I. Industry Overview

ⅰ.Industry Competent Authorities and Relevant Policies

In early 2024, Tanzania's Ministry of Works and Transport was split into the Ministry of Works (MOW) and the Ministry of Transport (MOT). The Ministry of Works retains most of the responsibilities, including formulating policies and standards related to engineering, construction, and transportation infrastructure, supervising their implementation, and managing public works and government buildings and construction. The Ministry of Transport is responsible for formulating and implementing transportation policies, managing railway, aviation, and water transportation, and issuing transportation licenses, etc.

Under the Ministry of Works, the National Roads Agency (TANROADS) is responsible for the maintenance and construction of national highways; the Tanzania Electrical, Mechanical and Electrification Services Agency (TEMESA) is responsible for the management and maintenance of transportation and other facilities and equipment. State-owned enterprises such as the Rural and Urban Roads Agency (TARURA), Tanzania Railways Corporation (TRC), Airport Authority (TAA), and Port Authority (TPA) respectively implement corresponding policies and manage the operation and maintenance of highways, railways, airports, ports, and other transportation infrastructure. The Tanzania-Zambia Railway is managed by the Tanzania-Zambia Railway Authority (TAZARA).

Transportation is a priority development area for the government. As an important coastal country in East Africa, Tanzania is a crucial transportation hub for its inland areas and 6 landlocked countries. However, the current transportation network in Tanzania remains to be developed. According to documents such as Tanzania National Development Vision 2025 (referred to as Vision 2025), the Third Five-Year Plan (2021/22-2025/26), and TANROADS development plan, transportation infrastructure is a priority development area for the government. It plans to build 6,000 km of new roads, 14 bridges; construct the Central Railway Line; build 4 new airports; and expand major seaports such as Dar es Salaam Port, Tanga Port, Mtwara Port, and inland ports such as Mwanza. Among them, the Central Railway Line is a key development project. The budgets for transportation facilities in the 2022/23, 2023/24, and 2024/25 fiscal years are approximately 850 million, 840 million, and 1.09 billion U.S. dollars respectively, accounting for about 5.1%, 4.7%, and 5.5% of the total budget.

ⅱ.Industry Development Status

Tanzania's transportation infrastructure construction has made some progress in recent years, but the overall level still needs to be improved, and the development levels of different transportation modes also vary.

In terms of roads, road transportation is the main transportation mode in Tanzania, undertaking more than 90% of passenger traffic and 75% of freight traffic. The total length of roads is 87,581 kilometers, but the road density is low, and some roads are in poor condition, urgently needing upgrading, reconstruction, and maintenance.

In terms of railways, the total length of railways in Tanzania is 3,667 kilometers. Most sections of the original railway lines have aging and damaged hardware, resulting in poor transportation capacity and high operating costs. For example, due to outdated facilities, the transportation capacity of the original Central Railway Line is far from meeting the demand, and roads have become the main alternative transportation mode. To improve railway transportation capacity, Tanzania launched the Standard Gauge Railway (SGR) project in 2017, but it still faces many challenges, with some projects having financing gaps.

In terms of aviation, Tanzania has more than 120 airports, among which Dar es Salaam, Kilimanjaro, and Zanzibar are international airports. There is an imbalance in regional development of airport facilities, and some small airports have relatively simple facilities, urgently needing modernization and expansion to meet the growing demand for air transportation.

In terms of water transportation, Tanzania has multiple seaports and inland ports. Dar es Salaam Port is one of the important ports in East Africa, but the throughput capacity and operational efficiency of the port need to be improved, and loading and unloading equipment, storage facilities, etc., need to be further updated and improved.

II. Key Projects

ⅰ.Central Standard Gauge Railway Project

The original Central Railway Line of Tanzania was built by the Germans in 1905 and later expanded by the British, with a meter-gauge design (1000mm). The railway line extends westward from Dar es Salaam to Kigoma, passing through Dodoma, with extension lines leading to cities such as Mwanza, Tanga, Singida, and Mpanda on Lake Victoria, with a total length of approximately 2,707 km. Due to aging and damaged hardware in many sections of the original railway line, the railway transportation capacity is poor and the operating cost is high, so roads have become the main alternative transportation mode.

To improve the transportation capacity of the Central Railway Line, Tanzania launched the standard gauge (1435mm) railway project in 2017. Some sections will be parallel to the old Central Railway Line, with a total length of 2,561 km. It will connect Dar es Salaam Port on the Indian Ocean with Mwanza on Lake Victoria, and have branch lines to Burundi, the Democratic Republic of the Congo, Rwanda, and Uganda, promoting trade between regions and beyond.

The SGR project is divided into 8 sections, with a designed speed of 160 kph (passenger) and 120 kph (freight), much higher than the current railway line speed of 30-56 kph, involving an amount of approximately 11.2 billion U.S. dollars. Among them, sections 1 and 2 are progressing relatively smoothly. EKF (credit rating AAA) and EKN (credit rating AAA) have participated in financing 840 million U.S. dollars and 150 million U.S. dollars respectively. EKF has reinsured with NEXI, OeKB, SERV, SACE, and CESCE, allowing ECAs from various countries to support their domestic enterprises' exports. A total of 17 banks are involved in financing, with a loan term of 20 years. The two sections were officially put into operation or trial operation in 2024; the contractors of sections 3 and 4 had financial difficulties in 2023, owing laborers at least 7 months of salaries, with an 1.8 billion U.S. dollars financing gap, which may be subcontracted externally in the future; section 5 is undertaken by China Civil Engineering Construction Corporation (CCECC), with financing led by Standard Chartered Bank, planning to raise 750 million U.S. dollars; sections 6 and 7 are undertaken by CCECC, and section 8 is in the preliminary preparation stage. Sections 6, 7, and 8 are part of the Tanzania-Burundi-Democratic Republic of the Congo cross-border standard gauge railway project, and the African Development Bank will provide 140 million U.S. dollars in financing for the project. CRRC International provided 1,430 locomotives for the project, worth approximately 130 million U.S. dollars. With the completion of various sections of the SGR, there will be a demand for about 8,000 locomotives in the future.

The funds for the SGR project mainly come from government budget expenditures or borrowings. Currently, the government budget has spent nearly 4 billion U.S. dollars, and the budget allocations for the 2023/24 and 2024/25 fiscal years are approximately 420 million U.S. dollars and 570 million U.S. dollars respectively. During the construction period, assuming that the 8 sections of the Central Railway Line are successively launched and enter the repayment period, the expenditure will reach a maximum of approximately 850 million U.S. dollars in 2035 and will not be settled until around 2045, which may put certain pressure on Tanzania's finances. In addition, the current account deficit may increase by an average of approximately 52 million U.S. dollars per year. However, the project will also create more than 60,000 jobs and drive GDP growth by 1 to 2 percentage points. If all sections of the SGR successfully enter the operation period, the annual freight volume of the railway line will increase from 200,000 tons to 17 million tons, the transportation cost will decrease by about 40%, creating more than 50,000 jobs, increasing exports by 15% to 20% (approximately 1.4 billion U.S. dollars), promoting the GDP of agriculture, mining, and tourism by about 1% to 5% respectively, and driving the overall GDP growth by 2 to 4 percentage points.

ⅱ.Tanzania-Zambia Railway Project

The Tanzania-Zambia Railway was aided by the Chinese government, built from 1970 to 1975, and put into commercial operation in 1976. It connects Dar es Salaam Port in Tanzania with Kapiri Mposhi, a central city in Zambia, with a total length of 1,860 km, facilitating the export of Zambia's minerals. In August 2023, Tanzania and Zambia requested the Chinese government to propose a plan for railway revitalization. In December 2023, CCECC conducted a technical and economic feasibility study on the restoration of the Tanzania-Zambia Railway. In February 2024, China submitted a plan to transform the Tanzania-Zambia Railway, planning to jointly invest 1 to 3 billion U.S. dollars with Chinese mining enterprises in Zambia through the PPP model to revitalize the Tanzania-Zambia Railway. After restoration, the transportation capacity of the Tanzania-Zambia Railway will be significantly improved, with an annual carrying capacity of approximately 2 million tons, accelerating the transportation of copper and cobalt mineral resources in Zambia. However, the railway faces competition from the Lobito Corridor railway line, with a certain risk of cargo diversion. The Lobito Corridor is a flagship project of the G7 Partnership for Global Infrastructure and Investment (PGII), and its development involves railway lines including the Benguela Railway (Benguela-Luau in Angola), the railway from Luau, Angola to Kolwezi, the Democratic Republic of the Congo, etc.

ⅲ.Magufuli Bridge Project

The Magufuli Bridge is located in Mwanza Province, Tanzania, with a total length of 4.66 kilometers, 4 two-way lanes, a designed speed of 120 km/h, and an estimated annual traffic capacity of over 1 million vehicle trips and 4 million passengers. It is the first permanent bridge across Lake Victoria and the longest low-pylon cable-stayed bridge in Africa. After the bridge is opened to traffic, the travel time between residents on both sides of the lake has been reduced from more than 2 hours of road detour or 40 minutes of ferry to about 5 minutes, significantly improving travel efficiency.

The Magufuli Bridge is a national major transportation hub project in Tanzania, jointly constructed by China Civil Engineering Construction Corporation and China Railway 15th Bureau Group Corporation. The bridge has not only broken through local transportation bottlenecks but also driven the vigorous development of surrounding agriculture, tourism, commerce, and other industries through its strong radiation effect, benefiting millions of people in the lake area. According to a preliminary estimate by the Mwanza Fisheries Association, after the bridge is opened to traffic, fish products can be delivered to processing plants or cold storage within 1 hour, and transportation costs have been reduced by 25%-30%. The improvement of transportation has also significantly driven the investment enthusiasm in the lakeside area. According to data from the Ministry of Lands, Housing and Human Settlements Development of Tanzania, since the start of bridge construction, the land price in the bridgehead area has increased by more than 30%, and the number of newly registered small and medium-sized business entities has increased by 2.8 times compared with 3 years ago. Currently, multiple logistics parks and tourism development projects are being planned, which are expected to create more than 20,000 jobs in the lake area within the next 5 years, promoting the industrial upgrading from traditional fishery to comprehensive services, commerce, and tourism.

III. Project Promotion Forms and Funding Sources

ⅰ.Project Promotion Forms

Tanzania's transportation infrastructure projects are promoted in various forms, including government direct investment and construction, public-private partnership (PPP) model, and international cooperation projects, etc. 

In government direct investment and construction projects, the government uses fiscal funds or borrowings to lead the whole process of project planning, bidding, construction, etc., such as some new road construction and maintenance projects. For some large, complex, and strategically significant projects, the Tanzanian government actively adopts the PPP model to attract the private sector to participate in project investment, construction, and operation, so as to improve project efficiency and fund utilization efficiency and reduce government financial pressure. For example, in some port upgrading and reconstruction projects. Tanzania also carries out transportation infrastructure projects through cooperation with international organizations and other governments, with the help of external funds, technology, and experience to promote project implementation, such as multiple road and railway projects supported by international organizations like the World Bank and the African Development Bank.

ⅱ.Funding Sources

Since 2000, the funds for Tanzania's transportation infrastructure projects have mainly come from the World Bank and the African Development Bank. The World Bank has provided 2.89 billion U.S. dollars in funding support for 11 major projects. Currently, ongoing projects include the Tanzania Multimodal and Railway Development Project Phase II, the Tanzania Transport Integration Project, etc., and multiple sub-projects are still in the bidding stage; the African Development Bank has provided 1.31 billion U.S. dollars in funding support for 10 projects. Currently, ongoing projects include the upgrading of the 160 km Mnivata-Newala-Masasi road, the construction of Msalato International Airport, etc.

Other funding sources include the Japan International Cooperation Agency (JICA), the Export-Import Bank of China, etc. Chinese engineering contracting enterprises have participated in about half of the projects, including CCECC, Sinohydro, China Wuyi, etc.

Currently, nearly 50 transportation infrastructure projects are being promoted in Tanzania, most of which have financing gaps. For example, in terms of railways, 600 km of meter-gauge railways need to be repaired, 210 km have paid advance payments, and the remaining 390 km have not; in terms of roads, 4,321 km of roads need maintenance, among which 2,800 km have started construction, and the contractors of 7 projects (total 2,035 km) are 4 Chinese enterprises including CCECC, China Railway Construction Corporation Limited, Sichuan Road & Bridge Co., Ltd., and Sinohydro; 2,840 km of roads have been damaged by rainfall and urgently need repair; the 1,000 km cross-border road project from the Zambian border to Dar es Salaam Port, etc. There are also nearly 1,000 km of road projects on Zanzibar, including the signed 100 km Zanzibar municipal road upgrading and reconstruction project, the 277 km Zanzibar township road maintenance project, the unsigned 190 km road project, the 246 km road project, as well as the Pangani Multipurpose Terminal project, the Zanzibar cargo port relocation project, and the Zanzibar Airport Terminal 4 project, etc.

IV. Market Development Potential

ⅰ.Opportunities Brought by Policy Support

The Tanzanian government attaches great importance to the construction of transportation infrastructure, taking it as a priority development area, and has introduced a series of supporting policies. Documents such as Vision 2025 and the Third Five-Year Plan have clarified the goals of transportation infrastructure construction, providing policy guarantees and planning guidance for project implementation. The government actively creates a good business environment to attract foreign investment in transportation infrastructure construction, providing convenience in land acquisition, tax incentives, administrative approval, etc., to reduce enterprise operating costs and institutional transaction costs. Through models such as PPP, the private sector is encouraged to participate, providing a broad market space for domestic and foreign enterprises, such as participating in investment, construction, and operation of port and railway projects through the PPP model.

ⅱ.Promotion by Economic Development Needs

In recent years, Tanzania's economy has maintained a growth momentum, with GDP growing by a certain margin during 2021-2025. Economic development has driven the increase in transportation demand such as passenger flow and cargo transportation. The acceleration of industrialization, the rapid development of manufacturing, mining, and other industries, require a large amount of raw materials and products to be transported, resulting in an urgent demand for efficient transportation infrastructure. As an important industry in Tanzania, agriculture relies on good transportation conditions for the transportation and circulation of agricultural products to reduce losses and improve agricultural economic benefits. The continuous improvement of urbanization level, the increase in urban population, and the increasing pressure on urban internal transportation have also increased the demand for urban roads, public transportation, and other infrastructure.

ⅲ.Driving Role of Regional Cooperation

Tanzania has a superior geographical location and is an important transportation hub in East Africa, connected to multiple surrounding landlocked countries. The acceleration of regional integration, such as the increasingly frequent trade within the East African Community, has led to a surge in demand for cross-border transportation infrastructure. The construction of roads, railways, and other projects connecting surrounding countries can promote regional trade and economic cooperation. As a participant in the "Belt and Road" Initiative, Tanzania's cooperation with China and other countries in the field of transportation infrastructure has been continuously deepened. Chinese enterprises have advantages in technology, funds, and experience, and can help Tanzania's transportation infrastructure construction, such as cooperation in projects like the Central Standard Gauge Railway and the Magufuli Bridge.

V. Challenges Faced

ⅰ.Funding Shortage

Despite various funding sources, there is a general financing gap in Tanzania's transportation infrastructure construction projects. The government's fiscal revenue is limited, and it is difficult to fully meet the funding needs of large-scale transportation infrastructure construction while satisfying other public service needs such as education and medical care. The approval process for projects supported by international funds is complex and time-consuming, affecting the timely availability of funds. Some projects are difficult to attract sufficient private sector investment due to high risks, unclear returns, etc.

ⅱ.Insufficient Technology and Talents

Tanzania is relatively lacking in high-end technologies for transportation infrastructure construction, such as railway electrification technology, advanced technologies for large bridge and port construction, and relies on foreign technical support. There is a shortage of domestic relevant professional and technical talents, and the team of professionals from project planning, design to construction management needs to be expanded and improved, which affects the progress and quality of project construction. The lack of technology and talents leads to the need to hire a large number of foreign experts and technical personnel during the project construction process, increasing project costs.

ⅲ.Complex Geographical and Climatic Conditions

Tanzania has a diverse terrain, including mountains, plains, lakes, etc. The construction of transportation infrastructure such as roads and railways in mountainous areas is difficult and costly, requiring overcoming terrain obstacles and carrying out a large number of earthwork projects and bridge and tunnel constructions. Some areas have hot and rainy climates, which have high requirements for the durability of building materials and construction techniques. Rainfall may cause road damage and project delays, such as some road construction projects having to be suspended during the rainy season. In addition, Tanzania has some ecologically sensitive areas. During the construction of transportation infrastructure, full consideration must be given to environmental protection to avoid damage to the ecological environment, which also increases the complexity and cost of project construction. 

VI. Conclusion

Tanzania's transportation infrastructure industry has great market development potential. The government's policy support has created a good policy environment for the industry's development. The inherent demand of economic development and the external promotion of regional cooperation have led to numerous transportation infrastructure construction projects with broad prospects. However, the industry also faces challenges such as funding shortages, insufficient technology and talents, and complex geographical and climatic conditions. For enterprises intending to enter Tanzania's transportation infrastructure market, it is necessary to fully assess risks, combine their own advantages, and formulate reasonable market development strategies. During the project implementation process, attention should be paid to cooperation with local governments and enterprises, and actively solve problems such as funds, technology, and talents to achieve sustainable development, contribute to Tanzania's transportation infrastructure construction, and realize their own economic and social benefits.