By Rachael Amongin
Imagine two neighbors who are already struggling to pay off their loans and they decide to take out an even bigger loan together, one four times more than the cost of the constructing the East African Crude Oil Pipeline (EACOP). That is close to what happened on August 6, 2026, when Presidents Yoweri Museveni and Samia Suluhu Hassan of Uganda and Tanzania respectively signed a Memorandum of Understanding (MoU) for the Tanga Regional Energy Hub.
The hub will include an oil refinery, storage tanks, pipelines and a gas link on Tanzania’s coast at a cost of USD20 billion. We are told this will bring jobs and development. But before our governments borrow and spend that kind of money, ordinary Ugandans and Tanzanians who are actually the people who will actually pay for it deserve a simple, honest answer to one question: is this a good deal for us? Here is why we believe the answer is no.
Think of a family that has borrowed heavily to build a house and now most of its monthly income goes to paying back the loan instead of school fees or food. That is close to where Uganda’s government finances stand today. Economists measure a country’s debt against its Gross Domestic Product (GDP) which is a simple way of asking: “if you added up everything the whole country produces and earns in one year, how much of that would it take to pay off all the government’s debt?”
For Uganda, the answer is 52.4% meaning the government already owes more than half of everything the country earns in a year and that figure is expected to climb to 60% by 2030. On top of that, more than a quarter of all the money government collects in taxes now goes simply to paying interest on old loans before a single school, road or clinic is funded. The International Monetary Fund (IMF), the world’s main lender of last resort, already rates Uganda at “moderate risk” of not being able to pay its debts. Tanzania is in a somewhat better position, but it is not immune. Tanzania’s debt stands at around 47% to 48% of everything the country earns in a year, and the IMF also rates Tanzania at moderate risk of debt distress.
Some officials say oil money will fix these problems but the IMF says this is not true. It expects Uganda to keep spending more than it earns even after oil production begins because the new oil money will likely go towards new spending and not towards closing the gap that already exists. This means that if the Tanga hub is paid for with government borrowing, it will be ordinary people, through their taxes, who carry the risk if the project does not pay off. This risk is made worse by changes happening around the world. Experts expect that the world will need less oil in the coming years as more people switch to electric cars and cheaper clean energy. If that happens, all this new refining equipment could sit idle while the loans that built it still need to be repaid.
There is also the question of who really benefits. Big oil projects like this one need specialized machinery and foreign engineers. Most of the USD 20 billion will go to imports and international contractors and not local workers or local businesses. Our experience with the East African Crude Oil Pipeline (EACOP) so far gives us a preview of long delays, foreign firms doing the skilled work and local people mostly doing lower-paid support jobs.
On the Tanzanian side, this is not just about lost opportunity it is about real economic damage already happening. In Chongoleani, near Tanga, where EACOP’s oil terminal is being built, local fishing communities have reported smaller catches because of noise from drilling and they say promised compensation and support has been slow or incomplete. Tanzania’s coastal mangrove forests in this same area which protect the coast, support fish breeding and are estimated to be worth around USD 2.1 billion to the economy but are already being cleared for oil facilities. That is money-earning and job-supporting nature being traded away for a project whose own experts say could take 20 to 30 years to repair, if it can be repaired at all.
None of this means Uganda and Tanzania should reject investment or stop working together. It means the money should go where it does more good at less risk. This include power lines, solar energy and rural electrification that reach ordinary families still living without electricity today and not a fossil-fuel megaproject whose profits depend on a global oil market that is already shrinking.
Before either government commits more public money to the Tanga hub, they should get an independent check on whether the two countries can really afford this debt and show the public in plain numbers what the same USD 20 billion could deliver if spent on clean, reliable power instead. It is our money and our debt. We deserve to see the real numbers before it is too late to change course. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
