Dar es Salaam. Tanzania and Iran have entered into a formal agreement that will see the former spending about US$7 million –or Sh17.6 billion – monthly to service its debt with the West Asian nation, it has been revealed. 

According to reports by the Iranian press, the deal was signed by Tanzania’s deputy minister of finance, Hamad Chande and Ali Fekri, the director-general of Iran’s Organisation for Investment, Economic and Technical Assistance.

Tanzania and Iran have agreed that the payment will be made monthly based on the agreed schedule that was kept from the public.

Iran is Tanzania’s biggest bilateral lender, with our 2022 analysis showing that the East African nation owes a total of Sh1.48 trillion to the Islamic Republic, a debt accrued for several years without being serviced.

The credit traces back to the late 1970s and early 1980s when Tanzania struck a deal with Iran on the importation of oil on credit.

READ MORE: Tanzania’s public debt increases to Sh76trillion

Iranian President Seyyed Ebrahim Raisi has engaged different African countries in battling sanctions and rebuilding Iran’s diplomacy arm.

In East Africa, Raisi has visited Kenya and Uganda. During the sidelines of the BRICS summit in South Africa, he was able to hold a meeting with the Tanzania president, Samia Suluhu Hassan.

Iran says the deal is part of its policy of developing “cooperation and investment with different governments.” It thinks the debt repayment will “facilitate” its relations with Tanzania, a nation that the Islamic Republic considers “strategic,” the Iranian press has reported.

Iran-Tanzania relations have been growing lately, with the trade volume between the two nations rapidly increasing over the last two years. Tanzania’s export value to Iran reached US$35 million by July 2023.

Iran considers Tanzania “one of the most important countries in East Africa,” and it has been taking several measures to expand economic ties with the country.

READ MORE: Tan-Trade Delegation in Iran to Boost Mining, Agricultural Cooperation

In late November 2022, Iran’s Trade Promotion Organisation (TPO) held the first exclusive exhibition of Iranian products and services in Tanzania in collaboration with the Iranian Trade Centre to showcase the Islamic Republic’s trade and export capacities.

Companies active in the agricultural sector, mines and industrial machinery, construction, medicine and medical equipment, participated in the exhibition.

In May 2023, a delegation of Tanzania Trade Development Authority (TanTrade), led by its Director General Latifa Khamis, visited Tehran to engage the Iranian counterparts, the Iran Chamber of Commerce, Industries, Mines and Trade (ICCIMA) on key areas of cooperation in trade.

The growing ties between the two countries have influenced Tanzania to consider opening an embassy in Tehran, with Deputy Minister of Foreign Affairs Ambassador Mbarouk Nassor Mbarouk telling the parliament on September 12, 2023, already the government was assessing such a possibility.

READ MORE: Tanzania Mulls Opening Embassies in Iran, Pakistan