From Durbs to Dar

Thursday, 29 October 2009 06:41

The North-South Corridor project promises to give African frieght a shot in the arm, although operators are skeptical

Regional economic communities (RECs) in southern and eastern Africa are upbeat about the prospects for the development of the North-South Corridor project, which seeks to drastically upgrade transport infrastructure, improve and accelerate border-crossing procedures, simplify paperwork and attract investment and trade to the region.

This follows the successful High Level Conference on the North -South Corridor held in Lusaka, Zambia in April at which substantial development finance was pledged for the project.

The conference also produced a substantial report on the North-South Corridor Pilot Aid for Trade Programme, which identifies aims, projects, problems and projected costs of the project.

Delegates to the Lusaka conference and officials closely involved with the project are optimistic that things have begun moving and that the project will ultimately facilitate greater investment and trade in the region, leading also to increased benefits and new opportunities for transport and logistics operators active along the corridor and its offshoots.

And while transport and logistics organisations in South Africa also appear to view recent developments in a positive light, many of their members – the operating companies – seem to have mixed feelings about it all.

What is also surprising is that while these developments continue and receive substantial coverage in the media, many South African transport and logistics operators seem to be completely unaware thereof. Quite a few said they were not interested in sending their trucks north of the border because of security problems, theft, corruption, long border post delays, damage to vehicles over bad roads and more.

Not so, however, says the Federation of East and Southern African Road Transport Associations (Fesarta) and its executive officer, Barney Curtis. He believes the project is well under way, is being well managed and will bring new opportunities to the region.

The Aid for Trade Programme is a model project enabling the Common Market for Eastern and Southern Africa (Comesa), East African Community (EAC) and Southern African Development Community (SADC), their member states and the international community, to implement an economic corridor-based approach to reducing costs of cross-border trade.

It seeks to enable producers and traders to be more competitive, thereby creating higher levels of economic growth, employment creation and therefore also reducing poverty. The project will also focus on taking the necessary steps to ensure that adequate power supply is made available to support the growing demand from industrial, commercial and domestic consumers.

The pilot programme is based on the decisions of the Comesa-EAC-SADC Tripartite Summit held in Kampala, Uganda in October 2008 and on the various subsequent decisions.
The Lusaka conference in April allowed Comesa, EAC and SADC authorities to outline the critical underpinnings for rolling out the various projects and programmes as well as the bottlenecks to trade that need to be removed in a sequential manner, if trade costs are to be reduced.

The delegates agreed on the critical importance of high level political commitment at the national level in order to spearhead and monitor implementation of agreed policy reforms to deepen regional integration.

The conference generated strong financial and technical support for the project, and about US$1.2 billion of funding was committed by the development partners for upgrading road, rail, ports and energy infrastructure and to support implementation of trade facilitation instruments.

Among other things, the conference stressed the need for similar aid-for-trade projects in respect of other regional transport corridors; identified the need for member states to show greater commitment to projects and programmes by both providing counterpart funding and implementing and harmonising supporting policies and regulations; stressed the need to put in place an institutional arrangement to guide and manage the programme; create mechanisms for disbursing committed funds and identifying funding gaps; seek ways to facilitate private sector participation; recognised the weak nexus between regional and national project planning; and highlighted the need to align national and regional priorities.

It further identified the challenge of ensuring regular maintenance of existing infrastructures, including allocation of the requisite resources from national budgets for this purpose.

But a number of transport and logistics operators approached by Road Ahead appear to be sceptical that much will come of it, saying that talk along these lines have been continuing for years and they “have heard it all before”.

Fesarta’s Curtis, however, disagrees with them.

“The North-South Corridor project is certainly not a talk shop,” he says. “The project is being managed by the Regional Trade Facilitation Programme (RTFP) as part of the World Trade Organization’s Regional Aid for Trade and several billion US dollars have been pledged to the project.

“It is well under way.”

Curtis says the overall objective of the project is to reduce poverty in the region and one of the ways of doing this is to reduce transport costs, particularly to landlocked countries.

“By reducing transport costs, there will be increased trade facilitation between the countries, and so opportunities will arise for all sectors. Its biggest impact will be the lowering of costs to the consumer in landlocked countries.

“I am not sceptical about the project. It is one of the few projects that has top quality management with sustainable outputs in view. Fesarta is working closely with the RTFP on the project. If we can achieve our objectives of making cross-border transport more efficient and with less hassles, then it will become more attractive to prospective transporters and logistics providers,” says Curtis

“Importers and exporters will be more inclined to trade with other African countries – intra-African trade – rather than with Europe, Asia and so forth. At present, the hassles are quite severe and many transporters are put off from doing this sort of work. It is a long, slow process, but I think we do make progress,” adds Curtis.

Michelle Ross, operations manager of Central African Road Services, which operates in some of the countries involved, is not so sure that his optimism is well placed.
“I am very negative about all that has been going on. From my point of view, it has all been taking too long, there has been too much wasted revenue with meetings month after month.

We have been attending a lot of meetings that have resulted in no conclusions and personally, I think they have been a waste of time,” says Ross.
But, she says, her colleague Harold Reed, who manages their company in Harare, Zimbabwe, is far more optimistic, particularly regarding new infrastructure at the Chirundu border post between Zimbabwe and Zambia.

And indeed, when approached, Reed said: “Advantages are plenty for operators and clients... that I can tell you.”

Operators using the route through Chirundu say the road from Lusaka to the border post on the Zambian side of the border is a good one, most of it having been newly resurfaced with clear markings as part of a Chinese development project.

In addition, a one-stop border post with excellent facilities has been built at Chirundu. These developments are set to be duplicated further along the route and throughout the entire North-South Corridor project.

But the Kafue Bridge, some 50 kilometres from Lusaka along the Chirundu route, continues to be vulnerable and a potential problem, and is in need of improvement – either a new bridge, or the upgrading of the existing one.

But truck drivers say since the improvements, waiting times at the Chirundu border post have been reduced, although sometimes delays of up to a week still occur.
Previously, trucks were often held up for a month or more, waiting for clearance. Now the border post handles almost 300 trucks and buses per day.

And Chirundu has already tasted the kind of benefits and opportunities that may come with the corridor project in the form of a new bridge and increased investment in the local economy. Basil Anderson, operations manager of the Cape Town-based Concargo group, says he is “fairly optimistic”.

He also mentions the upgrades at Chirundu, saying this has already brought improvements.

Anderson says while Zambia has already upgraded many of its roads, things are very quiet in Zimbabwe, Malawi continues to be “a problem” with long delays at border posts, and serious congestion continues at the Beitbridge border post between Zimbabwe and South Africa.

“But if the corridor plans come to fruition, it will definitely lead to more investment and more opportunities. We would put in more vehicles and employ more drivers. It certainly would have a major effect on our business.”

“If I manage two trips each to Zambia and Malawi at present, I consider it to have been a good month. That could improve drastically if they succeed with these plans, and I think it will happen. We are all hoping it will,” he says.

However, Anderson adds that corruption is still a serious problem that will not easily be stamped out.

Many other problems still remain. Gavin Kelly, technical and operations manager at the Road Freight Association, has said inefficiencies and bottlenecks at border posts still pose a major obstacle to efficient and on-time transport services.

“Intra-Africa trade has a tremendous growth potential on our continent. Barriers to easier trade in the Southern African Development Community and the Common Market of Eastern and Southern Africa regions need to be reduced or eliminated. Road transport remains the most important mode of transport in Africa,” he says.

Nonetheless, varying levels of progress have been made to date in upgrading regional infrastructure and integrating economies through an emerging network of transport and development corridors. And the project is likely to receive further impetus in November when the inaugural Nepad (New Partnership for Africa’s Development) Transport Summit 2009 and Africa Expo – the first of what is expected to be an annual event in Africa’s regional transport hubs – will take place in Johannesburg.

Decision-makers from African ministries of transport, trade, finance and communications, the African Union, Nepad and RECs will meet at the summit with senior executives in the private sector from major transport and logistics companies, international experts in transcontinental transport and representatives from development banks, world aid and donor-funding agencies.

The main focus will be on Africa’s key cross-border arteries and their importance in regional integration, including the North-South Corridor.

Main features of the North-South Corridor Pilot Aid for Trade Project

• A joint initiative of Comesa, EAC and SADC;
• Involves eight countries: Tanzania, Democratic Republic of Congo, Zambia, Malawi, Botswana, Zimbabwe, Mozambique, and South Africa;
• Will reduce time and costs of road and rail transport along two priority corridors of Nepad (plus routes branching off from main corridor);
• These are the Dar es Salaam Corridor linking the port of Dar es Salaam to the Zambian Copperbelt, and the North-South Corridor linking the Copperbelt to the southern ports of South Africa;
• Aims to upgrade road and rail infrastructure, border posts, and ports;
• Seeks to introduce simplified regulatory environment with reduced clearing procedures and harmonised documentation and regulations;
• To facilitate trade and investment in the region;
• Aims to resolve the current situation where different RECs offer different solutions to the same transport problem;
• To realise corridor-wide efficiencies and lower the costs of transport for traders and transporters;
• Seen as an important step towards the formation of a Free Trade Area across the three RECs;
• Implementation to be facilitated by various projects of the North-South Corridor Pilot Aid for Trade Programme.

Projects of the North South Corridor Pilot Aid for Trade Programme

Trade facilitation and administrative issues project, involving:
• harmonising the institutional, reporting and decision-making setup;
• funding arrangements;
• finalisation and implementation of the programme to simplify and harmonise customs procedures and legislation;
• support for cross-cutting programme regarding road safety and HIV/Aids;
• reduction of border-crossing times;
• introduction of one-stop border posts;
• harmonising regional customs bond guarantee schemes and transit management systems;
• harmonising and enforcing axle load and vehicle dimension limits;
• harmonisation of regional third-party vehicle insurance schemes; and
• total costs over five years estimated at around US$20.35 million, to which it is hoped the international community will contribute.

Road infrastructure projects and programmes, involving:

• Upgrading the entire road network to the same standard;
• Concessioning the road as one network to private operators;
• Alternatively, to retain upgrading and maintenance as responsibility of national roads agencies;

• Once initial backlogs are addressed, costs of maintenance fall significantly for the next 20 years;
• In year two, maintenance costs of entire network (excluding South African roads) estimated at about US$125m;
• By year six, maintenance costs will be about US$700m, falling to about US$450m in year seven;
• Total investment in roads for 20-year period (excluding South Africa) is US$9.8bn, of which US$6.4bn is capital investment and US$3.4bn is recurrent costs;
• Economic return on this investment (Net Present Value) estimated at US$13.9bn;
• In the initial years, higher amounts of investment expenditures are required to eliminate maintenance backlogs and raise road standard to appropriate levels; and
• Support from the international community for the establishment of roads funds and agencies to finance road maintenance and construction, with such funds to be financed through budget contributions, fuel levies, road user charges and donor contributions.

Rail transport projects, involving:

• Essentially the North-South railway system from the South African border, through the Copperbelt to the DRC, and the rail system feeding the Port of Dar es Salaam;
• Other rail corridors, such as those along the Benguela, Beira and Maputo corridors, also have the potential to serve the North-South corridor;
• Further studies to determine appropriate concession agreements and options available to governments to open up the railways to new investors and operators;
• Upgrading to a seamless regional operation for maximum efficiency;
• Upgrading and restructuring the TAZARA railway and the Kapiri Mposhi to Chingola railway;
• Extending the Northwest Railway to provide the expanding copper industry in Zambia and the DRC with a more economic transport solution;
• Strengthening the recently relaunched Southern African Railway Association (SARA) with financial and personnel resources and specialist services;
• Upgrading the Victoria Falls to Bulawayo Railway;
• Establishing a regional locomotive and wagon-leasing pool;
• Requested of international community to first assist countries to resolve the policy issues resulting in constraints to investments in the railways and to then assist countries to upgrade the railway infrastructure; and
• An estimated total cost of about US$7.25m for studies and consultations and US$800m in capital costs.

Regional ports project, involving:

• Short-term improvement of key backbone infrastructure to improve transport flexibility and access to regional ports;
• Improving congestion and berthing delays at the ports of Dar es Salaam and Durban;
• Improving operational and infrastructure constraints affecting ports such as Beira, Maputo, Walvis Bay and Lobito; and
• A request to the international community to provide financing of US$3.55m for studies and consultations and US$425m to construct a new container terminal and dredging of the main access channel at the port of Dar es Salaam.

A need for policy changes, improvement of trade facilitation measures and investments in infrastructure upgrades.
Interventions taking place in these sectors are financed by the international community and public sector budgets of governments serviced by the corridor, but significant funding gaps remain.

The role of government is to create a facilitating environment and manage the NSC Pilot Aid for Trade Programme as a single multimodal transport system.

Stef Terblanche

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