Tanzania is preparing to sell part of its gold reserves to finance infrastructure projects, turning to domestic mineral wealth as foreign aid, concessional loans and budget support become increasingly uncertain.
Planning and Investment Minister Kitila Mkumbo said this week that the government had instructed the Bank of Tanzania to carry out a partial sale of its bullion holdings, following a directive from President Samia Suluhu Hassan. The move reflects growing pressure on public finances as traditional development partners scale back assistance and borrowing costs rise.
Central bank data show Tanzania’s gold reserves were valued at about $1.3 billion at the end of December 2025. Authorities have not disclosed how much will be sold, when the transaction will take place, or how the proceeds will be allocated.
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Speaking in London, Mkumbo said the decision was driven by changing global priorities. “Governments are no longer interested in providing aid to Africa, so we are reorganising ourselves,” he said.
Across advanced economies, development assistance has come under strain as governments redirect spending toward domestic priorities, particularly defence and security. In the United States, the closure of USAID under President Donald Trump marked a sharp shift away from decades of bilateral development cooperation. In the United Kingdom, aid spending is set to fall from 0.5 per cent to 0.3 per cent of gross national income by 2027. Several European countries have announced similar reductions.
For Tanzania, these changes come at a sensitive moment. The country has faced increased scrutiny from Western partners following the disputed presidential election of October 2025, which returned President Samia to office. In November, the European Parliament adopted a resolution calling for the suspension of a €156 million aid programme, citing governance concerns. Although the European Commission has maintained dialogue with Dar es Salaam, uncertainty over future support remains.
At the same time, Tanzania faces significant infrastructure needs. Investment in roads, ports, power generation, water systems and urban services remains central to its development strategy. Yet financing these projects has become more difficult as concessional funding declines and international interest rates remain elevated.
In this context, drawing on gold reserves offers short-term fiscal flexibility. Gold plays a central role in Tanzania’s economy. The country is among Africa’s leading producers, with output estimated at 52 tonnes in 2023, according to the World Gold Council. That year, gold accounted for more than 22 per cent of national exports, valued at about $3.05 billion. The mining sector contributed nearly 10 per cent of gross domestic product and around 15 per cent of tax revenues.
Over the past three years, authorities have moved to tighten state control over the sector. In 2023, the government launched a programme allowing the central bank to purchase gold directly from local miners to build foreign exchange reserves. In 2024, new regulations required mining companies and traders to sell 20 per cent of their export proceeds to the Bank of Tanzania.
The planned reserve sale builds on this strategy, converting mineral revenues into infrastructure financing. Supporters argue that the approach reflects pragmatism in a changing financial environment. With commercial borrowing becoming more expensive and donor support declining, governments must mobilise domestic resources to sustain investment.
“If reserves are used to fund productive infrastructure, that can strengthen long-term growth,” said one regional economist, who asked not to be named.
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However, analysts caution that reducing reserve buffers carries risks. Foreign exchange reserves are designed to stabilise currencies, cushion external shocks and reassure investors. Selling them could increase exposure to commodity price volatility and capital outflows, particularly if global conditions deteriorate.
Governance is another concern. Without clear rules, reserve sales can become politically driven rather than economically strategic. Transparency around the size of the sale, project selection and oversight will be critical to maintaining investor confidence.
As aid flows weaken and debt burdens grow across Africa, governments are increasingly turning to mineral revenues, sovereign funds and domestic resources to finance development. From lithium in Zimbabwe to oil in Senegal and copper in Zambia, resource-backed financing is becoming more prominent.
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The challenge is ensuring that natural wealth is converted into durable public assets rather than short-term budget support. For Tanzania, the gold sale will test whether mineral resources can be used to close infrastructure gaps without undermining financial stability. Much will depend on how the process is managed and whether funded projects deliver lasting economic returns.
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