George Bush, the US president, and Jakaya Kikwete, his Tanzanian counterpart, have signed a five year US aid package for the east African country worth $698 million.

 

The two leaders signed the agreement on Sunday in the Tanzanian city of Dar es Salaam, the second stop of Bush's week long five-country trip to Africa.

The Millennium Challenge compact aims to reduce poverty and help stimulate economic growth in the country, according to the US run Millennium Challenge Corporation.

 

Kikwete said the pact would improve poor infrastructure that has been an "obstacle" to the country's development.

Act of compassion

 

Kikwete told Bush that he would be "remembered for many generations" for helping Tanzania and Africa as a whole.

 

"We act not out of guilt, but out of compassion, Mister President," Bush told his host at the State House.

 

The MCC says the investment, the largest ever by the corporation, will improve road works, extend the availability of electricity, and increase access to potable water.

 

Bush is due to discuss projects to fight Aids and malaria but he will also address the growing terrorist threat in the region.

 

Tanzania, considered a model for progressive development, is the centerpiece of a tour intended to highlight Bush's policies on the continent in contrast to his controversial handling of Iraq, Afghanistan and Somalia.

 

 

While in Dar es Salaam on Sunday, Bush will meet families of victims of an al-Qaeda attack on the US embassy there in 1998.

 

Jendayi Frazer, the top US diplomat for Africa, said the US was working "with African countries to build their capacity and to build their partnership in responding to these terrorist threats".

 

"So it's not only civil conflict, but also the global war on terror that is in our vital national interest to engage African countries robustly," she told reporters on Saturday.  

 

Bush arrived in Tanzania from Benin and will visit Rwanda, Ghana and Liberia.