The increased demand for secondary materials, particularly scrap metals, in cities due to development activities in both emerging economies and developing countries has increased the demand for recycling materials. It accelerated the growth of the circular economy and climate-smart development. This paper investigated the synergy between sustainable solid waste management and the circular economy in Tanzanian cities by examining the scrap business’s categories, quantity, market, and nature and the scrap business’s environmental benefits in Arusha. The study found that iron steel, cast iron, and aluminum were the most common scrap metal recovered and traded in Arusha. Offices and institutions, households, and garages were the primary sources of scraps. Over 314 tonnes of scrap metal were traded monthly in the city. The scrap business helped the steel industries save 300 tons of iron ore, 164 tons of coal, and 64 tons of bauxite while lowering their monthly energy consumption by 56%. Scrap metal trade contributes significantly to recycling, climate-smart, circular economy, and improving livelihoods. As a result, we call for a synchronized sustainable development and solid waste management system that connects product design, development manufacturing, and end-of-life products to improve the circular economy.