How new edible oil strategy aims to lower Sh500.6 billion import bill

The National Edible Oil Strategy (NEOS), whose content was unveiled during a high-level Edible Oil Investment Forum in Dodoma, seeks to transform Tanzania from a major edible oil importer into a self-sufficient producer and net exporter by 2035.

The strategy comes as the country grapples with a widening gap between domestic edible oil demand and local production.

According to 2025 estimates, Tanzania requires about 732,000 tonnes of edible oil annually.

However, local production fluctuates between 100,000 and 300,000 tonnes depending on the availability of raw materials, leaving an average annual deficit of about 400,000 tonnes. As a result, the country currently meets only about 40 percent of its edible oil requirements from domestic production.

The shortfall carries a significant economic cost, with Tanzania spending more than Sh500.6 billion ($200 million) each year on imports.

Experts attending the forum warned that rising global prices could push the import bill even higher, noting that importing the required 400,000 tonnes of palm oil could cost the country more than $400 million under adverse market conditions.

They also cautioned that Tanzania’s dependence on imports exposes it to external shocks, including export restrictions imposed by major producing countries such as Malaysia.

Presenting the National Edible Oil Strategic Production Plan (2026–2035), the chairman of the NEOS preparation committee, Mr Charles Ogutu, said the strategy prioritises two key crops; sunflower and oil palm. He said sunflower offers quicker returns and can be cultivated by smallholder farmers across most parts of the country, particularly in Singida, Dodoma and Simiyu regions.

Oil palm, meanwhile, has been identified as the long-term solution because of its superior productivity per hectare, with Kigoma, Mbeya and Tanga earmarked as strategic production zones.

Mr Ogutu said the strategy is built around six priorities: strengthening the policy and regulatory framework, improving access to finance, increasing production and productivity, expanding processing capacity, stabilising markets and creating employment opportunities.

"Sunflower productivity in Tanzania currently averages only one tonne per hectare compared with the global average of between three and four tonnes. Through hybrid seeds and irrigation, the strategy aims to increase yields to at least 1.4 tonnes per hectare," he said.

To achieve these targets, he said the strategy will require about Sh1 trillion (Sh959 billion) in investment over the next decade.

The funding is expected to come from a combination of government resources, private sector investment and development partners.

By 2035, Tanzania aims to expand sunflower cultivation to 2.1 million hectares and oil palm production to 60,000 hectares, creating an estimated three million jobs along the value chain.

"Our mission is to ensure Tanzania becomes self-sufficient before emerging as an exporter. We have the land and the farmers to achieve this. We believe the country will attain self-sufficiency by 2031 and generate exportable surpluses by 2035," said Mr Ogutu.

Opening the forum, the Minister for Agriculture, Mr Daniel Chongolo, signalled a tougher stance on edible oil imports, warning traders that future import permits would increasingly depend on investment in domestic production.

"In four and a half years, imports will only be permitted in proportion to an investor's local production. Tanzania must shift from being a nation of traders to becoming a nation of producers," he said.

He said the new strategy would strengthen collaboration between the government and the private sector to build a competitive, resilient and sustainable edible oil industry. "We must invest in sectors where Tanzania has the capacity to produce competitively and protect its foreign currency reserves," he said.

The minister pointed to Tanzania's sugar industry as a model for transforming the edible oil sector.

He said government interventions had gradually shifted the sugar industry from heavy dependence on imports towards greater domestic production, with exports expected in the near future.

"A key element of that strategy has been regulating imports. Whenever shortages occur, only established domestic producers are allowed to import the deficit, helping retain value within the local economy while safeguarding foreign exchange," he said.

TADB to drive financing

The Tanzania Agricultural Development Bank (TADB) has been positioned as the lead financial institution supporting implementation of the strategy.

TADB Executive Director, Mr Frank Nyabundege, said although agricultural lending had increased from Sh1.5 trillion to Sh5.8 trillion in recent years, the edible oil industry required specialised financing tailored to its production cycle.

"TADB's responsibility is to finance the entire agricultural value chain, from production to processing and ultimately delivering food to consumers," he said.

Mr Nyabundege said conventional two-year agricultural loans were unsuitable for long-term crops such as oil palm, whose maturity period extends over several years.

To address this, he said the bank has introduced financing with repayment periods of between 10 and 15 years while also offering refinancing facilities to commercial banks to encourage lending to farmers at more affordable interest rates.

He also urged Tanzanians to reclaim the country's historical position in oil palm production, noting claims that Malaysia's globally successful oil palm industry originated from seeds sourced from Kigoma.

Industry welcomes reforms

Director of Crop Development in the Ministry of Agriculture, Ms Yasinta Nzogela, said the government was reviewing policy inconsistencies that had discouraged local investment, including tax exemptions on imported crude palm oil.

"Our objective is clear. Tanzania must become self-sufficient in edible oil production. We are creating a more predictable and investor-friendly policy environment while ensuring fair competition between importers and local producers," she said.

The Cereals and Other Produce Regulatory Authority (COPRA) Director General, Ms Irene Madeje, said new regulations under Government Notice No. 91 formally establish rules governing the edible oil industry.

Under the regulations, importers will also be required to invest in local production or purchase produce from smallholder farmers.

"Investors should have confidence to invest because the domestic market will prioritise locally produced edible oil before imported products," she said.

Representing the Minister for Industry and Trade, Mr Patrick Kivanda said the strategy also seeks to increase local participation in manufacturing, with Tanzanians expected to account for at least 70 percent of factory workers in the sector by 2030 and 80 percent by 2035.

The Agricultural Transformation Office (ATO) implementation and delivery lead, Ms Levina Tobias, said the strategy aligns with the Agriculture Master Plan 2050 and is designed to ensure women and young people benefit from investments across the edible oil value chain.