AfDB has announced $696.4 million financing for Burundi and Tanzania to start Phase II of the Joint Tanzania-Burundi-DR Congo Standard Gauge Railway Project.
In a statement on December 12, AfDB said the financing is intended to construct 651km on the Tanzania-Burundi railway line, which will consist of a single electrified standard gauge track.
“This will be subdivided into three lots: Tabora – Kigoma (411 km) and Uvinza – Malagarasi (156 km) sections in Tanzania; and the Malagarasi –Musongati section (84 km) in Burundi,” the statement said.
The railway project will be connected to the existing railway network of Tanzania, providing access to the port of Dar es Salaam.
“In total, 400 kilometers of rail infrastructure has already been built in Tanzania from Dar es Salaam to Dodoma since the start of the first phase of the project. The rest of the section from Dodoma to Tabora is under construction,” it added.
Burundi will get $98.62 million in the form of grants, while Tanzania will receive $597.79 million in form of loans and guarantees.
AfDB said it will structure and mobilize financing of up to $3.2 billion from commercial banks, Development Financial Institutions, Export Credit Agencies and institutional investors The total cost of the project both in Tanzania and Burundi is estimated at nearly $3.93 billion.
The bank said the project will incentivize large-scale mining and commercial agriculture, transform the Central Transport Corridor to an economic corridor by enhancing trade and manufacturing opportunities, and provide for a shift from road trucking transportation, which causes accidents and high road maintenance cost.
The Central Corridor, a transport and trading route in East and Central Africa, has its end point in Dar es Salaam, Tanzania, where it connects to the rest of the world via shipping.
From Dar es Salaam, the corridor runs inland, serving the Tanzanian interior including Dodoma and Mwanza city, on to the landlocked Rwanda and Burundi, and the eastern part of the DRC.
“The SGR railway network will unlock and connect key economic processing zones, industrial parks, Inland Container Depot (ICDs), and population centers along the central corridor. This will enhance accessibility and promote economic activities.
“This project will contribute to building resilience by supporting the creation and development of institutions that will manage the new railway sector in Burundi and supporting capacity building through skills training in both countries,” the statement said.
The Joint Tanzania-Burundi-DR Congo project has largely been seen as taking on Kenya’s SGR in the region. Dar es Salaam port is a major competitor for Kenya’s Mombasa port.
In December 2022, Tanzania inked a $2.2 billion (Sh271 deal with China Civil Engineering Construction Corporation and China Railway Construction Corporation to complete the final section of the 2,102 km SGR, the longest stretch of the modern railway line on the continent, by 2026.
Despite Kenya in 2014 signing a tripartite agreement with Rwanda and Uganda to construct the SGR from Mombasa through Kampala Uganda to Kigali, the project didn’t go beyond Naivasha, which has not allowed full utilization of the railway.
President William Ruto in October during his maiden trip to Beijing sought more funding from China to complete the SGR in a joint bid with Uganda, the DRC and Congo Brazzaville.
Speaking during the Kenya-China investors roundtable in Beijing, President Ruto said talks had begun for the joint initiative in bid to improve flow of cargo and make the northern corridor competitive after the SGR stalled in Naivasha. However, no agreement was reached to secure the funding.
The construction of this railway will allow Burundi to intensify the exploitation of nickel, of which the country has the 10th largest deposit in the world in the Musongati mining fields.
However, AfDB said the project is a priority for not only the East African Community Rail Master Plan but also the African Union’s Program for Infrastructure Development in Africa and will facilitate economic and social transformation in Tanzania, Burundi and the region.
“The construction of this railway will allow Burundi to intensify the exploitation of nickel, of which the country has the 10th largest deposit in the world in the Musongati mining fields.
“The country also has resources such as lithium and cobalt, which are expected to generate significant revenue for the country through the rail link with the port of Dar es Salaam which currently accounts for 80% of the country’s import and export trade. This will add value to the national GDP and allow Burundi to have additional resources to accelerate its social and economic development,” it said.
