One report by the Washington-based bank found inefficiencies and governance issues at Dar es Salaam port cost Tanzania US$2.4 billion per year, equivalent to the value of 25 per cent of the total volume of merchandise imported to the country in 2012.
Since the port is also responsible for 14 per cent of trade for six landlocked neighbours - a segment of its business that is growing at 16.5 per cent annually - its problems take a toll on the economy of the entire region, reported HIS Media.
Dar es Salaam suffers from poor port and berth productivity, including lengthy cargo dwell times and high berth occupancy rates. Container vessels are required to queue for an average of 10 days before berthing.
The planned upgrade includes $400 million in civil and infrastructure works to deepen and strengthen existing berths; deepen and widen the port entrance channel and improve rail links.
A further $21 million will be spent on technical assistance to restructure the Tanzania Port Authority (TPA) and buy new management information systems.
Landside congestion is also a major problem as roads around the port are unable to cope with growing traffic volumes. Poor gate and traffic management make the problem worse, the bank says in its assessment study for the loan.
"On the main arteries - the volume of port traffic, in conjunction with growing urban traffic, and limited traffic management is overwhelming the current road network. In addition, there is a lack of parking, leading to trucks stopping on the road-side, and there is no effective gate management system operated by TPA, further exacerbating congestion," the study said.
Dar es Salaam handled 13.8 million tons of cargo in 2016, down 4.8 per cent down compared to 2015. According to the bank's traffic forecast, the upgraded facility will handle one TEU by 2018 and 1.75 million by 2023.