Eurobond to Facelift Infrastructure of Tanzania - kenyadetails

Eurobond to Facelift Infrastructure of Tanzania

Tanzania is set to have the most reliable and efficient infrastructure networks in the East African region following concerted initiatives and efforts to find new and alternative sources of finance. Through the Big Results Now (BRN) initiative, the government last month showcased some mega infrastructure projects worth over 10 billion US dollars to large scale financial institutions for potential consorting through equity or favorable debt considerations.

 

But another initiative in the pipeline is the plan to raise 1 billion US dollars by floating the Eurobond for long-term infrastructure investments, having an ultimate goal of unlocking and connecting remote key production area and markets. The implementation of the initiatives will definitely impact into an efficient and improved railways, ports, road networks and power projects. Moreover, it is from the initiatives witnessing the close involvements of the private sector in the form of public-private partnerships (PPP), in raising funds for infrastructure development instead of leaving everything to be done by the government.

 

Some of the projects shortlisted in the BRN scheme included the upgrading to Standard Gauge of the 1,263 km Dar es Salaam-Kigoma railway line (at estimated value of 3.4 billion US dollars), 378 km Tabora-Mwanza line (1 billion US dollars). Others are the deepening of Dar es Salaam port berths 1-7(500 million US dollars), the modernization of Mwanza South Port (400 million US dollars).Also, the construction of Dar es Salaam-Chalinze Expressway (519 million US dollars), the 105kms Arusha-Moshi-Himo Junction Dual Carriageway (363 million US dollars) makes the top list. Power projects outlined are the 320 MW Kinyerezi, 3 Power Plant (368 million US dollars), 330MW Kinyerezi 4 Power Plant (410 million US dollars).

 

Speaking on the issuance of the Eurobond last week, the Finance and Economic Affairs Minister, Ms Saada Mkuya Salum, said "the responsibility for meeting the enormous demand for new and better infrastructures remains to be of paramount importance owing to increased population and fast growing economic activities."

 

The government has picked out three international sovereign rating agencies - Fitch, Standard & Poors and Moodys. Credit rating is important because lenders use it to determine borrower's credit risk. Key issues to be considered in the credit rating process include economic growth rate, control of financial markets, inflation and balance of payment. Tanzania needed most of the money to fund infrastructure projects, crucial for speeding up economic growth and achieve improved living standards. According to analysts, the Eurobond would help fill up the gap amid the decreasing donors' support of the development budget. Therefore, it is from the above initiatives that would see the country's infrastructure networks become the most reliable and efficient in the region, reducing the cost of doing business and becoming significant incentive in attracting new investments.