Edible Oil Production

November 2022

Indicative Return:

More than 25%

Investment Timeframe

Short Term (0–5 years)

Ticket Size

Less than USD 500,000

Business Model Description

Provide and operate machinery and technology for the commercial processing of high value field crops, such as marula, sunflower, avocado and palm, into refined and double refined edible oil for local consumption and export through a public-private partnership model. The public sector allocates suitable land for installation of processing facilities together with relevant infrastructure, such as roads, power and water utilities, and requisite incentive package structure to encourage local value addition.

Expected Impact

Optimize domestic crop utilization, foster local value addition and advance import substitution.



Food and Beverage > Food and Agriculture

Direct Impact SDGs:

Indirect Impact SDGs:

Food and Beverage

Development need: Agriculture is the main stay of the Tanzanian economy, contributing about 24% of GDP. As a key driver for the economy, it can help to achieve major national priorities. Despite the potential, the sector suffers from a number of challenges, including low productivity and limited value addition (1).

Policy priority: The Tanzanian government recognizes agriculture as central to realizing its objectives of socio-economic development. It is committed to promote value addition in agriculture in order to increase the overall sector competitiveness. There is also commitment to use science technology to improve agriculture productivity and quality (3, 4, 5).

Gender inequalities and marginalization issues: Although agriculture employs over 70% of women, they are faced with a myriad of constraints in terms of access to land, credit, extension services and markets. As a result, women end up engaging in inferior, low quality jobs and earn far less compared to men (11).

Investment opportunities introduction: Tanzania has a significant supply gap for edible oil for domestic consumption. This presents an opportunity for investment in local processing for edible oil. The current production capacity is only 36% of total edible oil demand (6, 7).

Key bottlenecks introduction: The most common weakness for the majority of agriculture commodities in Tanzania is the slow pace of productivity increase. This is caused by multiple factors, including seeds, inputs like fertilizer and pesticide, watering, harvesting, drying and processing (4).

Food and Agriculture

Development need: The food industry faces several challenges including: lack of sufficient medium and large-scale processing activities; inadequate market development and weak industry linkages. Local markets are ill-structured, have unclear models/systems with inadequate information and very long chains which inhibits profitable businesses (2).

Policy priority: The government of Tanzania has identified edible oil as a strategic commodity for reducing food imports and promoting domestically produced food commodities. The choice of the product is supported by the fact that Tanzania’s large national demand for edible oil requires imports to meet about 60% of demand (5).

Gender inequalities and marginalization issues: Tanzanian women have limited decision-making power, unfavourable regulations, and biased socio-cultural norms, which reduces their access to finance, land, technical training, labour-saving equipment and other productive resources. As a result, barriers are stifling their potential to be leaders of technological invention, entrepreneurship, and legal and regulatory change throughout the agriculture sector (10).

Investment opportunities introduction: Product segments with potential market opportunities are premium oils sold mainly in urban centres, economy oils for sale across the country, crude oil targeting consumption in crop-growing areas, and refined palm that can be sold nationwide (9).

Key bottlenecks introduction: Although edible oil shows promise both in terms of seed production and processing, it still faces challenges in realizing its full potential. The major challenges include the availability of improved seeds, limited financial support, and stiff competition for the domestically produced edible oils from imports (8).

Market Size and Environment
Critical IOA Unit

Tanzania imports 320,000 tons of edible oil per year.

Tanzania’s annual demand for edible oil stands at 500,000 tons, whereas the country can supply only 180,000 tons, forcing it to import 320,000 tons each year, signaling major opportunities for import substitution (7).

Tanzania’s average import bill for animal or vegetable fats and oils and their by-products stands at around USD 126 million (14, 18).

With an annual output of around 350,000 tons of sunflower oilseeds, Tanzania is one of the top ten sunflower oilseed producers in the world (15).

Indicative Return

More than 25%

Investment Timeframe

Short Term (0–5 years)

A USD 11 million initial investment in a 12,000 metric tons solvent extraction refinery provides exhibits a 3-year breakeven period (9).

Ticket Size

Less than USD 500,000

Market Risks & Scale Obstacles

Business – Supply Chain Constraints

Market – Volatile

Business – Business Model Unproven

Sustainable Development Need

The level of food insecurity is high in Tanzania. 15% of rural households are food insecure, with 15% more at risk of becoming food insecure (32).

Tanzania imports significant amounts of food with an estimated value of USD 1.13 billion per year. Edible oil imports alone drain a lot of scarce foreign exchange for the country. The average import bill for animal or vegetable fats and oils and their by-products is USD 126 million per year (14, 18, 21, 23).

Expected Development Outcome

Edible oil production supports increase in food security levels. Deficit in food supply, edible oil in particular is a common occurrence in Tanzania. It is estimated that over 15% of rural households are food insecure, with 15% more at risk of becoming food insecure. The fortification of sunflower oil can, for example play an important role in reducing vitamin A deficiencies (14, 23, 32, 33).

Edible oil production advances the Government’s long-standing objective of promoting import substitution (21, 22, 23). It also supports the broader agricultural transformation and industrialization agenda (14, 18).

Primary SDGs addressed

Secondary SDGs addressed

Directly impacted stakeholders

People: The general population and low-income groups get increased access to affordable and nutritious food products, enhancing their food security levels.
Gender inequality and/or marginalization: Women and youth obtain income generation opportunities with growth potential.
Corporates: Small and large scale farmers enjoy uptake for their horticulture produce with lower post-harvest losses.
Public sector: The government benefits from greater domestic value addition and enhanced export activities towards industrialisation and regional integration.

Indirectly impacted stakeholders

Planet: Sustainable processing methods reduce the negative impact of the food industry on the environment, and lower post-harvest losses contribute to greater resource efficiencies.
Corporates: Other actors in the agricultural value chain benefit from demand for their services, such as transporters, packaging companies and certifiers.

Outcome Risks

Large-scale oil production may lead to the depletion of high value field crops, if the value chain is not managed sustainably, especially given potential externalities from further strain experienced through climate change.

Increased industrial activity through edible oil production may exacerbate pollution levels with negative health and biodiversity consequences for people and planet.

Impact Risks

The limited availability of high yield seeds and local seed multiplication and finance sources may limit the inputs required for edible oil production and hence reduce the expected impact.

If no deliberate efforts are in place to enhance the skill base of women and youth, the processing activities may provide opportunities to those already served and hence limit the expected impact.

The EU’s restrictions on the use of export taxes in a number of developing countries is a major trade risk, which may have negative trade effects for Tanzania particularly as it struggles to promote value addition, and which may hence limit the expected impact.

Impact Classification

B—Benefit Stakeholders


Edible oil production optimizes the utilization of high value field crops grown domestically, fosters local value addition and advances import substitution.


Farmers, especially small farm owners and farm households, benefit from new opportunities to supply raw material, and especially the rural population obtains enhanced skills in agro-processing and additional job opportunities through edible oil production.


While the edible oil production model is proven, input availability and the target focus on women and youth requires consideration.

Impact Thesis

Optimize domestic crop utilization, foster local value addition and advance import substitution.

Policy Environment

Third National Five-Year Plan (FYDP 3), 2021: Seeks to enhance research and development and productivity in strategic crops, including edible oil crops. Particular emphasis is on expanding the production zones for oil palm oil beyond Kigoma region, the traditional production area. The 19,641 hectares currently farmed represents just 17.2% of the area suitable for growing oil palm, suggesting significant room for expansion (4).

Sunflower Sector Development Strategy, 2016-2020: Highlights government’s emphasis on the use of hybrid seeds, starting with imports but increasingly shifting the focus to domestic breeding (35).

Tanzania Investment Centre (TIC), Strategy for Edible Oil Promotion, 2020: TIC is has laid down strategies for addressing key challenges in the edible oil sector particularly increased access to finance for farmers by securing investments into the edible oil processing segment (6).

Tanzania Official Seed Certification Institute (TOSCI) and the Tanzania Agriculture Research Institute (TARI) Strategy for the Edible Oil Sector: Main emphasis is to ensure sunflower can be cultivated in most parts of the country as it benefits from drought-resistant properties and is less susceptible to diseases than other oil-producing crops (35).

Financial Environment

Fiscal incentives: Tanzania offers 0% import duty on project capital goods, raw materials and replacement parts for agriculture, animal husbandry and fishing, including for edible oil production. It also offers 100% capital expenditure in the agricultural sector (30, 31, 32).

Fiscal incentives: To support the production of sunflower oil, the government has introduced VAT exemptions on importation of agricultural processing equipment and sunflower seed cake, while maintaining import tariffs on crude and refined palm oil at 10% and 25%, respectively (35).

Other incentive: In June 2020, the government announced that it would support farmers across the country to plant oil palm by providing them with free seedlings. The government also set aside USD 4.3 million to boost cultivation of oil palm. Measures are also being taken to improve the accessibility of farm inputs and undertake capacity building for farmers to enable better farm management (35).

Regulatory Environment

Crops Laws (Miscellaneous Amendments) Act, 2009: Amends various crops laws with a view to rationalizing roles and functions of Crop Boards, their financing and to provide for other related matters (28).

Plant Health Act, 2020: Has come into play following the dramatic spread of transboundary plant pests and after diseases have increased dramatically in recent years (26).

Plant Protection Act, 1997 and Plant Protection Regulations, 1999: List the pesticides registered in Tanzania (27).

TZS 54:2010: Animal and vegetable fats and oils – sampling (EAS 291), 2002: Is the standard that describes methods of sampling crude or processed animal and vegetable fats and oils, whatever the origin and whether liquid or solid (14).

TZS 1336:2010: Animal and vegetable fats and oils – determination of insoluble impurities content (EAS 312), 2002: Is the standard that specifies a method for the determination of the insoluble impurities content of animal and vegetable fats and oils (14).

East Coast Oils and Fats is a state-of-the-art facility for the manufacture of edible oils in Tanzania. The plant has a refining capacity of 600 tons per day and 220,000 tons per annum, and has introduced new product lines, including palm oil, sunflower oil, soya oil, margarine and soap (13).

Private sector

Murzah Oil Mills Tanzania, Ltd.

Mount Meru Group Ltd.

Joe Land Oil Tanzania, Yaza Investment Co. Ltd.


Ministry of Agriculture

Ministry of Industry and Trade

Agriculture Research Institutes

Tanzania Export Processing Zones Authority (TEPZA)

Agriculture Markets Development Trust (AMDT)

Tanzania Investment Centre (TIC)

Tanzania Industrial Research Development Organisation (TIRDO).


United Nations Industrial Development Organization (UNIDO)

International Trade Centre (ITC).


United States Agency for International Development (USAID)

SNV Netherlands Development Organisation.

Sector & Subsector Sources

1) EAC Secretariat, Fruits and Vegetable Strategy and Action Plan, 2021-2031.

2) World Bank Group, Transforming Agriculture, Realizing the Potential of Agriculture for Inclusive Growth and Poverty Reduction, 2019.

3) United Republic of Tanzania, Agricultural Sector Development Plan 2 (ASDP-2)

4) United Republic of Tanzania, Third National Five-Year Plan (FYDP 3), 2021

5) Sustainability: Reducing Edible Oil Import Dependency in Tanzania: A Computable General Equilibrium CGE Approach, 2019; www.mdpi.com/journal/sustainability

6) Tanzania Investment Centre 2017

7) International Trade Centre, Value Chain Analysis for Avocado Sub-Sector, 2019

8) Kombe, C.; Mpemba, Z.; Yabu, N.; Kazi, M.; Machemba, J.; Kibesse, B.; Mwita, D.; Mgangaluma, E.; Mashine, S.; Chaula, A.; et al. The Potentiality of Sunflower Sub-Sector in Tanzania; Bank of Tanzania Working Paper; Bank of Tanzania (BoT): Dar es salaam, Tanzania, 2017; Volume 10)

9) USAID, Feasibility Study for the Edible Oils Sector in Tanzania,2017)

10) World Bank, Gender and Economic Growth in Tanzania, 2013

11) UNDP, Mainstreaming, Acceleration and Policy Support (MAPS)

IOA Sources

12) UNDP/JADIAN Company Ltd, Feasibility Study for Establishment of Marula Oil Processing Industry at Doma Village, Mvomero District, 2021

13) https://www.metl.net/en/oils-soaps/east-coast-oils-fats

14)United Republic of Tanzania, Sunflower Sector Development Strategy, 2016-2020

15) (https://www.unido.org/news/tanzanias-sunflower-oil-producers-come-bloom#)

16) Oriental Consultants Global Co., Ltd. Mitsubishi Corporation Co., Ltd., Feasibility Study for Power for Food (P4F) Project: Development of Agro-Processing Zones equipped with Solar Power Generation and Battery Systems in the Republic of Tanzania. 2019

17) International Trade Centre -MARKUP Programme: Value Chain Analysis for Processed Avocado in Tanzania, 2019

18) International Trade Centre (ITC) TradeMap data

19) AUnited Republic of Tanzania, The National Industrial Survey Report 2013

20 International Labour Organisations (ILO), Women’s. Entrepreneurship Development, 2014

21) Wangwe et al, Industrial Development in Tanzania, 2016

22) https://www.statista.com/statistics

23) Mgeni, et al: Reducing Edible Oil Import Dependency in Tanzania

24) UNICEF/GoT, Tanzania National Nutrition Survey, 2018

25) United Republic of Tanzania, Vision 2025

26) National Parliament of Tanzania, May 22 2020

27) GoT, Plant Protection Act, 1999

28) GoT, Crops Laws (Miscellaneous Amendments) Act, 2009

29) EU/GoT: Joint Press Release, 2021, https://eeas.europa.eu/delegations

30 EAC Investment Guide, United Republic of Tanzania Standard Incentives for Investors

31) EU/GoT: Joint Press Release, 2021, https://eeas.europa.eu/delegations

32) Tanzanian Food Security and Health https://www2.shu.ac.uk/PDAN/tanzanian_food_security_and_health.html

33)  ITC Trademap (2018), https://www.trademap.org/Index.aspx

34) Maternal and Child Nutrition, Cost-effectiveness of sunflower oil fortification with vitamin A in Tanzania by scale, 2019

35)  AsokoInsights, Tanzania’s Edible Oil Industry, 2020

36) Action Plan for Palm Oil Development in Tanzania, 2020

37) Seed Change, Palm Oil and The Kigoma Region of Tanzania Value Chain Analysis Report, 2016