BGK grants loan for gov't investment in Tanzania

Polish development bank (BGK), in a consortium with five international banks, has granted a loan to the government of Tanzania. The funds will be used to finance the construction of a railway artery, essential to the development of the country and East Africa. The support, worth USD 76.5 million, is the largest project of its kind in BGK's history.

Poland’s BGK has granted another sovereign finance loan to the government of another country. This time, the borrower is the Tanzanian Ministry of Finance. The loan is part of an international financing consortium of six banks, in which BGK participates. Its total value exceeds USD 347 million of which BGK's share is the largest at USD 76.5 million. BGK provided the financing from its own funds, in accordance with the government's Financial Support for Exports program. The investment involves the construction, commissioning, and operation of a nearly 430-kilometer electrified railway line. The artery will be essential to the development of the country and East Africa in general. It will connect the region with Tanzania's main seaport, Dar es Salaam, a trade gateway for neighboring countries. A condition for BGK's involvement in the transaction was the participation of Polish subcontractors and suppliers in the construction industry. Therefore, Polish exporters will be the indirect beneficiaries of the financing. The loan, granted by a consortium including BGK, will be insured by Poland’s Export Credit Insurance Corporation (KUKE).

"The expansion of the Tanzania’s railways will increase the efficiency and speed of goods transport between the main ports on the Indian Ocean coast and the interior. These types of export contracts create opportunities for higher margins than in the highly competitive European market. An opportunity that Polish contractors and subcontractors can take advantage of. However, Tanzania is a high-risk market, which is why BGK is coming to their aid. It gives Polish entrepreneurs a sense of security and support in promising African markets." - Piotr Kuffel, director of BGK's International Expansion Office

This is BGK's third sovereign finance loan granted to an African government. The bank previously credited the governments of Rwanda (2023) and Angola (2024).