Zanzibar secures $428 million infrastructure financing to unlock Pemba

Unguja. The Revolutionary Government of Zanzibar (SMZ) on Tuesday, June 20, signed $428 million (Sh1.01 trillion) agreements with UK Export Financing (UKEF) for the expansion of Pemba Airport and construction of various road networks in Unguja and Pemba.

The loan agreements were signed by UKEF and Tanzania’s Finance and Planning ministry, which was represented by Zanzibar’s Minister of State, President’s Office, Finance and Planning, Ms Saada Mkuya Salum.

The projects are financed by Citibank London and Deutsche Bank London and guaranteed by the British Government through the Export Credit Agency, United Kingdom Export Finance (UKEF).

The Zanzibar government approved and signed the commercial contracts with the contractors in September 2022 and January 2023.

The extensive Zanzibar road project encompasses the 48km Tunguu-Makudunchi Road in Unguja South Region, the 12km Kisauni-Fumba Road in West Urban Region, and the 43.5km Mkoani-Chake Chake Pemba Road.

Speaking at the signing ceremony, Ms Salum said it was the first financing that SMZ has secured since the revolution and that it took several years before they could find partners who were willing to fund the project.

"These roads will be expanded to include four lanes, with two lanes in each direction, along with street lighting and pedestrian paths. The roadworks are anticipated to be an unprecedented boom for tourism," she said.

Also, present at the ceremony was Mr Jamal Kassim, who kick-started the search for favourable financing during his tenure as finance minister, saying the initial plan would have taken more than four years but with AKEF, it took a few meetings.

“There were many false starts, but we didn’t give up our pursuit and finally with the financing agreement in place we can now focus on the benefits that this project can bring to our nation,” said Mr Kassim.

He added: This is the biggest fincing deal that Zanzibar has had in history.

In his views, the project is set to transform Pemba Airport into an international airport by extending its runway to 2.5 kilometres and adding a new terminal building.

This is the first such financing arrangement between UKEF and Tanzania.

Construction of the airport will take place in two phases, with the first phase involving redesigning of the terminal building and extending the runway.

Pemba Airport currently serves only 45,000 passengers annually, whereas the number of tourists visiting the island exceeds 110,000 annually, and upon completion it will accommodate 750,000 passengers per year.

Pemba Airport, which was initially built in 1962, has a runway length of 500 metres and a width of 15 metres, which can only accommodate light aircraft, but the new redesign will allow international flights to fly direct into the island.

"Once completed at the end of 2026, the airport development will significantly attract more tourists to Pemba Island, as improved infrastructure often signals greater opportunities for the future, said the Minister of Works and Transport, D. Khalid Salum Mohamed.

He added: “The eastern part of the island, renowned for its pristine beaches, diverse hotel options, water sports activities, and vibrant nightlife, attracts a large number of travellers; however, they are right now in their poorest condition. The improved roads will unlock endless possibilities for tourism.”

Both the road projects and the Pemba Airport redevelopment are being implemented by Propav Infrastructure (Propav) and Tanzanian contractors Mwananchi Engineering and Contracting Limited (Mecco), something that has been heralded as a major coup for the Isles as it surges ahead in attracting foreign investment and boosting its tourism offering.

"These projects speak to who we are as a company," said Propav director Leandro Motta.

"We strive to build infrastructure that can play a key role in strengthening economies in Africa, and we believe that in these contracts, we have many of the elements that will contribute to Tanzania’s growth, not only now but in the future", he added.

His sentiment was echoed by Nasser Sheikh, the business development director of Mecco who expressed pride in contributing to the economic development of Zanzibar.

The signing ceremony was also witnessed by the British High Commissioner to Tanzania, Mr David Concar, who called it a historic milestone given the potential that the new facilities will have on the economy of Zanzibar.

The collaboration, he said, signifies a major step forward in strengthening the economic ties between Tanzania and the UK.

"The Projects will deliver significant social and economic benefits for the people in these areas in the process of lifting them from poverty," said Mr Concar.

He added: The project’s implementation will drive economic growth, enhance connectivity and open up new opportunities for trade and tourism in the region.