AfDB Approves $700M for Burundi-Tanzania Rail Project
On 12 December 2023, the AfDB approved USD 696.41 million of financing for Phase II of the Burundi-Tanzania Standard Gauge Rail (#SGR) project. The Phase UU consists of a rail line that is 651-km long and forms part of the Central Corridor in East Africa.
The project consists of a single electrified #SGR track which is subdivided into three segments. The Tabora – Kigoama (411 km) and Uvinza – Malagarasi (156 km) sections are in Tanzania while the Malagarasi – Musongati (84 km) section in Burundi.
The financial package breaks down into USD 98.62 in grants to Burundi and USD 597.79 million in loans and guarantees to Tanzania. As the Lead Arranger, the #AfDB plan to mobilize up to USD 3.2 billion from Commercial Banks, Development Financial Institutions (#DFI), Export Credit Agencies (#ECA) and other institutional investors. The full cost of the Tanzania-Burundi rail project is estimated to be nearly USD 4 billion.
Based on the Feasibility Studies, the rail will promote large-scale mining and commercial agriculture through cost-effective long-haul bulk transport. It will transform the Central Corridor into a lever of economic transformation by attracting investments along its path, which goes through Special Economic Zones (#SEZ), Inland Container Depots (#ICD) and main population centers.
The rail project will also contribute to reduce the carbon footprint of the transport sector as goods shift from truck to track, which is more efficient in terms unit transport cost and less polluting in terms of CO2 emitted per tonne-km. Eventually, the track will be extended to the Democratic Republic of Congo.
As such, the Tanzania-Burundi rail line is a priority of the East Africa Community Rail Master Plan as it will not only promote socio-economic development in the countries it passes through but also in the wider East African Community (#EAC) region as well.
The project is in line with AfDB’s #High5, Integrate Africa, Industrialize Africa policies as well as the AfDB 10-Year Strategy. It also forms part of the Regional Integration Strategy Paper of the Bank for East Africa (2023-2027), Country Strategy Paper (CSP) for Tanzania (2021-2025) and Country Strategy Paper (CSP) for Burundi (2019-2023).
Burundi is rich in #lithium, cobalt and boasts the world 10th largest reserves of nickel, found mostly around Musongati. Thus, the rail will contribute to monetize the mineral resources by linking the mining fields in Burundi with the Dar es Salaam seaport in Tanzania.
