Tanzania and South Korea Push US$2.5 Billion Economic Partnership Forward

TANZANIA · ECONOMY & DIPLOMACY

Two years after signing one of Korea’s biggest concessional finance commitments in Africa, Tanzania is pressing Seoul to turn pledges into construction sites — and both sides now admit delays are the biggest risk.

Tanzania South Korea economic ties are entering the implementation phase. Finance Minister Khamis Mussa Omar said the two governments agreed in Seoul this week to accelerate a US$2.5 billion concessional financing commitment and to closely monitor the projects pledged during President Samia Suluhu Hassan’s 2024 state visit.

The agreement was reached on the sidelines of the Korea-Africa Economic Cooperation (KOAFEC) Ministerial Meeting, where Omar led the Tanzanian delegation in talks with Korea Eximbank, the state bank that administers Korea’s Economic Development Cooperation Fund (EDCF), The Citizen reported. The financing covers transport infrastructure, technology, culture, manufacturing and health.

Delays Are the Central Complaint

Omar was unusually direct about the bottleneck. Tanzania values Korea’s development cooperation, he said, but implementation of jointly agreed EDCF projects must improve, because hold-ups on either side undermine the commitments made. “Some projects have taken several years before implementation could begin,” he said, calling for closer coordination on feasibility studies and detailed engineering designs.

The framework behind the talks was signed in Seoul on 2 June 2024, during Samia’s state visit for the inaugural Korea-Africa Summit, where she met then-president Yoon Suk Yeol. It made Tanzania the largest African recipient of Korea’s concessional credit program, with US$2.5 billion to be committed between 2024 and 2028, according to the Korean foreign ministry.

Hospitals, a College and a Graphite Road

The project list now under joint monitoring is concrete. First in line is a Smart ICT College in Dodoma, the capital, which both sides expect to enter implementation soon. Also discussed: an International Conference and Exhibition Centre in Zanzibar, the construction of Binguni Referral Hospital and further development of Muhimbili National Hospital in Dar es Salaam, the country’s largest referral facility.

Two transport items round out the package: the Ifakara–Mahenge road, a route directly tied to graphite mining activities in southern Tanzania, and the planned procurement of passenger coaches for the country’s new standard-gauge railway. The graphite link is no detail — Korea has explicitly framed its Tanzania engagement around access to critical minerals such as graphite, nickel and lithium, as The Diplomat noted after the 2024 summit.

KOAFEC Turns Twenty — and Bets on AI

The Seoul meeting itself was a milestone. The 8th KOAFEC, a consultative body founded in 2006 and marking its 20th anniversary, ran from 8 to 11 September with ministerial delegations from 45 African nations, organized by Korea’s Ministry of Economy and Finance, the African Development Bank and Korea Eximbank under the theme “Harnessing AI and Digital Infrastructure for Africa’s Transformation.”

Seoul used the occasion to unveil its K-AI Package, which bundles AI solutions, data centers and power infrastructure with EDCF-financed projects. “South Korea has gained experience and know-how through its transformation from an underdeveloped nation into an advanced country,” Finance Minister Koo Yun-cheol told reporters. “This cannot be obtained simply by purchasing computers or building data centers,” Yonhap reported.

Tanzania is already the showcase. In late August Seoul approved a US$170 million EDCF loan to build an AI and digital technology training institute in the country — the first AI-related project in the fund’s history — and at KOAFEC it confirmed the Tanzanian institution as the first selection under the K-AI Package. Communications Minister Angela Kairuki used the Seoul stage to invite Korean investors into data centres, 5G expansion, fibre-optic networks, e-government and support for the state telecom TTCL.

Trade Still Lags the Money

The commercial relationship remains far smaller than the financing pledge. Bilateral trade reached approximately US$388 million in 2024, and Tanzanian exports to Korea accounted for only about US$28 million, or 7.2 percent of the total, Tanzania’s new ambassador in Seoul, Noel Emmanuel Kaganda, told The Korea Herald. Korean investments worth nearly US$90 million have created around 5,000 jobs in Tanzania — meaningful, but modest against the US$2.5 billion framework.

Kaganda, who presented his credentials to President Lee Jae Myung on 22 July, argues the imbalance is an opportunity. Tanzania offers access to more than 300 million consumers through the East African Community and the Southern African Development Community — a combined market of roughly 720 million people, he said. Dar es Salaam is negotiating a double-taxation avoidance agreement and has opened early discussions on an economic partnership agreement, as well as on sending skilled workers to Korea under its Employment Permit System.

What to Watch

The test of the Seoul talks is whether signed projects move into procurement and construction before the framework expires in 2028. Korea’s AI emphasis under Lee Jae Myung aligns closely with Tanzania’s Vision 2050, and the K-AI designation gives Dodoma a first-mover advantage among African partners. The wider contest for the continent’s minerals and infrastructure contracts is tracked in The Rio Times’ Africa: The New Scramble series.

For now, both governments are saying the right things about speed. Omar’s public impatience — and Seoul’s decision to put US$170 million behind a Tanzanian AI institute weeks before the ministerial — suggest each side knows the window between pledge and delivery is where partnerships like this are usually lost. Tanzania’s parallel push to attract digital-infrastructure capital, detailed in our coverage of the KOAFEC investment pitch, shows how much of the strategy now runs through technology rather than traditional aid.