Financing renewable energy through green bonds in Tanzania: A legal perspective

By Baraka Thomas

Tanzania’s renewable energy sector has significant potential to diversify the national energy mix and contribute to climate change mitigation. Financing, however, remains a key barrier.

The promulgation of The Capital Markets and Securities (Corporate and Subnational Sustainability Bonds) Regulations, 2025 (GN 302 of 2025) provides a statutory framework for green bonds, explicitly recognizing renewable energy as an eligible project.

This article analyzes the legal and regulatory framework for green bonds in Tanzania, evaluates practical market precedents, and provides insights on leveraging green bonds as a financing tool for renewable energy projects, while drawing lessons from other sub-Saharan African countries.

Access to reliable and clean energy is central to Tanzania’s sustainable development goals. Renewable energy sources such as solar, wind, hydropower, and geothermal present opportunities to diversify the national energy mix and reduce greenhouse gas emissions.

While strategic policies such as the National Energy Policy (2015) and the Power System Master Plan (2020–2040) provide direction, financing has remained one of the most stubborn barriers to scaling renewable energy projects.

Globally, green bonds debt instruments dedicated to financing environmentally sustainable projects have become a powerful tool for mobilizing both public and private capital. Tanzania has now joined this movement.

The question is whether green bonds can become the game changer in closing the financing gap and powering Tanzania’s clean energy transition.

The legal framework for green bonds in Tanzania

A major milestone came on 23 May 2025, when the Government of Tanzania promulgated the Capital Markets and Securities (Corporate and Subnational Sustainability Bonds) Regulations, 2025 (GN 302).

For the first time, the law explicitly recognized green bonds as a debt instrument designed to finance long-term, environmentally friendly projects. Renewable energy is specifically listed as an eligible category.

The objectives of the regulations includes, to widen the scope of financing for projects with environmental and social benefits, and, to diversify Tanzania’s capital market products while enhancing liquidity among others.

To ensure credibility, the regulations require any issuer to obtain approval from the Capital Markets and Securities Authority (CMSA) before offering bonds to the public. Issuers must meet strict conditions related to governance, disclosure, and project eligibility.

The legal implication is clear. Tanzania now has a statutory pathway for both public and private entities to raise capital for renewable energy projects through green bonds. This framework removes the regulatory uncertainty that has long discouraged investors and project developers.

Early market precedents in Tanzania

While GN 302 has formalized the legal environment, Tanzania had already tested the waters with notable issuances.

CRDB Bank blazed the trail with the Kijani Bond, Tanzania’s first major green bond. Oversubscribed by 429 percent with International Finance Corporation(IFC) as an anchor investor, the Kijani Bond financed a wide range of sustainability projects, from renewable energy generation to climate-smart agriculture, water and forestry initiatives, and green buildings. Its success sent a strong signal of market appetite.

NMB Bank followed with the Jamii Sustainability Bond in 2023, raising Sh400 billion. Crucially, it became the first Tanzanian corporate bond to be cross-listed on the London Stock Exchange. Proceeds went into renewable energy and climate-positive infrastructure. The international listing gave Tanzania global visibility, proving that green bonds from Dar es Salaam can compete on international platforms.

At the subnational level, Tanga UWASA issued a green bond to finance water infrastructure. Though not an energy project, it underscored the feasibility of municipal and utility-level issuances in Tanzania.

Together, these precedents show that the Tanzanian market is not only ready for green bonds but also has the appetite and institutional capacity to make them a mainstream financing tool.

Comparative lessons from Sub-Saharan Africa

Tanzania’s green bond market may be young, but other African nations provide a roadmap for scaling it effectively.

Nigeria offers the most vivid lesson in credit enhancement. Through Credit Guarantee Company (Infracredit), corporate issuers like Access Bank and North South Power improved their credit ratings, leading to oversubscribed bonds.

South Africa saw similar success when IFC and the Development Bank of Southern Africa guaranteed Johannesburg’s municipal green bond, which achieved a rating above the city’s standalone profile. In Kenya, Acorn’s pioneering green bond was de-risked through a GuarantCo guarantee.

The message for Tanzania is simple: partial guarantees from Development Finance Institutions (DFI) or local facilities can reduce costs of capital and make renewable energy bonds far more attractive.

Currency denomination is another critical lesson. Both Nigeria and South Africa issued bonds in local currency, shielding issuers from foreign exchange volatility while mobilizing domestic savings.

Kenya blended the two approaches, issuing shilling-denominated bonds that were also cross-listed in London to attract international investors. Tanzania should adopt the same hybrid approach: prioritize local currency issuance for stability but use international listings to draw global attention.

Fiscal incentives are also key. Nigeria offered corporate income tax exemptions, while South Africa allowed accelerated depreciation for renewable energy assets. India, beyond Africa, demonstrated that tax-exempt coupon payments can spark massive oversubscription.

Tanzania could do the same-VAT exemptions on renewable energy equipment or tax relief on bond interest could stimulate both issuers and investors.

Government participation is equally vital. Nigeria issued Africa’s first sovereign green bond in 2017, creating a benchmark for private issuers. South Africa’s municipal issuances had the same catalytic effect. Tanzania should consider sovereign or TANESCO-backed green bonds to set pricing references and send a clear message of state commitment.

Finally, diversification of the investor base is essential. Kenya’s M-Akiba mobile treasury bond showed how retail investors, through mobile platforms, can become active participants. With Tanzania’s extensive mobile money ecosystem, a similar approach could democratize green bonds and ensure steady demand for renewable energy financing.

Implications for renewable energy financing in Tanzania

The legal clarity offered by GN 302, combined with the success of CRDB’s Kijani Bond and NMB’s Jamii Bond, positions Tanzania to harness green bonds as a powerful financing tool. The implications are far-reaching.

First, green bonds can unlock significant domestic and international capital for solar, wind, geothermal, and hydro projects, increasing renewable energy’s share in the national electricity mix. Currently, hydropower and natural gas dominate, while solar and wind remain marginal contributors.

Second, this financing pathway can accelerate Tanzania’s commitments to climate change mitigation by reducing reliance on fossil fuels and expanding clean generation capacity. Third, the development of a green bond market will also deepen Tanzania’s capital markets, providing new products for investors and enhancing overall market liquidity.

Conclusion: A Call to action

Tanzania stands at a crossroads. With the Capital Markets and Securities Regulations, 2025, the country now has a credible legal foundation for green bond financing. Renewable energy is expressly recognized as an eligible sector, and recent bond issuances demonstrate strong investor demand.

But laws alone will not deliver results. To truly unlock the potential of green bonds, Tanzania must take additional steps: provide operational guidance through CMSA, issue pilot sovereign or utility-backed bonds, introduce fiscal incentives, and develop credit enhancement mechanisms. Just as importantly, the country must broaden the investor base, using its mobile money platforms to democratize participation.

The opportunity is clear. If embraced, green bonds can become the financial engine driving Tanzania’s renewable energy expansion, climate change response, and economic resilience. For policymakers, investors, and citizens alike, the message is the same: the more we invest in renewables, the stronger Tanzania’s future will be.

Baraka Thomas is Energy, Mining, Finance and Investment Lawyer