January 6, 2003

ADB pulls out of Arusha Rail Project

The African Development Bank (ADB) has dropped the idea of funding a feasibility study for the Arusha-Musoma rail extension after learning that the Tanzania government has approached the World Bank to finance a similar study for a road linking the two towns.

A report by the East African Community's (EAC) transport committee reveals that ADB had offered to rescue the rail project after it failed to get a financier from rich Western countries.

The EAC was apparently not aware that when it identified the ADB as the most likely financier of the feasibility study, the Tanzania government had on its own approached the World Bank for money to carry out a similar study for the Makuyuni-Lalago road. Upon discovering this, ADB decided to discontinue processing the financial application lodged by the EAC.

If built, the railway line will link Lake Victoria with Tanga port and thereby provide Uganda, Rwanda and eastern areas of the Democratic Republic of Congo with a shorter alternative route to the Indian Ocean coast. There is already an existing railway line between Tanga and Arusha. The Tanzanian government has been putting emphasis on building new roads and rehabilitating existing ones as part of poverty reduction drive. In the current fiscal year, it has allocated Tsh21.64 billion ($21.6 million) "for fast track road construction." The road sector as a whole has been allocated Tsh250.7 billion ($250 million) in the 2002/03 financial year, according to Finance Minister Basil Mramba.

The EAC in its drive to stimulate trade in the region, has taken over from its member states some projects considered key to regional integration, such as the Arusha-Musoma rail link. The link has been on Uganda's agenda for some years, and when President Yoweri Museveni made an official tour of Tanzania, he instructed Ugandan officials to look into the technicalities of construction of the rail link. Large quantities of Uganda's exports and imports go through Dar es Salaam port which, is a much farther away than Tanga port.

The Arusha-Musoma rail extension is listed among the top priority projects for the EAC. The Makuyuni-Lalago road is so far not among the EAC's priority road projects.

ADB provides loans at highly discounted rates for a wide range of projects that promote regional integration such as rail, energy and telecommunications. Its lending is, however, done in collaboration with the World Bank and the International Monetary Fund.

Uganda uses Mombassa and Dar es Salaam ports to import and export its goods. The country's freight handled by Dar averages 20,000 tonnes per month. It mainly exports cotton and coffee and imports fertilizers, cement, foodstuffs, machinery and electronic equipment.

The shelving of the project is a blow to Tanga port as the rail link project would have increased cargo traffic at the port, which at present handles mostly agricultural crops like sisal, coffee and a few imports.

In its heyday in the 1970s, Tanga used to be called the "sisal port" as it was handling about 200,000 tonnes of the fibre annually in exports. The crop yields have since fallen drastically. (The East African, Nairobi)

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