Tanzania Secures $195 Million Budget Support from European Union

The European Union (EU) has agreed to provide Tanzania with $195 million in budget support to help the country implement its development programs. The funds will support policy changes and industry growth in the blue economy, finance for growth, gender equity, green energy, and smart cities.

Quick facts

• The agreement was signed by Tanzanian President Samia Suluhu Hassan and EU Ambassador to Tanzania Manfredo Fanti last week in Dodoma. President Hassan said the funds would help accelerate the implementation of development programs in the country. 
• Fanti said the funds are part of €262 million grant budget support for Tanzania from 2021 to 2027. 
• Natu Mwamba, Permanent Secretary of the Ministry of Finance and Planning, said that the funds will be used to support policy reforms and sector development in the country.
• The EU budget support disbursements are for five programs financed through the new cooperation framework known as the Multi-annual Indicative Program (MIP) for Tanzania, covering a period of seven years (2021-2027). 

Key quote  

President Hassan said: 

“The money will be used to promote policy changes and industry growth in the blue economy, finance for growth, gender equity, green energy, and smart cities, as well as the renovation of rural roads in the southern highlands region.” 

Key background 

• The signing of the first partnership agreement between the EU and African, Caribbean and Pacific states happened in 1975. 
• According to President Hassan, so far Tanzania has received about €2,394 from the EU billion as grants and a total of €216.41 million as concessional loan from the European Investment Bank (EIB). 
• The European International Bank and the European Commission signed an agreement in February 2023 for a total volume of €4 billion to support African, Caribbean and Pacific countries until 2027. 
• The fund intends to create jobs for women and youth and support green and digital transitions in EU partner countries.  
• In the same month, the EU signed agreements with some local banks in Tanzania to unlock €270 million, which will finance projects benefitting women and advancing the economy.  

The big picture 

• In addition to the European Union, other countries have also provided significant support to the African continent over the years. This has led some observers to characterize the relationship between these countries and Africa as a form of competition.  
• The United States has traditionally been the dominant foreign power in Africa. However, it has faced increasing competition from China in recent years. The United States is trying to maintain its influence in Africa by providing military assistance, and by promoting democracy and good governance. 
• China has been the most active country in Africa in recent years. It has invested heavily in infrastructure, natural resources, and manufacturing in Africa. China is also providing financial assistance to African countries and is working to expand its cultural influence on the continent. 
• The motives behind the scramble for Africa are complex and not fully understood, but it is clear that countries are seeking economic, strategic, and cultural advantages by establishing a strong presence in the continent.