Tanzania and Zambia have agreed to inject $80 million into their loss-making railway company, which is suffering from decades of under-investment.

The governments have agreed to invest the money in the Tanzania–Zambia Railway Authority (Tazara) over the next 12 months, starting with an immediate injection of $9.2 million to offset salary arrears and support operations.

The amount agreed upon is slightly more than a third of the $211 million Tazara needs over five years, with the balance expected to be raised from private sources.

With interest-free loans worth yuan 2,543 billion ($412 million) from China since its inception in 1968, Tazara is the Eastern economic giant’s largest single foreign aid project in Africa.

The 1,860 kilometre line was built to transport copper from Zambia and the Democratic Republic of Congo to Dar es Salaam, from where it was shipped to China.

The line also handles imported crude for cleaning at Ndola in Zambia, but has been affected by a decline in cargo volumes and industrial unrest.
The authority has been making losses since it was set up, managing a surplus only in 1992.

“The cry from Tazara has always been that the company needs recapitalisation in order for it to turn around. The offer by the shareholders of $40 million each in the next 12 months is a good start,” Tazara’s head of public relations Conrad Simuchile said.

The Tazara management said it will for the first time seek to raise 15 per cent of the investment fund from the private sector, with China expected to meet the rest of the commitment.

Reforms are also planned in the form of giving autonomy to the Lusaka and Dar es Salaam regional offices.

Former Tazara managing director Damas Ndumbaro, however, said attracting funding from the private sector would be difficult because railways are not profitable ventures.

“The operational costs are so high that they call for government investment. From Dar es Salaam to Zambia, the Tazara railway has 274 bridges, over 1,900 culverts and 19 tunnels and it is Tazara that is maintaining the infrastructure from tickets sales.

The cost of train tickets needs to be higher if are to raise enough money for maintenance,” said Dr Ndumbaro.

However, Lucas Chongo, a former Tazara technical engineer, said the venture could be profitable again if bulk cargo were carried via rail, leaving roads as feeders for other loads.