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Tanzania’s $14bn rail programme to be country’s ‘biggest ever project’

Tanzania plans to use commercial loans to finance a $14.2 billion rail network building programme over the next five years, the country’s transport minister has been reported as saying.02 Apr 2015

Samuel Sitta said the rail investment programme “will be the single biggest project ever to be implemented” by the government since Tanzania became an independent nation in 1961, according to The Africa Report.

Sitta said the renewal of the country’s rail network is needed to meet increasing demand for the transportation of cargo to neighbouring countries, including the Democratic Republic of the Congo, Rwanda, Burundi and Uganda, in addition to improving the domestic supply network.

Work planned under the rail programme includes building a 2,561 kilometre standard gauge railway, which will link the port at Tanzania’s commercial capital of Dar es Salaam to Rwanda and Burundi at a cost of $7.6bn, Sitta said. Two additional lines, costing an estimated $6.6bn, will connect Dar es Salaam to mining areas in the south and north of the country, Sitta said.

Tanzania has two railway systems of different gauges that were constructed at different times and for different purposes, according to the Tanzania Transport Sector Review (146-page / 11.5 MB PDF) published by the African Development Bank Group (AfDB) in September 2013.

The sector review said the first and oldest system is the Reli Asset Holding Company / Tanzania Railway Limited system, which was built in colonial times to a 1 metre gauge (1,000mm) standard and is 2,707km in total length.

The Tanzania-Zambia Railway (Tazara) is the second rail system which was built from 1970-75 and financed by China. The system was built to the ‘cape gauge standard’ of 1,067mm, which the sector review said is similar to the rail systems of Southern Africa, to which it links with Zambia. The total length of the system is 1,860km, of which 975km is in Tanzania.

According to the sector review, “the performance of Tazara over the past 30 years has been below expectations, primarily because it was undercapitalised from the start... the railway owes its survival to the continued technical support provided by the government of China”.

In October 2014, Tanzania announced the signing of investment deals with China worth more than $1.7bn, including plans to build a ‘satellite city’ to ease congestion in Dar es Salaam and $85m in grants and zero-interest loans from China for unspecified projects. According to figures from the China Business Network, China’s total direct investment in Tanzania soared from $700m in 2011 to $2.1bn in 2012, with investments focused on railways, ports, buildings, road construction, gas pipelines and wind power farms.

In December 2014, the World Bank said it would provide $1.2bn of funding to support infrastructure development and “improve the competitiveness” of countries throughout the East African Community (EAC), which is the regional intergovernmental organisation of Burundi, Kenya, Rwanda, Tanzania and Uganda. In addition, the bank said it would provide extra “resources for regional infrastructure through market-driven private sector financing and guarantees”, through the bank’s International Finance Corporation and the Multilateral Investment Guarantee Agency.

The bank’s country director for Burundi, Tanzania and Uganda, Philippe Dongier, said last year that investment in transport will “better connect landlocked countries” and improve access to the ports of Dar-es-Salaam and Mombasa in Kenya.

The AfDB has also approved a $40m 10-year line of credit to the East African Development Bank (EADB) for a series of projects including infrastructure and manufacturing in the EAC. The EADB invests in projects in sectors including infrastructure, transport and manufacturing throughout the region.