Tanzania is facing a significant financing gap of over $12 billion to implement its climate priorities, according to the World Bank. The country's climate commitments require nearly $20 billion, but only about one-third of the required funding has been identified. This shortfall was highlighted at the Tanzania Climate Finance Roundtable in Dar es Salaam, which brought together government officials, development partners, and financial institutions.
The World Bank's Country and Climate Development Report warns that inadequate action on climate change could reduce Tanzania's economic growth by up to four percent by 2050. Climate change could also push an additional 2.6 million people into poverty and contribute to internal migration involving as many as 13 million people. World Bank Group Regional Practice Director, Anna Wellestain, emphasized that Tanzania's climate agenda is first and foremost a development agenda.
The Tanzanian government is calling for greater access to grants, concessional funding, and private capital to finance adaptation and low-carbon development. Finance Minister, Hamis Mussa Omari, noted that the scale of financing required is beyond what domestic revenues can support, while meeting obligations in health, education, and job creation. He warned that excessive reliance on loans could increase the country's debt burden.
The government is exploring alternative financing options, including green bonds, carbon finance, and sustainable finance taxonomies. Almost three-quarters of the 2026/27 national budget will be financed from domestic resources. The government is working with development partners on a proposed sovereign green, social, and sustainability-linked bond. Examples of growing interest in sustainable finance include the corporate green bond issued by CRDB in 2023 and the green bond issued by the Tanga Urban Water Supply and Sanitation Authority.
Key sectors that require climate financing include energy, agriculture, water, infrastructure, and forestry. Investment opportunities in renewable energy, sustainable agriculture, green minerals, the blue economy, and ecotourism could generate employment opportunities for young people and women. Climate considerations should be incorporated into mainstream government development planning rather than handled through separate systems.
Stakeholders are being urged to focus on a small number of practical programs rather than creating additional platforms for discussion. Wellestain suggested converging on two or three programmatic options, identifying government counterparts and interested parties, and agreeing on immediate analytical and next steps. The ultimate test of climate finance should be its impact on people's lives.
The government and development partners are working together to mobilize resources and respond to climate change. The goal is to move from promises to delivery and from commitments to results. Effective climate finance is seen as an investment in growth, stability, and a partner that delivers.
Key points
- Tanzania faces a $12 billion financing gap to implement its climate priorities.
- Inadequate action on climate change could reduce Tanzania's economic growth by up to four percent by 2050.
- The government is seeking alternative financing options, including green bonds and concessional funding.
