Joint Railway Project in Burundi and Tanzania worth $696.41 Million Approved

The African Development Bank Group has greenlit significant financing, totalling $696.41 million, to propel Phase II of the Joint Tanzania-Burundi-DR Congo Standard Gauge Railway (SGR) Project.

This funding aims to construct 651 kilometres of the Tanzania-Burundi railway line, featuring a single electrified standard gauge track across three segments: the Tabora – Kigoma (411 km) and Uvinza – Malagarasi (156 km) sections in Tanzania, and the Malagarasi –Musongati section (84 km) in Burundi. This expansion project seeks to integrate into Tanzania’s existing railway network, offering direct access to the vital port of Dar es Salaam. To date, 400 kilometres of railway infrastructure have been established in Tanzania, linking Dar es Salaam to Dodoma, while construction progresses on the Dodoma to Tabora section.

Burundi is set to receive $98.62 million in grants, while Tanzania will benefit from $597.79 million in loans and guarantees from the Bank Group. Acting as the Initial Mandate Lead Arranger (IMLA), the Bank will mobilise and structure financing of up to $3.2 billion from commercial banks, Development Financial Institutions (DFIs), Export Credit Agencies (ECAs), and institutional investors. The total project cost in both countries is estimated at nearly $3.93 billion.

The Standard Gauge Railway will streamline long-haul bulk transport, catalysing large-scale mining and commercial agriculture. It aims to transform the Central Transport Corridor into an economic powerhouse, fostering trade and manufacturing opportunities. By mitigating accidents and reducing road maintenance costs, the SGR network will encourage a shift from road trucking transportation. This initiative seeks to unlock and interconnect economic processing zones, industrial parks, Inland Container Depots (ICDs), and population centres, fostering accessibility and bolstering economic activities.

Additionally, this project is pivotal for the East African Community (EAC) Rail Master Plan, the African Union’s Program for Infrastructure Development in Africa (PIDA), and will significantly contribute to economic and social transformation in the region.

Crucially, the construction of this railway will empower Burundi to harness its rich natural resources. It will facilitate the extraction of nickel, among other key resources like lithium and cobalt, boosting the country’s revenue through efficient rail links with the port of Dar es Salaam, which presently handles 80% of the country’s import and export trade. This strategic move is poised to elevate Burundi’s GDP, facilitating accelerated social and economic development.

The project harmoniously aligns with the African Development Bank’s Ten-Year Strategy and operational priorities, specifically the “High 5” objectives: “Integrate Africa” and “Industrialise Africa.” Furthermore, it resonates with the Bank’s Regional Integration Strategy Paper for East Africa (2023-2027) and the Country Strategy Papers (CSPs) for Tanzania (2021-2025) and Burundi (2019-2023).

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Source: African Development Bank