Tanzania's Electricity Isn't Africa's Most Expensive. It's Still Expensive Enough to Cost the Country Factories.

DAR ES SALAAM — Tanzania does not have Africa's most expensive electricity. It isn't even among the five costliest markets on the continent. That's the easy headline, and it's also the wrong one to focus on. A July 2026 electricity pricing comparison covering 22 African markets puts Tanzania's residential tariff at 13.7 US cents per kilowatt hour, measuring low-voltage residential service at around 100 kWh per month, the volumetric energy charge only, excluding fixed and demand charges. That places Tanzania 10th on the list. The more consequential number isn't Tanzania's rank. It's what sits at the bottom of the same table. The Full Comparison RankCountryResidential Tariff (US¢/kWh) 1Sierra Leone22.82Liberia22.03Namibia18.34Ghana18.15Eswatini17.46Malawi17.07Senegal14.68Kenya14.49South Africa14.310Tanzania13.711Mauritius13.612Seychelles13.213Nigeria12.614Lesotho12.215Côte d'Ivoire12.116Uganda11.317Morocco9.818Zambia4.519Botswana4.320Egypt1.921Algeria1.622Ethiopia1.3Source: Electron Intelligence, July 2026 electricity pricing comparison; residential volumetric energy charges only, fixed and demand charges excluded. Ethiopia's 1.3 cents per kWh is not a typo. It's less than a tenth of Tanzania's rate, and it places Ethiopia in a category with Algeria and Egypt, both below 2 cents, that no other East African economy comes close to. That gap is corroborated by other, independently tracked pricing data: separate 2026 tariff comparisons have consistently placed Ethiopia as Africa's single cheapest electricity market, supported by extensive hydropower resources and deliberately low, state-directed pricing. The East African Comparison Is the One That Actually Matters For Tanzania, ranking against Sierra Leone or Liberia is close to meaningless. The comparison that matters is against the countries actively competing for the same manufacturing investment, regional trade routes and export processing capacity. Kenya sits at 14.4 cents, Tanzania at 13.7, Uganda at 11.3, and Ethiopia at 1.3. Tanzania undercuts Kenya by only 0.7 cents, a gap small enough to be irrelevant to most investment decisions. Uganda undercuts Tanzania by 2.4 cents, more meaningful, but still a difference of degree. Ethiopia isn't in the same conversation. For an electricity-intensive manufacturer running continuous production, a textile mill, a cement plant, a cold chain network, that difference compounds fast once consumption reaches the scale a real factory requires. Why Electricity Price Is Industrial Policy, Not a Utility Bill A factory needs roads, water, logistics, finance, skilled labour and market access, but electricity is different from most of those inputs because it's consumed continuously through the entire production process, and it can't be substituted or deferred. A cement plant can't negotiate with its kilns. A steel manufacturer can't shut down furnaces because power got expensive this quarter. A cold storage operator can't tell refrigeration units to run only when electricity is affordable. A textile factory competing globally on price cannot absorb energy costs materially above what its competitors elsewhere are paying. That's why electricity pricing belongs in industrial policy conversations, not just utility sector reviews. Tanzania has genuine generation advantages: major hydropower resources, natural gas, solar potential, and a transmission network that's actively expanding. But producing more electricity and producing competitively priced electricity are two separate objectives, and Tanzania has spent most of the last decade focused almost entirely on the first one. What Ethiopia's Number Actually Signals Ethiopia's 1.3 cents doesn't mean Tanzania should copy Ethiopia's model wholesale, an approach built on enormous hydropower resources and heavily state-directed pricing that carries its own trade-offs, including a utility's weakened ability to finance its own maintenance and expansion when prices sit this far below cost recovery. What it signals is the strategic principle underneath the number: electricity can function as an investment attraction tool in its own right. A manufacturer choosing between Tanzania, Kenya and Ethiopia for a new plant is not evaluating electricity in isolation, but a large, persistent price gap becomes one more reason to look elsewhere, compounding on top of financing costs, logistics and market access. Price Isn't the Whole Story, Reliability Is Half of It None of this means tariff alone determines industrial competitiveness. A manufacturer may tolerate a relatively high electricity price if supply is genuinely reliable. The reverse holds just as strongly: cheap electricity becomes far less attractive if a factory still has to run backup generators, diesel systems or battery redundancy because the grid itself can't be trusted to deliver power when production actually needs it. The number that matters to an investor evaluating Tanzania isn't the grid tariff in isolation. It's closer to: grid tariff, plus reliability costs, plus backup generation, plus connection costs, plus transmission costs, plus financing costs. That combined figure, not the 13.7-cent headline rate, is what actually determines whether Tanzanian production is cost-competitive against Kenyan, Ugandan or Ethiopian alternatives. Where the Real Opportunity Sits None of this should be read as criticism of TANESCO or the government specifically. Tanzania is adding generation capacity and expanding transmission, and that investment creates a genuine opportunity to shift from an electricity scarcity conversation to an electricity competitiveness strategy. One option worth serious consideration: differentiated pricing for strategic industries tied to measurable outcomes, job creation, processing of Tanzanian raw materials, export volume, import substitution, backed by predictable long-term power contracts under transparent rules rather than case-by-case negotiation. There's a private-sector opportunity sitting alongside the policy one. Solar generation, battery storage, captive power, industrial mini-grids, energy efficiency and smart metering are all areas where private capital could participate directly, and Tanzania's industrial parks could become platforms for dedicated energy solutions rather than leaving individual manufacturers to solve power problems on their own. A textile park with predictable renewable electricity built in is a fundamentally more attractive investment proposition than an industrial park where every tenant negotiates its own power solution. One specific gap worth watching: Tanzania is among the markets where private third-party wheeling, letting an independent power producer sell electricity directly to a commercial user across the grid, still lacks a published, usable network charge, which limits how easily developers can price and finance those arrangements today. The Harder Question The 13.7-cent figure doesn't prove Tanzanian factories actually pay 13.7 cents per kWh; it measures residential consumption specifically, and industrial tariffs follow a different structure entirely. But the ranking still sends a signal worth acting on: Tanzania sits in the upper half of Africa's electricity markets, barely cheaper than Kenya, meaningfully more expensive than Uganda, and in an entirely different category from Ethiopia. Tanzania has spent years answering how to generate more electricity. The harder question, the one that actually determines whether the country becomes a manufacturing destination rather than a manufacturing afterthought, is how to make that electricity cheap enough, reliable enough and predictable enough that a factory choosing where to locate in East Africa picks Tanzania first. Industrialisation doesn't begin when a factory opens its doors. It begins with the cost of keeping the machines running after that. FAQ Is Tanzania's electricity the most expensive in Africa? No. At 13.7 US cents per kWh, Tanzania ranks 10th of 22 markets in the July 2026 comparison, well below the most expensive markets like Sierra Leone (22.8 cents) and Liberia (22.0 cents). How does Tanzania compare to its immediate East African neighbours? Tanzania is slightly cheaper than Kenya (13.7 vs 14.4 cents) and more expensive than Uganda (11.3 cents), but dramatically more expensive than Ethiopia, whose 1.3-cent rate is roughly a tenth of Tanzania's. Does this figure reflect what Tanzanian factories actually pay for electricity? No. The comparison measures residential volumetric energy charges at low consumption levels, not industrial tariffs, which follow different pricing structures. It's a useful signal of the broader cost environment, not a direct measure of industrial electricity costs. Why is Ethiopia's electricity so much cheaper than Tanzania's? Ethiopia has extensive hydropower resources and has pursued a deliberately low, state-directed pricing model as part of its industrial strategy, though that approach carries trade-offs, including reduced revenue for the utility to fund its own maintenance and expansion. Does cheap electricity guarantee industrial competitiveness on its own? No. Reliability matters as much as price. A manufacturer facing cheap but unreliable power may still need expensive backup generation, which can erase the price advantage entirely; the real comparison investors care about combines tariff, reliability costs and connection costs together. What could Tanzania do to improve its industrial electricity competitiveness? Options include differentiated, predictable long-term power pricing for strategic industries tied to measurable economic outcomes, expanding private-sector participation in solar, storage and captive power, and resolving gaps like the lack of a published network charge for third-party electricity wheeling, which currently limits private power developers' ability to sell directly to commercial users.