Tanzania is preparing to proceed with a partial sale of its gold reserves, following direct instructions from President Samia Suluhu Hassan. The announcement was made on Monday, 26 January in London by Kitila Mkumbo, Minister of State for Planning and Investment, during an official visit. According to the minister, the government has formally requested the Bank of Tanzania to carry out the operation. At this stage, no details have been disclosed regarding the volumes to be sold, the timing of the transaction or the precise allocation of the proceeds.
The decision reflects mounting pressure on public finances, as concessional financing becomes scarcer, international interest rates remain elevated and access to commercial borrowing grows more expensive.
Governments are no longer interested in providing aid to Africa. We are therefore reorganising,
Mkumbo said.
Gold reserves estimated at USD 1.3 Billion
Data released by the Bank of Tanzania show that the country’s gold reserves were valued at approximately USD 1.3 billion at the end of December 2025. While the share to be sold has not been specified, the reserves represent a significant short-term source of liquidity. By monetising part of its gold holdings, the government can raise funds without immediately increasing public debt, at a time when commercial borrowing has become costlier and less predictable.
Tanzania’s decision comes amid a global retreat from development assistance, particularly in advanced economies, where governments are redirecting spending towards domestic priorities such as defence and security. In the United States, the closure of USAID under President Donald Trump marked a sharp break with more than six decades of bilateral development cooperation.
Recommanded
In the United Kingdom, the government announced that aid spending would be gradually reduced from 0.5% to 0.3% of gross national income by 2027, in order to finance increased defence and security expenditure. Several European countries including France, Germany, Sweden and the Netherlands have announced similar cuts, further increasing uncertainty for aid-dependent African economies.
A politically sensitive context with western partners
For Tanzania, the decline in aid comes at a particularly sensitive moment. The country has faced heightened scrutiny from Western partners following the contested October 2025 presidential election, which returned President Samia Suluhu Hassan to office. In November 2025, the European Parliament adopted a non-binding resolution calling for the suspension of a EUR 156 million aid programme, citing governance and electoral concerns. While the European Commission has maintained dialogue with Dar es Salaam, the future of EU financial support remains uncertain.
Large and persistent infrastructure financing needs
At the same time, Tanzania faces substantial infrastructure investment requirements, particularly in : roads and transport corridors, ports and logistics platforms, electricity generation and distribution, water supply systems, urban services. Infrastructure investment remains a cornerstone of the country’s development and industrialisation strategy. However, financing these projects has become increasingly challenging due to the decline in concessional loans and the persistence of high global interest rates.
Gold as a strategic pillar of Tanzania’s economy
The initiative underscores the central role of gold in Tanzania’s economy. According to the World Gold Council, the country produced approximately 52 tonnes of gold in 2023, ranking among Africa’s leading producers. Data from the Bank of Tanzania indicate that in the same year: gold accounted for 22.5% of total exports, with export revenues of around USD 3.05 billion, the mining sector contributed approximately 9.9% of GDP, and generated about 15% of government tax revenues.
Tighter state control over the gold sector. In recent years, Tanzanian authorities have strengthened state oversight of the mining sector to maximise domestic economic benefits. In 2023, the government launched a programme allowing the Bank of Tanzania to purchase gold directly from local miners, with the objective of building up foreign exchange reserves. In 2024, new regulations required mining companies and gold traders to sell 20% of their gold export revenues to the central bank. The planned sale of gold reserves forms part of this broader strategy to channel mining revenues into public investment financing.
A pragmatic short-term budgetary tool
Supporters of the policy argue that it reflects pragmatism in a rapidly changing global financial environment. As commercial borrowing becomes more expensive and external aid declines, African governments are increasingly forced to mobilise domestic resources to sustain investment. With gold prices at record highs, selling a portion of reserves may also be viewed as a favourable arbitrage, converting a reserve asset into tangible public infrastructure.
Macroeconomic and governance risks. Despite these advantages, analysts caution that reducing foreign exchange reserves entails significant risks. Gold reserves play a critical role in: supporting currency stability, cushioning external shocks, reinforcing investor confidence. An excessive drawdown could increase exposure to commodity price volatility and capital outflows, particularly in the event of a global economic downturn. Governance is another key concern. Without clear rules and transparency regarding the size of the sale, the allocation of funds and project oversight, the operation could be perceived as driven by short-term political considerations rather than sound economic management.
Part of a broader african trend
Tanzania’s move mirrors a wider trend across Africa, where governments are increasingly turning to natural resource revenues to finance development, from lithium in Zimbabwe to oil in Senegal and copper in Zambia.
For Tanzania, the partial sale of gold reserves represents a strategic test. The challenge will be to demonstrate that mineral wealth can be transformed into productive and durable public assets, without undermining macroeconomic stability. The success of the strategy will ultimately depend on transparency, project quality, and the ability of funded infrastructure to generate sustainable economic returns in an increasingly constrained global financing environment.
