Tanzania has secured $1.2 billion commercial financing facility. This will be utilized for the construction of Lot 6 Standard Gauge Railway from Tabora to Kigoma.

The financing was secured though the African Development Bank (AfDB). AFDB provided $800 million under the Partial Credit Guarantee (PCG). Additionally, the remaining balance will be raised from other financiers.

“By combining development finance, commercial lending and insurance capacity, we have successfully unlocked the scale of financing required to deliver this type of transformational regional infrastructure. Moreover, it reflects the vision behind the New African Financial Architecture for Development (NAFAD), focusing on private capital mobilization and partnerships in risk sharing to mobilise resources at scale,” said Max Ndiaye, Senior Director African Development Bank Group.

Nine Banks to Issue the Loan

Furthermore, AfDB stated that it mobilised a nine-bank syndicate for the $1.2 billion commercial facility. This facility was co-arranged by Deutsche Bank and Société Générale.

AFDB provided $800 million under the Partial Credit Guarantee (PCG).

Also, their commitments comprise $720 million of guaranteed lending and $480 million of lending based on clean risk to the sovereign

Moreover, the signed facility forms part of the overall $2.3 billion financing package, which outside of this commercial tranche comprises an ECA tranche and a further tranche to be mobilised in collaboration with a co-guarantor, all within the Bank’s broader mobilisation mandate.

Funding to Support Tabora-Kigoma Line

Also, the financing will support the construction of the 411-kilometre electrified Tabora–Kigoma line. This section is known as Lot 6, a strategic link in Tanzania’s railway network.

“ Lastly, the strategic value of this railway lies in the productive investment it can unlock along the Central Corridor. Furthermore,by connecting agricultural and mineral production areas, industrial centres and markets, the investment can strengthen regional value chains and expand opportunities for businesses and communities. Additionally, our ambition is to translate this landmark financing into a corridor that supports competitive industries, creates jobs and deepens regional integration,” said Mike Salawou, Director of the African Development Bank’s Infrastructure and Urban Development Department.