In January 2022, the governments of two African countries, Burundi and Tanzania, entered into a $900 million agreement to build a connecting railway between the two nations’ capitals. This railway deal has come about due to both countries’ economies showing remarkable growth and a significant number of added jobs in both nations’ workforces. Additionally, the deal will positively impact trade and decrease poverty rates for both Tanzania and Burundi.
Poverty in Burundi
Burundi is a landlocked African country that ranks as the most impoverished nation globally. The country struggles with food insecurity and a poverty rate that is challenging to decrease. Burundi’s poverty rate now hovers at about 70%, increasing from 64.9% in 2013.
A lack of access to clean water and Burundi’s dependence on agriculture as a primary source of income exacerbates Burundi’s struggles. Agriculture’s status as the nation’s main source of income is likely to change as the progress on the railway commences.
Burundi’s economy dried up in 2015 as the government went through electoral changes that led to a contraction in the economy, according to the World Bank. The onset of the COVID-19 pandemic also led to a halt in Burundian economic growth. However, the new railway deal with Tanzania could increase trade and job availability and boost both countries economically.
Poverty in Tanzania
Tanzania has struggled to improve its economy and decrease its poverty rate, although it has had more success in this regard in comparison to Burundi. Since 2000, Tanzania’s economy has ranked as “one of Africa’s fastest-growing economies,” with an annually increasing GDP of almost 7%. However, Tanzania’s economic growth dipped to 2.1% in fiscal year 2020 as the COVID-19 pandemic pummeled the country. Fortunately, Tanzania is bouncing back economically as the nation regains its footing.
Tanzania’s primary business sectors with the most significant economic contributions are agricultural processing and mining. Both business sectors remained steady in the past year in terms of work and output, and even with inflation and the ongoing pandemic, the sectors remained stable in their economic contributions. With that in mind, the nation is determined to branch out to other economic sectors and not rely so heavily on agriculture and mining. The railway deal between Tanzania and Burundi will ignite new economic growth and development opportunities for various sectors in Tanzania.
Tanzania and Burundi’s Workforces
Tanzania and Burundi have large workforces in agriculture and mining. In 2020, Tanzania’s agricultural workforce accounted for close to 65% of the country’s overall workforce while Tanzania’s mining industry employed more than 310,000 individuals in 2019. Up to 160,000 Burundians rely on mining for their livelihoods. As of 2019, more than 85% of the Burundian population depended on agriculture as their primary source of income.
Tanzania’s and Burundi’s governments are determined to expand their workforces to generate economic growth with the new railway deal. Burundi’s industrial and structural workforce contributes less than 10% to the country’s overall gross domestic product (GDP). The average salary for a Burundian construction worker is 690,000 BIF, roughly $340 per month. Anyone working in construction in Burundi is heavily underpaid.
Tanzania’s construction workers often do not have formal training. The monthly salary of Tanzanian construction workers is slightly higher than the average wages of Burundi’s construction workers. The highest average salary for a Tanzanian construction worker is 1,830,062.00 TZS, roughly $700 a month.
The Tanzanian and Burundian governments are implementing a railway deal to develop a railroad to connect. This could help the countries could provide new jobs, increase salaries for construction workers and lessen dependence on agriculture and mining.
The Potential Impact of the Railway Deal
The two governments developed the railway deal to create inter-nation trade and travel and improve both economies simultaneously. Developing the integrated railway network will take several months and maintenance will require trained professionals to begin construction and keep the railways functional.
In the United States, 119 miles or 190 kilometers of rail work require 4,000 professionals for construction and maintenance and additional work in the surrounding areas. The Tanzania and Burundi deal will span a minimum of 282 kilometers; thus, the potential for job opportunities in Tanzania and Burundi is significant.
There are expectations of further possibilities for increased trade and new partnerships to develop as the railway starts operating. Tanzania and Burundi expect the added trade routes will enhance trade with the East African Communities (EAC), according to All Africa.
Tanzania and Burundi’s trade efforts are significant in the Democratic Republic of the Congo (DRC). For all regional markets in Africa, the Tanzania and Burundi new railway system could create inter-regional trade, boost employment rates, drop poverty rates and increase salaries for all involved.
– Clara Mulvihill