DAR ES SALAAM: THE Economic and Social Research Foundation (ESRF) position paper, “Global Oil Price Volatility and Tanzania: Impacts and Policy Options,” released in March 2026, is one of the most timely and strategically important policy reports in Tanzania this year.
Views expressed in the paper correctly highlight how rising global oil prices and geopolitical instability, especially disruptions in the Gulf region and along key transport routes like the Strait of Hormuz pose significant economic risks to Tanzania.
The policy presented as a special issue rightly earns praise for changing the national debate—moving from seeing global oil shocks as distant international concerns to recognising them as immediate threats to domestic economic stability, household welfare, inflation management, fiscal health, and energy security.
The policy paper accurately highlights the wider transmission pathways through which oil price shocks impact Tanzania. These include changes in transport expenses, inflationary pressures, instability in the fuel market, increased business operating costs, effects on foreign exchange reserves, fiscal policy strain, and disruptions to the supply chain.
Its policy recommendations on strategic fuel reserves, domestic refining, renewable energy growth, gas utilisation, logistics integration, and energy diversification are progressive and strategically well-founded.
Although the ESRF policy paper highlights macroeconomic and institutional aspects, it largely overlooks the deeper social, informal, and household realities that influence how everyday Tanzanians experience oilprice shocks.
In many ways, the paper effectively explains the economics of oil volatility, but it does not fully reflect the real experience of inflation and how this environment has eroded people’s purchasing power.
A key strength of the position paper is its recognition that rising fuel prices increase operating costs across sectors, including agriculture, manufacturing, transport, trade and logistics.
It accurately highlights that small businesses and transport operators are particularly vulnerable because they have limited capacity to absorb higher costs. This point is crucial given Tanzania’s economy’s reliance on SMEs and informal-sector activities that employ the majority of Tanzanians.
The 12-page policy paper, authored by a few individuals on behalf of ESRF, references some works— though not all are entirely relevant— yet it underestimates the prevalence of informality in Tanzania’s economy and does not sufficiently evaluate the impact of oil shocks on everyday citizens.
For most Tanzanians, the economy is not experienced through GDP growth rates or fiscal policy statements. It is experienced through daladala fares, boda boda transport costs, food prices, charcoal prices, fishing fuel, irrigation expenses, cooking gas affordability, and critically, the shrinking amount of money left after daily survival costs.
The ESRF position paper notes that “the day-to-day cost of living for many Tanzanians becomes increasingly difficult during periods of sustained fuel price increases,” but it does not explore this critical point in sufficient depth.
The government’s decisionmakers should find this report useful, especially in light of the ESRF’s function as a think tank, if it had gone much further in quantifying how many households are reducing meals, how many transport operators are becoming financially distressed, how many SMEs are operating at a loss, and how rising fuel costs are worsening urban poverty.
The reality, in my view as an economist, is that fuel inflation in Tanzania spreads through the economy with extraordinary speed because transport is deeply embedded in almost every aspect of daily life.
When fuel prices increase, the costs for transporting food go up, leading to higher market prices. School transportation costs also rise, and commuting becomes more expensive. Fishing becomes less profitable, construction materials get pricier, and household purchasing power slowly declines.
However, the position paper, likely hastily written, remains overly centred on systems, institutions, and policy tools, while paying inadequate attention to the human consequences’ impact.
A significant weakness is the paper’s narrow focus on urban vulnerability. Urban households are especially impacted by oil price shocks since they rely almost entirely on bought goods and services. Meanwhile, some rural households may depend partially on subsistence farming, but urban residents must buy food, transportation, water, cooking energy, electricity, and most household essentials.
The position paper discusses inflation in general but fails to clearly distinguish how it impacts low-income urban youths, tenants, casual labourers, and salaried workers on fixed incomes. This gap is significant because ongoing oil-related inflation gradually undermines the middle class and increases urban vulnerability.
The ESRF’s paper assessment, upon closer analysis, overlooks a crucial psychological aspect of economic hardship. Inflation is not just an economic indicator; it also acts as a social and emotional burden. Sustained rises in transport and food prices cause household stress, anxiety, decreased mobility, shrinking savings, and increasing frustration among citizens.
Small traders are more focused on survival than growth. Families delay healthcare visits, postpone schooling expenses, and compromise on nutrition. However, these social issues are largely overlooked in the report.
Another significant gap concerns debt stress and financial fragility among households and SMEs. The report addresses business operating costs but does not sufficiently explore how sustained fuel-price hikes affect areas such as loan repayment, SACCO performance (often viewed as a caring supporter), informal borrowing that helps ease economic stress for many Tanzanians, supplier credit, mobile lending, and working capital cycles, all of which are vital to the individual economy.
The report’s authors should have recognised that many small businesses rely on short-term borrowing. As operational costs increase and consumer purchasing power declines, the risk of repayment problems rises considerably. This underlying financial fragility within the wider economy may not be immediately evident in official macroeconomic data.
The report also underestimates the likely employment implications of prolonged energy shocks. Businesses facing sustained cost increases often respond by reducing staff, freezing recruitment, lowering wages, cutting allowances, or delaying expansion.
Youth employment remains especially fragile as small businesses, which are Tanzania’s main employers, dominate the sector. The ESRF paper addresses business profitability but does not thoroughly explore the labour-market impacts of sustained oil-price volatility.
Another critical omission concerns food security. The paper correctly notes that agriculture depends heavily on fuel for production and distribution. However, it does not sufficiently examine how oil-price increases affect the affordability of fertilisers, irrigation costs, mechanised farming, food transport, and post-harvest logistics.
This matters because food inflation is among the most politically and socially sensitive outcomes of energy shocks. For ordinary citizens, the most visible consequence of oil-price increases is often not fuel itself but rising food prices and reduced access.
The report’s discussion of strategic fuel reserves is economically important and looks ahead strategically. The Kigamboni storage project is accurately described as a key national energy-security investment that can strengthen readiness for external shocks. However, the paper might somewhat exaggerate the buffering capacity of the reserves without thoroughly considering their limitations.
The report acknowledges that one to two weeks of extra fuel coverage might not be enough during extended disruptions. However, it does not fully explore worst-case situations like long-lasting Strait of Hormuz blockades, regional shipping disturbances, a significant global recession, or prolonged foreign exchange shortages. Such scenarios could produce far deeper domestic disruptions than the report currently anticipates.
Another key weakness of this hurried assessment report is its inadequate discussion of exchange-rate vulnerability. Since oil imports are paid in US dollars, sustained increases in oil prices strain foreign exchange reserves. However, the report does not sufficiently clarify how currency depreciation further impacts ordinary citizens by raising the prices of imported medicines, machinery, spare parts, school supplies, electronics, and industrial components.
In reality, oil shocks often trigger broader imported inflation across the economy. The report also overlooks a deeper structural critique of Tanzania’s economic model. The oil-price crisis exposes Tanzania’s long-standing vulnerability stemming from dependence on imported refined petroleum products, industrial goods, and fertilisers, as well as weak domestic manufacturing.
The paper rightly advocates for refinery development and energy diversification. However, it does not fully address the core challenge of structural industrialisation. Without building a stronger domestic productive capacity and improving productivity, Tanzania will continue to be vulnerable to external geopolitical shocks, despite short-term stabilisation efforts.
Upon further critical examination, the assessment also pays insufficient attention to gendered impacts. Women are disproportionately affected by oil-related inflation because they dominate many household survival activities, including food vending, retail trade, household energy management, and informal commerce.
Rising LPG prices could lead households to revert to charcoal and firewood, thereby raising environmental damage, health risks related to respiratory issues, and unpaid domestic work. These aspects require more focused attention.
The report’s most compelling aspect is its focus on long-term policy strategies. Its suggestions regarding renewable energy, gas utilisation, refinery development, logistics integration, and market coordination are well-founded and support the nation’s resilience objectives over the long term.
The focus on energy diversification is especially crucial, since Tanzania’s future stability relies on decreasing its heavy dependence on imported petroleum. Nonetheless, the report could have been more comprehensive if it incorporated household vulnerability surveys, informal-sector stress indicators, urban poverty analysis, transport affordability tracking, and food-security stress assessments.
Ultimately, the ESRF paper functions effectively as a significant warning document focused on strategy and policy. It accurately highlights the macroeconomic risks caused by global oil price fluctuations and provides credible policy options to strengthen national energy resilience.
However, the report still does not fully capture the everyday Tanzanian experience of the crisis that many common Tanzanians are facing. For many citizens, the oil shock is no longer just about global geopolitics, strategic petroleum reserves, or energy diversification policies.
It concerns smaller meals, shrinking incomes, sacrifices in transportation, declining small-business margins, increased household anxiety, and most importantly, the growing fear that simply surviving is becoming more costly each month. This human experience needed much more attention in the evaluation.
Since the ESRF has earned significant respect in Tanzania as a think tank, it was essential to carefully consider the fundamental policy issues I identified to maintain its role as a government advisor, especially when policy directives are executed and affect most Tanzanians.