Tanzania has signed a $1.5bn, 20-year loan agreement with Standard Chartered Bank Tanzania to fund the construction of a 550km stretch of standard gauge railway between the commercial capital and port of Dar es Salaam and Matukupora, in the centre of the country.
The Tanzanian Finance and Planning Ministry and Standard Chartered Bank Tanzania said in a statement yesterday that the loan, which was coordinated by the bank, was the largest ever raised by the ministry. The main funders, it added, were the Export Credit Agencies of Denmark and Sweden.
Speaking at the signing ceremony, Philip Mpango, Tanzania’s finance minister, said: "With the help of Standard Chartered and our partners, the project financing will further increase direct employment in Tanzania, and more importantly, enable our local communities to thrive as they will be able to gain access to wider social services such as food and housing."
He also thanked the governments of Sweden and Denmark, represented at the event by their ambassadors. He said: "These two nations have shown us their true friendship not only in words but also in action. Please convey our country’s sincere appreciation to the Export Credit Agencies and lenders in your countries."
Other contributors to the loan were the Development Bank of Southern Africa, the Trade and Development Bank and the African Export-Import Bank.
The rail link is part of a $14.2bn plan to build around 2,500km of standard gauge rail lines in the country over the next five years. It is intended to reduce road congestion and decrease freight costs by 40%.
Each freight train is expected to transport up to 10,000 tonnes, equivalent to 500 lorry-loads.
It will also connect Tanzania to Burundi, Rwanda and The Democratic Republic of Congo, making it an important enabler of regional integration.
Image: The railway is intended to alleviate Tanzania’s chronic traffic congestion (Dreamstime)