28 July 2023

Deutsche Bank finances three major road upgrades in Zanzibar

Deutsche Bank has announced the close of a €263m lending facility to the Ministry of Finance in the United Republic of Tanzania, which will support the rehabilitation and upgrade of three major roads in Zanzibar

The Global Hausbank acted as a coordinating mandated lead arranger, agent and lender on the two-tranche loan. The first is a €242m facility provided by both Deutsche Bank and UK Export Finance (UKEF), which also includes a UKEF buyer credit loan guarantee. The second is a €21m commercial facility by Deutsche Bank as a sole lender.

About the project

Covering a total distance of 103 kilometres, the financing is to rehabilitate and upgrade the Tunguu-Makunduchi (48km), Fumba-Kisauni (12km), and Moani-Chake and Pemba Airport Spur (43.5km) roads on the island. The upgrade will widen the three roads to four lanes each, instal street lighting and additional paving and include further civil engineering works such as drainage. The project is designed to help improve road safety, reduce congestion, and stimulate economic development via increased access to markets and social services. It will also improve connectivity in Zanzibar and enhance tourism, which is the major revenue driver for the local economy.

Expected to take three years to complete, the construction work will be undertaken through strategic joint ventures, with Spanish-owned international construction company Propav Infraestructuras leading and collaborating with local Tanzanian construction company Mecco Ltd.

Supporting African infrastructure

Speaking about UKEF’s support for infrastructure upgrades in Zanzibar, Nigel Huddleston, the UK Minister for International Trade, said, “Good local infrastructure is key to encouraging businesses to invest and work with local suppliers. This deal will support crucial development across Zanzibar, unlock new opportunities for UK companies in Africa, and grow sectors that will create jobs and boost the economy across our nations.”

In his introduction to Propav’s Sustainability report, CEO José Diniz explains, “Our business model consists of the construction of sustainable infrastructures through multidisciplinary solutions in Africa and Latin America, markets with great interest in this type of projects to promote economic growth and improve the quality of life of its citizens.”1

Werner Schmidt“We are proud to support the Government of Tanzania and Zanzibar on their infrastructure projects”
Werner Schmidt, Global Head of Structured Trade Export Finance

Deutsche Bank Global Head of Structured Trade Export Finance Werner Schmidt added, “Deutsche Bank has been a longstanding partner for our clients in Africa, and we are proud to support the Government of Tanzania and Zanzibar on their infrastructure projects. We remain committed to supporting projects that will generate a positive impact for the people and that helps support economic growth and development.”

Kees Hoving, the bank’s Co-Chief Executive Officer for Middle East and Africa (MEA), said: “Deutsche Bank continues to grow its African business and this important transaction in Tanzania is yet another key milestone in our ambition to support ‘Building a better Africa’.”

Note header image is from the Propav Infraestructuras Corporate profile


1 See propav.com