Tanzania’s Oil Import Bill Has Jumped 52% to $3.4 Billion

Tanzania spent $3.43 billion importing petroleum products in the twelve months ending August 2026, up from $2.26 billion a year earlier. The 51.7% increase is one of the most consequential figures in the Bank of Tanzania’s September Economic Review because petroleum alone accounted for roughly one third of the increase in the country’s goods import bill. Tanzania’s export earnings are growing, tourism remains resilient and gold prices are providing significant foreign exchange support, yet increasingly expensive imported energy is absorbing a large part of those gains. The oil bill is therefore no longer only an energy issue. It has become an external balance, inflation and currency issue. Why Did Tanzania’s Petroleum Bill Rise So Quickly? The Bank of Tanzania links the increase to higher global petroleum prices and disruptions associated with conflict in the Middle East. Crude oil prices increased to $84.4 per barrel in August, 36% above their average level in the fourth quarter of 2025. Shipping disruptions also increased transportation costs. Tanzania imports most of the refined petroleum used in transport and industry. When global prices rise, the country has limited ability to avoid the foreign exchange impact in the short term. A higher oil price therefore reaches Tanzania through several channels at once. The import bill rises, transport costs increase, businesses face more expensive logistics and the Bank of Tanzania has to monitor whether those costs begin spreading into broader inflation. How Much Is Petroleum Affecting Tanzania’s External Balance? Imports of goods and services increased by 21.4% to $21.27 billion in the year ending August. Petroleum products accounted for $3.43 billion of that total and roughly one third of the increase in the goods import bill. Freight payments also rose sharply to $1.68 billion from $1.30 billion. The combination of higher fuel and shipping costs helped widen Tanzania’s current account deficit to $2.48 billion from $1.70 billion a year earlier. 2026093021262104 This is the contradiction inside Tanzania’s otherwise strong external sector. The country exported more goods and services, but the cost of importing energy and other inputs rose even faster. Why This Matters for the Shilling Oil is usually purchased in foreign currency. A larger petroleum bill therefore increases demand for dollars and other hard currencies. Tanzania’s reserves remain adequate at $5.89 billion, equivalent to 4.2 months of projected imports excluding imports associated with foreign direct investment. That provides a buffer. But the longer petroleum remains expensive, the more foreign exchange Tanzania must devote to energy instead of machinery, industrial inputs, debt service or reserve accumulation. The problem is structural because every additional litre of imported fuel creates another future foreign currency payment. Can Tanzania Reduce the Exposure? The long term response lies in changing the energy and transport structure of the economy. More domestic electricity generation can reduce diesel use in industries and institutions. Electric buses, motorcycles and vehicles can gradually shift transport demand from imported petroleum towards domestically generated electricity. More efficient freight transport and rail can reduce fuel consumption per tonne of cargo moved. Tanzania cannot eliminate oil imports quickly. Aviation, road transport, industry and logistics will continue to require petroleum for years. The economic objective is therefore not immediate independence from oil. It is reducing the share of national foreign exchange that has to be repeatedly sent abroad simply to keep the transport system moving. A $3.4 billion petroleum bill demonstrates the scale of the opportunity. Every unit of energy Tanzania can produce domestically is not only an energy investment. It is also a foreign exchange investment.