MWE Correspondent
Tanzania’s government has made a bold move to support local businesses by slashing the excise duty on energy drinks.
In a budget speech delivered in Parliament on Thursday, June 12, 2025, the Minister for Finance, Dr. Mwigulu Nchemba, announced that the tax would be reduced from Sh561 to just Sh134.2 per litre—a cut of more than 75%.
This major reduction, which forms part of the proposed 2025/2026 national budget totalling Sh56.49 trillion, is intended to lower production costs for Tanzanian manufacturers, increase the competitiveness of local products, and attract new investment into the country’s fast-growing beverage sector.
“This change is expected to reduce government revenue by Sh170.2 million,” said Dr. Nchemba during his address.
While the cut may appear modest at first glance, it has the potential to significantly shift the landscape for the country’s energy drink market. Until now, local producers have struggled to keep up with the costs associated with excise taxes, especially when competing against imported brands that often benefit from economies of scale and better technology.
Manufacturers are hopeful that this tax relief will not only make their products more affordable for consumers but also encourage more entrepreneurs to enter the market. Reduced production costs could lead to better quality control, more competitive pricing, and even product innovation that appeals to Tanzania’s youthful population—who form a large consumer base for these drinks.
This decision is one of several fiscal measures proposed in the new budget that aims to support domestic industries. Among them are tax waivers on agricultural inputs, reductions on clean cooking energy equipment, and various incentives to drive up investment in sectors such as natural gas, health, and infrastructure.
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Though the Treasury expects a shortfall of Sh170.2 million due to the lowered excise duty, the government appears willing to absorb this hit in the hope that increased production, job creation, and economic activity will make up for it in the long term.
Economic analysts are cautiously optimistic. Some have pointed out that the real test will lie in how well this reform is implemented—and whether the intended benefits reach both producers and consumers. The move could also position Tanzania as a competitive beverage production hub within the East African Community, if combined with improvements in transport, energy reliability, and raw material supply chains.
As Parliament prepares to debate and approve the full Finance Bill before the start of the financial year on July 1, stakeholders in the beverage and manufacturing sectors are already planning how to adjust their business models to make the most of this opportunity.
