The African Development Bank (AfDB) structured the financing and arranged an $800 million Partial Credit Guarantee, the largest issued by the institution.

The facility forms part of an overall $2.3 billion financing package for Lot 6 of Tanzania’s Standard Gauge Railway.

Tanzania previously mandated the AfDB to structure and mobilise up to $3.2 billion for the broader regional railway programme.

A syndicate of nine banks will provide the $1.2 billion commercial facility, co-arranged by Deutsche Bank and Société Générale.

Other lenders include HSBC, Commerzbank, Nedbank, Stanbic Bank Tanzania, First Abu Dhabi Bank, FirstBank UK and Bank of Africa United Kingdom.

The commitments comprise $720 million in guaranteed lending and $480 million in financing based on Tanzania’s sovereign credit risk.

AfDB’s guarantee covers the principal of the protected financing and two years of interest.

Credit insurance arranged by Texel distributes $405.5 million of AfDB’s exposure among international insurers, including Lloyd’s syndicates. “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,” AfDB Senior Director Max Ndiaye said.

The railway will connect Tanzania’s western regions with the wider rail network and the Port of Dar es Salaam.

Farmers and mining companies are expected to benefit from cheaper and more efficient transport, while construction and railway operations will create employment.

The line will also support trade with the Democratic Republic of Congo (DRC) through the Kigoma and Kalemie ports on Lake Tanganyika.

The wider railway programme is expected to strengthen transport links with Burundi and eastern DRC. “The strategic value of this railway lies in the productive investment it can unlock along the Central Corridor,” AfDB Infrastructure and Urban Development Department Director Mike Salawou said.

“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.”

The remaining financing package includes an export-credit agency component and another tranche expected to be mobilised with a co-guarantor.

–AfDB/ChannelAfrica–