Biofuels provide a new opportunity to enhance economic development in Tanzania. Drawing on detailed
cost estimates, we develop a dynamic computable general equilibrium model to estimate the impact of
different biofuel production scenarios on growth and poverty. Our results indicate that maximizing the
poverty-reducing effects of a biofuels industry in Tanzania requires engaging and improving the
productivity of smallholder farmers. Evidence shows that cassava-based ethanol production is more
profitable than other feedstock options. Our findings also indicate that cassava generates higher levels of
pro-poor growth than do sugarcane-based systems. However, if smallholder yields can be improved rather
than expanding cultivated land, then sugarcane and cassava outgrower schemes can produce similar propoor
outcomes. We conclude that in so far as the public investments needed to establish a biofuels
industry in Tanzania are in accordance with national development plans, producing biofuels will
contribute to achieving the country’s overall development objectives.