DAR ES SALAAM, Tanzania – In a significant economic milestone, Tanzania's mining sector contributed 10.1% to its Gross Domestic Product (GDP) in 2024, achieving its national target two years ahead of schedule, Minister for Minerals Anthony Mavunde announced on April 23, 2025. This achievement, up from 9.1% in 2023 and 7.3% in 2021, is the result of aggressive legal and fiscal reforms under President Samia Suluhu Hassan's administration aimed at maximizing national benefit from its vast mineral resources—a strategy that holds profound implications for Kenya and the wider East African Community (EAC).

The reforms are a direct attempt to avert the so-called "resource curse," where abundant natural wealth paradoxically leads to poor economic outcomes and social instability. By focusing on in-country value addition and tightening regulations, Tanzania is rewriting its relationship with foreign capital and positioning itself as a regional powerhouse in the processing of critical minerals. For Kenya, whose mining sector contributes less than 1% to its GDP, Tanzania's trajectory serves as both a competitive warning and a strategic playbook.

New Rules for Foreign Investors

Central to Tanzania's strategy are the September 2025 amendments to the Mining (Local Content) Regulations. Published on September 12, 2025, these updated rules now mandate that foreign companies supplying goods or services to the mining sector must form a joint venture with a company that is 100% owned by Tanzanian citizens. The local partner must hold at least a 20% equity stake in the joint venture. This is a significant tightening from previous regulations, which allowed partnerships with indigenous companies that could have up to 80% foreign ownership, a loophole often criticized for enabling "shell" structures.

These regulations, which came into immediate effect without a grace period, create an urgent compliance challenge for foreign investors, including any Kenyan firms operating or planning to enter the Tanzanian market. Furthermore, the Mining Commission will now publish a list of goods and services exclusively reserved for 100% Tanzanian-owned companies, effectively cordoning off parts of the supply chain from foreign competition.

The Value Addition Imperative

Tanzania is moving decisively to end the large-scale export of raw minerals. A strategy launched on May 8, 2025, aims to establish Tanzania as a regional hub for processing strategic minerals like lithium, graphite, nickel, and rare earth elements, which are crucial for the global green energy transition. A July 2025 report by Manufacturing Africa identified 14 specific value-addition opportunities that could generate between USD $7.2 billion and $11.7 billion in annual revenue. This policy directly challenges the traditional extract-and-export model and puts pressure on regional peers, including Kenya, to develop their own processing capabilities to remain competitive.

The government's ambition is already attracting regional attention. Minister Mavunde has explicitly invited investment from neighboring countries, stating, “East African capital must back East African resources,” signaling a desire for regional partnerships but on Tanzania's terms. This has prompted delegations from Kenya's mining sector to visit Tanzania to learn from its regulatory and economic models, as confirmed by Tanzania's State Mining Corporation (Stamico) in July 2023.

The Enduring 'Curse': Social and Environmental Costs

Despite the economic successes, the traditional burdens of the mineral curse persist. In the gold-rich Geita region, mining activities continue to cause significant environmental degradation. A 2021 study noted a 17% deforestation rate in the area between 2016 and 2020, while reports from December 2023 highlighted ongoing water pollution from mercury and cyanide used in gold processing. The National Environmental Management Council (NEMC) has warned that large land areas in mining districts like Chunya are becoming unproductive due to destructive mining practices.

In the Merelani hills, the world's only source of tanzanite, artisanal miners work in hazardous conditions. Studies have documented dangerously high levels of respirable dust, including quartz and graphite, and inadequate ventilation in deep, narrow shafts, leading to risks of silicosis and other respiratory diseases. While President Hassan's government has increased support for small-scale miners—who now contribute nearly 40% of the industry's revenue—by issuing more licenses and establishing local mineral markets, ensuring safe and environmentally sound practices remains a formidable challenge.

Implications for Kenya and the EAC

Tanzania's assertive, national-interest-first approach to mining presents a complex scenario for the East African Community's goal of policy harmonization. While the EAC Treaty promotes joint management of natural resources, Tanzania's stringent local content and value-addition mandates may complicate efforts to create a seamless regional market. Investors may face a patchwork of differing regulations across the bloc, potentially hindering cross-border investment.

For Kenya, the message is clear. The underperformance of its own mining sector stands in stark contrast to Tanzania's boom. Tanzania's success in formalizing artisanal mining, curbing smuggling through state-controlled buying centers, and leveraging its mineral wealth to drive industrialization offers a powerful model. However, the new regulations also mean that Kenyan firms looking to participate in Tanzania's growth will face higher barriers to entry, requiring genuine partnerships with fully Tanzanian-owned entities. As Tanzania forges ahead, Kenya faces a critical choice: to learn from its neighbor's successes and failures to revitalize its own sector, or risk being left behind in the race to power the future. FURTHER INVESTIGATION REQUIRED on the specific number of Kenyan companies impacted by the 2025 regulations.