Tanzania: Local Firms to Gain Huge Business from SGR Construction
Posted on : Wednesday , 8th February 2017
Construction of the first 300-kilometre stretch of the standard gauge railway between Dar es Salaam and Morogoro begins from next month to mark the beginning of one of the major infrastructure projects under the second Five-Year Development Plan (2016/17- 2020/21).
State-owned Reli Assets Holding Company Ltd (RAHCO) signed an agreement with a joint venture of Turkish firm Yapi Merkezi and Portugal's Mota-Engil Engenharia e Construção África, S.A. after it was picked for construction of the railway line.
President John Magufuli has stated that the first phase of the mega-project will cost about 2 trillion/-, which will be financed by government domestic resources beginning with the 1.0tri/- that has been set aside for the purpose in the current financial year.
While the project may leave a gaping hole in the current account, we believe there will be a big relief even before completion through a multiplier effect as many local construction firms will be subcontracted, suppliers will get businesses and new jobs will be created as a strong workforce will be needed for the work.
In short, local businesses stand to gain from the construction work -- from local cement manufacturers who have been complaining of suffering from market overcapacity, to steel manufacturers, transporters, hotel owners and other suppliers.
The Dar to Moro SGR construction is just the beginning as there are three more phases of the mega railway project, which means a huge windfall to local companies and Tanzanians in general. There is also the 1,443-kilometre Uganda oil pipeline that will be constructed from Hoima in Western Uganda to Tanga Port through Kagera Region.
Other major projects include the Mchuchuma coal and iron ore in Liganga, one of the largest industrial projects in Tanzania for the past 50 years, whose completion is expected to stimulate the local economy and upgrading of the 110km Dar es Salaam-Chalinze Expressway to a six-lane carriage way to ease traffic on the road leading to the central corridor.
We see hope and pray all these projects begin in time to bring the much waited relief to the ongoing tight liquidity situation which analysts say may threaten growth targets and boost growth and development.
But how we are prepared to cash in from the windfall may be the one hundred-dollar question.
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