Tanzania government, StanChart in Sh3.3tr SGR loan deal

Friday February 14 2020

 

By Alex Malanga @ChiefMalanga amalanga@tz.nationmedia.com

Dar es Salaam. The government and Standard Chartered Bank yesterday signed a $1.46 billion (Sh3.3 trillion) loan agreement for financing the second phase of the standard gauge railway (SGR).
Standard Chartered Tanzania acted as global co-coordinator and mandated lead arranger of the loan, which is the largest single foreign currency financing raised by the Ministry of Finance to date.
The biggest component of the financing of the railway’s second phase linking Morogoro and Dodoma regions comes from the Export Credit Agency Covered Facility from the Export Credit Agencies of Denmark and Sweden.
Finance and Planning minister Philip Mpango said the loan will be repaid over a period of 20 years.
He added that construction of the 300-kilometre section between Dar es Salaam and Morogoro is 70 percent complete, while the second phase is 30 percent done.
“Our aim is to complete this project as scheduled, so that the railway can become operational in 2021,” Dr Mpango said, adding that construction of phases three and four of the SGR is scheduled to start before the end of the year.
Upon its competition, the SGR will not only unleash the socioeconomic potential of the connected region, but also increase freight and passenger capacity as well as release pressure on the road network.
“It is worth emphasising the regional dimension of the project as it will connect landlocked neighbouring countries, particularly Uganda, Rwanda, Burundi and the Democratic Republic of Congo,” Dr Mpango said.
“The project will therefore provide faster, safer and low-cost trade routes connecting the Great Lakes Region with the rest of the world.”
The new railway is also expected to address current congestion challenges and cut freight service charges by at least 40 percent as up to 10,000 tonnes of freight will be hauled per trip.
“There is broad consensus that an efficient transportation system is the key component in reducing the cost of doing business and improving market access,” Dr Mpango noted.
He added that a modern railway network is considered economical and environmentally friendly in addition to being more efficient than other modes of transport.
Standard Chartered Tanzania chief executive Sanjay Rughani said the deal signified investors’ confidence, and demonstrated the multinational bank’s international network capabilities and commitment to Tanzania.
“As a leading international bank for Africa, with over 100 years of being in Tanzania, the African continent remains a key corridor not only for Standard Chartered, but also our global clients,” he said.
“We are delighted to have reached this milestone in Tanzania to fund the SGR project that will deliver massive benefits to Tanzania and support the government’s 2025 vision of making Tanzania an industrialised country.”
Mr Rughani added that the bank will continue to leverage its unique network reach, and the credibility it has built over time, to further position Tanzania as the go-to destination for investments.
Work on the SGR has so far created more than 8,000 new jobs for Tanzanians, and has opened up opportunities for communities in the project area.