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.
 
Family visit
 
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.
 
This is the US president's second trip to Africa since he became president in 2001.