In the Eastern African bloc, Tanzania, recognized as one of the rapidly developing economies, is projected to achieve an impressive 6.4% GDP growth, reaching $86.97 billion by 2024. Over the past decade, despite occasional global economic fluctuations, Tanzania’s GDP has exhibited a consistent upward trend. Although there was a slight decline in 2020, the country has maintained an annual GDP growth rate of over 4% for more than a decade, highlighting its emerging economic prominence in Africa.

With a population nearing 65 million and disposable incomes growing by approximately 3% annually, Tanzania’s demand for oils and fats has significantly increased. This surge is primarily driven by the expanding middle class and the growth of the food and personal care industries. The rise in disposable income enhances households’ purchasing power, particularly for essential commodities like edible oil.

Edible Oil Sector in Tanzania

The edible oil industry is vital to Tanzania’s economy and food security. The country produces over 450,000 metric tons of edible oil annually, predominantly from sunflower and groundnut oil. Despite significant growth in sunflower seed production, Tanzania’s edible oil processing capacity remains notably low compared to the demand, estimated at approximately 300,000 tons annually. A considerable portion of this demand gap, which surpassed 950,000 metric tons in 2023, is filled by imports, constituting around 60% of the total consumption of all edible oils.

Palm Oil in Tanzania

Palm oil is the most widely used edible oil in Tanzania, favored for cooking due to its affordability, availability, and compatibility with traditional dishes. It also plays a pivotal role in various industrial applications, including food processing, cosmetics, and biodiesel production. Its versatility, cost-effectiveness, and favorable properties make it the preferred choice across several sectors in Tanzania

Palm oil accounts for 50% of Tanzania’s total edible oil consumption, with nearly all requirements met through imports, which constitute approximately 98% of the country’s total edible oil imports. The upward trend in Tanzania’s edible oil requirement reflects economic recovery, especially as the nation’s tourism and food service sectors rebound post-pandemic. The diverse applications of palm oil, ranging from food processing to personal care and industrial uses, underscore its affordability and versatility, making it a staple in local kitchens and a preferred ingredient for food manufacturers.

Malaysian Palm Oil in Tanzania

In 2023, Tanzania solidified its position as a significant market for Malaysian palm oil, becoming the second-largest importer of Malaysian palm oil in sub-Saharan Africa and the 12th largest globally, up from 17th in 2022. This surge, attributed to a notable 29% growth in palm oil imports during the 2023 financial year, reflects Tanzania’s increasing demand for palm oil and its strengthening economic and trade relations with Malaysia, a major producer in the industry.

Source: MPOB

Detail Product	Jan – Dec 2022  volume	Jan – Dec 2023  volume
Cooking Oil	89988	83864
Crude Palm Oil	60519	25060
Crude Palm Olein	8401	180047
Palm Fatty Acid Distillate	14696	10185
RBD Palm Oil	0	1
RBD Palm Olein	56840	4404
RBD Palm Stearin	18481	17878
Refined Bleached Palm Olein	244	0
Grand Total	249169	321438

Source: MPOB

The MPOB data for Tanzania between 2022 and 2023 highlights significant trends in the types and quantities of palm oil products imported. During this period, there was a remarkable surge in imports of crude palm olein, indicating a growing preference for this processed oil over solid fats. Cooking oil also accounted for a significant portion of the imports, maintaining consistent volumes over the two years, which suggests a steady demand for this essential cooking ingredient within the Tanzanian market. In contrast, the import of refined, bleached palm olein declined in 2023, possibly due to increased domestic refining capabilities or shifts in market preferences towards less processed products. Meanwhile, imports of palm fatty acid distillate remained relatively stable, reflecting consistent demand for by-products used in industries like soap manufacturing. 

Growing Oleochemical Industry in Tanzania

In Tanzania, the soap manufacturing and bath product industries are experiencing a notable growth rate of 3.73% annually. Essential ingredients such as soap noodles, flakes, chips, blends, and stock, all derived from palm oil, are fundamental to soap production. Moreover, various oleochemicals sourced from palm oil are crucial in personal care, pharmaceutical, and industrial sectors, emphasizing Tanzania’s reliance on palm oil derivatives for a range of consumer and industrial goods. This reliance highlights ongoing opportunities to expand the market share of Malaysian palm oil within the region. Additionally, there is significant potential for market expansion into landlocked countries such as Burundi, Malawi, Rwanda, and Zambia, offering promising prospects for the growth of palm oil-derived oleochemicals.

Outlook for 2024 

Tanzania remains a promising market for Malaysian palm oil in 2024, with potential for further expansion through strategic initiatives. Emerging as a key hub for Malaysia in the African edible oil market, Tanzania’s strategic projects, such as the Standard Gauge Railway connecting Dar es Salaam with neighboring landlocked countries like Rwanda, Burundi, and Uganda, position it uniquely for re-exportation. Furthermore, Tanzania’s strategic location makes it an ideal distribution center, alongside Kenya, in the East African region.

Looking forward to the 2024 financial year, the Tanzanian edible oil market is poised to experience a moderate increase in import and consumption volumes. The Malaysian Palm Oil Council (MPOC) forecasts a rise in Malaysian palm oil imports to 350,000 metric tons, marking a 9% increase from 2023. This uptick is attributed to anticipated urbanization exceeding 50% in the next decade, fueling demand for processed foods and various edible oils. Additionally, projected growth in both the food and non-food sectors, along with increased purchasing power among the population, will further drive this demand.

Prepared by Thev Batumalai