI registered but undisbursed in 2024 — Record gap
22%FDI disbursement rate 2024, down from ~30% in 2019
17,000×Gap between PPPC mandate (TZS 34T/yr) and budget
TZS 2.1TPension capital locked in govt. securities
6,422 MWSouth Africa unlocked via capital stack reform
Tanzania Economic Research Institute (TERI)
Amran Bhuzohera
Dr. Bravious Kahyoza — Director of Economic Research, TICGL/TERI
Open Distribution — Research Paper
TICGL; BoT; TIC; PPPC; World Bank; AfDB; IFC
v1.0 Final — June 2026
AB
Amran Bhuzohera
Managing Director & Chief Economist — Tanzania Investment and Consultant Group Ltd (TICGL)
Amran Bhuzohera is the Managing Director and Chief Economist of TICGL, Tanzania's leading independent investment consultancy and economic research advisory. With a focus on project finance architecture, development economics, and private sector investment mobilisation, Amran leads TICGL's flagship research programme — TERI (Tanzania Economic Research Institute) — which produces evidence-based policy analysis on Tanzania's investment climate, capital market development, and infrastructure financing. His work bridges the gap between macroeconomic diagnostics and transaction-level advisory, making him one of Tanzania's foremost voices on structural investment reform. He advises private investors, DFIs, and government bodies on capital stack structuring, PPP architecture, and blended finance deployment across Tanzania's infrastructure sectors. Amran is the author of multiple TICGL research papers on Tanzania's project finance market and is a regular contributor to policy dialogues on FYDP IV implementation and investment climate reform.
Executive Summary
Tanzania's Investment Failure is Structural, Not Documentary
❌ The Conventional Diagnosis
"Tanzania lacks bankable projects. The solution is better feasibility studies, improved project documentation, and stronger project preparation units."
✓ The Structural Diagnosis (This Paper)
"Tanzania lacks project financing architecture. The solution is building the institutional capacity to structure capital stacks, assemble debt layers, and deploy blended finance instruments."
A dominant narrative in Tanzania's investment promotion community holds that the primary obstacle to infrastructure project implementation is the shortage of bankable projects — properly documented, financially modelled proposals that lenders can evaluate. This paper challenges that narrative directly.
While project documentation quality matters, treating bankability as the root cause of Tanzania's investment failure is analytically incomplete and practically counterproductive. The core argument: Tanzania's project finance market suffers from a fundamental capital stack architecture failure. The structure of how project financing is assembled — or more precisely, the institutional inability to assemble it — is the primary driver of why viable projects do not reach financial close, why USD 6.0 billion in registered FDI did not disburse in 2024, and why FYDP IV risks repeating the financing failures of FYDP III.
Core Thesis
A bankable project is a necessary condition for investment, not a sufficient one. A project with excellent documentation, credible feasibility analysis, and clear revenue projections will still fail to reach financial close if the capital stack above the equity layer cannot be assembled. Tanzania's structural deficit is in the institutional capacity to structure, stack, and mobilise the debt and blended finance layers that sit above investor equity — not primarily in the quality of project preparation documents.
Section 1
Bankability vs. Project Financing — Defining the Terms
1.1 What Is a Bankable Project?
A bankable project is one that a financial institution — a commercial bank, DFI, or capital market investor — is willing to finance. Bankability is a relational concept describing the relationship between a project and the financing system that evaluates it. A project is bankable when it has a credible feasibility study, supportable revenue projections, clear legal and regulatory structure, adequate debt service coverage ratios (DSCR), and documented risk allocation between all parties.
The critical insight: bankability says nothing about whether the financing instruments necessary to close the deal actually exist, are accessible, or can be assembled at the required scale, tenor, and cost. A project can be exquisitely documented and still fail to reach financial close if the capital stack cannot be built above it.
1.2 What Is Project Financing? — The Capital Stack
Project financing is a financial engineering discipline, not a documentation exercise. The investor (equity provider) typically brings only 20–30% of total project cost. The remaining 70–80% must be structured through debt and blended finance — layers that Tanzania's institutional infrastructure cannot currently assemble at the required scale and tenor.
Senior Debt
CRDB · NMB · AfDB · IFC · World Bank · JICA · DFC · DSE bond | Requires 10–25yr tenor
50–65%
Mezzanine / Sub-Debt
Subordinated DFI loans · Pension fund infra bonds · Convertibles | Higher-return tolerance
10–20%
Blended / Concessional Finance
World Bank PRG · VGF/TIVF · EU EFSD+ · DFC · JICA ODA | First-loss absorption
10–20%
Equity — Investor / Sponsor
FDI equity · PPP private partner · Government co-investment | Highest risk; last repaid
20–30%
The Key Distinction in Plain Terms: Bankability is about whether the project is ready for financing. Project financing is about whether the financing system is capable of funding it. Tanzania has invested heavily in the former while systematically underinvesting in the latter.
Infrastructure Project Capital Stack — Typical Layer Distribution
Tanzania context: % of total project cost by financing source category
Capital Stack Layers — Tanzania Infrastructure Project Context
Capital Layer
Typical %
Source (Tanzania Context)
Key Requirement
Tanzania Status
Senior Debt
50–65%
CRDB, NMB, AfDB, IFC, World Bank, JICA, DFC, DSE bond
FDI equity; PPP private partner; government co-investment
Highest risk; last repaid; triggers the rest of the stack
PRESENT — But stranded
Section 2
Anatomy of Tanzania's Capital Stack Structural Failures
Tanzania's project finance market exhibits six structural failures that prevent capital stacks from being assembled — regardless of project documentation quality. These failures operate at the institutional, regulatory, and market-infrastructure levels.
F1
Tenor Mismatch — Foundational Architecture Problem
Commercial banks offer 3–7 year max tenors. Infrastructure needs 10–25 years. Every project hits this wall, documented or not.
F2
TANESCO Off-Taker Risk — Energy Sector Stopper
TANESCO's TZS 400B/year deficit and IPP payment history prevents commercial lenders from providing senior debt to new energy projects.
F3
Shallow Capital Market — No Long-Tenor Debt
DSE market cap ~11% of GDP (SSA avg. 20%). No corporate bond market at scale. Pension funds >85% locked in government securities.
F4
Blended Finance Void — No VGF, No TIVF
No Viability Gap Funding mechanism. Proposed TIVF not operationalised. Every project requiring concessional support needs bespoke donor negotiation.
F5
PPPC Capacity Deficit — 17,000× Funding Gap
FYDP IV PPP pipeline: TZS 34T/year mandate. PPPC budget: TZS 1–2B. Capacity is 17,000× below mandate.
F6
78% FDI Disbursement Gap — Equity Stranded
842 projects worth USD 7.7B registered in 2024. Only USD 1.72B disbursed (22%). High registration + low disbursement = financing architecture failure.
Failure 1: Tenor Mismatch — Sector by Sector
Tenor Mismatch by Infrastructure Sector
Required vs. available loan tenor (years) — the foundational barrier
Capital Market Benchmarks
Tanzania vs. Kenya vs. SSA Average (composite score, 100 = best)
Tenor Mismatch — Infrastructure Project Type vs. Tanzania Commercial Bank Reality
Project Type
Min. Required Tenor
TZ Bank Max Tenor
Gap
Consequence
Solar/Wind IPP (30–150MW)
15–20 years
5–7 years
10–13 yrs
Debt service 2.1× too high; unviable at EWURA tariff
Road / Bridge PPP
15–25 years
5–7 years
10–18 yrs
Toll revenue model collapses under short-tenor repayment
Water / Sanitation
15–20 years
5–7 years
10–13 yrs
Tariff required exceeds affordability threshold
Port / Rail Infrastructure
20–30 years
5–7 years
15–23 yrs
No commercially viable structure possible without DFI
Agro-Processing (medium)
7–10 years
3–5 years
4–5 yrs
Working capital misallocation; project under-leveraged
Failure 2: TANESCO — The Energy Sector's Capital Stack Stopper
TANESCO: The Single Most Critical Off-Taker Risk in Tanzania's Project Finance Market. SOEs generate an estimated TZS 2 trillion in annual losses. TANESCO alone contributes TZS 400 billion per year in deficit. Against TZS 90 trillion of cumulative public investment in SOEs, the return is negative. For any energy IPP seeking senior debt, TANESCO's creditworthiness — not project documentation quality — is the binding financing constraint.
Failure 3: Shallow Capital Market — Comparative Data
Capital Market Indicators — Tanzania vs. Kenya vs. SSA Average (2025)
Indicator
Tanzania (2025)
Kenya (2025)
SSA Average
Gap / Implication
Market Cap / GDP
~11%
~25–30%
~20%
9 pp below SSA average
Corporate Bond Market
None at scale (2 firsts 2024–25)
Active; multiple issuers
Emerging
No domestic long-tenor debt market
Pension AUM in Govt. Securities
>85%
~60%
~65–70%
TZS 2.1–3.2T trapped; unavailable
Private Sector Credit / GDP
~16%
~32%
~25%+
Credit intermediation severely limited
Infrastructure Bond Issuances
2 (TARURA, DAWASA)
10+
Varies
Template exists but no pipeline
Failure 4: The Blended Finance Institutional Void
The VGF Gap: India's VGF programme (2004) has supported over USD 20 billion in infrastructure by covering the gap between commercial viability and full project cost. South Africa's REIPPPP enabled 6,422 MW in 7 years through standardised VGF-equivalent mechanisms. Tanzania's absence of an equivalent mechanism means economically sound but commercially marginal projects — rural roads, water, social infrastructure — cannot attract private finance regardless of documentation quality.
Failure 5: PPPC — A 17,000× Institutional Capacity Gap
PPPC Institutional Capacity Gap (Logarithmic Scale)
Annual mandate (TZS 34T) vs. operational budget (TZS 1–2B) — most extreme institutional mismatch in Tanzania's investment ecosystem
Section 3
The FDI Disbursement Gap — Hard Evidence of Structural Failure
The most direct empirical evidence for the structural financing diagnosis is Tanzania's FDI registration-disbursement gap. In 2024, TIC registered 842 projects worth USD 7.7 billion — the highest value since 1991. Yet actual FDI disbursements reached only USD 1.72 billion: a 22% disbursement rate. USD 6.0 billion in registered FDI did not move.
The declining disbursement rate — from ~30% in 2019 to 22% in 2024 — as registration volumes increase is particularly diagnostic. The more ambitious the investment pipeline, the more pronounced the capital stack failure becomes.
Tanzania FDI: Registered vs. Disbursed (2019–2024)
USD Billions — The widening gap between investor commitment and capital deployment
Tanzania FDI Registration vs. Disbursement Gap — 2019–2024
Year
Registered FDI (USD B)
Disbursed FDI (USD B)
Disbursement Rate
Undisbursed Gap (USD B)
Status
2019
~3.6
1.07
~30%
~2.5
Baseline
2020
~2.8
0.83
~30%
~2.0
Stable (COVID)
2021
~3.2
0.99
~31%
~2.2
Slight recovery
2022
~3.9
1.10
~28%
~2.8
Rate declining
2023
~5.9
1.47
~27%
~4.3
Gap widening
2024
7.7
1.72
22%
6.0 — Record
Structural crisis
FYDP IV PPP Requirement vs. Tanzania's Current Financing Capacity (USD B/year)
The scale mismatch between FYDP IV development ambition and actual structural financing capacity
FYDP IV Scale Mismatch: FYDP IV requires TZS 170 trillion from the PPP channel over five years — approximately USD 13 billion per year. Even assuming every project were impeccably documented, Tanzania's current financing architecture cannot absorb this. The banking sector lacks the tenor. The capital market lacks depth. Blended finance mechanisms do not exist at scale. Bankability improvements alone will not close this gap.
International Evidence — Capital Stack Architecture as the Decisive Variable
The international evidence from successful emerging market project finance programmes consistently demonstrates that the decisive variable is capital stack architecture — not project documentation quality. Every major success was achieved by resolving a structural financing constraint, not by improving feasibility study standards.
International Comparators — Capital Mobilised by Structural Reform
What each country achieved by addressing capital stack architecture — not documentation
South Africa — REIPPPP
2011–2018 · Renewable Energy IPP Programme
6,422 MW
~USD 14B
Standardised PPA + Treasury backstop
Eskom's off-taker risk was resolved via government-backed PPA with Treasury backstop. Tanzania equivalent: TANESCO payment guarantee + standardised PPA template.
India — VGF Programme
2004–Present · Viability Gap Funding
USD 20B+
Up to 40% capex
Grant for commercially marginal projects
VGF improves project economics by reducing equity return required and enabling commercial lender participation. Direct precedent for Tanzania's proposed (unoperationalised) TIVF.
Kenya — RBA Pension Reform
2017–Present · Retirement Benefits Authority
~USD 1.3B/yr
10% of pension AUM
Regulatory change only
RBA regulatory amendment released ~USD 1.3B annually for infrastructure from pension funds — no sovereign borrowing, no FX risk. Tanzania could release TZS 2.1–3.2T with SSRA equivalent.
Morocco — PPP Transaction Advisory
2010–Present · Dedicated PPP Centre
USD 8B+ by 2023
Full DFI engagement
Budget benchmarked to deal volume
Morocco's PPP Centre was given budget and mandate to engage DFIs, structure concessions, and close transactions. Tanzania PPPC needs scaling from TZS 1–2B to TZS 380–680B annually.
Brazil — BNDES Infrastructure
1952–Present · National Development Bank
USD 50B+
15–25 years
State anchor lender for long-tenor debt
BNDES eliminates dependency on international DFI deal-by-deal engagement. Tanzania equivalent: TIFF capitalised by BoT + pension funds + DFIs.
International Comparators — Key Structural Innovation & Tanzania Equivalents
Country Programme
Key Structural Innovation
Capital Mobilised
Tanzania Equivalent Needed
South Africa REIPPPP
Standardised PPA + Treasury backstop for Eskom off-taker risk
6,422 MW; ~USD 14B total
TANESCO payment guarantee + standardised PPA
India VGF Programme
Government grant covering 20–40% capex for marginal projects
USD 20B+ infrastructure
TIVF — Tanzania Infrastructure Viability Fund (not yet operational)
Kenya Pension RBA Reform
10% pension AUM allocation to infrastructure bonds
~USD 1.3B annual capacity
SSRA regulatory amendment allowing 10–15% infra allocation
Morocco PPP Programme
Dedicated PPP transaction advisory unit with full DFI mandate
USD 8B+ structured PPP by 2023
PPPC budget scaling from TZS 1–2B to TZS 380–680B
Brazil BNDES Infrastructure
State development bank as domestic anchor for 15–25yr tenors
The following five reforms address Tanzania's capital stack structural failures directly. Each targets a specific architectural failure identified in Section 2. These are not alternatives to project preparation improvement — they are the structural complements that make project preparation productive.
Reform Implementation Timeline & Capital Unlocked
Five structural reforms by timeline (months) and estimated capital mobilisation potential
R1
TANESCO Credit Enhancement — Energy Sector Unlock
Establish a government-backed TANESCO Payment Guarantee Facility, structured as a USD-denominated escrow funded by gold export revenue or TRA collections, guaranteeing TANESCO's IPP payment obligations for the full PPA duration. Engage World Bank and AfDB for Partial Risk Guarantee overlay. This single reform would immediately unlock the energy IPP pipeline.
0–12 Months300–500 MW unlockedUSD 450M–1.5B
R2
SSRA Pension Fund Infrastructure Allocation
SSRA should amend pension fund investment guidelines to allow 10–15% of AUM to be allocated to qualifying infrastructure bonds listed on the DSE or issued by CMSA-approved SPVs. At TZS 21.4 trillion in pension AUM, this immediately releases TZS 2.1–3.2 trillion — without sovereign debt, without foreign exchange risk, and without donor dependency. Requires a regulatory amendment only — not legislation.
0–6 MonthsTZS 2.1–3.2T unlockedRegulatory only
R3
TIVF Operationalisation — Tanzania's VGF
The Tanzania Infrastructure Viability Fund should be operationalised as a dedicated VGF mechanism, capitalised at TZS 200–400 billion per year from TRA revenue, DFI contributions (World Bank, AfDB, JICA, EU EFSD+), and selected SOE divestiture proceeds. The VGF mechanism converts economically sound but commercially marginal projects into bankable investments.
12–18 Months30–50 projects/yrNot yet operational
R4
PPPC Institutional Scaling
PPPC's budget should scale from TZS 1–2 billion toward TZS 380–680 billion, benchmarked against Morocco's PPP Centre and India's PPP appraisal architecture. Financed via increased Treasury allocation, a DFI revolving project development facility, and a transaction success fee structure aligning PPPC incentives with deal completion.
A dedicated TIFF should be established as a domestic development finance institution providing 10–25 year infrastructure debt. Capitalised by the Bank of Tanzania (seed capital), pension funds (from SSRA reform), and DFI concessional contributions. Tanzania's structural equivalent of Brazil's BNDES, India's IIFCL, and Kenya's infrastructure bond facility.
Tanzania's infrastructure investment challenge is structural, not documentary. The country's development financing gap — estimated at USD 10–13 billion per year through 2030 — will not be closed by improving feasibility study quality, however necessary that improvement may be. It will be closed when Tanzania's capital stack architecture is capable of assembling 70–80% of project cost from structured debt, blended finance, and domestic capital market instruments above an investor's equity layer.
The evidence is unambiguous: a 22% FDI disbursement rate with registered values at record highs confirms that documentation is not the binding constraint. A 3–7 year banking sector tenor ceiling confirms that domestic debt markets cannot support infrastructure finance. A TZS 400 billion per year TANESCO deficit confirms that the energy sector's off-taker risk is a capital structure problem. A >85% pension AUM concentration in government securities confirms that the domestic long-tenor capital pool is regulatory-locked, not unavailable.
The Policy Imperative
Tanzania's policymakers, development partners, and advisory institutions must shift their primary analytical frame from "how do we prepare better projects?" to "how do we build the institutional architecture that can finance the projects we already have?" Project preparation, without financing architecture, produces well-documented projects that never reach financial close.
The investment environment is shifting in Tanzania's favour: FYDP IV is ambitious and credible; the mineral sector is generating USD-denominated export revenues; the DSE is recording historic capital market firsts; and international DFI interest is genuine. The decisive variable in whether Tanzania captures this moment is not the quality of its project documentation — it is whether the structural financing architecture is built in time to deploy it.
TICGL's Advisory Mission is to operate precisely at this structural gap: building the capital stack architecture — feasibility, structuring, DFI engagement, risk instrument selection, capital market instruments — that converts investor interest into closed transactions, registered FDI into disbursed capital, and FYDP IV ambition into operational infrastructure.
Sources & Data References
TICGL/TERI — Project Finance in Tanzania: Gaps, Structures & the Advisory Role (April 2026, v1.0 Final). ticgl.com/project-finance-in-tanzania/
Bank of Tanzania — Financial Sector Stability Reports 2023–2025; Balance of Payments Statistics 2019–2024
Tanzania Investment Centre (TIC) — Tanzania Investment Report 2025; FDI Registration and Realisation Data 2019–2024
PPPC CentreStage Dialogue Series — FYDP IV PPP Financing Framework Presentation, March 2026
CMSA / DSE — Capital Market Statistics 2019–2025; TARURA Infrastructure Bond 2024; DAWASA Green Bond 2024–2025
Municipal Bonds & Capital Market Development in Tanzania 2026 | TICGL Economic Research
📊 TICGL Economic Research · March 2026
Municipal Bonds & Capital Market Development in Tanzania
The Contribution of Local Government Authorities to Tanzania's Capital Markets — Closing the USD 68–88 Billion Financing Gap on the Path to a USD 1 Trillion Economy
🗓 March 2026📍 Dar es Salaam, Tanzania🏛 Tanzania Investment and Consultant Group Ltd📚 Sources: DSE · CMSA · BOT · IMF · World Bank · AfDB · ODI
$68–88B
Cumulative Financing Gap 2024–2030
~USD 10–13B per year average
$0.5B/yr
Municipal Bond Target by 2030
From virtually zero today
$1.0B/yr
Capital Markets Target by 2030
~7–9% of annual financing gap
TZS 21.4T
Pension Funds AUM 2024
~USD 7.9B — Tanzania's largest capital pool
28
Companies Listed on DSE
Target: 50+ by 2030
$1 Trillion
GDP Target — Vision 2050
Requires USD 3.7T total investment
1
Introduction and Context
Tanzania faces a growing structural development financing gap. Research by TICGL (February–March 2026), the IMF, and the World Bank estimates that Tanzania requires investment equivalent to approximately 35.9–42% of GDP annually to sustain the 6–7% growth rate demanded by Vision 2050 (Dira 2050).
This is not a temporary problem — it is a structural one that widens each year. By 2030, the annual gap is projected to reach USD 11–15 billion. Closing this gap without excessive reliance on external borrowing requires financial innovation — and this is precisely where Municipal Bonds (debt instruments issued directly by Local Government Authorities through the capital market) emerge as a powerful, transformative, and durable new tool.
🎯Central Research Question
Can Municipal Bonds — debt securities issued directly by Local Government Authorities (LGAs) through Tanzania's capital market — play a meaningful role in closing the USD 68–88 billion development financing gap for 2024–2030, and ultimately support Tanzania's path to a USD 1 Trillion economy by 2050?
1.1 Tanzania's Economic Baseline — Key Data (2020–2030)
Before examining Municipal Bonds in depth, it is essential to understand the macroeconomic environment in which these instruments will operate:
Indicator
2020
2024 / 2025
2030 Target
Trend
GDP (Nominal, USD Billion)
$67.8B
$87.4B (2025 est.)
~$121B
▲ Growing
Real GDP Growth Rate (%)
4.8%
5.9% (2025)
6–7%
▲ Accelerating
GDP per Capita (USD)
$1,104
~$1,277 (2023)
~$2,000
▲ Rising
Tax-to-GDP Ratio
11.8%
13.1% (2024)
16–18%
▲ Reforming
FDI Inflows (USD Billion)
$1.0B
$6.6B (Record!)
$10–15B/yr
▲ Record High
Total External Debt (USD B)
$25.5B
$34.5B (2023)
~$50.8B
● Managed
Informal Sector (% of GDP)
~46%
~46% (persistent)
<40%
● Stagnant
DSE Market Cap / GDP
~8.3%
~10.8% (2025)
20–25%
▲ Early Growth
Sources: World Bank Country Overview 2025; IMF Article IV 2025; Bank of Tanzania; TICGL Economic Research (Feb–March 2026); Vision 2050 (Dira 2050).
Tanzania GDP Growth — Actual vs Target
Nominal GDP (USD Billion), 2020–2030 | Sources: World Bank, IMF, TICGL
Tanzania Real GDP Growth Rate (%)
Annual Growth Rate, 2020–2030 | Sources: IMF, World Bank, TICGL
2
The Development Financing Gap — 2024–2030
The TICGL February 2026 report — drawing on IMF, World Bank, AfDB, and ODI data — demonstrates that Tanzania faces a structural financing gap estimated at USD 68–88 billion cumulatively for the period 2024–2030.
Year
GDP (USD B)
Required Investment (35.9–42% of GDP)
Available Financing
GAP (USD B)
Risk Level
2024
$83.0B
$29.9–34.9B
$20.8–23.2B
$8–10B
MODERATE
2025
$87.4B
$31.4–36.7B
$21.9–25.3B
$9–11B
MODERATE
2026
$95.4B
$34.3–40.1B
$24.8–27.7B
$9–12B
MODERATE
2027
$101.3B
$36.5–42.5B
$26.3–29.4B
$10–13B
HIGH
2028
$107.6B
$38.7–45.2B
$29.1–32.3B
$10–13B
HIGH
2029
$114.2B
$41.1–48.0B
$30.9–34.3B
$11–14B
HIGH
2030
$121.2B
$43.5–50.9B
$32.7–37.6B
$11–15B
VERY HIGH
CUMULATIVE 2024–2030
~$710B
~$255–298B
~$186–210B
~$68–88B
CRITICAL
Sources: ODI (2025); IMF Medium-Term Projections; World Bank Tanzania Overview 2025; AfDB AEO 2024; Vision 2050 milestones.
Annual Financing Gap — Tanzania 2024–2030
USD Billion mid-point estimates | Sources: ODI, IMF, World Bank, TICGL
Required vs Available Financing (USD B)
Annual comparison 2024–2030 | Sources: IMF, World Bank, TICGL
2.1 Four Pillars of Gap Closure
The USD 68–88 billion gap cannot be closed by any single source. It requires simultaneous mobilisation across four interconnected pillars:
Pillar
2023 Actual
2025 Est.
2030 Target
Gap Closure (USD/yr)
Status
1. Domestic Revenue (TRA)
11.5–12.5% Tax/GDP
13.1% Tax/GDP
16–18% Tax/GDP
$4.0–5.5B/yr
Reforming
2. FDI (Private Sector)
$1.34B
$6.6B ← Record!
$10–15B/yr
$3–8B/yr
Fastest-Growing
3. PPP (Public-Private)
$0.3B/yr
$0.8B/yr
$3.0B/yr
~$2.2B/yr
Emerging
4a. Capital Markets — Bonds
$0.05B/yr
$0.10B/yr
$0.60B/yr
~$0.60B/yr
Early Stage
4b. Equities / IPOs — DSE
$0.02B/yr
$0.04B/yr
$0.20B/yr
~$0.20B/yr
Early Stage
4c. Pension Funds → Infra
<$0.05B/yr
~$0.10B/yr
$0.30–0.78B/yr
~$0.50B/yr
MAJOR OPPORTUNITY
4d. Municipal Bonds (LGAs) 🆕
ZERO
ZERO (pilot stage)
$0.50B/yr
~$0.50B/yr
🚀 NEW FRONTIER
4e. Green / Climate Finance
$0.1B/yr
$0.3B/yr
$1.5B/yr
~$1.2B/yr
Growing
TOTAL — All Pillars (Full Reform)
~$11.3B
~$18.5B
~$30–35B
$15–22B/yr
✓ ACHIEVABLE
Sources: TICGL Capital Market Development Research, March 2026; TICGL Financing Gap Report, February 2026.
Four Pillars — 2030 Contribution Targets (USD B/yr)
Estimated annual contribution to gap closure by 2030
Capital Market Instruments Growth (USD B/yr)
2023 Actual vs 2030 Target — showing Municipal Bonds opportunity
3
Municipal Bonds — Definition and Concept
A Municipal Bond (also called a Local Government Bond or LGA Bond) is a debt instrument issued by a City Council, District Council, or other Local Government Authority (LGA) with the purpose of raising funds from investors to finance public infrastructure and services.
📌Simple Principle
The municipality says to investors: "Give us money today so we can build a water / road / hospital project — we will pay you interest every year for a defined period, and then repay your principal in full." The security for repayment is the LGA's actual revenue streams (land rates, service fees, business levies).
3.2 Global Precedents — Municipal Bonds Work
Municipal Bonds are not a new concept globally. They are used successfully in many countries, particularly South Africa, Kenya, India, and the United States:
Country / City
Year
Amount
Project
Outcome
South Africa (eThekwini/Durban)
1996–present
ZAR 20B+
Water, urban infrastructure
Africa's largest municipal market — continent's benchmark
Kenya (Nairobi)
2011 (pilot)
KES 2B
Water pipeline (NCWSC)
Successful — provides a direct model for Tanzania
Uganda (Kampala)
2015
UGX 50B
City roads
Piloted — still developing
India (Pune, Ahmedabad)
1997–present
INR 100B+
Water, public transport
Best practice model — robust, strong repayment track record
USA (NYC, LA, Chicago)
1812–present
USD 4T+ (national)
Schools, hospitals, roads, water
World's largest municipal bond market — the ultimate benchmark
🇹🇿 Tanzania (DAWASA Green Bond)
2024
TZS 53.1B (~$20M)
Water & sanitation — Dar es Salaam
TANZANIA'S FIRST — lays the foundation for full Municipal Bonds!
*The DAWASA Green Bond is not a full Municipal Bond, but it is the closest existing precedent — proof that Tanzania can issue infrastructure bonds for urban services through the DSE.
3.3 Types of Municipal Bonds — Which Are Most Viable for Tanzania?
Bond Type
Repayment Source
Most Suitable Projects
Viability for Tanzania
General Obligation (GO) Bond
All LGA revenues (rates, fees, levies)
Schools, hospitals, internal roads
Requires legislative change and improved revenue tracking
Revenue Bond
Revenues from the specific project (water, tolls, BRT)
Water supply, wastewater, BRT, electricity grid
✅ MOST VIABLE — DAWASA/Tanga UWASA are live proof-of-concept
Tanzania's Capital Market — DSE Performance Overview
The Dar es Salaam Stock Exchange (DSE) reached historic milestones in 2025–2026, with equity market capitalisation overtaking government bonds in value for the first time in history — a signal that investor confidence is growing rapidly.
DSE Indicator
2023
2024
2025 (Latest)
2030 Target
Total Market Cap (USD)
~$7.9B
~$8.6B
~$9.42B
$25–30B
Listed Companies
27
27
28
Target: 50+
Sustainability Bonds Outstanding
0
0
TZS 498B+
Brand new segment!
Infrastructure Bonds (listed)
0
0
TARURA (2025) — FIRST EVER!
5+ issuers
CIS / Unit Trust AUM
N/A
TZS 1.8T
TZS 3.4T
+89% in 18 months
Historic Milestone (Feb 2026)
—
—
🏆 Equity overtook Govt Bonds in value — first time in history
DSE Capital Market Contribution to Financing Gap (USD B/yr)
2023 → 2030 projection — all instruments combined
5
Pension Funds — The Primary Investors in Municipal Bonds
Tanzania's pension funds represent the single largest pool of long-term domestic capital in the country. With combined Assets Under Management (AUM) of TZS 21.4 trillion (~USD 7.9 billion) in 2024, these institutions are a strategic force that — when properly directed — can become the anchor investors for Municipal Bonds and infrastructure financing broadly.
5.1 Tanzania's Pension Fund Landscape
Fund
Members Served
AUM (TZS, 2024)
AUM (USD, 2024)
% of Total
Govt. Securities Allocation
NSSF
Private sector, self-employed
~TZS 9–10T
~$3.3–3.7B
~42–47%
>60% — Over-allocated
PSSSF
Civil servants
~TZS 5–6T
~$1.9–2.2B
~23–28%
>65% — Over-allocated
PPF
Parastatal workers
~TZS 3–4T
~$1.1–1.5B
~14–19%
~60–70%
LAPF
Local govt. employees
~TZS 2–3T
~$0.7–1.1B
~9–14%
>70% — Excessive
GEPF
Govt. employees (provident)
~TZS 1–2T
~$0.4–0.7B
~5–9%
>75% — Far too high
WCF
All workers (compensation)
~TZS 400–700B
~$155–270M
~2–3%
Variable
TOTAL
~5 million members
TZS 21.4T
~USD 7.9B
100%
85–90% in Govt. Securities — <2% in infrastructure bonds
Real asset values grow with time and economic activity
✅ STRONG — infrastructure is inflation-resilient
Has excess capital (TZS 12.8–14.9T in govt. bonds)
Requires large upfront capital commitment
✅ IDEAL — capital is ready and available
Faces concentration risk from government bond overexposure
Municipal bonds diversify the portfolio away from sovereign risk
✅ DUAL BENEFIT — better risk management and better returns
🔑One Regulatory Change Could Unlock Everything
If BOT/MoF amend the Pension Fund Investment Guidelines to allow 5–10% of AUM to be allocated to DSE-listed Infrastructure Bonds — including Municipal Bonds — this would immediately release USD 390–780 million per year for urban infrastructure projects. No new taxes. No additional sovereign debt. No new foreign borrowing. Just a reallocation of capital that is already there.
5.3 Pension Fund Infrastructure Allocation — International Benchmarks
Country
Total AUM
Actual Infra %
Target Infra %
Outcome / Notes
🇹🇿 Tanzania (current)
~$7.9B
<2%
5–10% (TICGL)
USD 390–780M/yr gap left on table
🇰🇪 Kenya
~$13B
~5–8%
10–15%
NSSF Kenya — gas pipeline financing (2023)
🇿🇦 South Africa
~$200B
~10–15%
~15–25%
Africa's benchmark — GEPF finances major infrastructure
Capital Market Contribution via Municipal Bonds — Projections 2023–2030
Drawing on DSE data, CMSA reports, pension fund AUM, and international benchmarks, TICGL estimates that Tanzania can reach USD 1.0 billion per year in total capital market contributions to the financing gap by 2030. Within this, Municipal Bonds can contribute USD 0.5 billion per year — provided that the required legal and institutional reforms are implemented on time.
6.1 Capital Market Contribution by Instrument — 2023–2030 Projections
Capital Market Instrument
2023
2024
2025
2027 (Est.)
2029 (Est.)
2030 Target
% of 2030 Annual Gap
Infrastructure Bonds on DSE (incl. TARURA model)
$0.01B
$0.02B
$0.03B
$0.15B
$0.30B
$0.40B
~3.1%
Green / Climate / Sustainability Bonds
$0.01B
$0.02B
$0.03B
$0.08B
$0.18B
$0.20B
~1.5%
🆕 Municipal Bonds — LGA Issuances
$0.00B
$0.00B
Pilot Stage
$0.10B
$0.30B
$0.50B 🌟
~3.8%
Equities / IPOs (DSE)
$0.02B
$0.03B
$0.04B
$0.12B
$0.18B
$0.20B
~1.5%
Pension Funds → Infrastructure Bonds
<$0.05B
~$0.08B
~$0.10B
$0.20B
$0.28B
$0.30–0.78B
~3.8–6%
Diaspora Bonds
$0.00B
$0.00B
$0.00B
$0.03B
$0.08B
$0.10B
~0.8%
Sukuk (Islamic Bonds)
Minimal
Minimal
Emerging
$0.06B
$0.09B
$0.12B
~0.9%
TOTAL CAPITAL MARKET CONTRIBUTION
$0.05B
$0.07B
$0.10B
$0.28B
$0.62B
$1.00B
~7–9%
Sources: DSE/CMSA Reports 2025; TICGL Capital Market Development Research, March 2026; TICGL Financing Gap Analysis, February 2026.
🌟Municipal Bonds — A Uniquely Fast-Track Opportunity
Among all new capital market instruments, Municipal Bonds have the highest potential for rapid scale-up because: (1) Urban infrastructure demand is growing explosively, (2) The legal framework already exists, (3) DAWASA and Tanga UWASA have validated the model, (4) Pension funds are ready and waiting to buy, and (5) Bond auction oversubscriptions prove investors have unmet demand.
Capital Market Instruments — 2030 Target Distribution
USD Billion per year — share of the $1.0B total CM contribution by 2030
Capital Market Growth Trajectory 2023–2030 (USD B/yr)
All instruments combined vs Municipal Bonds alone — trending lines
6.2 Three-Phase Implementation Roadmap — Municipal Bonds 2025–2030
Phase
Period
Key Actions
Financial Target
Gap Impact
Phase 1 — Foundation
2025–2027
• DSM & Mwanza Municipal Bond Pilot (CMSA/PMO-RALG/UNCDF)
• Amend Pension Fund Guidelines (MoF/BOT) — allow 5% infra allocation
• Establish PPP Bond Framework on DSE
• Roll out TARURA model to TANROADS, TANESCO, DAWASA, TPA
$50–100M (Pilot issuance)
~$390–780M pension + $50–100M pilot
Phase 2 — Scaling
2027–2029
• Issue USD-denominated Sovereign Green Bond on international market (MoF/BOT)
• Scale Sukuk market to 10+ active issuers (Zanzibar focus)
• Launch REIT market for urban housing and commercial real estate
• Reach 50+ listed companies on DSE
$200–500M (Sovereign Bond)
~$0.28–0.42B/yr (total CM)
Phase 3 — Maturity
2029–2030+
• Launch Derivatives Market (interest rate and FX futures)
• Establish domestic Credit Rating Agency (or attract international)
• List carbon credits on DSE
• Municipal Bonds from 5+ cities — $500M/yr target fully achieved
$1.0B/yr (Capital Markets)
~7–9% of annual gap
Three-Phase Roadmap — Municipal Bond Scale-Up vs Total Capital Market (USD B/yr)
Phase transitions and cumulative growth 2025–2030
7
Barriers to Municipal Bonds in Tanzania — and Solutions
Despite the enormous opportunity, there are real structural constraints that have prevented Municipal Bonds from emerging in Tanzania for decades. Understanding and addressing them systematically is essential:
Barrier
Impact / Assessment
Recommended Solution
Weak LGA Financial Transparency
Investors do not trust that LGAs can repay — lack of audited revenue data, inconsistent CAG reporting, no public financial disclosure standard
Ring-fence 5–10 creditworthy LGAs and require them to meet CMSA-grade audit standards. UNCDF and World Bank can provide technical assistance.
Dependency on Central Government
Most LGAs lack independent revenue — over 80% of their budgets come from central government transfers, making bond repayment credibility weak
Strengthen LGA own-source revenues — land rates, service fees, business levies. Dar es Salaam already earns TZS 1.5T+/yr. This model must be replicated in Mwanza and Arusha.
No Credit Rating System for LGAs
Without a formal credit rating, investors have no standardised way to price the risk of an LGA bond — making pricing arbitrary and investor interest low
CMSA should develop an LGA creditworthiness framework (modelled on Kenya's LGFCA). AfDB has offered technical assistance for this in East Africa.
Thin Capital Market Liquidity
Tanzania's secondary bond market remains illiquid — investors struggle to exit positions, which discourages participation in long-duration bonds
BOT and CMSA to prioritise secondary market development — repo facilities, market-making incentives, and electronic trading. This is essential for the Phase 2 scaling target.
Pension Fund Regulatory Constraints
Current guidelines prevent pension funds from allocating more than 2% to infrastructure bonds — the primary potential investor base is legally excluded
Amend Investment Guidelines (BOT/MoF) to allow 5–10% infrastructure allocation. This single action could unlock $390–780M/yr immediately.
Project Preparation Deficit
Most LGA projects are not bankable — no feasibility studies, financial models, or environmental assessments that bond investors require
Establish a Project Preparation Facility (PPF) — funded by UNCDF, AfDB, World Bank — to prepare 10–15 LGA projects to bond-issuance standard by 2027.
No Credit Guarantee Instruments
For early-stage markets, investors will demand very high interest rates from LGAs — making projects financially unviable without credit enhancement
Deploy partial credit guarantees from AfDB, IFC, or USAID for initial bond tranches. AfDB and IFC both operate African municipal bond guarantee facilities that Tanzania can access.
Barrier Severity Assessment — Municipal Bonds in Tanzania
TICGL assessment: impact score (1–10) for each barrier
Tanzania Municipal Bond Status vs Current Status (2025/2026)
Key readiness dimensions — how close Tanzania is to issuance
8
Five Priority Actions — Municipal Bonds & Capital Market 2026–2030
TICGL identifies five specific actions that — if implemented simultaneously and urgently — can unlock the USD 1.0 billion/year capital market contribution required by 2030. Each action is assigned to a lead institution, a clear timeline, and a quantified impact.
1
🔴 Amend Pension Fund Investment Guidelines
BOT/MoF to permit 5–10% of AUM to be allocated to DSE-listed Infrastructure Bonds — including Municipal Bonds. No new debt. No new taxes. No foreign borrowing. Simply a reallocation of capital that already exists.
Lead: MoF / CMSA / BOT +$390–780M/yr immediatelyTimeline: Dec 2026
2
🔴 Launch Municipal Bond Pilot — Dar es Salaam & Mwanza
The legal framework exists. UNCDF completed feasibility studies in 2019. A first bond of TZS 50–100B (in the style of the DAWASA Green Bond) for a single clearly-defined project (water, internal roads, or sanitation). CMSA, PMO-RALG, and MoF must collaborate.
Lead: PMO-RALG / CMSA / UNCDF +$50–100M pilot → $500M/yr by 2030Q2–Q4 2026
3
🔵 Scale TARURA Bond → TANROADS, TANESCO, DAWASA, TPA
Each new issuer contributes USD 50–100M/year to the market without any burden on the sovereign debt ceiling. The TARURA model is validated — it now needs to be replicated at speed across Tanzania's major infrastructure SOEs.
Lead: CMSA / DSE / SOEs +$150–400M/yr2026–2027
4
🔵 Issue USD-Denominated Sovereign Green Bond — International Market
Tanzania's single largest potential capital market transaction — USD 200–500M in one deal — aligned with AfDB and GCF frameworks. This would place Tanzania firmly on the global climate finance map as a serious issuer.
🟡 Launch Diaspora Bond Programme (USD-denominated)
Tanzania has an estimated 3M+ diaspora sending ~USD 700M in remittances annually — none of which is currently channelled into formal investment instruments. Modelled on successful programmes in Ethiopia and Ghana, initial target: USD 100–150M/yr. Timeline: 2027 | Impact: +$100–150M/yr.
Amend Pension Fund Investment Guidelines — allow 5–10% infra allocation
MoF / CMSA / BOT
December 2026
$390–780M/yr immediately
🔴 CRITICAL
2
Municipal Bond Pilot — DSM & Mwanza
PMO-RALG / CMSA / UNCDF
Q2–Q4 2026
+$50–100M pilot → $500M/yr by 2030
🔴 VERY HIGH
3
Scale TARURA Bond → TANROADS, TANESCO, DAWASA, TPA
CMSA / DSE / SOEs
2026–2027
+$150–400M/yr
🔵 HIGH
4
Issue Sovereign Green Bond (USD) — International Market
MoF / BOT
2027
+$200–500M (single transaction)
🔵 HIGH
5
Launch Diaspora Bond Programme
BOT / MoF / TIC
2027
+$100–150M/yr
🟡 MEDIUM
Five Priority Actions — Estimated Annual Impact (USD B/yr by 2030)
TICGL estimates of gap-closing contribution per action
Implementation Timeline — Actions by Year
When each priority action is expected to become active
9
Vision 2050 — Capital Market's Role in the USD 1 Trillion Economy
Municipal Bonds and capital market development broadly play an important — but currently small — role in Tanzania's long journey toward the USD 1 Trillion GDP target. The overall development framework unfolds in three phases across 25 years.
Phase
Period
GDP Target
Cumulative Investment Needed
Financing Gap
Capital Markets Role
Phase 1 — Foundation
2025–2030
$120–130B
~$220–250B (ODI)
~$68–88B — MODERATE
Build foundations: DSE, Municipal Bonds, Pension Fund reform
Phase 2 — Scaling
2031–2040
$300–380B
~$700–900B
~$280–350B — HIGH
Scale: municipal bonds from 20+ cities, sovereign green bonds, REIT market
Phase 3 — Maturity
2041–2050
$750B–$1T
~$1.8–2.2T
~$620–750B — VERY HIGH
Full capital market: derivatives, international listing, carbon markets, pension-infrastructure integration
TOTAL 2025–2050
25 years
$1 Trillion
~$3.7T (ODI)
~$990B+ — CRITICAL
Capital markets must transition from peripheral to PRIMARY pillar
Sources: ODI (2025); IMF Long-Run Growth Projections; World Bank CCDR; Vision 2050 (Dira 2050).
📌Critical Context
The USD 68–88B gap in Phase 1 (2025–2030) represents approximately 7% of the total USD 990B+ gap over 25 years. But Phase 1 is BY FAR the most critical window — it is the period in which Tanzania must build the foundations of its capital market, scale domestic revenues, and develop its PPP framework. Failure in Phase 1 compounds exponentially into Phases 2 and 3.
Tanzania GDP Trajectory to USD 1 Trillion — Vision 2050
Three-phase GDP path 2025–2050 | Sources: ODI, IMF, Vision 2050
Cumulative Financing Gap by Phase — 25-Year Overview (USD B)
The scale of financing challenge grows dramatically phase by phase
9.1 DSE Market Trajectory to 2030 — Capital Market Vision
DSE Indicator
2025 (Actual)
2027 (Projected)
2030 (Target)
Actions Required
Total Market Cap (USD B)
~$9.42B
~$14–18B
$25–30B
10–15 new IPOs + bond market scaling
Listed Companies
28
35–40
50+
SOE IPOs, agribusiness, fintech listings
Market Cap / GDP (%)
~10.8%
~14–16%
20–25%
Municipal bond & SOE listings drive growth
Bond Market Turnover (TZS T/yr)
5.85T
~8–10T
15T+
Municipal, green, SOE bonds pipeline
Capital Market Contribution to Gap
~$0.10B/yr
~$0.28–0.42B/yr
$1.0B/yr
All 5 priority actions fully implemented
DSE Market Cap / GDP (%) — Path from 10.8% to 20–25% Target
Tanzania vs Africa benchmark — capital market depth as % of GDP | Sources: DSE, CMSA, TICGL
10
Conclusions and Recommendations
TICGL's research draws seven key findings and a set of specific, time-bound recommendations to the institutions responsible for Tanzania's capital market development. The window for action is now.
10.1 Seven Key Findings
1
Tanzania faces a structural, widening development financing gap of USD 68–88 billion (2024–2030) — averaging USD 10–13 billion per year. Closing this gap requires all four financing pillars to operate simultaneously; no single source is sufficient on its own.
2
Capital markets currently contribute less than 1% of annual financing needs (USD 0.10B/yr in 2025 against a need of USD 9–11B/yr). The 2030 target is USD 1.0B/yr — a ten-fold increase that is achievable with targeted reforms.
3
Municipal Bonds are a powerful new instrument that Tanzania has NEVER USED despite legislation existing since the 1990s. The DAWASA Green Bond and Tanga UWASA bond provide near-equivalent precedents proving that Tanzania can issue infrastructure bonds for urban utilities.
4
Pension Funds hold TZS 21.4 trillion (~USD 7.9B) in assets — with over 85% locked in government securities. A single regulatory change (allowing 5–10% infrastructure allocation) could release USD 390–780M per year immediately, with zero new borrowing.
5
DSE market reforms are bearing fruit — the TARURA Infrastructure Bond (2025) is Tanzania's first of its kind. The model now needs to be replicated across major SOEs and creditworthy LGAs urgently.
6
Tanzania's capital market is demonstrably investor-ready for Municipal Bonds — every major government bond auction in 2025 was significantly oversubscribed, including the 25-year bond that received TZS 794.5B against its target. Investors have unmet demand; the product does not yet exist.
7
Without implementing four-pillar reforms simultaneously, the IMF and ODI estimate that Vision 2050's USD 1 Trillion target will be delayed by 5–10 years — with compounded consequences for poverty, inequality, and welfare for 73 million Tanzanians.
10.2 Specific Recommendations by Institution
Lead Institution
Recommended Action
Timeline
Expected Impact
MoF / BOT
Amend Pension Fund Investment Guidelines — allow 5–10% allocation to infra/municipal bonds
2026
$390–780M/yr released immediately
PMO-RALG / CMSA
Launch Municipal Bond Pilot — Dar es Salaam & Mwanza (with UNCDF technical support)
Q2–Q4 2026
+$50–100M pilot; template for all cities
CMSA / DSE
Scale TARURA bond model to TANROADS, TANESCO, DAWASA, TPA — 3+ new bond issuers
2026–2027
+$150–400M/yr
MoF / BOT
Issue USD-denominated Sovereign Green Bond on international markets (GCF/AfDB aligned)
2027
+$200–500M in single transaction
BOT / MoF / TIC
Launch Diaspora Bond Programme (USD-denominated) — target USD 500M over 2027–2030
2027
+$100–150M/yr
TRA / CMSA / LGAs
Strengthen LGA own-source revenues (land rates, service fees) to build creditworthy base for bond issuance
2025–2027
Foundational sustainability for bonds
Combined Impact of All Five Priority Actions — Annual Gap-Closure Contribution (USD B/yr)
Tanzania has the tools. Tanzania has the momentum. The DAWASA Green Bond, Zanzibar Sukuk, TARURA Infrastructure Bond, and the record USD 6.6B FDI surge in 2025 are each proof of concept that Tanzania can execute at scale. Municipal Bonds are the logical next step in this trajectory. The question is not whether Tanzania can issue Municipal Bonds. The question is whether Tanzania's policymakers will make the bold decisions required within the critical 2025–2030 window. For the USD 1 Trillion economy under Vision 2050 to be achieved on time, capital markets — including Municipal Bonds — must transition from a peripheral role to a primary pillar of Tanzania's national development finance architecture. The time is now.
Publication Details
TICGL Economic Research · March 2026
Tanzania Investment and Consultant Group Ltd
Sources: DSE · CMSA · BOT · IMF · World Bank · AfDB · ODI · Vision 2050 (Dira 2050) ticgl.com · data.ticgl.com
Why TRA's Strong Performance Is Still Not Enough | TICGL Analysis
Why TRA's Strong Performance Is Still Not Enough
Despite record collections of TSh 18.77 trillion and 103.7% efficiency, Tanzania's revenue growth cannot match its development ambitions
18.77T
TSh Collected (H1 2025/26)
103.7%
Target Achievement
13.6%
Year-on-Year Growth
6-7T
TSh Budget Deficit
Record-Breaking Performance
The Tanzania Revenue Authority (TRA) has delivered one of its strongest revenue performances in recent history, consistently surpassing collection targets and recording solid year-on-year growth. In the first half of the 2025/26 fiscal year (July to December 2025), TRA collected TSh 18.77 trillion, exceeding its target of TSh 18.10 trillion and achieving an overall efficiency of 103.7%. This performance represents a 13.6% increase compared to the same period in 2024/25, when collections stood at TSh 16.52 trillion.
Historic Achievement: December 2025 set a new record with TSh 4.13 trillion collected in a single month, the highest monthly revenue ever recorded by the Authority. Monthly collections exceeded targets in all six months, with efficiency ranging between 100.4% and 110.0%.
Monthly Revenue Performance
Month
Collections 2024/25
Target 2025/26
Collections 2025/26
Efficiency
Growth
July
TSh 2.35T
TSh 2.57T
TSh 2.68T
104.1%
14.1%
August
TSh 2.42T
TSh 2.56T
TSh 2.82T
110.0%
16.3%
September
TSh 3.02T
TSh 3.31T
TSh 3.47T
105.0%
15.1%
October
TSh 2.65T
TSh 2.80T
TSh 2.81T
100.4%
6.0%
November
TSh 2.50T
TSh 2.85T
TSh 2.86T
100.4%
14.4%
December
TSh 3.58T
TSh 4.01T
TSh 4.13T
102.9%
15.5%
Total
TSh 16.52T
TSh 18.10T
TSh 18.77T
103.7%
13.6%
What's Driving the Success
This strong performance is not accidental. It reflects improved tax administration, aggressive debt recovery, and enhanced compliance measures. Key achievements include:
TSh 483 billion collected from tax arrears through enhanced debt recovery
Registered taxpayers increased by 7.3% to 7.68 million
2,094 new staff trained to strengthen institutional capacity
Over the medium term, the results are even more striking. Revenue collected in the first half of the fiscal year has more than doubled since 2020/21, rising from TSh 9.24 trillion to TSh 18.77 trillion, while TRA's operational efficiency improved from 77.48% to 85.71%.
The Fundamental Problem: Revenue vs. Expenditure Mismatch
Yet, despite these undeniable achievements, TRA's strong performance is still not enough to meet Tanzania's broader economic and development needs. The core challenge lies not in revenue administration, but in the mismatch between revenue growth and the scale of government expenditure requirements.
For 2025/26, the Government has set an ambitious annual revenue target of TSh 36.06 trillion, equivalent to 14.1% of GDP. However, total government expenditure is projected at TSh 42 to 44 trillion, leaving a financing gap of approximately TSh 6 to 7 trillion.
Persistent Budget Deficits
This structural gap has resulted in persistent budget deficits averaging 3 to 4% of GDP over the past decade, even in years of strong revenue performance. The consequences are significant:
Fiscal Year
Budget Deficit
Deficit as % of GDP
Key Funding Sources
2020/21
TSh 4.2T
3.5%
Domestic borrowing, concessional loans
2021/22
TSh 4.8T
3.2%
External aid, bonds
2022/23
TSh 5.1T
3.0%
IMF loans, domestic revenue shortfalls
2023/24
TSh 5.4T
3.1%
Increased borrowing amid inflation
2024/25
TSh 5.6T
3.1%
External debt, grants
2025/26 (Projected)
TSh 6.5T
3.2%
Ongoing borrowing
The Debt Burden
To bridge this gap, the Government continues to rely on domestic and external borrowing, pushing public debt to about 42% of GDP by 2025. The implications are severe:
Debt servicing alone now absorbs 20 to 25% of the national budget
Interest payments in 2024/25 estimated at TSh 4.2 trillion, comparable to an entire month of peak TRA collections
This growing debt burden directly reduces the fiscal space available for new development projects
Structural Economic Constraints
Tanzania's challenges extend beyond the immediate revenue-expenditure gap. Several structural factors limit the impact of even strong tax collection outcomes:
Low Revenue-to-GDP Ratio
At 14.1% of GDP, Tanzania's revenue ratio lags behind regional peers such as Kenya (16 to 18%) and Rwanda (15 to 17%). This limits the Government's ability to finance large-scale infrastructure and social investments without borrowing. Flagship projects under FYDP III and the national development agenda require over TSh 10 trillion annually in capital spending alone. Even with strong TRA performance, domestic revenues currently cover only 60 to 70% of total budgetary needs.
The Informal Economy Challenge
More than 50% of economic activity remains informal, constraining tax potential despite the growing number of registered taxpayers. This vast shadow economy represents billions in uncollected revenue, limiting the government's fiscal capacity.
Weak Production Base
Domestic production growth remains modest at 2.4%, signaling a narrow industrial base. Revenue growth is still highly exposed to external shocks such as inflation, global commodity prices, and import fluctuations. Without a stronger manufacturing and production sector, revenue sustainability remains vulnerable.
Demographic and Climate Pressures
Population growth now exceeds 69 million people, while climate-related pressures on agriculture (which contributes about 25% of GDP) continue to push public spending upward faster than revenues can sustainably grow. These pressures create an ever-expanding need for public services, infrastructure, and social protection.
Exploring Tanzania's Development Financing
How can Tanzania bridge the gap between revenue collection and development needs? What structural reforms are necessary for fiscal sustainability?
TRA's recent revenue performance clearly demonstrates that Tanzania has made meaningful progress in strengthening tax administration and improving compliance. Exceeding collection targets, achieving over 100% efficiency, and more than doubling first-half revenues since 2020/21 are major institutional achievements that should not be understated.
However, the evidence also makes it clear that strong revenue performance alone cannot resolve Tanzania's fiscal and development challenges. Despite collecting TSh 18.77 trillion in just six months and targeting TSh 36.06 trillion for the full year, the Government continues to face annual budget deficits of around 3 to 4% of GDP, driven by expenditure needs that significantly exceed domestic revenue capacity.
The central issue, therefore, is not whether TRA is performing well. It clearly is. The question is whether the structure of the economy and the fiscal framework allow revenue gains to translate into sustainable development financing. A low revenue-to-GDP ratio (14.1%), a large informal sector, modest growth in domestic production, and rising demographic and climate-related pressures all limit the impact of even strong tax collection outcomes.
The Path Forward
TRA's performance should be viewed as a foundation rather than a solution. To move from short-term fiscal resilience to long-term sustainability, Tanzania must complement strong revenue administration with broader economic and fiscal reforms:
Expanding the tax base beyond the current 7.68 million registered taxpayers
Accelerating formalization of the 50% informal economy
Strengthening productive sectors to move beyond 2.4% domestic production growth
Improving expenditure efficiency and prioritization of public spending
Reducing dependence on external borrowing to create sustainable fiscal space
Only through this integrated approach can Tanzania ensure that rising revenues not only meet targets, but also meaningfully support economic growth, reduce borrowing, and deliver lasting development outcomes. The challenge is not administrative; it is structural. And addressing it will require reforms that go far beyond what any revenue authority, no matter how efficient, can achieve alone.
In just nine months of the 2024/25 fiscal year, the Tanzania Revenue Authority (TRA) has collected TZS 24.05 trillion, marking a 17% increase compared to TZS 20.55 trillion collected during the same period in 2023/24. With projections showing total annual collections could exceed TZS 32 trillion, TRA’s performance now rivals the country’s reliance on external development financing — which typically stands at TZS 7–8 trillion annually from loans and grants. This growth signals that domestic revenue can progressively become a sustainable source for financing development projects, reducing dependence on foreign aid.
Revenue Collection Performance – January to March 2025 (Q3, FY 2024/25)
Collected: TZS 7.53 trillion
Target: TZS 7.43 trillion
Performance:101.32% of the target
Growth:13.47% compared to the same period in FY 2023/24 (which had TZS 6.63 trillion collected)
TRA exceeded the target by TZS 0.10 trillion (100 billion).
Cumulative Revenue – July 2024 to March 2025 (First 9 months)
Collected: TZS 24.05 trillion
Target: TZS 23.21 trillion
Performance:103.62%
Growth:17.01% compared to the same period in FY 2023/24 (TZS 20.55 trillion)
This is the highest ever 9-month collection in TRA’s history.
Historical Growth Comparison
FY 2020/21 (Same period): TZS 13.59 trillion
FY 2024/25 (Current period): TZS 24.05 trillion
Growth in 4 years:77% increase
This highlights the impact of reforms since President Samia Suluhu Hassan assumed office.
Key Drivers of Improved Revenue Collection
1. Leadership Directives
Implementation of President Samia’s instructions to improve voluntary tax compliance.
2. Internal Improvements at TRA
Improved staff discipline and innovation.
Engagement with business communities and tax education.
Deployment of the enhanced Customs Management System (TANCIS) in January 2025.
Better enforcement of Electronic Fiscal Devices (EFDs).
Weekend services at TRA offices (Saturday & Sunday).
Weekly “Taxpayer Listening Day” (every Thursday).
3. Government Reforms and Environment
Port services improvement led to increased imports/exports.
Enhanced relations with investors.
Rise in the number of Authorized Economic Operators (AEOs).
Focus for April – June 2025 (Q4)
Finalization of IDRAS (Domestic Revenue System) by June 2025.
Intensified tax education campaigns.
Enforcement of electronic receipt issuance.
Fair and equitable taxation (no favoritism).
Collaboration with the Presidential Tax Review Taskforce.
Strengthening audit and investigation units to fight tax evasion.
Tanzania’s revenue performance and how the Tanzania Revenue Authority (TRA) has improved in collecting taxes.
1. Strong Revenue Growth
TRA collected TZS 24.05 trillion from July 2024 to March 2025.
This is TZS 3.5 trillion more than the same period last year.
It shows a 17% increase, which is a sign of strong economic activity and better tax compliance.
TRA is not only meeting but exceeding its targets.
2. Better Efficiency and Reforms Are Working
TRA’s systems like TANCIS and EFD enforcement are helping track and collect taxes better.
Opening offices on weekends and listening to taxpayers every Thursday builds trust and accessibility.
It shows that management reforms are paying off.
3. Business and Government Relationship is Improving
The number of registered businesses and investors is going up.
TRA is working more closely with them instead of just punishing—a shift from fear to collaboration.
4. Taxpayer Engagement is Crucial
TRA is thanking taxpayers and encouraging patriotism.
This signals that voluntary compliance is improving—people are paying taxes because they trust the system more.
5. Tanzania is Building a Stronger Economy
A 77% growth in 4 years (from TZS 13.6T in 2020/21 to TZS 24.05T now) tells us:
There’s real momentum.
The government's focus on transparency, digital systems, and service delivery is helping.
🔑 In Simple Terms:
This report shows that Tanzania is collecting more tax than ever before, because:
People are paying more willingly.
TRA is doing a better job.
The government is creating a good business environment.
Key Revenue Collection Figures – TRA Report (March 2025)
