Why EU funds freeze will have no impact on Tanzania’s Sh56.5 trillion budget

Although Sh400 billion represents a modest 0.7 percent of Tanzania’s total budget, further analysis shows that only about 10.9 percent of the amount, equivalent to a negligible Sh43.6 billion, goes directly to the government.

According to the Minister for Foreign Affairs and East African Cooperation, Ambassador Mahmoud Kombo, the remaining 138.6 million Euros, or 89.1 percent, is channelled through indirect management involving EU member-state organisations, international bodies, private-sector partners, NGOs and consulting firms.

Speaking on Friday after meeting members of the diplomatic corps regarding the EU Parliament resolution, Mr Kombo said no government activities or projects would be affected.

He said that the EU Parliament is not the final decision-maker in this matter, as the European Commission holds the authority to issue the final verdict. Discussions are still under way.

“The EU Parliament, just like Tanzania’s Parliament, has the mandate to comment on anything relating to their budget. Their internal discussions are ongoing, but even if they decide to suspend the funds, our national budget will not be affected because only 10.9 percent of that money reaches us.

Therefore, Tanzanians should not be misled or alarmed by inaccurate information,” he said.

He noted that early next week the government will engage in talks with EU representatives in Tanzania. Diplomatic efforts through Tanzania’s Ambassador to Belgium are also continuing.

On Thursday, November 27, 2025, the EU Parliament debated and passed a resolution on what it termed “post-election killings and the deteriorating human rights situation in Tanzania, including the case of imprisoned opposition leader Tundu Lissu”.

Among other issues, the resolution called on the European Commission to temporarily suspend the signing of the 2025 Tanzania–EU Partnership Programme (Annual Action Plan – AAP 2025), valued at 156 million Euros.

“As is well known, despite the good partnership and friendship we enjoy with the EU, each side remains independent and is not directed by the other in any matter—whether within parliamentary systems or other executive or judicial institutions. Each side operates within the limits of its own jurisdiction,” said Mr Kombo.

He said that relations with the EU are managed by the European Commission, not the European Parliament.

“Therefore, anything resolved by the Parliament regarding us must undergo further decision-making by the Commission. If there is anything to be brought to us for discussion, it must come through the European Commission, as it is the official body responsible for managing diplomatic relations between Tanzania and the EU.”

Providing a breakdown of the suspended funds, he said the 129 million Euros is for the Together4Value Project which is aimed at strengthening value chains in agriculture and mining.

Of that money, only 13 million Euros is allocated to the government through the President’s Office (Planning and Investment) while the remaining 116 million Euros is managed by external implementing partners. These are mostly EU member states.

The TANTECH Digital Economy Initiative, valued at 20 million Euros, allocates 1.5 million Euros to the Ministry of Information, Communication and Information Technology. The remaining 18 million Euros is directed to EU implementation channels, NGOs and private-sector innovation partners.

Meanwhile, the 7 million Euros Cooperation Facility, designed to enhance coordination between Tanzania and the EU, will send 2.5 million Euros directly to the government via the Ministry of Finance and Planning, with the balance managed through technical experts and international institutions.

Officials stressed that because most of the funds are directed to non-government actors, particularly Tanzania’s private sector, civil society, EU partners and consulting agencies, any delay in signing the agreements would impact the wider development community rather than the government itself.