Abstract

Tanzania faces a critical juncture in its HIV/AIDS response due to shifts in international funding, particularly with the suspension of USAID’s foreign aid programs. Historically, external support has played a crucial role in financing Tanzania’s HIV/AIDS interventions, such as the President’s Emergency Plan for AIDS Relief (PEPFAR). However, recent changes in global financial dynamics necessitate a strategic shift toward domestic resource mobilization. This paper explores sustainable strategies for strengthening Tanzania’s internal financing mechanisms to ensure the continued provision of HIV/AIDS services. These strategies include the establishment of the AIDS Trust Fund, health levies, public-private partnerships, and social impact bonds. Additionally, innovative funding models such as mobile money transaction taxes, tourism health levies, and alcohol and tobacco taxes are proposed as mechanisms to support Tanzania’s HIV/AIDS programs without relying on foreign aid.

Introduction

Tanzania, like many Sub-Saharan African nations, has historically relied on external donors to fund its HIV/AIDS programs. USAID, through PEPFAR, has been instrumental in providing financial support for HIV prevention, treatment, and care. However, recent shifts in global health funding, including the suspension of U.S. foreign aid, have led to significant challenges for Tanzania’s health sector (Politico, 2025). With HIV prevalence still high, innovative domestic financing mechanisms are urgently needed to sustain progress in the fight against HIV/AIDS.

Impact of USAID Cuts on Tanzania’s HIV/AIDS Response

The recent suspension of U.S. foreign aid funding poses significant challenges to Tanzania’s health sector, particularly in the implementation of the National Multisectoral Strategic Framework for HIV and AIDS 2021/22–2025/26 (NMSF V). The NMSF V emphasizes a multisectoral approach to HIV prevention, treatment, and care, aiming to reduce new infections and AIDS-related mortality. However, the halt in U.S. aid, which has been instrumental in supporting Tanzania’s HIV programs through initiatives like PEPFAR, threatens to disrupt these efforts. The suspension could lead to shortages in antiretroviral drugs and hinder the progress made in reducing HIV prevalence, undermining the objectives outlined in the NMSF V. Therefore, there is a pressing need for Tanzania to explore alternative funding sources and strengthen domestic resource mobilization to ensure the continuity of HIV/AIDS interventions (TACAIDS, 2021).

Current HIV/AIDS Landscape in Tanzania

Tanzania has made notable strides in reducing the HIV prevalence rate from 5.7% in 2016 to 4.7% in 2022 (Tanzania Commission for AIDS (TACAIDS), 2022). Despite these improvements, the country remains home to over 1.5 million people living with HIV, with approximately 400,000 new infections reported each year (World Bank, 2022). The treatment cost per person stands at approximately 400,000 TZS annually, a figure that contributes to the national healthcare budget strain. Consequently, there is a clear need for innovative financing solutions to sustain HIV/AIDS treatment and prevention programs without over-reliance on external donors.

Innovative Domestic Financing Solutions

To reduce dependence on external donors, Tanzania must focus on innovative internal funding mechanisms. A comprehensive approach to domestic resource mobilization is crucial for sustaining HIV/AIDS interventions. The following strategies offer feasible solutions for generating sustainable internal funding:

1. AIDS Trust Fund (ATF)

The establishment and expansion of the AIDS Trust Fund (ATF) are pivotal in financing Tanzania’s HIV/AIDS response. The government aims to finance 30% of the national HIV response through the ATF by 2025, reducing reliance on foreign aid (TACAIDS, 2021). Increasing contributions from local businesses, philanthropists, and individuals will enhance the ATF’s capacity to finance essential HIV/AIDS services.

2. Health Levies and Taxation

The introduction of targeted taxes on harmful products such as alcohol, tobacco, and mobile transactions can generate substantial revenue for HIV/AIDS programs. For instance, Tanzania can levy a tax of 200 TZS per liter of alcohol and tobacco, which could raise approximately 60 billion TZS annually. Additionally, a mobile money tax on the country’s 50 million users could contribute an estimated 1.825 trillion TZS per year (Tanzania Revenue Authority [TRA], 2022). These funds could provide a steady stream of revenue to support HIV/AIDS prevention, treatment, and care.

3. Public-Private Partnerships (PPPs)

Public-Private Partnerships (PPPs) represent a promising avenue for financing HIV/AIDS interventions. By partnering with private corporations, including pharmaceutical companies and insurance providers, Tanzania can secure additional resources for HIV/AIDS services. These partnerships could involve corporate social responsibility initiatives that align with national HIV response objectives (USAID, 2020).

4. Social Impact Bonds (SIBs)

Social Impact Bonds (SIBs) offer an innovative way of financing health interventions. In this model, private investors fund HIV/AIDS programs, and the government repays them based on measurable health outcomes. This performance-based financing model ensures that funds are directed toward interventions that yield concrete results, which could significantly enhance the effectiveness of HIV/AIDS programs in Tanzania (World Bank, 2022).

5. Tourism Health Levy

With approximately 1.5 million tourists visiting Tanzania annually, a health levy of 40,000 TZS per tourist could generate 60 billion TZS annually (Ministry of Natural Resources and Tourism [MNRT], 2021). This levy could contribute significantly to financing HIV/AIDS programs, particularly in regions with high HIV prevalence.

Proposed Calculation of innovative Internal Financing

A proposed model for funding HIV/AIDS treatment in Tanzania illustrates the feasibility of relying on internal resources:

Total HIV patients: 1.5 million

Cost per person per year: 400,000 TZS

Total annual cost: 600 billion TZS

Possible Funding Sources:

1. Mobile Money Transaction Tax:

With 50 million mobile money users in Tanzania, charging each user just 100 TZS per day would generate 1.825 trillion TZS annually, more than enough to cover the cost of HIV treatment. As of December 2024, the country recorded approximately 63.2 million active mobile money accounts, marking a 3.9% increase from 60.8 million in September 2024 (Daily News, 2024). The mobile money market in Tanzania is dominated by key providers, with M-Pesa leading at 24 million subscribers, followed by Mixx by Yas with 19 million and Airtel Money with 11 million (Daily News, 2024).

2. Tourism Health Levy:

By charging 40,000 TZS per tourist which is equal to 20 usd,Tanzania could generate 60 billion TZS annually, covering 10% of the treatment costs. Tanzania has witnessed a substantial increase in international tourist arrivals, reflecting the country’s growing appeal as a premier travel destination. According to the Bank of Tanzania, the total number of international tourists reached approximately 2,026,378 in the year ending July 2024, representing a 22% increase from 1,808,205 recorded in the previous year (The Citizen, 2024).This surge in tourism contributed to an estimated revenue of $3.534 billion during the same period. Additionally, the National Bureau of Statistics (NBS) reported that between January and September 2024, international arrivals stood at 1,560,641, marking a 20% rise compared to 1,299,994 visitors in the corresponding period of 2023 (Daily News, 2024). The United States accounted for the highest number of international visitors (112,579), followed by France (72,009), Germany (57,798), the United Kingdom (51,505), and Italy (51,056) (Daily News, 2024).These statistics highlight the significant role of tourism in Tanzania’s economy and the effectiveness of Health promotional efforts if we can opt to introduce a tourism health leavy.

3. Alcohol & Tobacco Tax:

A health tax of 200 TZS per liter on 300 million liters of alcohol and tobacco sold annually would raise 60 billion TZS, covering another 10% of the treatment costs. Tanzania’s alcohol production and sales are influenced by both formal and informal markets. In 2019, beer production in the country was estimated at approximately 4.3 million hectoliters (430 million liters), while spirits production reached around 32.4 million liters (Statista, 2024). These figures primarily represent the formal sector and may not account for informal and home-brewed alcoholic beverages.

Total Funds Raised: 1.945 trillion TZS

Total Funds Needed: 600 billion TZS

Surplus: 1.345 trillion TZS, which can be directed to other health initiatives.

This model clearly demonstrates that Tanzania can fully fund HIV/AIDS treatment internally and even generate surplus funds for other critical health interventions (World Bank, 2022).

Conclusion

Tanzania’s HIV/AIDS response is at a critical crossroads. The recent cuts in U.S. foreign aid necessitate a shift toward domestic financing. By leveraging innovative funding strategies, such as the AIDS Trust Fund, health levies, PPPs, and mobile money transaction taxes, Tanzania can ensure the sustainability of its HIV/AIDS programs. Through internal financing, Tanzania can reduce its reliance on donors and build a more resilient health system capable of addressing the HIV/AIDS epidemic in the long term.

References

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