Africa Growing Together Fund provides $50 million loan for Msalato International Airport Construction Project (Linked to Umbrella Project ID#36104)

On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Project ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on March 13, 2020, AGTF signed a $50 million loan agreement (ID#5050200001055) with the Government of Tanzania for the Msalato International Airport Construction Project. On the same day, the African Development Bank (AfDB) issued a $198.63 million loan (ID#2000200004672) and the African Development Fund issued an $23 million loan agreement (ID#2100150042269) to the Government of Nigeria for the same project. The borrowing terms of the AGTF, AfDB, and ADF loans were as follows: a 24-year maturity, a 5-year grace period, an interest rate of 6-month LIBOR plus a 0.9% margin, a 0.25% commitment fee, and a 0.25% management fee. The purpose of the project is to construct a new international airport in the district Msalato for the city of Dodoma, thereby improving access, regional and international connectivity to the administrative capital city and the Central Region of the country. The scope of the project includes a passenger terminal, a runway, air navigation equipment. It also includes other related operational services, such as a fuel distribution company, water supply systems, electrical power distribution substations and a fire-fighting service. Upon completion, the airport is expected to handle at least 50,000 aircrafts and a million passengers per year, most of which will be international. The airport is expected to benefit and serve more than 200 million passengers in East Africa, as well as international trade networks, and especially business travelers and tourists. The project will also seek to improve long-term institutional capacities of the Tanzania Airports Authority (TAA), the Tanzania Civil aviation Authority (TCAA) and the Accident Investigation Bureau (AIB) in meeting international operational standards and strengthening of national regulatory oversight. The first loan disbursement took place on January 13, 2021. However, this project suffered significant delays in procurement due to the lockdown resulting from the COVID-19 pandemic. In September 2021, AFDB awarded a contract to China Jiangxi International Economic and Technical Cooperation Co., Ltd (CJIC) for the implementation of the Msalato International Airport Construction Project.

Additional details

1. The AfDB project identification number is P-TZ-DA0-003. 2. The project’s economic rate of return is estimated at 11.6%. 3. The all-in interest rate (1.864%) was calculated by adding an 0.9% margin to the average 6-month LIBOR rate in March 2020 (0.964%). 4. The margin of 0.9% was calculated by adding the Funding Cost Margin (unknown) to the Lending Margin (0.8%) and the Maturity Premium (0.10%)

Number of official sources

7

Number of total sources

7