Tanzania

Cheap, reliable power has long been the missing link in Africa's efforts to industrialise. Moving from exporting raw materials to refining and processing them at home is essential to retaining more value and creating better-paid jobs for local communities. The global critical minerals boom has made that opportunity even greater: Africa holds about 30% of the world's reserves of metals such as cobalt, copper and manganese, which are essential to products ranging from electric vehicles to AI data centres.

In August, Tanzania completed the Julius Nyerere Hydropower Project - on time and largely within budget - taking a major step towards removing this constraint. As Africa's fourth-largest dam, it is a striking engineering achievement. Yet the industrial vision it supports is what could ultimately transform the country.

Such a large-scale hydropower plant has been contemplated in Tanzania since the 1960s, but the project took on renewed urgency in 2022, when the country faced daily electricity rationing. The 2,115MW plant has now nearly doubled Tanzania's generation capacity to 4,646MW, against peak demand of 2,271MW. That substantial margin reflects an understanding of industrial needs: minerals generate 52% of Tanzania's export earnings, while mining and refining account for 38% of industrial energy consumption.

Tanzania built ahead of demand, recognising that refining and manufacturing cannot expand on an unreliable grid. Surplus electricity is a strong starting point, but the question is whether the country can turn that power into industrial investment, higher-value production and broader economic growth. Tanzania' s graphite deposits, the Kabanga nickel project and its domestic refining policy give that ambition practical weight.

Tanzania is among the world's leading holders of graphite reserves, yet China controls about 90% of global refining capacity. Graphite refining is expensive and energy-intensive, but demand continues to rise as lithium-ion batteries power electric vehicles and portable electronics. With East Africa holding a fifth of global reserves, domestic refining capacity could position Tanzania as a regional processing hub. The country has already created a regulatory environment designed to make this growth more inclusive by withholding large-scale mining licences unless applicants present concrete plans for local value addition.

Kabanga alone is projected to generate US$2.4 billion in corporate taxes and US$1.2 billion in royalties, while creating 1,090 jobs over its 18-year lifespan. Power alone will not deliver these benefits, but it removes one of the principal constraints that had previously kept them out of reach.

Abundant clean energy could deliver benefits beyond industrialisation. Tanzania can use surplus generation to supply neighbouring markets and deepen regional energy integration. Electricity exports to countries such as Zambia and Kenya would generate commercial returns while turning domestic infrastructure into a source of regional influence.

Tanzania is not the first country to use a major hydropower project to accelerate industrialisation. What sets it apart is how it has avoided the political and financial traps that have dogged similar megaprojects. Rather than relying on external funders, who often charge extortionate interest rates and insist on foreign contractors, Tanzania financed the JNHPP almost entirely from domestic government revenues and employed more than 12,000 local people at the peak of construction.

The financing model matters. Large infrastructure projects can deliver transformative economic gains while leaving governments constrained by debt or external political leverage. Tanzania has instead treated the dam as a nationally owned development platform. For a project of this size, its success would make a remarkable case that African states can build strategic infrastructure on terms aligned with their own industrial priorities.

Although generation capacity requires the largest investment, it is only the first step. Tanzania must still expand its transmission network, build cross-border interconnectors and connect mines, refineries, manufacturers and underserved communities to reliable power. Network capacity will have to double to move electricity from the dam to industrial users. This creates opportunities for external partners whose expertise and investment will be essential to delivering the required infrastructure.

Continued investment in refining and processing is equally important. Tanzania's policy direction favours domestic value addition, but mines, smelters and refineries require sustained capital and a stable, investor-friendly regulatory environment. The dam creates the opportunity; it does not by itself ensure that investors will establish operations in the country.

The same is true of access. The economic case for the dam will be stronger if its benefits extend beyond large industrial users to businesses and communities that remain poorly served. Expanding connectivity would widen the productive base, support smaller enterprises and make the project a national development asset rather than one focused chiefly on export-oriented industry.

The Julius Nyerere dam has removed a major power constraint, but Tanzania's industrial transformation is far from complete. The next test is whether the country can build the supporting ecosystem and generate sufficient demand. That means expanding interconnectors and transmission lines, sustaining investment, and maintaining policies that encourage refining and manufacturing. If Tanzania puts those pieces in place, the new capacity could accelerate national development and fulfil its transformative potential.