LAGOS, Nov 6 – Tanzania has signed a $1.2 billion commercial financing facility for the Tabora–Kigoma section of its Standard Gauge Railway (SGR), with the African Development Bank (AfDB) structuring an $800 million partial credit guarantee (PCG) to support the transaction. The guarantee is the largest issued by the Bank to date.
The financing will support construction of the 411-kilometre electrified railway line, designated Lot 6, which forms part of Tanzania’s broader railway development programme. The transaction combines development finance, commercial lending and credit insurance to mobilise capital from international financial institutions while managing the risks associated with sovereign borrowing.
Tanzania had mandated the AfDB to structure and mobilise up to $3.2 billion for its regional Standard Gauge Railway programme. The financing strategy was designed to bring together institutions with different investment requirements and risk appetites under a unified structure, while accounting for the country’s wider debt obligations and geopolitical developments affecting interest rates.
The Bank acted as Initial Mandated Lead Arranger, mobilising a nine-bank syndicate for the $1.2 billion commercial facility. Deutsche Bank and Société Générale co-arranged the transaction, with participation from HSBC, Commerzbank, Nedbank, Stanbic Bank Tanzania, First Abu Dhabi Bank, FirstBank UK and Bank of Africa United Kingdom.
The lenders’ commitments comprise $720 million in guaranteed lending and $480 million in lending extended on an unsecured basis to the sovereign. The signed commercial facility forms part of a wider $2.3 billion financing package, which also includes an export credit agency tranche and an additional tranche to be mobilised in collaboration with a co-guarantor.
At the centre of the commercial financing is an AfDB partial credit guarantee of up to $800 million, covering the principal of the guaranteed tranche and two years of interest. The Bank remains the Guarantor of Record, while credit insurance arranged by broker Texel distributes $405.5 million of exposure to a panel of international insurers, including Lloyd’s syndicates.
The insurance arrangement brings additional private-sector risk-bearing capacity into the financing structure, helping strengthen the guarantee and support the mobilisation of commercial lending for the railway project.
The railway is expected to improve transport connectivity across western Tanzania, linking agricultural and mineral production areas with industrial centres and markets. Farmers, mining operators and local communities are expected to benefit from more efficient freight movement, lower transport costs and employment opportunities during construction and operation.
The Tabora–Kigoma line will connect with Tanzania’s wider railway network and the port of Dar es Salaam, while providing an important route for trade with the Democratic Republic of Congo through Lake Tanganyika and the ports of Kigoma and Kalemie. The wider railway programme is also expected to strengthen regional connections with Burundi and eastern DRC.
The project forms part of the development of the Central Corridor, a regional transport network intended to facilitate trade and movement of goods across East and Central Africa. Improved rail capacity could reduce logistics constraints for producers and businesses while supporting the development of regional value chains.
“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. It reflects the vision behind the New African Financial Architecture for Development (NAFAD), focusing on private capital mobilization and partnerships in risk sharing to mobilise resources at scale,” said Max Ndiaye, Senior Director African Development Bank Group.
“The strategic value of this railway lies in the productive investment it can unlock along the Central Corridor. 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. Our ambition is to translate this landmark financing into a corridor that supports competitive industries, creates jobs and deepens regional integration,” said Mike Salawou, Director of the African Development Bank’s Infrastructure and Urban Development Department.
The transaction advances the AfDB Group’s Ten-Year Strategy for 2024–2033 and its Four Cardinal Points, particularly its priorities around mobilising African capital, building resilient infrastructure and strengthening competitive value chains.
By combining its infrastructure expertise with guarantee instruments and commercial financing partnerships, the Bank is seeking to expand private capital participation in large-scale African infrastructure projects. The Tanzania railway transaction also demonstrates how blended finance structures can distribute risk across development institutions, commercial banks and international insurers to support strategic investments with regional economic significance.
