The 506km (314-mile) section runs from Tabora in mid-western Tanzania to Kigoma in the western region of the country on the northeastern shores of Lake Tanganyika and close to the border with Burundi and the DRC. The line is part of the 2,561km railway network from the Indian Ocean port of Dar es Salaam to Mwanza on Lake Victoria. Its construction would be completed in 2026.

This is the second contract the two Chinese companies have worked on; they are also building a US$1.3 billion railroad, awarded last year during a visit by Chinese Foreign Minister Wang Yi.

The firms are building the fifth phase of Tanzania’s SGR linking Mwanza and the southern town of Isaka, 341km away.

“With this contract, the government has invested US$10.04 billion, in the Dar es Salaam–Mwanza and Tabora-Kigoma SGR lines; it should be noted that all of this money is from loans that we received from a variety of sources,” Hassan said.

She dismissed criticism that the country was taking on too much debt.

“Today and in the future, if we feel it is profitable, we will continue to borrow to construct various projects for sustainable development,” she said.

The railway is planned to eventually reach countries such as Burundi, the DRC, Rwanda and Uganda – and probably beat Kenya as the East African logistics hub.

Hassan said when the SGR was completed, Tanzania would be better placed to use its geographic advantage for cross-border trade.

Kenya had plans to build a railway from the coastal city of Mombasa to Malaba, at the border with Uganda, that was supposed to cross to Rwanda, South Sudan and the DRC.

China-Tanzania ties sealed with 15 agreements during presidential visit

But to date it has only built the Mombasa-Nairobi leg with an extension to Naivasha, a town in the Central Rift Valley, at a cost of US$5 billion. The railway ends abruptly at Naivasha after China dropped its earlier promise to fund construction to Malaba.

In Tanzania, the latest deal completes the central railway network from Dar es Salaam to Mwanza and Dar es Salaam to Kigoma. So far, the East African nation has constructed 2,102km, which Tanzanian officials say gives the country the longest railway network in Africa.

Tim Zajontz, a research fellow at the Centre for International and Comparative Politics at Stellenbosch University in South Africa, said the steady progress in the construction of Tanzania’s SGR had given the country an edge over Kenya.

“At the moment, it looks as if Tanzania might win East Africa’s railway race by linking cargo markets in Burundi, Rwanda, the DRC and Uganda with Tanzanian seaports,” Zajontz said.

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China-funded infrastructure across Africa force difficult decisions for its leaders

China-funded infrastructure across Africa force difficult decisions for its leaders

During the trip China agreed to implement belt and road projects where the SGR projects fall, and also revamp Tanzania-Zambia Railways – or Tazara Railway – first funded by China 50 years ago and still its largest foreign aid project.

Chinese companies failed to win contracts in earlier phases of the railway as part of an anti-corruption drive by former Tanzanian president John Magufuli. Tanzania cancelled the initial tender process – which Chinese companies were thought to have a high chance of winning – over “irregularities”.

Tanzania had earlier awarded two separate tenders, in 2017 and 2019, to the Turkish firm Yapi Merkezi to build more than 700km of railway linking Dar es Salaam to Makutupora, in the centre of the country, at a combined cost of more than US$3 billion.

Zajontz said the fact that CCECC and CRCC had now also won the Tabora-Kigoma railway contract showed the pragmatism of the Tanzanian government in pushing on with the Standard Gauge Railway.

“Chinese contractors are not only extremely cost competitive, for the Tabora-Kigoma section they also seem to have facilitated a finance package which allows [capital] Dodoma to proceed with SGR constructions at full steam,” Zajontz said.

“President Hassan is eager to advance the government’s strategy to turn Tanzania into East Africa’s preferred gateway for overseas trade and China is again considered a welcome partner in this endeavour.”

Magufuli was outspokenly critical about some Chinese practices in Tanzania and stood in the way of several high-profile projects, including the US$10 billion Bagamoyo megaport and special economic zone, 65km north of Dar es Salaam.

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The deal was signed in 2013 in the presence of Xi Jinping, who travelled to Tanzania to witness the agreement soon after he became China’s president. But the project stalled after a number of concerns were raised by Magufuli, including over the generous tax breaks demanded by the Chinese investor in the proposed special economic zone.

Zajontz said Hassan had also declared the rehabilitation of the Tanzania-Zambia Railway a strategic priority. He said these developments would affect economic calculations and negotiations around the stalled port project and special economic zone in Bagamoyo.

“A firm like China Merchants [Bank] obviously only invests in Bagamoyo if a megaport there has the potential to become a regional, China-oriented trade hub,” Zajontz said.

“The Tanzanian government seems committed to put the country back onto the map of China’s Belt and Road Initiative.”

Mark Bohlund, senior credit research analyst at REDD Intelligence, said China never got involved in infrastructure financing in Tanzania – at least not to the same extent as in Ethiopia and Kenya – before the election of Magufuli in 2015 turned the government towards autarky, or self-sufficiency.

Bohlund said that as a consequence the Chinese credit exposure to Tanzania – which had fallen from US$2.58 billion in 2017 to US$1.98 billion in 2021 – remained relatively low, leaving room to lend more.

“Both Kenya and Tanzania are likely to remain central in China’s [belt and road] project but the potential for new lending will remain higher in Tanzania for the foreseeable future,” Bohlund said.