Chinese firms win $9bn Tanzanian rail scheme amid East African transport boom

Tanzania has awarded rail contracts worth $9bn to a consortium of Chinese firms led by China Railway Materials (CRM), with construction to begin as early as this month.

Tanzanian transport minister Samuel Sitta told the country’s parliament on 30 May that the consortium had been awarded a contract to build a 2,600km standard gauge railway from Dar es Salaam to the country’s western borders.

It was not clear what route the line or lines will follow, but the principal route for development is the central corridor between the port of Dar es Salaam and the future deepwater port of Bagamoyo, and the land bridge between lakes Tanganyika and Victoria.

Sitta said 10% of the funding for the project would be raised by the consortium with the remainder coming from bank loans.

He added that Tanzania had signed a framework agreement with China Railway No 2 Engineering Group to build a rail link between the southern port of Mtwara and coal and iron ore developments being undertaken by a Chinese group, to the southern port of Mtwara near big offshore natural gas discoveries.

Chinese mining group Sichuan Hongda is involved in a $3bn joint venture with Tanzania to mine coal and iron ore.

Race to the middle of Africa

The quick start of the project reflects the race to develop rail and port infrastructure in east African countries.

In particular, Tanzania is competing with Kenya, its northern neighbour, to build rail links with the Great Lake states of Uganda, Rwanda, Burundi and, beyond them, the Democratic Republic of Congo (DRC) with all its undeveloped mineral wealth.

To the south, Mozambique is also developing infrastructure rapidly.

PwC’s prediction of how Tanzania’s rail network is likely to develop (source: PwC)

The country that completes its transport and export infrastructure first will be in a position to sign deals capturing the market for mineral exports.

Kenya and Uganda are both engaged in partnerships with Chinese rail builders. On the other side of the continent, the standard gauge Benguela line has already been constructed across Angola, linking the Atlantic with the DRC.

Tanzania set to boom

Tanzania’s ability to compete in this race reflects the country’s new-found bankability, which is founded on the recent discovery of offshore natural gas. It is expected that over the next two years, reserves of up to 2 trillion cubic feet will be established.

According to accountant PwC, Tanzania will shortly become one of the fastest growing economies in the world. It estimates that transport and power projects worth $19bn will shortly come to market.

Meanwhile, Tanzania is set to upgrade 10 airports in the present financial year in an attempt to keep pace with the country’s passenger and cargo traffic, which is growing at a rate of 20% a year.

Mary Nagu, the minister for civil society, told a recent seminar in Dar es Salaam that the targeted airports are Julius Nyerere International Airport, Kilimanjaro International Airport, Songwe International Airport and the regional airports of Mwanza, Mtwara, Bukoba, Shinyanga, Kigoma, Tabora and Mafia.

The government plans to invest some $5.5bn on these projects, according to the official Tanzania Invest website.

According to the Tanzania Airports Authority’s latest statistics, 5 million passengers and 28,000 tonnes of cargo passed through the country’s airports in 2013.

Main image: One they made earlier – the Chinese-built Tazara line between Tanzania and Zambia was completed in the 1970s (Jossejonathan/Wikimedia)

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  1. This is indeed very good news for the country and investors alike.

    Managing the future for the next generation is the best thing that the governments can do in this age of modernisation.

    Hopefully this will also create schools and hospitals and other necessary facilities and bring about the change for the people of the country, with this wealth.

  2. I know the Chinese will do a good job!
    Wish they would build a rail system in America but would probably would be a bad investment because Americans have to drive and love traffic jams!

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