Tanzania Secures $1.2 Billion Railway Deal to Boost Trade, Jobs and Regional Links

The railway project is expected to improve transport efficiency, reduce freight costs and create employment opportunities for communities living along the Central Corridor.

Tanzania has secured a $1.2 billion commercial financing agreement to support the construction of the Tabora–Kigoma section of its Standard Gauge Railway, marking a major investment in the country's transport infrastructure and regional trade connections. The African Development Bank (AfDB) played a central role in arranging the financing and providing a Partial Credit Guarantee (PCG) of up to $800 million, its largest guarantee of this kind to date. The funding will support the development of a 411-kilometre electrified railway connecting western Tanzania with the country's wider transport network and international trade routes.

The financing agreement forms part of Tanzania's broader railway development programme, for which the government has mandated the African Development Bank to structure and mobilise up to $3.2 billion. Securing such substantial investment required cooperation between development finance institutions, commercial banks and insurance providers to accommodate different financing requirements and investment risks. The arrangement also had to account for Tanzania's existing debt obligations and geopolitical developments affecting international interest rates.

The railway project is expected to improve transport efficiency, reduce freight costs and create employment opportunities for communities living along the Central Corridor. Farmers, mining companies and other businesses could benefit from improved access to domestic and regional markets, making it easier to transport agricultural products, minerals and manufactured goods. The investment is also expected to strengthen Tanzania's economic connections with neighbouring countries, particularly the Democratic Republic of Congo and Burundi.

African Development Bank Mobilises Nine Banks for Railway Financing

The African Development Bank assembled a syndicate of nine commercial banks to provide the $1.2 billion financing facility, with Deutsche Bank and Société Générale serving as co-arrangers. Participating lenders include HSBC, Commerzbank, Nedbank, Stanbic Bank Tanzania, First Abu Dhabi Bank, FirstBank UK and Bank of Africa United Kingdom. Their combined commitments include $720 million in guaranteed lending and another $480 million provided based on the lenders' direct exposure to Tanzania's sovereign credit risk.

The commercial facility forms part of a larger $2.3 billion financing package that also includes an export credit agency tranche and an additional tranche to be mobilised in cooperation with another guarantor. The African Development Bank's guarantee of up to $800 million covers the principal of the protected financing portion and two years of interest, reducing financial risks for participating lenders. This arrangement allows commercial banks to contribute substantial funding to a major infrastructure project that would otherwise face greater financing difficulties.

Insurance broker Texel arranged additional credit protection that distributes $405.5 million of the African Development Bank's exposure among international insurers, including Lloyd's syndicates. This risk-sharing arrangement brings private insurance capacity into the financing structure and strengthens the Bank's ability to mobilise commercial investment. The transaction demonstrates how development finance, commercial lending and insurance partnerships can work together to support large infrastructure investments without relying entirely on government funding.

New Railway to Strengthen Trade Across Tanzania and Central Africa

The 411-kilometre electrified Tabora–Kigoma railway, identified as Lot 6, will provide an important transport connection between Tanzania's western regions and the broader Standard Gauge Railway network. Improved rail connectivity is expected to make the movement of agricultural products, minerals and other goods more efficient, supporting businesses that depend on reliable long-distance transport. Communities along the route could also benefit from employment during construction and railway operations, creating economic opportunities beyond the transport industry.

The railway will connect with Tanzania's wider network and the port of Dar es Salaam, improving access to international shipping routes for businesses operating in western Tanzania. Its connection through Kigoma and Kalemie ports across Lake Tanganyika will support trade with the Democratic Republic of Congo, providing another important route for regional commerce. Tanzania's wider railway development programme is also expected to strengthen transport connections with Burundi and eastern DRC, supporting cross-border investment and trade.

The Central Corridor has considerable potential to connect agricultural production areas, mining operations, industrial centres and consumer markets through a more efficient transport system. Lower transportation costs and improved freight capacity could encourage businesses to expand operations and make local products more competitive in regional markets. Stronger railway infrastructure could also support the development of supply chains and create new opportunities for communities involved in farming, manufacturing and trade.

Railway Investment Supports Jobs, Industrial Growth and Regional Integration

Max Ndiaye, Senior Director at the African Development Bank Group, described the financing agreement as an example of how development banks can mobilise large-scale investment through cooperation with commercial lenders and insurance providers. He linked the transaction to the New African Financial Architecture for Development (NAFAD), which promotes private capital mobilisation and financial risk-sharing partnerships. The financing structure reflects the growing importance of attracting private investment into infrastructure projects that can support economic development across African countries.

Mike Salawou, Director of the African Development Bank's Infrastructure and Urban Development Department, highlighted the railway's potential to connect agricultural and mineral production centres with industries and markets. He emphasised that improved transport connections could strengthen regional value chains, support competitive businesses and generate employment opportunities for local communities. The Bank expects the investment to contribute to stronger regional integration by making trade and productive investment more accessible along the Central Corridor.

The railway financing agreement supports the African Development Bank Group's Ten-Year Strategy 2024–2033 and its Four Cardinal Points, particularly the priorities of mobilising Africa's capital and developing resilient infrastructure and competitive value chains. By bringing commercial investors into a major transport project, the Bank is helping Tanzania expand infrastructure investment and create opportunities for industrial development and regional trade. Successful construction and operation of the Tabora–Kigoma railway could strengthen Tanzania's position as an important regional transport hub, supporting business growth, employment and wider economic development.