Tanzania logistics gains need transparent mining institutions

Tanzania’s public dialogue on justice in the mining sector is a functional test of institutional credibility in a pillar industry now large enough to move macro aggregates. On a calendar-year base, mining and quarrying contributed about 10.1% of GDP in CY2024, up from roughly 9.1% in CY2023. With nominal GDP around $80.0 billion in CY2024, the sector’s gross value added was near $8.1 billion.

The external channel is larger: in the twelve months to August 2025, gold receipts were about $4.3 billion, anchoring goods exports and compressing the current-account deficit that averaged roughly 2.7% of GDP in CY2024. When land compensation, tenure clarity, and grievance resolution surface as pressure points, the signal to markets is straightforward: as volumes scale, governance quality becomes a price-forming input to sovereign and corporate risk premia.

Policy architecture, transmission mechanisms, and macro outcomes are tightly linked. First, a domestic offtake rule for gold—requiring a defined share of output to be available for central-bank purchases from October 2024—has reinforced reserve diversification. With official reserves above $5 billion through mid-2025 (c. four to five months of goods and services import cover), on-shore gold procurement raises the probability that external buffers can stabilise FX liquidity during adverse commodity or tourism shocks.

Second, logistics upgrades—phased commissioning of standard-gauge railway segments across the central corridor—reduce inland haulage costs and cycle times for bulk minerals, lifting mine netbacks and the fiscal take. Third, a steady project pipeline supported net FDI inflows near $1.7 billion in CY2024, with mining a material slice. These same levers can strain social consent if resettlement, environmental externalities, or shared-benefit mechanisms are mishandled; the dialogue underscores that implementation quality, not intent, now drives risk pricing.

The sector’s macro imprint is capital-intensive and export-led. Direct formal employment remains modest—circa 19,000 jobs as at March 2024—so growth lifts the balance of payments more than household incomes in mining districts. That asymmetry strengthens the shilling’s external footing when gold is firm but increases sensitivity to governance shocks that halt production or trigger injunctions.

A stoppage at a large asset can shave tenths off real growth, widen the current-account gap via lost exports, and dent fiscal buoyancy where royalties, corporate tax, and dividends are concentrated. Listed producers with Tanzanian exposure—Barrick Gold (GOLD) via the Twiga joint venture and AngloGold Ashanti (AU) via Geita—must now price execution and permitting certainty alongside ore grades and all-in sustaining costs. For allocators, the analytical pivot is whether rule clarity converts headline reforms into predictable remedies at ground level.

Global context heightens the stakes. With XAUUSD elevated and energy inputs more stable than in 2022–2023, cash margins are supportive; yet governance uncertainty widens discount rates, caps valuation multiples, and delays final investment decisions. A domestic offtake and refining regime can compress transaction spreads and retain value on-shore, but opacity on pricing formulas, settlement timelines, or refinery intakes pushes dealers to widen margins and producers to demand tighter contractual protections.

Logistics modernisation lowers delivered costs and unlocks inland deposits, but rights-of-way and compensation processes, if prolonged, bleed time value and raise litigation overhangs that translate into a governance premium on sovereign and corporate funding curves. Regionally, peers with clearer dispute-resolution timelines and transparent fiscal regimes—such as Botswana in diamonds or Ghana’s ongoing gold fiscal recalibration—illustrate how credibility compresses spreads even when headline commodity exposure is similar.

Forward assessment is measurable across two horizons. Over the next 12–18 months: keep mining’s GDP share at or above 10.0% on a CY basis; sustain gold exports at ≥$4.0 billion annualised at prevailing prices; maintain net FDI inflows at ≥$1.5 billion with a stable mining slice; and reduce the stock of unresolved land-compensation and grievance cases quarter-on-quarter. Over a 3–5 year horizon: lift rail throughput and shorten mine-to-port turnaround times by double-digit percentages versus 2023 baselines; preserve reserves above four months of import cover with a rising, transparently priced gold share; and demonstrate consistent, time-bound dispute resolution from filing to settlement.

If these thresholds hold while the policy rate—currently 6.0%—anchors inflation expectations and the fiscal regime remains predictable, the governance premium narrows, funding costs decline, and investment converts from episodic to continuous. If they do not, spreads widen even into a strong-gold tape, project clustering fades, and a 10%-of-GDP engine becomes a volatility amplifier rather than a stabilizer.