Tanzania receives $565 mln financing to expand port

By Fumbuka Ng'Wanakilala

DAR ES SALAAM (Reuters) - Tanzania signed a $565 million deal on Friday with the World Bank and other development partners to expand its main port of Dar es Salaam, part of plans to boost the east African nation's role as a regional trade hub.

Tanzania wants to lift capacity to 28 million tonnes a year by 2020 from the 14.6 million tonnes it handled in the financial year 2013/14. The World Bank said in May that inefficiencies at the port cost Tanzania and neighbours up to $2.6 billion a year.

The port, whose main rival is the bigger but also congested port of Mombasa in Kenya, acts as a trade gateway for landlocked states such as Zambia, Rwanda, Malawi, Burundi and Uganda, as well as the eastern region of Democratic Republic of the Congo.

World Bank Group managing director Sri Mulyani Indrawati advised Tanzania to invite private sector participation in major infrastructure projects, but said that should be done with transparency and with proper regulations in place.

"It's not only that all these investments should be done by the public sector -- inviting more private sector participation can provide more investments," she said at a news conference after the signing of the port financing agreement.

Tanzania's Transport Minister Harrison Mwakyembe said investments in infrastructure projects would have a direct impact on creating much-needed jobs and expanding trade in East Africa.

"The Dar es Salaam port handles about 90 percent of Tanzania's trade, but port delays have been worsened by limitations in operational efficiency. We believe that this programme will turn around the port," he said.

The World Bank teamed up with Britain's Department for International Development (DFID) and Trade Mark East Africa, an organisation that aims to help regional integration.

The estimated $565 million cost would come from loans and grants, the World Bank said.

Tanzania, like its neighbour Kenya, wants to capitalise on a long coastline and upgrade existing rickety railways and roads to serve growing economies in the heart of Africa.

"Future growth of the economy depends on the port's ability to improve, to become more efficient and to be able to handle more trade," said Ros Cooper, acting head of DFID Tanzania.

The Dar es Salaam port handles $15 billion worth of goods a year, equivalent to 60 per cent of Tanzania's GDP in 2012. Tanzania's economy has been growing at a sturdy 7 percent a year, but analysts say poor infrastructure is a bottleneck.