Yesterday, World Bank Group President Jim Yong Kim announced that Tanzania will be able to access up to $2.4 billion in concessional financing over the next three years, an increase of half a billion dollars over previous allocations.
The additional resources will come from the World Bank Group’s International Development Association (IDA), the Bank’s fund for the poorest, which in December of last year received a record 18th replenishment of $75 billion. Approximately $45 billion of those funds will be invested in Africa over the next three years.
Because of Tanzania’s strong macroeconomic management and political stability as well as the overall growth opportunities in the country, Tanzania’s is one of the “scale-up countries,” meaning that in addition to concessional resources, they will be able to borrow additional resources on non-concessional terms that are lower than market rates.
Kim made this announcement during a ceremony in which he and Tanzanian President John Magufuli laid the foundation stone for the Ubungo Interchange in Ubungo District of Dar Es Salaam. The interchange will be financed under one of the three projects signed today, with a total value of $780 million.
The Ubungo Interchange is a critical piece of infrastrucure designed to reduce congestion at a key strategic gateway in Dar Es Salaam, and the next step in an ambitious effort to connect the Port of Dar Es Salaam to rural areas, industries, and the wider region.
Kim underscored the need to leverage private sector investment for infrastructure development as well as in job-creating industries for the estimated 800,000 young men and women entering the labor market in Tanzania each year.
“Investing in infrastructure has a significant multiplier effect, spurring growth in subsequent years,” World Bank Group President Jim Yong Kim said. “Right now there are trillions of dollars of capital in the developed world seeking higher returns. We see tremendous opportunities in developing countries for private sector investment in areas like infrastructure, which is crucial for jobs and growth. The key to unlocking this potential is through greater collaboration between the public and private sector to achieve each developing country’s highest aspirations.”
The Ubungo Interchange will be constructed under the Dar Es Salaam Urban Transport Project (DUTP) as a follow-on investment to the Second Central Transport Corridor (CTCP2) financed by the World Bank. The CTCP2 pioneered the establishment of the first phase of the Bus Rapid Transit (BRT) system in Dar es Salaam City.The DUTP will also finance Phases 3 and 4 of the BRT while supporting capacity enhancements for public transport institutions.
Dar es Salaam has a population of 4.4 million and is growing at a rate of 6.5 percent per year. It is expected to achieve megacity status before 2030. The Ubungo Interchange is expected to reduce congestion, improve travel time, and decrease costs for commuters and commercial consumers.
Kim and President Magufuli also signed the financing agreements for the $225m Second Water Sector Support Project (WSSP2), and for the $130m additional financing for the Tanzania Strategic Cities Project. The WSSP2 will support the strengthening of capacities for integrated water resources planning and management in Tanzania, as well as improve access to water supply and sanitation services in Dar es Salaam. The Tanzania Strategic Cities Project will finance an upscaling of infrastructure in eight cities across Tanzania.