Regional Infrastructure Gains Ground in SADC
Posted Nov 10, 2008
There has been a dramatic push for infrastructure investment and development in Africa over the past few years. This is true, too, of most SADC states, which, while maintaining a bias towards the domestic market, have also seen a dramatic shift towards the development of regional infrastructure.
At a strategic level, the launch of the SADC Corridor Development Strategy attests to a renewed commitment to regional infrastructure development and there are already improved levels of cross-border collaboration involving two or more member states.
Peace in Angola has led to a massive injection of funds to support the government’s ambitious infrastructure development programme. Two key elements of the programme are the estimated US$2 billion project to rehabilitate and modernise the Benguela Railway and the US$1.8 billion project to modernise the port at Lobito.
Other projects with a regional perspective include the feasibility studies currently under way to link the Moçambedes Railway to Namibia. Phase 1 of the N$900 million (US$100 million) northern rail link from Tsumeb to Odangwa was concluded in 2006 while the government of Namibia recently approved the one kilometre extension of the railway into Angola.
Going westwards, Angola and Zambia have agreed on a plan to expand the existing railway line to link the two countries and to build road linkages to boost trade. However, it appears that the Zambian segment of the railway (243km in total) is being contested following the recent signing of a memorandum of understanding between the Zambian government and other parties, which includes China Railways International Ltd.
Another project worth highlighting is the expansion and modernisation of the Walvis Bay Port, a project estimated to cost R1,2 billion (US$150 million), according to the Namibia Ports Authority. Namibia has entered into agreements with Botswana and Zimbabwe to provide land to build dry port and storage facilities at the deepwater port. The project also includes the development of facilities to service oil rigs along the west coast. The Walvis Bay Corridor Group recently opened an office in Johannesburg to aggressively pursue private sector investors.
Namibia’s determination to make Walvis Bay a port of regional significance does not end there. Recently, Namibia’s state-owned petroleum firm, Namcor, issued a tender for the construction of a R700 million (US$70 million) fuel storage facility. Construction of the 118 000m³ facility is scheduled to start in the first half of 2009.
There are also significant developments on Southern Africa’s eastern seaboard. A study conducted by Qatari firm Vanessia Petroleum has reportedly confirmed the feasibility of the Mozambique-Malawi fuel pipeline. According to Malawi’s Finance Minister, Goodall Gondwe, Vanessia Petroleum is prepared to spend US$150 million to lay the pipeline and build the storage facility. This follows the recent signing of an $8 billion deal between the Mozambican government and OILMOZ for an oil refinery with a production capacity of 350 000 barrels a day of refined oil.
As the host of the FIFA 2010 Soccer World Cup, South Africa has become a hive of infrastructure activity. Gauteng province alone is undergoing a facelift with a R11 billion (about $1,2 billion) road upgrade. The R25 billion ($2,5 billion) Gautrain Rapid Rail Link represents another critical milestone for infrastructure development in SADC.
The government plans to spend more than R400 billion ($40 billion) on infrastructure by 2010. The major beneficiaries are airports, energy, ports, rail and roads, all of which could play a catalytic role in enhancing South Africa’s position as SADC’s premier exporter.
In Zambia, the National Road Fund Agency has developed a $1,6 billion, 10-year programme for the expansion, upgrading and maintenance of roads. This initiative includes building tolled highways using public private partnerships.
The North-South Corridor could be a major beneficiary of this vast programme. As the region’s busiest corridor and major trade route, the corridor will remain the catalyst for the promotion of regional trade with positive economic spin-offs in almost all SADC member states.
Tanzania is also developing a Dar es Salaam Port Master plan — a blueprint for the expansion and modernisation of its port infrastructure. This study is under way and implementation is scheduled to begin in the next six to 18 months. The port is vital to the landlocked countries of Burundi, Democratic Republic of Congo, Rwanda and Uganda.
The World Bank’s Development Research Group estimates that Sub-Saharan Africa could gain in the range of $20 billion annually or $203 billion over 10 years as a result of trade-related infrastructure upgrading projects, to which SADC would be a major contributor. There is no doubt that the work being done currently lays a solid foundation for the future of the region, particularly, in light of the recent launch of the Free Trade Area.
The reduction of non-tariff barriers has also been a key element of interventions aimed at easing the movement of people and goods across borders in SADC. With support from a number of donor-financed programmes, including the Regional Trade Facilitation Programme (RTFP), several initiatives to establish One-Stop Border Posts, such as those between Zambia and Zimbabwe at Chirundu and between South Africa and Mozambique at Ressano Garcia/Lebombo, are under way.
While significant strides continue to be made in increasing infrastructure investment across SADC, much more must be done to urgently address some major constraints on the project front. This includes weak capacity of project owners/promoters; a lack of bankable projects coming through the pipeline; and information asymmetry.
As part of its contribution to SADC’s regional integration agenda, the NEPAD Business Foundation (NBF) would like to encourage, project owners/promoters and development partners to use its network and sector committees for market sounding/market testing purposes. This will allow business to assume a more pro-active and participatory role at early project development stage.
To this end, the NBF is putting in place several instruments to mobilise and provide assistance in project development. For example, in February 2008, it established a Project Management Office to find, screen, develop and facilitate implementation of bankable projects that fit into the NEPAD objectives/strategy. These will be passed onto the private sector through its sector and sub-sector committees.
In order to improve deal flows along the project pipeline, the NBF is also setting up the NBF Catalyst Fund, for which responsibility will lie with the Project Management Office and CRESCO Capital. Its functions will include:
- Promoting an enabling environment for investment in countries in which the Fund invests;
- Project scooping;
- Providing technical and financial support to conduct pre-feasibility and feasibility studies;
- Providing detailed designs, assistance for project packaging advisory services, and assistance in deal making and transactional advice; and
- Facilitating and supporting the involvement of NBF members across the project value chain.
The NBF is offering its services and the collective capability of its broad membership to scale up infrastructure development and private sector investment as part of its contribution to the attainment of NEPAD’s vision, goals and objectives.
However, for the NBF, success in all these endeavours hinges on effective collaboration with regional economic communities, governments, and development partners.
- Mr Rocha is Senior Project Manager of the NEPAD Business Foundation, based in Johannesburg