MWANZA (Reuters) -- Choking back dust, schoolchildren in the Tanzanian city of Mwanza watch as a heavy digger rips up the surface of an old road to make way for a new paved highway to their local hospital overlooking Lake Victoria.

Tanzania, one of the world's poorest countries, has one of the worst road networks in Africa.

But with help from the international donor community, the country has embarked on an ambitious infrastructure regeneration scheme.

It is hoped that modernizing Tanzania's roads will provide a huge boost to the economy and reduce poverty in a country where more than half the 34 million people live on less than $1 a day.

"It is one of the most ambitious such projects in Africa," Leopold Mujjungi, director for trunk roads at Tanzania's Ministry of Works, told Reuters at a plant in Mwanza making concrete blocks for roadside drainage ditches. "We want all our regional centres and borders to be linked by bitumen roads that are well built and well maintained." -----------Herculean Task---------

He faces a Herculean task -- roads carry 70 percent of all freight and 90 percent of all passengers in Tanzania.

The country has far fewer roads per square kilometer than most of its east African neighbors, and many have descended into disrepair after years of neglect.

Small towns and villages are spread across the length and breadth of the vast country, and all but a handful are connected by dirt tracks that become impossible to pass for weeks at a time during the rainy season.

The state of the roads is so bad that buses from coastal Dar es Salaam to the second city Mwanza take a huge detour up the paved route north to the Kenyan capital Nairobi before looping back southwest into Tanzania.

A train ride from Dar es Salaam to Mwanza takes more than 30 hours.

The European Union, World Bank and several bilateral donors have divided up Tanzania's road network into a patchwork of regeneration projects stretching across the country from the Indian Ocean to the Great Lakes.

All are concerned that the millions of dollars being pumped into the schemes are well spent -- and that the results are still around to benefit local populations in the years to come.

The sections of drainage channel being built beside Lake Victoria are crucial because, along with overloading, water damage is the main source of road degradation.

Inadequate care of new roads means they need resurfacing every 10 to 20 years, which can cost more than three times as much regular maintenance.

Following a clash in 1999 between donors and Tanzania's government over lack of maintenance, support from the EU, one of the biggest contributors, was linked to the successful completion of government reforms in the roads sector.

Tanroads, a semi-autonomous roads agency, was set up by the Tanzanians in 2000, and the EU pledged 161 million euros for roads over five years, including 42 million euros for urgent maintenance.

More than 35 million euros has been spent so far this year. -----------No Quick Fix----------

"It is absolutely vital the main donors sit down together and discuss crucial policy issues like maintenance," said William Hanna, head of the European Commission delegation in Tanzania.

"Are there enough funds in place for maintenance? Will it be carried out properly?" he said, standing by a new EU-funded bridge over a creek that regularly used to flood the road between the city and its airport, 9km (5.6 miles) away.

Hanna led a group of EC ambassadors inspecting road projects around Mwanza last month. The EC is the EU's executive branch.

While there is no quick end in sight to the huge challenges facing the country's road builders, local businesses are expected to become more profitable as transport times for goods and services are reduced.

New bus services have been set up to reach rural communities that previously faced long walks, and accidents numbers are expected to drop as road quality improves.

Local economies have also received a temporary boost as hundreds of people find work constructing the new highways, bridges, culverts and drainage channels.

For Philip, a taxi driver at Mwanza airport, maintaining his car now costs less because of the smooth road surface.

The journey to the city centre used to be tortuous -- and sometimes impossible because of the floods. Now it is a comfortable 10-minute cruise.