North-South Corridor project gathers momentum

The development of an economic block in East and Southern Africa has received a boost with investment commitments from development partners, while developments in Zimbabwe are also improving the outlook for the region,
Piet Coetzer reports.

The North-South Corridor project, spearheaded by the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) received a substantial boost in early April.

Development partners committed over $1.5 billion towards the initiative for the upgrade of road, rail and port infrastructure at a two-day meeting of leaders from the region in the Zambian capital of Lusaka.

The meeting discussed plans to attract funds for infrastructure and energy projects that could help spur regional trade and change the lives of millions. The North-South Corridor is an initiative that will remove the bottlenecks along the main trading routes throughout the region by speeding up border crossings, improving railways, roads and ports across east and southern Africa.

Once in place it will open up the area to new business opportunities in Tanzania, Democratic Republic of Congo (DRC), Zambia, Malawi, Botswana, Zimbabwe, Mozambique and South Africa.

The pledged funds are also for supporting trade in the corridor. The World Bank has committed $1bn, of which $500 million is for projects along the North-South Corridor.The other $500m will be invested in projects complementing the corridor.

The European Commission (EC) has committed $150m, while the United Kingdom has committed £100m towards transforming regional infrastructure and increasing trade across Africa.

The African Development Bank (AfDB) has committed $600m, part of which is for projects on the North-South Corridor while the rest is for the Nacala Development Corridor in Mozambique.

The pledges were made as presidents from Kenya, Uganda, South Africa and Zambia, representatives from the region’s economic communities and top players from the European Union ,the World Bank and the AfDB gathered at Mulungushi international conference centre to launch the North-South Corridor. The Corridor project intends to spend $7bn to revamp 8 646 kilometres (5 374 miles) of highway, halve waiting times at border posts and cut the cost of moving goods by $50m a year.

The project, a pilot under the Aid for Trade programme, will prioritise routes from the Dar es Salaam port in Tanzania to the Copperbelt province in Zambia and the DRC; and routes from the Copperbelt to South Africa’s ports, according to its website (www.northsouthcorridor.org).

Zambia’s President Rupiah Banda, South Africa’s Kgalema Motlanthe, Kenya’s Mwai Kibaki, and Uganda’s Yoweri Museveni met in Lusaka to attract funding for the project aimed at boosting trade flows and improving economic growth on the world’s poorest continent. Improvements on rail, port and trade facilities will cost an estimated $1.3bn over the next five years.

“Once the project is successfully implemented, the bottlenecks faced by countries along the corridor will have been removed to facilitate trade, with the ultimate objective of reducing transport costs,” said President Banda at the conference.

Deepening co-operation

The project will deepen economic co-operation between 26 nations with a combined population of 526 million and speed up the creation of a free trade area that was agreed to in October 2008, President Kibaki said.

Southern Africa needs $800m for the rehabilitation of rail wagons, locomotives and sections of railway in Tanzania, Zambia, Botswana and Zimbabwe, while more than $450m is needed to upgrade the main Dar es Salaam port.

The project will seek aid, loans or investment and encourage the full or partial sale of state-owned companies to private investors. It will start an investment fund for regional infrastructure, work to harmonise customs procedures between countries and aim to slash the length of time it takes to cross borders at a cost of $20.4m over the next five years.

President Museveni said Africa needed fair trade with Western nations more than aid to develop. “It’s the job of Africans to strengthen themselves through trade... this is a matter of survival.”

Britain said it would separately provide £100m for the region’s infrastructure to increase trade and mitigate the effects of the global financial crisis. Transporting a single cargo of copper from the Congo to ports takes weeks, whereas in Europe the same cargo would reach ports within a fraction of that time.

President Kibaki said the countries had agreed to build new power projects to ensure access to roads, rail, telecommunication links and electricity.

“The shortage of electric power remains a major constraint of economic development in our countries,” he said.

Power generation

The North-South Corridor could add an additional 35GW of electricity to the grid of the southern African power pool by 2015. The corridor, which would run along the two main trading routes in Africa, would travel between South Africa’s Durban port and the Copperbelt area of the DRC and Zambia, as well as between the Copperbelt and Dar es Salaam.

Speaking at the conference in Lusaka, North-South Corridor head of the regional trade facilitation programme, Mark Pearsons, said there was currently an 8 600MW difference between the power pool’s installed and available capacity.

The difference was ascribed to the fact that several units in the southern African power pool were currently being refurbished and would be returning to service shortly.

There was also the matter of fuel constraints.

In 2008, the power pool commissioned only 1 747MW of power, against a set target of 2 014MW.

Pearsons estimated that more than $4.7bn would be needed to fund the development of identified transmission projects in the region, which would include linkages between Zambia and Tanzania, the DRC and Zambia, Malawi and Mozambique.

SADC director of infrastructure Remmy Makumba said it had a generation capacity of about 43 000MW, and that it anticipated a shortfall of between 3 000MW and 4 000MW within the short term.

Makumba added that copper originating in the copperbelt of Zambia and the DRC was likely to become more competitive as the North-South Corridor came on line.

Zimbabwe government reconstruction

In another positive development for the region, South African business leaders called for guarantees to protect new investment in Zimbabwe, after noting efforts by Harare’s new unity government to attract business to help its battered economy.

A Zimbabwe government reconstruction summit in early April produced a 100-day action plan that seeks to end the country’s isolation and is aimed at re-engagement with Western governments, seen as crucial in funding an economic recovery plan.

South African mining magnate Patrice Motsepe, who led a 22-member delegation from Business Unity South Africa (BUSA) which held talks with President Robert Mugabe and Finance Minister Tendai Biti in Harare, returned in a buoyant mood.

“This was a very good meeting; it was a very frank discussion and they want to make Zimbabwe attractive. The critical thing is that the rules of investment should remain in place,” Motsepe told reporters after the meeting. “The concern is that there should be no shifting of goalposts a few years down the line. What the president and the finance minister have reconfirmed is the new policy formulated by the inclusive government to create an environment which builds trust,”
he added.

Biti told journalists he had assured the group that the new government was committed to protecting investments.

“We made it clear that our economy is ready for investment,” he said.