Issue sovereign bond to fund railway project, govt advised

Dodoma. Kigoma Urban MP Zitto Kabwe (ACT-Wazalendo) has advised the government to issue a sovereign bond to finance the ongoing construction of the standard gauge railway (SGR).

Debating the budget estimates for the Ministry of Works, Transport and Communications on Friday evening, Mr Kabwe noted that since getting foreign assistance was difficult, the best way to finance the project would be through selling the bond to Tanzanians — at home and in the diaspora.

Works, Transport and Communications minister Makame Mbarawa on Thursday tabled before in Parliament his office budget for the 2017/18 fiscal year.

It showed that Sh900 billion from domestic revenue has been allocated for the SGR project. The sum according to him, would be for “continuation of SGR construction from Dar es Salaam to Dodoma”.

In the 2016/17 financial year the government allocated Sh1 trillion to fund the first phase of the project starting from Dar es Salaam to Morogoro (300km). The total cost was Sh2.5 trillion. President John Magufuli this month launched the first phase of the project being undertaken by Portuguese and Turkish contractors.

The work is expected to completed in 30 months.

However, the financing modality (using domestic revenue) prompted questions from the Opposition Camp on the pace of execution of the project and the fate of foreign loan agreements of Sh17.5 trillion that the government had entered.

“The minister of Finance, Dr Philip Mpango, told this august House last year that for the project to become viable, then its sections should be built simultaneously. We share the same view, and we would like to see how the government is poised to execute that,” said Mr David Silinde (Momba — Chadema) when he was tabling the shadow budget speech on Thursday.

Mr Kabwe told Parliament that out of Sh1 trillion allocated for the current fiscal year only Sh290 was disbursed by last month. “With the current financing, it is going to take us three budget years to construct the first phase to Morogoro worth Sh2.5 trillion.”

Mr Kabwe suggested that the government issue a ‘railway bond’ and let the people to take part in financing the project.

“The government should table the matter in Parliament and we can pass a law for a 15-year sovereign bond. Then we will inject the funds raised into constructing an SGR railway line to Makutupora, Dodoma, where a dry port can be established and all cargo destined for Rwanda, Burundi and Uganda can be cleared from there. That way the project will become viable economically, especially in the growth of the capital.”

He noted that Tanzania is facing similar situation that Ethiopia went through in 2011 when it failed to get a Sh14 trillion loan by Word Bank and China to construct the Grand Ethiopian Renaissance Dam to produce 7,000MW.

“After failing to get the foreign loan, the country under the then Prime Minister Meles Zenawi mobilised its citizens especially in the diaspora through selling a government bond and raised about Sh10 trillion or 70 per cent of the required amount. In July the construction will be completed,” said Mr Kabwe. “Indeed, we don’t have a big diasporan community like Ethiopia’s but we can still proceed with the sale of the bond and adjust it according to our situation.”