TANZANIA: TANZANIA has embarked on a transformative journey with the construction of the Standard Gauge Railway (SGR)-a monumental infrastructure project that promises to significantly enhance the country’s economic landscape.
Spanning from Dar es Salaam to Mwanza via Isaka, the SGR is set to revolutionize transportation in Tanzania, fostering economic growth, regional integration, and sustainable development.
By providing a modern, efficient, and reliable transportation link across key regions, the SGR will unlock numerous opportunities that promise to accelerate Tanzania’s economic growth, enhance regional integration, and improve the livelihoods of millions.
The SGR is a significant upgrade from the existing narrow-gauge railway system that has long been a bottleneck in Tanzania’s transportation network.
Spanning approximately 1,219 kilometers, the SGR is designed to support trains traveling at speeds of up to 160 kilometers per hour for passenger services and 120 kilometers per hour for freight.
This modern rail system will drastically reduce travel times, enhance safety, and lower transportation costs. For businesses, the SGR means faster and more reliable delivery of goods.
The railway will facilitate the movement of raw materials to industries and finished products to markets, both domestically and for export.
This is especially critical for Tanzania’s burgeoning mining and agricultural sectors, which rely heavily on efficient logistics to remain competitive.
For example, the transportation of minerals from the Lake Zone to Dar es Salaam, a journey that currently takes several days by road, will be significantly shortened, reducing wear and tear on vehicles, minimizing losses and cutting down on transportation costs.
With a cost estimated at around 7.6bn/- USD, this ambitious project is not just about building a railway; it’s about laying the tracks for Tanzania’s economic future.
In accelerating economic growth, the SGR is expected to contribute substantially to Tanzania’s GDP by improving transportation efficiency and reducing logistics costs.
According to a report by the African Development Bank, improved infrastructure can boost GDP growth by up to two percent annually.
The SGR will directly support key sectors such as agriculture, mining, and manufacturing, which collectively contribute over 50 percent of Tanzania’s GDP.
For instance, the agricultural sector, which employs about 65 percent of Tanzania’s workforce and contributes 28.7 percent to the GDP, will benefit immensely from the SGR.
The railway will facilitate faster and more reliable transportation of agricultural products from rural areas to urban markets and ports.
This will improve access to markets and is expected to increase agricultural productivity and reduce post-harvest losses, which currently stand at around 30 percent.
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As a result, the agricultural sector could see an annual growth rate increase of 1-1.5 percent, translating to a significant boost in rural incomes and national food security.
The mining sector, contributing around 5.2 percent to the GDP, will also gain from the SGR.
Tanzania is rich in minerals like gold, diamonds, and tanzanite, with the Lake Zone being a major mining hub. The SGR will streamline the transportation of minerals to Dar es Salaam port, reducing transportation costs by up to 40 percent.
This will enhance the competitiveness of Tanzanian minerals in global markets, potentially increasing export revenues by 20-30 percent in the coming years.
Enhancing Trade and Regional Integration The SGR is not just a national project; it is a cornerstone of Tanzania’s broader vision of regional integration within the East African Community (EAC).
By connecting Tanzania’s largest port in Dar es Salaam with the Lake Victoria port city of Mwanza, the SGR will serve as a crucial trade corridor linking Tanzania with neighboring countries such as Uganda, Rwanda, Burundi, and the Democratic Republic of Congo.
This enhanced connectivity will make it easier and cheaper for these landlocked countries to access global markets, positioning Tanzania as a key trade hub in the region.
Moreover, the SGR is expected to attract significant foreign investment as companies look to capitalize on the improved logistics infrastructure. With better access to international markets, Tanzanian products can compete more effectively on a global scale, boosting exports and earning valuable foreign exchange.
This, in turn, will strengthen the country’s balance of payments and support the stability of the Tanzanian shilling.
However, the SGR is strategically designed to enhance trade within Tanzania and with neighboring countries.
Tanzania’s current railway system, built over a century ago, is outdated and inefficient, with average speeds of just 30-40 kilometers per hour according to Tanzania Railway Corporation (TRC).
The new SGR, with speeds of up to 160 kilometers per hour for passengers and 120 kilometers per hour for freight, will drastically reduce travel times and increase the volume of goods transported.
The World Bank estimates that logistics costs in East Africa are among the highest globally, accounting for about 40 percent of the value of traded goods.
By reducing these costs through the SGR, Tanzania can become a more competitive player in regional trade.
The railway will serve as a crucial link between Tanzania and its landlocked neighbors Uganda, Rwanda, Burundi, and the Democratic Republic of Congo providing them with a reliable route to the Indian Ocean.
It is estimated that transit times from these countries to Dar es Salaam will be reduced by 50 percent and transportation costs by up to 30 percent, making Tanzanian ports more attractive for regional trade.
This boost in trade is expected to increase Tanzania’s export revenues significantly. In 2022, Tanzania’s total exports stood at around 9.6bn/- USD.
With the SGR operational, this figure could rise by 15-20 percent annually, adding approximately 1.4bn/- USD to the economy each year.
Moreover, the increased trade volumes will stimulate the growth of other sectors, including warehousing, logistics, and manufacturing, creating a ripple effect throughout the economy.
Job Creation and Poverty Reduction The construction and operation of the SGR will have a direct impact on job creation.
During the construction phase, thousands of jobs have been created, providing employment opportunities for Tanzanians and boosting local economies. Beyond direct employment, the SGR will stimulate economic development along its route.
As transportation becomes more efficient, areas previously considered remote will become more accessible, encouraging investment in these regions.
New businesses, from hotels and restaurants to manufacturing plants and warehouses, are likely to spring up along the railway line, creating additional jobs and contributing to local economies.
The increased economic activity is also expected to lead to an expansion of the tax base, providing the government with additional revenue to invest in public services such as healthcare, education, and infrastructure. This virtuous cycle of investment and growth will contribute to reducing poverty and improving the quality of life for Tanzanians.
The SGR project has been a major source of employment during its construction phase, providing jobs to over 10,000 Tanzanians.
This has had a direct impact on local communities, boosting incomes and reducing poverty in construction zones.
Once completed, the SGR will continue to create employment opportunities in operations, maintenance, and associated industries.
According to the Tanzania National Bureau of Statistics (NBS), the unemployment rate in Tanzania was 9.7 percent in 2022.
The SGR is expected to contribute to reducing this rate by creating up to 50,000 direct and indirect jobs over the next decade.
These jobs will not only be in the railway sector but also in industries that will emerge along the railway corridor, such as logistics, hospitality, and retail.
In addition, the SGR will facilitate the growth of small and medium-sized enterprises (SMEs) by improving access to markets.
SMEs contribute around 35 percent to Tanzania’s GDP and employ more than 20 percent of the workforce.
By reducing transportation costs and opening up new markets, the SGR will enable these businesses to expand, further contributing to economic growth and job creation.
Environmental and social benefits While the primary focus of the SGR is economic development, it also brings significant environmental and social benefits.
The shift from road to rail transport will reduce greenhouse gas emissions, as trains are more fuelefficient and produce fewer emissions per ton of freight compared to trucks.
The SGR is expected to cut CO2 emissions by approximately 80,000 tons annually, contributing to Tanzania’s climate change mitigation efforts.
Socially, the SGR started to improve connectivity between urban and rural areas, making it easier for people to access essential services such as healthcare and education.
This improved accessibility is expected to enhance the quality of life for millions of Tanzanians, particularly in remote regions.
The Standard Gauge Railway from Dar es Salaam to Mwanza via Isaka is more than just a transportation project; it is a catalyst for economic transformation in Tanzania.
By improving transportation efficiency, reducing logistics costs, and enhancing trade, the SGR will contribute significantly to GDP growth, create jobs, and reduce poverty.
The railway will also position Tanzania as a key player in regional trade, attracting investment and fostering sustainable development.
As Tanzania continues to invest in infrastructure, the SGR stands as a shining example of how strategic projects can unlock a nation’s economic potential.
With the SGR set to become fully operational, Tanzania is on track to achieve its goal of becoming a middle income country by 2030, paving the way for a prosperous future for all Tanzanians.
