REPUBLIC OF ZAMBIA REPUBLIC OF MALAWI
DATA COLLECTION SURVEY ON NACALA CORRIDOR INTEGRATED DEVELOPMENT IN SOUTHERN AFRICA
FINAL REPORT
MARCH 2018
JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) ORIENTAL CONSULTANTS GLOBAL CO., LTD. MITSUBISHI UFJ RESEARCH AND CONSULTING CO.LTD. 6R EIGHT-JAPAN ENGINEERING CONSULTANTS INC. CR(3) 18-009
REPUBLIC OF ZAMBIA REPUBLIC OF MALAWI
DATA COLLECTION SURVEY ON NACALA CORRIDOR INTEGRATED DEVELOPMENT IN SOUTHERN AFRICA
FINAL REPORT
MARCH 2018
JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) ORIENTAL CONSULTANTS GLOBAL CO., LTD. MITSUBISHI UFJ RESEARCH AND CONSULTING CO.LTD. EIGHT-JAPAN ENGINEERING CONSULTANTS INC.
Exchange Rate (March 2018) US Dollar (USD) 1.00=Japanese Yen (JPY) 106.79 Zambian Kwacha (ZMW) 1.00= (JPY) 10.99 Malawian Kwacha (MWK) 1.00= (JPY) 0.15
Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
TABLE OF CONTENTS Page List of Tables ...... vi List of Figures ...... xi List of Abbreviations ...... xv
Executive Summary
Chapter 1 Introduction ...... 1-1 1.1 Background of the Study ...... 1-1 1.2 Objectives of the Study ...... 1-1 1.3 Study Area ...... 1-2 1.4 Counterpart Agencies for the Study ...... 1-3 1.5 Study Schedule ...... 1-3
Chapter 2 Corridor Development in Zambia and Malawi and Current Status of Nacala Corridor Development ...... 2-1 2.1 Clusters of Transport Corridors ...... 2-1 2.1.1 Propulsion Frameworks: Transport Corridors as Economic Corridors ...... 2-1 2.1.2 Transport Corridors Relevant to Malawi and Zambia ...... 2-3 2.1.3 Current Status of Major Transport Corridors Excluding Nacala Corridor ...... 2-5 2.1.4 Institutions for Transport Corridors ...... 2-6 2.2 Current Conditions and Status of Nacala Corridor ...... 2-8 2.2.1 Background of Nacala Corridor ...... 2-8 2.2.2 Status and Conditions of Nacala Corridor ...... 2-9 2.3 Current Usage of Nacala Corridor vis-a-vis Major Corridors ...... 2-15 2.3.1 Distance between Major Cities and Main Ports ...... 2-15 2.3.2 Traffic Volume in Zambia and Malawi ...... 2-16 2.3.3 Freight Traffic at Border ...... 2-17 2.3.4 Freight Share per Corridor ...... 2-19 2.3.5 Freight Movement on Nacala Corridor ...... 2-22 2.3.6 Capacity of Major Ports ...... 2-23 2.3.7 One Stop Border Posts (OSBPs) ...... 2-25 2.3.8 Transit Time and Cost ...... 2-27 2.4 Comprehensive Evaluation of the Corridors ...... 2-29 2.4.1 Hearing Survey Results on Nacala Corridor ...... 2-29 2.4.2 Comprehensive Analysis on Transport Corridors Related to Zambia and Malawi ..... 2-31
Chapter 3 Present Condition of Zambia ...... 3-1 3.1 Agriculture...... 3-2 3.1.1 Overview of the Agriculture ...... 3-2 3.1.2 Agriculture Condition ...... 3-2 3.1.3 Structure of Agriculture Producers ...... 3-5
i Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.1.4 Current Situation on Agriculture Production and Distribution ...... 3-5 3.1.5 Agribusiness Clusters and Players ...... 3-9 3.1.6 Related Policies, Programmes and Projects ...... 3-13 3.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector ...... 3-19 3.2 Industry ...... 3-55 3.2.1 Overview of the Industry ...... 3-55 3.2.2 Current Condition and Potential of Industrial Development Along Nacala Corridor ...... 3-56 3.3 Mining ...... 3-58 3.3.1 Overview of the Mining ...... 3-58 3.3.2 Mineral Production in Zambia ...... 3-58 3.3.3 Export of the Mineral Commodities ...... 3-60 3.3.4 Export Destinations of Mineral Commodities ...... 3-60 3.3.5 Government Policy of Mining Sector ...... 3-63 3.3.6 Development Potential of the Mining Sector in the Nacala Corridor Region ...... 3-64 3.4 Trade ...... 3-64 3.4.1 Overview of the International Trade ...... 3-64 3.4.2 Traded Commodities ...... 3-65 3.4.3 Trade Along Nacala Corridor ...... 3-68 3.4.4 Development Potential and Challenges of the Trade Sector in the Nacala Corridor Region ...... 3-72 3.5 Tourism ...... 3-73 3.5.1 Overview of the Tourism ...... 3-73 3.5.2 Tourism Sector of the Nacala Corridor Region ...... 3-76 3.5.3 Policy Direction and Challenges of Tourism Sector ...... 3-78 3.5.4 Development Potential and Challenges of the Tourism Sector in the Nacala Corridor Region ...... 3-79 3.6 Energy ...... 3-80 3.6.1 Current Situations of the Electricity Sub-Sector ...... 3-80 3.6.2 Current Situations of the Petroleum Sub-Sector ...... 3-83 3.6.3 Development Potential and Challenges of the Energy Sector ...... 3-85 3.7 Foreign and Domestic Investment ...... 3-87 3.7.1 Investment in Zambia ...... 3-87 3.7.2 Investment in Eastern Province ...... 3-90 3.8 Transport Infrastructure and Logistics ...... 3-92 3.8.1 Current Transport Sector ...... 3-92 3.8.2 Road Sub-Sector ...... 3-93 3.8.3 Rail Sub-Sector ...... 3-98 3.8.4 Aviation Sub-Sector ...... 3-102 3.8.5 Waterway Sub-Sector ...... 3-104
Chapter 4 Present Condition of Malawi ...... 4-1 4.1 Agriculture...... 4-2 4.1.1 Overview of the Agriculture ...... 4-2
ii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.1.2 Agriculture Condition ...... 4-2 4.1.3 Structure of Agriculture Producers ...... 4-5 4.1.4 Current Situation of Agriculture Production and Distribution ...... 4-6 4.1.5 Agribusiness Clusters and Players ...... 4-11 4.1.6 Related Policies, Programmes and Projects ...... 4-13 4.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector ...... 4-20 4.2 Industry ...... 4-43 4.2.1 Overview of the Industry ...... 4-43 4.2.2 Current Condition and Potential of Industrial Development Along Nacala Corridor ...... 4-44 4.3 Mining ...... 4-45 4.3.1 Overview of the Mining ...... 4-45 4.3.2 Mineral Production in Malawi ...... 4-46 4.3.3 Export of Mineral Commodities ...... 4-46 4.3.4 Government Policy of Mining Sector ...... 4-47 4.3.5 Increased Mining Projects in Recent Years ...... 4-48 4.4 Trade ...... 4-49 4.4.1 Overview of the International Trade ...... 4-49 4.4.2 Traded Commodities ...... 4-50 4.4.3 Development Potential and Challenges of the Trade Sector in the Nacala Corridor Region ...... 4-53 4.5 Tourism ...... 4-53 4.5.1 Overview of the Tourism ...... 4-53 4.5.2 Policy Direction of Tourism Sector ...... 4-57 4.5.3 Development Potential and Challenges of the Tourism Sector in the Nacala Corridor Region ...... 4-58 4.6 Energy ...... 4-59 4.6.1 Current Situations of the Electricity Sub-Sector ...... 4-59 4.6.2 Current Situations of the Liquid Fuel and Gas Sub-Sector ...... 4-61 4.6.3 Development Potential and Challenges of the Energy Sector ...... 4-63 4.7 Foreign and Domestic Investment ...... 4-66 4.8 Transport Infrastructure and Logistics ...... 4-68 4.8.1 Current Transport Sector ...... 4-68 4.8.2 Road Sub-Sector ...... 4-71 4.8.3 Rail Sub-Sector ...... 4-77 4.8.4 Aviation Sub-Sector ...... 4-83 4.8.5 Waterway Sub-Sector ...... 4-84
Chapter 5 Overall Issues and Impact Analysis of Nacala Corridor Development ...... 5-1 5.1 Evaluation of Relevance of Nacala Corridor Development to Existing Policies and Plans ...... 5-1 5.1.1 Zambia’s National Development Plan and Nacala Corridor ...... 5-1 5.1.2 Zambia’s National Transport Policy (ZNTP) and Nacala Corridor ...... 5-3 5.1.3 Zambia’s Budget Allocation Related Nacala Corridor Development ...... 5-3
iii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.1.4 Malawi Growth and Development Strategy (MGDS) III and Nacala Corridor ...... 5-6 5.1.5 Malawi’s National Transport Policy and Nacala Corridor ...... 5-7 5.1.6 Malawi’s National Transport Master Plan (MNTMP) and Nacala Corridor ...... 5-8 5.1.7 Malawi’s Budget Allocation Related Nacala Corridor Development ...... 5-9 5.1.8 Regional Economic Integration Policy and Nacala Corridor ...... 5-12 5.2 Possible Driving Forces for Nacala Corridor Development ...... 5-14 5.2.1 Zambia ...... 5-14 5.2.2 Malawi ...... 5-20 5.3 Overall Issues on Nacala Corridor Development ...... 5-24 5.3.1 Issues on Nacala Corridor Transport ...... 5-24 5.3.2 Issues on Economic Sectors ...... 5-26 5.3.3 Issues on the Relationship Between Corridor Transport and Economic Sectors ...... 5-29 5.3.4 Issues on Regional Economic Integration ...... 5-30 5.4 Impact Analysis ...... 5-31 5.4.1 Perspectives on Nacala Corridor Development ...... 5-31 5.4.2 Impact of Railway Upgrading on Transport Cost ...... 5-36 5.4.3 Impact of Nacala Corridor Development on Fuels and Fertiliser ...... 5-40 5.4.4 Economic Impact on the Nacala Corridor Region ...... 5-45
Chapter 6 Proposed Growth Scenarios of Zambia and Malawi Related to Nacala Corridor Development ...... 6-1 6.1 Introduction ...... 6-1 6.2 Advantages of Nacala Corridor over Other Transport Corridors of Zambia and Malawi ...... 6-2 6.2.1 Emergence of Nacala Corridor as an Important Alternative Transport Route ...... 6-2 6.2.2 Advantages of Nacala Corridor over Other Transport Corridors for Zambia and Malawi ...... 6-3 6.2.3 Impact of Advantageous Nacala Corridor with Planned Interventions on Development of Economic Sectors ...... 6-9 6.3 Proposed Vision for Nacala Corridor Development ...... 6-10 6.3.1 Proposed Vision on Nacala Corridor Development for Zambia, Malawi and Mozambique ...... 6-10 6.3.2 Nacala Corridor Development Concept and Guiding Principles ...... 6-10 6.4 Basic Policies on the Utilisation of Nacala Corridor and Development of Nacala Corridor Transport Infrastructure and Services ...... 6-12 6.4.1 Basic Policies on the Utilisation of Nacala Corridor ...... 6-12 6.4.2 Selection of Development Scenario of Nacala Corridor Transport Infrastructure and Services ...... 6-14 6.5 Basic Policies on Priority Economic Sectors and Target Markets in Nacala Corridor Development ...... 6-17 6.5.1 Increasing Importance of Regional Markets ...... 6-17 6.5.2 Basic Policies for Development of Economic Sectors in Relation to the Development of Nacala Corridor Transport Infrastructure ...... 6-17
iv Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
6.5.3 Priority Economic Sectors to be Promoted in Relation to Nacala Corridor Transport Infrastructure Development ...... 6-18 6.6 Strategies and Four Stages for Development of Nacala Corridor Transport Infrastructure and Services ...... 6-21 6.6.1 1st Stage (Present Situation) and 2nd Stage of Development of Nacala Corridor Transport Infrastructure and Services ...... 6-21 6.6.2 3rd Stage and 4th Stage of Development of Nacala Corridor Transport Infrastructure and Services ...... 6-21 6.7 Zambia’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Development ...... 6-23 6.7.1 Zambia’s Strategies for Promoting Development of Potential Economic Sectors by Taking Advantage of the Upgraded Nacala Corridor ...... 6-23 6.7.2 Zambia’s Potential Economic Sectors Related to Nacala Corridor Development ...... 6-25 6.7.3 Description of Potential Economic Sectors of Zambia and Key Points for Promoting Development of Potential Economic Sectors of Zambia ...... 6-27 6.8 Malawi’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Transport Development ...... 6-32 6.8.1 Malawi’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Transport Development ...... 6-32 6.8.2 Malawi’s Potential Economic Sectors Related to Nacala Corridor Development ...... 6-33 6.8.3 Description of Potential Economic Sectors of Malawi and Key Points for Promoting Development of Potential Economic Sectors in Malawi ...... 6-35
Chapter 7 Priority Projects Proposed for Promoting Nacala Corridor Development ...... 7-1 7.1 A Long List of Projects ...... 7-1 7.2 List of Recommended Priority Projects Promoting Nacala Corridor Development ...... 7-16 7.3 Brief Profiles of Priority Projects Recommended for Promoting Nacala Corridor Development ...... 7-17 7.3.1 Development of Transport Infrastructure of Nacala Corridor ...... 7-17 7.3.2 Promotion of Economic Sectors Along Nacala Corridor ...... 7-27 Appendix for Chapter 7: Points to be Considered for Farming Plan ...... 7-36
ANNEX : Records of the Seminars
v Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report LIST OF TABLES Page
Table 1.1 Study Area (Nacala Corridor Region in Zambia and Malawi) ...... 1-2 Table 1.2 List of Main Counterpart Agencies for the Study ...... 1-3
Table 2.1 Distance between Major Cities and Main Ports ...... 2-16 Table 2.2 Border Freight Traffic for Zambia and Malawi in 2015 ...... 2-18 Table 2.3 Freight Share per Corridor for Zambia (Year 2016) ...... 2-20 Table 2.4 Freight Share per Corridor for Malawi (Year 2016) ...... 2-21 Table 2.5 Freight Movement on Nacala Corridor in Zambia ...... 2-22 Table 2.6 Freight Movement by Railway in Malawi (2015) ...... 2-23 Table 2.7 Outline of the Capacity of the Major Ports ...... 2-25 Table 2.8 Development Status of OSBPs at Various Border Towns ...... 2-26 Table 2.9 Transit Time and Costs for the Major Towns from Various Ports ...... 2-28
Table 3.1 Demographic Characteristics of the Study Area ...... 3-1 Table 3.2 Agriculture Products by Agro-ecological Region ...... 3-3 Table 3.3 Farm Structure in Zambia (2016) ...... 3-5 Table 3.4 Category of Producers inside of Farm Block ...... 3-15 Table 3.5 Roles of the three Committees for Screening the Investment Plans ...... 3-15 Table 3.6 Progress of the Farm Block Development ...... 3-16 Table 3.7 Export and Import of Maize by Zambia by Country (Unit: ton) ...... 3-24 Table 3.8 Import of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-26 Table 3.9 Export of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-26 Table 3.10 Export and Import of Soya Bean by Zambia by Country (Unit: 1,000 ton) ...... 3-27 Table 3.11 Import of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-29 Table 3.12 Export of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-29 Table 3.13 Export and Import of Wheat by Zambia by Country (Unit: 1,000 ton) ...... 3-30 Table 3.14 Import of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-31 Table 3.15 Export of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-32 Table 3.16 Export and Import of Cotton Lint by Zambia by Country (Unit: 1,000 ton) ...... 3-33 Table 3.17 Import of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-34 Table 3.18 Export of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-34 Table 3.19 Export and Import of Bovine Meat by Zambia by Country (Unit: ton) ...... 3-36 Table 3.20 Export and Import of Live Bovine Animal by Zambia by Country (Unit: ton) ...... 3-36 Table 3.21 Export and Import of Live Goats and Sheep and Sheep Meat by Zambia by Country (Unit: ton) ...... 3-37 Table 3.22 Export and Import of Meat and Edible Offal of Poultry by Zambia by Country (Unit: ton) ...... 3-38 Table 3.23 Export and Import of Live Poultry by Zambia by Country (Unit: ton) ...... 3-38 Table 3.24 Import of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-40 Table 3.25 Export of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-40
vi Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.26 Import of Meat of Sheep and Goat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-41 Table 3.27 Export of Meat of Sheep and Goat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-41 Table 3.28 Import of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-42 Table 3.29 Export of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-42 Table 3.30 Export and Import of Fish by Zambia by Country (Unit: ton) ...... 3-43 Table 3.31 Import of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-45 Table 3.32 Export of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-45 Table 3.33 Export and Import of Soya Bean Oil by Zambia by Country (Unit: 1,000 ton) ...... 3-46 Table 3.34 Export and Import of Sunflower Oil by Zambia by Country (Unit: 1,000 ton) ...... 3-46 Table 3.35 Import of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-47 Table 3.36 Export of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-48 Table 3.37 Import of Sunflower Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-48 Table 3.38 Export and Import of Raw Sugar by Zambia by Country (Unit: 1,000 ton) ...... 3-50 Table 3.39 Export and Import of Refined Sugars by Zambia by Country (Unit: 1,000 ton) ...... 3-51 Table 3.40 Import of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-53 Table 3.41 Export of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-53 Table 3.42 Import of Soap and Detergent by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-55 Table 3.43 GDP and Employment by Industry ...... 3-56 Table 3.44 Contribution of the Mining and Quarrying Sector to the National Economy (Million ZMW at 2010 Constant Price) ...... 3-58 Table 3.45 Mineral Production in Zambia from 2009 to 2013 (Metric ton unless otherwise specified) ...... 3-59 Table 3.46 Export of Major Mineral Products from 2012 to 2016 (million USD) ...... 3-60 Table 3.47 Export Value and Destinations of Copper from 2011 to 2015 (million USD) ...... 3-61 Table 3.48 Export Value and Destinations of Precious Stones and Semi-Precious Stones in 2015 ...... 3-62 Table 3.49 Export Value and Destinations of Cement in 2015...... 3-62 Table 3.50 Export Value and Destinations of Lime in 2015 ...... 3-62 Table 3.51 Export Value and Destinations of Cobalt in 2015 ...... 3-62 Table 3.52 Export Value and Destination of Sulphur in 2015 ...... 3-62 Table 3.53 Export Value and Destination of Manganese in 2016 ...... 3-62 Table 3.54 Top Ten Export and Import Commodities in 2015 ...... 3-68 Table 3.55 Top Five Destinations of Export and Import at Mwami Border Post from 2013 to 2016 ...... 3-70 Table 3.56 Top Five Exported and Imported Commodities at Mwami Border Post from 2013 to 2016 ...... 3-71 Table 3.57 Tourist Arrivals and Annual Tourism Earnings ...... 3-73 Table 3.58 Tourist Arrivals by Port of Entry in 2015 ...... 3-77 Table 3.59 Tourist Arrivals in Eastern Province from 2011 to 2015 ...... 3-77 Table 3.60 Tourism Statistics by Province in 2015 ...... 3-78 Table 3.61 Guiding Principles and Measures for Tourism Sector Development ...... 3-79 Table 3.62 Electricity Access ...... 3-80
vii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.63 Power Generations in Zambia ...... 3-81 Table 3.64 Consumption of Power by Sector in 2015 ...... 3-82 Table 3.65 National Fuel Consumption from 2010 to 2015 (metric ton) ...... 3-85 Table 3.66 Major Projects in the Energy Sector ...... 3-86 Table 3.67 Investment in Eastern Province in Comparison with the Whole Country (Pledged base, 2010-2016) ...... 3-91 Table 3.68 Yearly Finding Requirement (USD) for the Transport Sector 2013-2016 ...... 3-93 Table 3.69 Road Conditions by Road Type for 2014 (RDA 2014) ...... 3-95 Table 3.70 Funding Sources for Road Works in 2016 ...... 3-95 Table 3.71 Budget Allocation by Programme in 2016 ...... 3-96 Table 3.72 Areas of Congestion and their Causes ...... 3-96 Table 3.73 ZRL Market Share in 2013 ...... 3-100 Table 3.74 Proposed New Transport Quota System by ZRL ...... 3-102 Table 3.75 Dry Port and ICD Facilities and Select Information ...... 3-105
Table 4.1 Demographic Characteristics ...... 4-1 Table 4.2 Distribution of Landholdings and Cultivated Area by Farm Size ...... 4-6 Table 4.3 Top 30 Ranked Irrigation Schemes and Current States of their Financing ...... 4-14 Table 4.4 Recent Implemented Projects Related to Aflatoxins Control ...... 4-19 Table 4.5 Export and Import of Groundnuts by Malawi by Country (Unit: 1,000 ton) ...... 4-24 Table 4.6 Import of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-25 Table 4.7 Export of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-26 Table 4.8 Export and Import of Rice by Malawi by Country (Unit: 1,000 ton) ...... 4-27 Table 4.9 Import of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-29 Table 4.10 Export of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-29 Table 4.11 Export and Import of Legumes by Malawi by County (Unit: 1,000 ton) ...... 4-30 Table 4.12 Import of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-31 Table 4.13 Export of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-32 Table 4.14 Export of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-32 Table 4.15 Import of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-32 Table 4.16 Export of Cotton Lint by Malawi by Country (Unit: 1,000 tons) ...... 4-33 Table 4.17 Export and Import of Tobacco by Malawi by Country (Unit: 1000 tons) ...... 4-35 Table 4.18 Import of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-36 Table 4.19 Export of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-36 Table 4.20 Export and Import of Raw Sugar by Malawi by Country (Unit: 1,000 ton) ...... 4-37 Table 4.21 Export and Import of Refined Sugars by Malawi by Country (Unit: 1,000 ton) ...... 4-38 Table 4.22 Export and Import of Tea by Malawi by Country (Unit: 1,000 ton) ...... 4-39 Table 4.23 Import of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-40 Table 4.24 Export of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 4-41 Table 4.25 Export and Import of Soya Beans by Malawi by Country (Unit: 1,000 ton) ...... 4-42 Table 4.26 Import of Soya Bean Oil by Malawi by Country (Unit: 1,000 ton) ...... 4-42 Table 4.27 GDP 2016 at 2010 Constant Price ...... 4-44 Table 4.28 Employment by Industry 2013 ...... 4-44
viii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.29 Contribution of Mining and Quarrying Sector to the National Economy (Million MWK at 2010 Constant Price) ...... 4-45 Table 4.30 Mineral Production in 2015 and 2016 ...... 4-46 Table 4.31 Mineral Export in 2015 and 2016 ...... 4-47 Table 4.32 Top Ten Export and Import Commodities in 2015 ...... 4-52 Table 4.33 Top Five Importers and Exporters of Top Five Traded Commodities in 2015 ...... 4-52 Table 4.34 Tourist Arrivals ...... 4-54 Table 4.35 Expenditures by Purpose of Visit and Average Number of Nights in 2015 ...... 4-56 Table 4.36 Annual Average Room and Bed Occupancy Rates in 2015 ...... 4-56 Table 4.37 Tourist Arrivals by Port of Entry Along Nacala Corridor in 2015 ...... 4-56 Table 4.38 Visions and Objectives in Malawi 2020 Tourism Development Strategy ...... 4-57 Table 4.39 Challenges to the Tourism Sector ...... 4-58 Table 4.40 Access to Electricity ...... 4-59 Table 4.41 Installed Capacity and Peak Demand from 2007 to 2016 ...... 4-59 Table 4.42 Existing Power Stations ...... 4-59 Table 4.43 Peak Demand Forecast...... 4-60 Table 4.44 Stand-by Power Supply Installation, Electricity Generation and Demand by Industry in 2012 ...... 4-61 Table 4.45 Fuel Import from 2000 to 2016 ...... 4-62 Table 4.46 Fuel Import by Corridor from 2000 to 2016 (Thousand Litres) ...... 4-63 Table 4.47 Major On-Going and Planned Projects and Investments Proposed in IRP ...... 4-65 Table 4.48 Major Large Scale Investment Projects in 2016 ...... 4-67 Table 4.49 Freight Demand by Mode in 2015 (1,000 ton) ...... 4-70 Table 4.50 2016/17 Transport Sector Budget (billion MWK) ...... 4-70 Table 4.51 Malawi's Road Network at the Time of 2009 ...... 4-74 Table 4.52 Condition of Malawi’s Classified Road Network as of June 2010 ...... 4-74 Table 4.53 Actual Roads Fund Income and Road Works Expenditures (million MWK) ...... 4-74 Table 4.54 Ongoing Reconstruction Projects ...... 4-76 Table 4.55 Potential Reconstruction Projects ...... 4-76 Table 4.56 MNTMP Capital Road Projects ...... 4-76 Table 4.57 2015 Annual Accumulative (ton) ...... 4-83 Table 4.58 Current Demand at Kamuzu Airport...... 4-84
Table 5.1 Macroeconomic Targets ...... 5-2 Table 5.2 Ten Critical Development Outcomes for Diversification and Inclusive Economic Growth ...... 5-3 Table 5.3 Expenditure by Function in 2017 and 2018 ...... 5-4 Table 5.4 Revenue in 2017 and 2018 ...... 5-5 Table 5.5 Improvement of Nacala Corridor (Rail) as Indicators in MGDS III ...... 5-6 Table 5.6 Expenditure from 2016/17 to 2018/19 ...... 5-10 Table 5.7 Revenue, Grants and Financing from 2016/17 to 2018/19 ...... 5-12 Table 5.8 Food and Cash Crop Production in Eastern Province, 2005/06–2014/15 ...... 5-15 Table 5.9 Top Three Industries of Each Province Passing through Major Corridors ...... 5-35 Table 5.10 Freight Demand by Mode in 2015 (1,000 ton) ...... 5-36
ix Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 5.11 Pure Transport Cost by Commodity in 2016 ...... 5-36 Table 5.12 Transit Time and Costs for the Major Towns from Various Ports ...... 5-37 Table 5.13 Transit Time and Costs for the Major Towns from Various Ports at Present and Future ..... 5-39 Table 5.14 Impacts of Nacala Corridor Development on Transport Time and Cost ...... 5-40 Table 5.15 Regional Prices of Petrol and Diesel in US Dollars (USD/litre, as of 31st December 2016) ...... 5-41 Table 5.16 Fuel Price at Port and Transport Cost to Malawi by Corridor ...... 5-41 Table 5.17 Impact on Transport Cost in Malawi (Fuel) ...... 5-42 Table 5.18 Average Annual Fertiliser Price (Urea) (USD/ton) ...... 5-43 Table 5.19 Transport Cost of Fertiliser in Zambia ...... 5-44 Table 5.20 Pure Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton) ...... 5-44 Table 5.21 Transport Cost of Fertiliser in Malawi ...... 5-44 Table 5.22 Impact on Transport Cost of Fertiliser Import in Zambia ...... 5-45 Table 5.23 Impact on Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton) ...... 5-45
Table 6.1 Comparison of Number of Farmers and Land in Zambia and Malawi ...... 6-19 Table 6.2 Selection Criteria of Potential Economic Sub Sectors ...... 6-20 Table 6.3 Selection Criteria of Potential Economic Sub Sectors in Zambia ...... 6-25 Table 6.4 Selection of Priority Products in Zambia ...... 6-26 Table 6.5 Potential Economic Sub Sectors and Primary Products in Zambia ...... 6-26 Table 6.6 Selection Criteria of Potential Economic Sub Sectors in Malawi ...... 6-34 Table 6.7 Selection of Priority Products in Malawi ...... 6-34 Table 6.8 Potential Economic Sub Sectors and Primary Products for Malawi ...... 6-35
Table 7.1 Long List of Projects for Promoting Nacala Corridor Development ...... 7-3 Table 7.2 Basic Policy on the Selection of the Priority Projects ...... 7-16 Table 7.3 Priority Projects Recommended for Promoting Nacala Corridor Development ...... 7-17
x Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report LIST OF FIGURES Page
Figure 1.1 Study Area: Nacala Corridor Region ...... 1-2 Figure 1.2 Workflow ...... 1-4
Figure 2.1 Corridors Supplying Zambia and Malawi ...... 2-4 Figure 2.2 National Transport Corridor Coordination Secretariat ...... 2-8 Figure 2.3 Current Conditions of Development of Nacala Corridor ...... 2-8 Figure 2.4 Traffic Volume on Main Roads in Zambia and Malawi (2015) ...... 2-17 Figure 2.5 Major Border Posts Related to Zambia and Malawi ...... 2-17 Figure 2.6 Proportions of Observed Truck Movements in Malawi (2016) ...... 2-19 Figure 2.7 Imports and Exports by Seaport (ton) ...... 2-21
Figure 3.1 Nacala Corridor Region in Zambia ...... 3-1 Figure 3.2 Agro-ecological Region and Vegetation Type ...... 3-3 Figure 3.3 Water Catchment in Zambia ...... 3-4 Figure 3.4 Main Crop Zones of Zambia ...... 3-6 Figure 3.5 Production of Maize (right) and Other Cereals (left) ...... 3-6 Figure 3.6 Production of Oil Crops ...... 3-7 Figure 3.7 Production of Tobacco, Cotton and Coffee ...... 3-7 Figure 3.8 Number of Livestock – Cattle, Goats, Pigs, Sheep (right) and Chicken (left) ...... 3-8 Figure 3.9 Concentration of Food Manufacturing Firms in Zambia, and the Spatial Analysis of New Entrants ...... 3-10 Figure 3.10 COMACO Value Chain Model ...... 3-19 Figure 3.11 Net Agricultural Export Value in Zambia ...... 3-20 Figure 3.12 Production of Maize by Zambia and its Export by Country ...... 3-24 Figure 3.13 Import of Maize by Country in the Integrated Region ...... 3-25 Figure 3.14 Production and Trade of Soya Bean by Zambia ...... 3-27 Figure 3.15 Import of Soya Bean by Country in the Integrated Region ...... 3-28 Figure 3.16 Production and Trade of Wheat by Zambia ...... 3-30 Figure 3.17 Import of Wheat by Country in the Integrated Region ...... 3-31 Figure 3.18 Production and Trade of Cotton Lint by Zambia ...... 3-32 Figure 3.19 Import of Cotton Lint by County in the Integrated Region ...... 3-34 Figure 3.20 Number of Livestock by Zambia ...... 3-35 Figure 3.21 Number of Small Livestock by Zambia ...... 3-35 Figure 3.22 Import of Bovine Meat by Country in the Integrated Region ...... 3-39 Figure 3.23 Import of Meat of Sheep and Goat by Country in the Integrated Region ...... 3-41 Figure 3.24 Fish Production 2011-2014 by Zambia ...... 3-43 Figure 3.25 Import of Fish by Country in the Integrated Region ...... 3-44 Figure 3.26 Production and Trade of Edible Oil by Zambia ...... 3-46 Figure 3.27 Import of Soya Bean Oil by Country in the Integrated Region ...... 3-47 Figure 3.28 Import of Sunflower Oil by Country in the Integrated Region ...... 3-48 Figure 3.29 Production of Sugar Cane and Trade of Sugar by Zambia ...... 3-49
xi Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 3.30 Production and Trade of Refined Sugar ...... 3-50 Figure 3.31 Trade of Sugar Confectionery by Zambia ...... 3-51 Figure 3.32 Import of Refined Sugar by Country in the Integrated Region ...... 3-52 Figure 3.33 Import of Sugar Confectionery by Country in the Integrated Region ...... 3-54 Figure 3.34 Trade of Soap and Detergent by Zambia ...... 3-54 Figure 3.35 Import of Soap and Detergent by Country in the Integrated Region ...... 3-55 Figure 3.36 Copper Production and Copper Price ...... 3-59 Figure 3.37 Export and Import Values from 2006 to 2015 ...... 3-64 Figure 3.38 Top 10 Export Partners in 2015 ...... 3-65 Figure 3.39 Top 10 Import Partners in 2015 ...... 3-65 Figure 3.40 Traditional and Non-Traditional Export from 2007 to 2017 ...... 3-66 Figure 3.41 Export by Product Category from 2006 to 2015 ...... 3-67 Figure 3.42 Import by Product Category from 2006 to 2015 ...... 3-67 Figure 3.43 Export and Import Values at Mwami Border Post ...... 3-69 Figure 3.44 Tourist Arrivals by Continent ...... 3-73 Figure 3.45 Tourist Arrivals by Purpose of Visit ...... 3-74 Figure 3.46 Tourist Arrivals by Top Ten Overseas Markets in 2015 ...... 3-74 Figure 3.47 Tourist Arrivals by Top Ten Africa Markets in 2015 ...... 3-75 Figure 3.48 Tourists Visited Major National Parks ...... 3-75 Figure 3.49 Installed Capacity by Type of Generation ...... 3-81 Figure 3.50 Power Generation by Power Plant ...... 3-82 Figure 3.51 Power Import and Export ...... 3-83 Figure 3.52 Government Import of Petroleum Feedstock and Finished Products from 2011 to 2016 ..... 3-84 Figure 3.53 Refinery Production of Petroleum Products in 2016 ...... 3-84 Figure 3.54 Investment in Zambia (Pledged base, 2010-2016) ...... 3-88 Figure 3.55 Investment in Zambia (Pledged base, 2010-2016) by Sector ...... 3-88 Figure 3.56 Investment in Zambia (Pledged base, 2016) by Area ...... 3-89 Figure 3.57 FDI Liabilities Stocks by Source Country, 2014-2015 ...... 3-89 Figure 3.58 FDI Liabilities Stocks by Industry, 2014-2015 ...... 3-90 Figure 3.59 Investment in Eastern Province (Pledged base, 2010-2016) ...... 3-91 Figure 3.60 Core Road Network in Zambia ...... 3-94 Figure 3.61 Feeder Road Density ...... 3-97 Figure 3.62 Road Network and Per Capita Agricultural Production for 2015 ...... 3-97 Figure 3.63 Railway Network in Zambia ...... 3-99
Figure 4.1 The Nacala Corridor Region in Malawi ...... 4-1 Figure 4.2 Agricultural Development Domains for Malawi ...... 4-4 Figure 4.3 Distribution of Water ...... 4-5 Figure 4.4 Production of Maize (left) and Other Cereals (right) ...... 4-7 Figure 4.5 Production (left), Import and Export (right) of Legumes ...... 4-8 Figure 4.6 Production of Cash Crops ...... 4-9 Figure 4.7 Volume of Export Crops ...... 4-9 Figure 4.8 Number of Livestock - Cattle, Goats, Pigs and Sheep (left), Chickens (right) ...... 4-9 Figure 4.9 Potential Irrigation Area ...... 4-13
xii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 4.10 Production and Trade of Groundnuts by Malawi...... 4-23 Figure 4.11 Import of Groundnuts by Country in the Integrated Region ...... 4-25 Figure 4.12 Export of Groundnuts by Country in the Integrated Region ...... 4-26 Figure 4.13 Production, Area Harvested, Yield and Export of Rice by Malawi ...... 4-27 Figure 4.14 Import of Rice by Country in the Integrated Region ...... 4-28 Figure 4.15 Production and Export of Legumes by Malawi ...... 4-30 Figure 4.16 Import of Chickpeas by Country in the Integrated Region ...... 4-31 Figure 4.17 Export of Pigeon Pea by Country in the Integrated Region ...... 4-32 Figure 4.18 Production and Export of Cotton Lint by Malawi ...... 4-33 Figure 4.19 Production and Trade of Tobacco by Malawi ...... 4-34 Figure 4.20 Import of Tobacco by Country in the Integrated Region ...... 4-36 Figure 4.21 Production and Trade of Raw Sugar by Malawi ...... 4-37 Figure 4.22 Production, and Trade of Refined Sugar by Malawi ...... 4-38 Figure 4.23 Production and Export of Tea by Malawi ...... 4-39 Figure 4.24 Import of Tea by Country in the Integrated Region ...... 4-40 Figure 4.25 Production and Export of Oil Seeds in Malawi ...... 4-41 Figure 4.26 Production and Trade of Edible Oil by Malawi ...... 4-42 Figure 4.27 Export and Import Values from 2006 to 2015 ...... 4-49 Figure 4.28 Top 10 Export Partners in 2015 ...... 4-50 Figure 4.29 Top 10 Import Partners in 2015 ...... 4-50 Figure 4.30 Export by Product Category from 2006 to 2015 ...... 4-51 Figure 4.31 Import by Product Category from 2006 to 2015 ...... 4-51 Figure 4.32 Tourist Arrivals in 2005 by Continent ...... 4-54 Figure 4.33 Tourist Arrivals by Purpose of Visit ...... 4-54 Figure 4.34 Tourist Arrivals by Top Ten African Markets ...... 4-55 Figure 4.35 Tourist Arrivals by Top Ten International Markets in 2015 ...... 4-55 Figure 4.36 Tourist Arrivals by Port of Entry in 2015 ...... 4-56 Figure 4.37 Power Generation and Consumption from 2007 to 2016 ...... 4-60 Figure 4.38 Consumption by Customer Category of ESCOM in 2016 ...... 4-60 Figure 4.39 Fuel Import from 1999 to 2016 ...... 4-62 Figure 4.40 Fuel Import by Corridor in 2016 ...... 4-63 Figure 4.41 FDI Inflow to Malawi (2011-2014) ...... 4-66 Figure 4.42 FDI Inflow to Malawi by Sector (2014) ...... 4-66 Figure 4.43 Authorized Investment in Malawi (2016) by Sector ...... 4-67 Figure 4.44 Organization Structure of MOTPW ...... 4-70 Figure 4.45 Institutions Relating to Road Traffic ...... 4-71 Figure 4.46 Road Network in Malawi ...... 4-73 Figure 4.47 Historic Development of the Railway Network in Malawi ...... 4-79 Figure 4.48 Freight Volume at Nayuchi from 2012 to 2016 ...... 4-82
Figure 5.1 Expenditure for Selected Functions in 2018 (Economic Affairs, Environmental Protection and Housing and Community Amenities) ...... 5-5 Figure 5.2 Proposed Integrated National Transport Network ...... 5-9 Figure 5.3 Expenditure of Major Programmes ...... 5-11
xiii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 5.4 Location of Chipata- Petauke-Serenje Rail Line ...... 5-16 Figure 5.5 Location of Possible Driving Force Projects and Plans ...... 5-23 Figure 5.6 Industry Share to the Total GDP at Current Prices, 2015: Nacala Corridor ...... 5-32 Figure 5.7 Industry Share to the Total GDP at Current Prices, 2015: North-South Corridor ...... 5-32 Figure 5.8 Industry Share to the Total GDP at Current Prices, 2015: Dar es Salaam Corridor ...... 5-33 Figure 5.9 Industry Share to the Total GDP at Current Prices, 2015: Lobito Corridor...... 5-34
Figure 6.1 Current Conditions of Development of Nacala Corridor ...... 6-3 Figure 6.2 Transport Cost: Comparison of Transport Corridors Related to Zambia and Malawi ...... 6-8 Figure 6.3 Transport Time: Comparison of Transport Corridors Related to Zambia and Malawi ...... 6-9 Figure 6.4 Concept of Corridor Development ...... 6-11 Figure 6.5 COMESA-EAC-SADC Tripartite FTA: Expanding Regional Market －Urban Population 2030 of Major Cities in the Region ...... 6-13 Figure 6.6 Access to Regional Market via Nacala Port ...... 6-14 Figure 6.7 Wide Railway Network in Zambia and Malawi: Scenario A ...... 6-15 Figure 6.8 Wide Railway Network in Zambia and Malawi: Scenario B ...... 6-15 Figure 6.9 Wide Railway Network in Zambia and Malawi: Scenario C (Selected) ...... 6-16 Figure 6.10 Railway Network (Scenario C: Selected) with Areas of Potential Economic Sectors ...... 6-39
Figure 7.1 Development Stages and Implementation Periods ...... 7-2 Figure 7.2 Location of Luangwa Bridge ...... 7-19 Figure 7.3 Chipata Bypass ...... 7-21 Figure 7.4 Lilongwe North-West Bypass ...... 7-23 Figure 7.5 Location of Blantyre City Road Improvement Project ...... 7-24 Figure 7.6 Blantyre Inner Relief Road ...... 7-24
xiv Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report LIST OF ABBREVIATION 7NDP Seventh National Development Plan ACE Agricultural Commodity Exchange (Malawi) ADMARC Agricultural Development and Marketing Corporation AfDB African Development Bank AGCOM Agricultural Commercialization Project for Malawi AHCX Auction Holdings Limited Commodity Exchange (Malawi) ANE National Road Agency（Mozambique） AP-SEZ Agro-Processing Special Economic Zone ASF African Swine Fever ASWAp Agriculture Sector Wide Approach CAA Civil Aviation Authority CAADP Comprehensive Africa Agriculture Development Programme CAZ Cotton Association of Zambia CBPP Contagious Bovine Pleuropneumonia CCPC Competition and Consumer Protection Commission CDN Corredor de Desenvolvimento do Norte CEAR Central East African Railways CEEC Citizens Economic Empowerment Commission CFM Caminhos de Ferro de Moçambique CCGC China’s Gezhouba Group Corporation CLN Corredor Logístico Integrado do Norte COMACO Community Markets for Conservation COMESA Common Market for Eastern and Southern Africa C-SAAP Country-led Situation Analysis and Action Planning DCA Department of Civil Aviation DCC Dar es Salaam Corridor Coordinating Committee DRC Democratic Republic of the Congo DRI Direct Reduced Iron DRTSS Directorate of Road Traffic and Safety Services (Malawi) EAC East African Community EAPP East Africa Power Pool ECF East Coast Fever ECOWAS Economic Community of West African States EDF Export Development Fund EIA Environmental Impact Assessment EIB European Investment Bank EIF Enhanced Integrated Framework ESCOM Electricity Supply Corporation of Malawi Limited E-SLIP Enhanced Smallholder Livestock Investment Project EU European Union F/S Feasibility Study FAO Food and Agriculture Organisation FAOSTAT Food and Agriculture Organisation Statistics FDI Foreign Direct Investment FISP Farmer Input Support Programme (Zambia) FISP Farm Inputs Subsidy Programme (Malawi) FMCG Fast Moving Consumer Goods
xv Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
FRA Food Reserve Agency FSP Fertilizer Support Program FTA Free Trade Area FTC Farmer Training Centre FUM Farmers Union of Malawi GBI Green Belt Initiative GDP Gross Development Product GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GMA Game Management Areas GOM Government of Malawi GOZ Government of Zambia GW Giga Watt (109 watt) HFO Heavy Fuel Oil ICD Inland Container Depot ICT Information Communications Technology ICTC Inter-Country Trade Centre IDA International Development Association IDC Industrial Development Cooperation IFAD International Fund for Agricultural Development IPPs Independent Power Producers IRP Integrated Resource Plan (Malawi) JICA Japan International Cooperation Agency KIA Kamuzu International Airport KPAs Key Priority Areas MAPAC Malawi Programme for Aflatoxin Control MBS Malawi Bureau of Standards MERA Malawi Energy Regulatory Authority MFEZ Multi Facility Economical Zone MFL Ministry of Fisheries and Livestock (Zambia) MGDS Malawi Growth and Development Strategy MHID Ministry of Housing and Infrastructure Development (Zambia) MIDP Medium Scale Irrigation Development Project MITC Malawi Investment and Trade Centre MNLP Malawi National Land Policy MNTMP Malawi National Transport Master Plan MNTP Malawi National Transport Policy MOA Ministry of Agriculture (Zambia) MOAIWD Ministry of Agriculture, Irrigation and Water Development (Malawi) MOCTI Ministry of Commerce, Trade and Industry (Zambia) MOE Ministry of Energy MOITT Ministry of Industry, Trade and Tourism (Malawi) MOTPW Ministry of Transport and Public Works (Malawi) MOU Memorandum of Understanding MRA Malawi Revenue Authority MT Metric Ton MTC Ministry of Transport & Communications (Zambia) MW Mega Watt MWK Malawian Kwacha
xvi Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
MWS Ministry of Works & Supply (Zambia) NAIP National Agricultural Investment Plan NAP National Agriculture Policy NAS National Agriculture Strategy NASFAM National Smallholder Farmers’ Association of Malawi NCIC National Construction Industry Council NEPAD New Partnership for Africa's Development NEPAD-IPPF NEPAD Infrastructure Project Preparation Facility NES National Export Strategy NGO Non-Governmental Organization NMT Non-Motorised Transport NRFA National Road Fund Agency (Zambia) NTE Non Traditional Exports NWRA National Water Resources Authority O&M Operation and Maintenance OFID OPEC (Organization of the Petroleum Exporting Countries) Fund for International Development OPRC Output and Performance Based Road Contracting System OSBP One Stop Border Post PACA Partnership for Aflatoxin Control in Africa Petromoc Petróleos de Moçambique PPP Private Public Partnership PSO Public Service Obligation PTA Preferential Trade Area RA Roads Authority (Malawi) RDA Road Development Agency (Zambia) RDC Railroad Development Corporation REO Rare Earth Oxides RFA Road Fund Administration (Malawi) RGCs Rural Growth Centres RISDP Regional Indicative Strategic Development Plan RSS Road Sector Strategy RSZ Railway Systems of Zambia RTSA Road Transportation & Safety Agency RUTF Ready to Use Therapeutic Foods SA South Africa SADC Southern African Development Community SAPP Smallholder Agribusiness Promotion Programme SAPP Southern African Power Pool SDI Spatial Development Initiative SEZ Special Economic Zone SLIP Smallholder Livestock Investment Project SMEs Small and Medium Enterprises SNAP Second National Agriculture Policy SPS Sanitary and Phytosanitary SVIP Shire Valley Irrigation Project SWB Small Water Bodies T4 Great East Road
xvii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
TAZAMA Tanzania-Zambia Mafuta TAZARA Tanzania-Zambia Railway Authority TEU Twenty Feet Equivalent Unit TFCAs Transfrontier Conservation Areas TIP SWAp Trade Industry and Private Sector Development Sector Wide Approach TWG Technical Working Group UAE United Arab Emirates UEMOA West African Economic and Money Union USAID United States Agency for International Development UNDP United Nations Development Programme UNSD United Nations Statistics Division WB World Bank WBCG Walvis Bay Corridor Group WITS World Integrated Trade Solution WTO World Trade Organization ZAMACE Zambian Commodity Exchange ZDA Zambia Development Agency ZMW Zambian Kwacha ZNFU Zambia National Farmers Union ZNTMP Zambia National Transport Master Plan ZNTP Zambia National Transport Policy ZRA Zambia Revenue Authority ZRA Zambia Railways Authority ZRL Zambia Railways Limited
xviii Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Executive Summary
Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa
1. Objectives of the Study
The Nacala Corridor is an important economic corridor in Southern Africa, extending from Nacala Port in the northern region of Mozambique, through Lilongwe, the capital city of Malawi, to Lusaka, the capital city of Zambia. The study has three objectives. The first objective is to identify issues, needs, and development potentials of the Nacala Corridor Region. Second, the study is to propose priority projects including those suitable for assistance by considering integrated development strategies for the Nacala Corridor Region. Third, it aims to clarify roles of regional organisations, such as COMESA, SADC, and NEPAD, in Nacala Corridor Development and identify possible cooperation between those organisations and JICA. This study focuses on Zambia and Malawi, since a master plan was already prepared for the Nacala Corridor Region in Mozambique.
2. Study Area
The target area of the Study is the Nacala Corridor Region in Zambia and Malawi shown in the table and figure below.
Table 1 Study Area (Nacala Corridor Region in Zambia and Malawi) Country Route of Nacala Corridor Provinces/Regions Lusaka, Eastern, Muchinga, Central, and Zambia Lusaka-Chipata and Extended Routes Copperbelt Provinces Malawi Mchinji-Lilongwe-Chiponde / Nayuchi Nationwide
Chipata
Lilongwe Nacala Port
Lusaka Tete Blantyre
Figure 1 Study Area: Nacala Corridor Region
S-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3. Corridor Development in Zambia and Malawi and Current Status of Nacala Corridor Development
Zambia and Malawi are landlocked countries and their access routes to seaports are limited to crossing-border land transport. Therefore, they use several transport corridors as follows:
Corridor to Durban Port: North-South Corridor in Zambia and Durban Corridor in Malawi Corridor to Dar es Salaam Port: North-South Corridor in Zambia and Dar es Salaam Corridor in Malawi Corridor to Beira Port: Beira Corridor in Zambia and Malawi Corridor to Ports in west coast of Africa: Lobito Corridor and Walvis Bay Corridor only in Zambia
Figure 2 Corridors in Zambia and Malawi
S-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
At present, cargo transport does not use the Nacala Corridor very much in comparison with other corridors. It is because the railway and Nacala Port of the Nacala Corridor have not yet been well known by potential users, although the railway in the Nacala Corridor has been upgraded by a private mining group for transporting coal from Moatize up to Nacala Port. The upgraded railway is available up to Blantyre, the southern commercial centre of Malawi, through Nkaya and Liwonde. However, due to the inefficiency of the transportation network as a result of the lack of connectivity between road and railway transportation (Multi Modal Dry Ports for example), the advantages of railway transportation have not yet been enjoyed in Lilongwe, the capital of Malawi, or Chipata, in Zambia.
As for development of economic sectors, Zambia’s agricultural sector has a high export potential; however, it needs to address challenges of low-productivity of small scale farmers and stagnant production of Farm Blocks (large scale farms). Malawian economic sectors, especially commercial agriculture and agro-processing sectors started responding to the upgraded Nacala Corridor Railway for exporting their products. Now it is time for Malawi to encourage small scale farmers to organise themselves and to export their products to regional markets, as well as outside regional markets, by utilizing the railway and roads of the Nacala Corridor. For promoting corridor development, it is essential to promote development of both corridor infrastructure and economic sectors.
4. Advantages of Nacala Corridor
With planned interventions to maximise the transport functions of the Nacala Multi-Modal Corridor, its advantages in terms of transport cost and time are identified in comparison with other corridors. Those interventions include upgrading of railway and construction of dry ports.
Zambia: In Lusaka, Nacala Corridor (Rail and Road) has an advantage over other corridors in terms of transport cost, while in terms of time, the Lusaka-Durban Corridor has an advantage over the other corridors in terms of time. In Chipata, the Nacala Corridor (Rail and Road) has an advantage over the other corridors in terms of transport cost and time.
S-3 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 3 Transport Cost and Time: Comparison of Transport Corridors Related to Zambia
Malawi: In Lilongwe, the Nacala Rail and Road Corridor after the interventions has an advantage over the other corridors in terms of transport cost and time. The Nacala Rail Corridor has an advantage over the other corridors in terms of cost, while, the Nacala Road Corridor has an advantage over the other corridors in terms of time. In Blantyre, the Nacala Rail Corridor after the interventions will have an advantage over the other corridors in terms of transport cost and time. The Nacala Rail Corridor has an advantage over other corridors in terms of cost.
S-4 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 4 Transport Cost and Time: Comparison of Transport Corridors Related to Malawi
5. Impacts of Transport Corridor Improvement on Economic Sectors
The Study reveals that the Nacala Corridor (combined rail and truck transport) is advantageous over the other transport corridors in terms of transport cost and time after the completion of upgrading the railway in the Nacala Corridor.
As a result, it is expected that prices of fuel and fertilizer would decline, access to neighbouring countries and regional markets would be improved, and the potential for economic sector development in the Nacala Corridor areas would increase. Therefore, the following two kinds Figure 5 Concept of Corridor Development
S-5 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
of development strategies for the Nacala Corridor and its surrounding areas are recommended: (1) to develop transport corridor infrastructures so that economic sectors could utilize them more easily and efficiently, and (2) to support to make full use of development potential of economic sectors taking advantage of upgraded the Nacala Corridor.
6. Proposed Growth Scenarios of Zambia and Malawi Related to Nacala Corridor Development
(1) Staged Development of Transport Infrastructure and Services of Nacala Corridor
Considering transport cost and time necessary for utilising the Nacala Corridor, the following four stages of development of corridor transport infrastructures are set for the proposed growth scenario:
1st Stage (Present Situation at 2018): Upgraded Railway between Nacala and Moatize, together with the Rehabilitated Railway section between Limbe and Nkaya.
2nd Stage (2020): Upgraded Railway between Nacala and Chipata passing through Lilongwe by a private group. According to the private group, the required period for this upgrading is two years. Therefore, the 1st period that transfers from the 1st stage to the 2nd stage is expected as two years from now, and then the 2nd stage is expected to run in 2020. The advantage of the Nacala Corridor will be expanded to the whole of Malawi and Eastern Province in Zambia.
3rd Stage (2023): Upgraded Railway and Roads with Establishment of Multi-Modal Dry Ports in Blantyre, Lilongwe and Chipata. Due to these, truck transport and upgraded railway transport can be combined smoothly, and then the transport time from Lusaka to the Nacala port will become the second shortest among the transport corridors and also the cost will become the lowest. In order to develop the dry ports, it may need two years from design stage to start operation without fund arrangement. Therefore, the 2nd period which is from the 2nd stage to the 3rd stage, is expected to take at least three years and the 3rd stage is expected to start in 2023 at the earliest.
Figure 6 Four Stages of Nacala Corridor Development
S-6 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 7 Development of Nacala Corridor and Impact on Economic Sectors in 3rd Stage
4th Stage (2030): In the long term, it is expected that transport times and costs of the other corridors will be reduced in Zambia and Malawi due to emerging competition with the Nacala Corridor, which has advantages in transport times and costs. Though it may difficult to estimate the period that is necessary for competitions among the corridors occur, at least several years may be needed to perform the full functions of the Nacala Corridor after the installation of the dry ports. It may take several years before continuous competitions occur. Therefore, the 4th stage is assumed to begin in 2030.
For Zambia, the Nacala Corridor will be considered as one of the several transport corridors that have merit in Zambia, which will have an advantage of transport cost and time through (1) the implementation of projects such as construction of the dry port and its access roads in Chipata, to accelerate the use of the Nacala Corridor for transporters, traders and other private entities in Zambia, and (2) the promotion of economic sectors which utilise the Nacala Corridor.
For Malawi, the Nacala Corridor will be (1) the only railway transportation available in Malawi that enables to transport commodities at a lower price than road transport and (2) a multimodal corridor connecting Malawi to regional markets through Zambia to increase the amount of selling goods and enter new markets.
(2) Potential Products to be Targeted for Expansion of Production and Export to Regional Markets
As described in the concept of corridor development, it is necessary to consider the points below to make a positive cycle between the development of economic sectors and the development of the Nacala Corridor.
① Promote the growth of economic sectors which will strengthen its competitiveness through the utilisation of the benefits brought by the development of the Nacala Corridor,
S-7 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
such as decreasing the transport cost, increasing the assuredness of the transportation, decreasing of the price of fuel and fertilisers, etc.
② Prioritise the economic sectors which can create a positive circle of the utilisation of the transport corridor and the development of the economic sectors, by which the continuous maintenance and further upgrade of the transport corridor will be promoted.
Based on the characteristics of agriculture production in Zambia and Malawi, it is clarified that considerable agricultural potential in Zambia and that in Malawi are different. In Zambia, there are still enough land to develop commercial farming and an opportunity to develop value chain based on the agricultural products from the farms due to their certain volume and uniformed quality of production. On the other hand, land use in Malawi has already been developed to a certain level; therefore, it might be necessary to improve the productivity of agriculture and market access of small scale farmers.
Based on the understanding above, analysing regional market potential for Zambia and Malawi as well as their present productive sectors’ potential, the potential economic sub sectors are selected with the criteria below:
Table 2 Selection Criteria of Potential Economic Sub Sectors
Zambia Malawi Suitable to combine in Agricultural Cluster Small scale farmers as beneficiaries Large production in Nacala Corridor Region Export crop. Or its production meets domestic demand High demand in the regional market Future market growth can be expected (or strong market demand in foreign market） Great benefit of using the Nacala Corridor
Table 3 Potential Economic Sub Sectors and Primary Products
Sub Sector Zambia Malawi Crop Production Maize Groundnuts Soya Bean Rice Wheat Pulse crops Cotton Cotton Tea Tobacco Agro-processing Sugar Sugar Edible Oil（Soya Bean, Sunflower） Edible Oil（Soya Bean, Sunflower） Livestock Bovine Meat - Small Ruminant（Goat, Sheep） Chicken Farming Others Soaps and synthetic preparations Rare earth Niobium
S-8 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Staged Development of Economic Sectors by Utilising Transport Infrastructure and Services of Nacala Corridor
In accordance with the stages of development of corridor transport infrastructures, the following staged development of economic sectors is set for the proposed growth scenario. The transition periods of the stages are assumed as follows;
1st Period (2017-2019): The period from now till the 2nd stage means by completion of the upgrading of the railway between Nkaya and Chipata through Mchinji.
2nd Period (2020-2022): The period between the 2nd stage to the 3rd stage means before the construction of multi-modal dry ports in Blantyre, Lilongwe and Chipata.
3rd Period (2023-2029): The period between the 3rd and 4th stages means after the completion of the Nacala Corridor from viewpoint of infrastructure.
Table 4 Growth Strategies of Economic Sectors by Development Stage Nacala Corridor Country Expected Positive Impacts at the Strategies for Economic Stage Infrastructure and Service Period (Zambia/ Stage Sector Development Development Malawi) 1st (1) Upgraded Railway 1st Period No advantage of the Nacala - Stage between Nacala and (Present Corridor over other corridors Moatize situation : except the advantage of (2) Rehabilitated Railway 2017 – Zambia Chipata-Nacala Rail Corridor Section between Limbe 2019) in transport cost and Nkaya No impact on Lusaka and Eastern Province economy Substantial impact on the Need to encourage economy of Malawi, especially small scale farmers to on the southern Malawi in expand their terms of the transport cost. production and export Advantage of import of to neighbouring fertiliser and fuel markets. Malawi Advantage of export of sugar, Needs to promote the tobacco and tea, etc. utilisation of the Nacala Rail Corridor and Nacala Port by conducting sales activities.
2nd Upgraded Railway 2nd Period Advantage (reduced transport Need to support small Stage between Nacala and (2020 – costs and time) of the Nacala scale farmers in Chipata 2022) Corridor between Chipata and Eastern Province for (1) Upgraded Railway Nacala over other corridors export oriented between Nacala and Advantages for Eastern production by taking Moatize Province to utilise the Nacala advantage of impacts (2) Rehabilitated Railway Rail Corridor for fertiliser and of upgraded Nacala Section between Limbe Zambia fuel import (reduced prices of Rail Corridor and Nkaya fertiliser and fuel) (reduced prices of (3) Upgraded Railway Opportunity for Eastern fertiliser and fuels, as Section between Nkaya Province to export products to well as reduced and Chipata through regional markets (inland transport costs and Mchinji neighbouring countries and time) coastal countries through Nacala Port). Large areas of Malawi covered Need to support small by the cargo railway services scale farmers for Malawi of the Nacala Corridor. improvement of Opportunity for development of productivity, branding
S-9 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Nacala Corridor Country Expected Positive Impacts at the Strategies for Economic Stage Infrastructure and Service Period (Zambia/ Stage Sector Development Development Malawi) economic sectors targeting for marketing and regional markets, as well as access to domestic outside regional markets. and regional markets. 3rd Combined Rail Transport 3rd Period Advantage of the Nacala Needs to attract Stage and Truck Transport (2023 – Corridor between Lusaka and private investments between Nacala and Lusaka 2029) Nacala over other corridors for the development through Chipata Good impact on the economy of Farm Blocks in Upgraded Railway of Lusaka and Chipata Lusaka and its between Nacala and Advantage for Lusaka and surrounding areas, as Chipata Chipata to utilise the Nacala well as in Eastern (1) Upgraded Railway Corridor for fuel and fertiliser Province for between Nacala and import with reduced prices. expanding agricultural Zambia Moatize Opportunity to export products production oriented to (2) Rehabilitated Railway to neighbouring countries and regional markets. Section between Limbe other regional markets. Need to continue to and Nkaya support small scale (3) Upgraded Railway farmers of Eastern Section between Nkaya Province for and Chipata through expanding agricultural Mchinji production oriented to regional markets. Establishment of Opportunity to export products Need to continue to Multi-Modal Dry Ports to Zambia, DRC, and other promote the Blantyre regional markets by utilising development of Lilongwe rail and truck transport of the economic sectors for Malawi Chipata Nacala Corridor and other export to regional corridors such as North-South markets Establishment of OSBP Corridor and Dar es Salaam Mwami-Mchinji Border Corridor 4th Revitalised Railway And then Reduction of transport costs of Need to promote to Stage Utilisation of Other Corridors (2030 ~) not only the Nacala Corridor, expand production due to Emerging but also other rail corridors due and export of Competition with Combined to the competition among the potential products or Railway Transport and Truck corridors economic sectors Transport between Nacala Positive impact on the targeting regional and Lusaka Zambian economy and markets and Zambia agricultural sector due to international markets reduced transport costs and by widely using time, and reduced prices of revitalized rail fertiliser and fuels transport corridors Opportunity to expand (not only the Nacala production and export for Corridor but also regional markets and outside other corridors) regional markets Opportunity to export products Need to promote to Zambia, DRC, and other economic sectors regional markets via rail and widely targeting Malawi truck transport of the Nacala regional and outside Corridor and other corridors regional markets such as North-South Corridor and Dar es Salaam Corridor
S-10 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
7. Priority Projects for Promoting Nacala Corridor Development In order to initiate and sustain the implementation of the selected growth scenario, the following fifteen projects are identified as priority projects which are recommended for implementation. The priority projects are categorized broadly into two groups. A group of projects is those for development of corridor transport infrastructure and the other is a group of the projects for promoting economic sectors such as agriculture and livestock.
Table 5 Priority Projects Recommended for Promoting Nacala Corridor Development
Project Sector Period Development of Transport Infrastructure of Nacala Corridor Zambia Z1 Replacement of Luangwa Bridge Road 1st Development of One Stop Border Post (OSBP) of Transport Corridors from Zambia (ICT Z24 (National Single Window), Physical Facilities, Capacity Development and Institutional Road 1st Building) Z6 Construction of New Chipata Bypass Road 2nd Z16 Construction of Chipata Multi-Modal Dry Port Logistics 2nd Malawi M3 Expansion of Lilongwe North Western Bypass Road 2nd M4 Blantyre City Road Improvement Road 1st M5 Construction of Blantyre Inner Relief Road Road 2nd Construction of Multi-modal Dry Ports in Blantyre (Limbe and Others) and Lilongwe M17 Logistics 1st (Kanengo) M18 Capacity Development of Government Officers for OSBP Operation Logistics 1st M39 Improvement of Electricity Supply to Industrial Areas in Lilongwe and Blantyre Energy 1st Promotion of Economic Sectors Along Nacala Corridor Zambia Promotion of Export-Oriented Agriculture and Livestock Development Targeting Small Z31 Agriculture 2nd Scale Farmers in Eastern Province Study on Farm Block Development Models with Special Considerations for Small Scale Z32 Agriculture 1st Farmers Z39 Export Strategy Formulation Study for Zambia Trade 1st Malawi M27 Groundnuts Production Revitalisation with Special Attention to Aflatoxin Control Agriculture 2nd M29 Improvement of Market Access for Small Scale Rice Farmers Agriculture 2nd
S-11 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chapter 1 Introduction
1.1 Background of the Study The Nacala Corridor, extending from Nacala Port in the northern region of Mozambique, through Malawi, to Lusaka, the capital city of Zambia, is an important economic corridor in Southern Africa. JICA has been assisting the development of the Nacala Corridor and its surrounding areas through various projects. However, most of the projects have targeted the northern region of Mozambique. At present, traffic volume along the Nacala Corridor in Zambia and Malawi is not much, and the potential of the corridor development is not utilised effectively. For landlocked countries such as Zambia and Malawi, development and utilisation of international corridors, which would improve access to international markets and vitalise the regional economy, is an important issue for the development of the national economy.
The Government of Zambia identified diversification of the economy and infrastructure development for economic diversification as the most important issue in the Sixth National Development Plan (2013-2016). A cross-ministerial working group was established for Nacala Corridor Development.
The Government of Malawi identified development of transport infrastructure as one of the most important issues in the Malawi Growth and Development Strategy II (2011-2016), and infrastructure development and management of international corridors as one of the priority areas in the National Transport Policy formulated in 2015.
However, except for some information about infrastructure development, there had been no adequate information of the existing conditions and development potential of the Nacala Corridor from a perspective of regional development incorporating both hard and soft aspects of economic sectors. Therefore, the JICA Study was conducted to collect information on Nacala Corridor Development in Zambia and Malawi, placing a special focus on identification of development potentials and formation of projects.
1.2 Objectives of the Study The objectives of the Study were to identify issues, needs, and development potentials of the Nacala Corridor Region, and to identify priority projects by considering integrated development strategies for the Nacala Corridor Region.
The following information were collected and analysed to achieve the objectives:
Existing projects related to the development of the Nacala Corridor Region Current socio-economic conditions of the Nacala Corridor Region Economic sector development in the Nacala Corridor Region Logistics networks for economic sector development in the Nacala Corridor Region
1-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
The Study also clarified roles of regional organisations, such as Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC), and New Partnership for Africa’s Development (NEPAD), in Nacala Corridor Development, and identified possible cooperation between those organisations.
1.3 Study Area The target area of the Study is the Nacala Corridor Region in Zambia and Malawi shown in Figure 1.1. The Nacala Corridor is a transport corridor consisting of railway and road. It runs from Nacala Port in the northern region of Mozambique through Malawi, to Lusaka of Zambia. The Nacala Corridor Region is defined as shown below according to expected influence and impacts given by the Corridor.
Table 1.1 Study Area (Nacala Corridor Region in Zambia and Malawi) Country Route of Nacala Corridor Provinces/Regions Lusaka, Eastern, Muchinga, Central, Zambia Lusaka-Mwami and Extended Routes and Copperbelt Provinces Malawi Mchinji-Lilongwe-Chiponde/Nayuchi Nationwide Source: JICA Study Team
Chipata
Lilongwe Nacala Port
Lusaka Tete Blantyre
Source: JICA Study Team Figure 1.1 Study Area: Nacala Corridor Region
1-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
1.4 Counterpart Agencies for the Study The main counterpart agencies for the Study are shown in Table 1.2.
Table 1.2 List of Main Counterpart Agencies for the Study Zambia Malawi Regional Organisation Ministry of Transport and Ministry of Transport and Public COMESA Communications Works SADC Ministry of Works and Supply Ministry of Agriculture, Irrigation and NEPAD Ministry of Housing and Infrastructure Water Development Development Ministry of Industry, Trade and Ministry of Agriculture Tourism Ministry of Fisheries and Livestock Ministry of Finance, Economic Ministry of Commerce, Trade and Planning and Development Industry Ministry of Natural Resources, Ministry of Mines Energy and Mining Ministry of National Planning and Development
1.5 Study Schedule The general workflow chart for the implementation of the Study is shown in Figure 1.2.
1-3
February, 2017 March April May June July August September October November December January February
Works in Works in Work in Zambia and Malawi Works in Japan Works in Zambia and Malawi Works in Japan Works in Japan Work in Japan Zambia and Japan
Preparatory Review of Completed On-Going 【1】 Work 【3】 and Planned Projects Related to Clarification of the Corridor Development Needs and Issues 【1-1】 in Corridor Development and 【7】 Collection and Data Collection and Analysis Selection of Analysis of 【4】 on the Existing Situation, Prospective Existing Data Needs, and Development Projects for JICA's Assistance
【1-2】 【 】 Evaluation of Relevance of the 4-1 Nacala Corridor Development Clarification of Preparation of Needs and Issues
【 】 Africa Southern in Development Integrated Corridor Nacala on Survey Collection Data Field Survey 7-1 in Corridor 【 】 Examination of the Existing Development 4-2 Conditions of Transport
Analysis of the Current Examination of 【4-3】 Situation of the Agricultural Development Sector and Agribusiness 【7-2】 Objectives, Strategies, and Development Work Items Work 【4-4】 Impact Analysis Examination of 【7-3】 the Assistance Policy of JICA Data Collection and Analysis 【 】 regarding the Possibility of 5 Cooperation with Regional Selection of Organizations 【 】 Prospective 7-4 Projects for 1 JICA's Assistance - Data Collection and Analysis of 4 【5-1】 Relevant Regional Organizations
Analysis of the Possibility of 【5-2】 Cooperation with Relevant Regional Organizations
【1-3】 【2】 Preparation of and Discussion regarding the Draft Preparation of and 【8】 Preparation of Explanation 【6】 Discussion on the Interim Final Report (DF/R) Preparation of Final Report Draft and Report (IT/R) 【11】 Inception Discussion (F/R) Report on Draft 【8-1】 Preparation of DF/R 【 】 Prepation Inception 6-1 of IT/R Report Reports 【 】 Discussion 【8-2】 Discussion on DF/R 6-2 on IT/R
Seminar for the Governments of 【9】 Zambia and Malawi and Development Partners
Seminar for the Meetings 【 】 Report Final 10 Private Sector February, 2017 March April May June July August September October November December January February Source: JICA Study Team Figure 1.2 Workflow
Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chapter 2 Corridor Development in Zambia and Malawi and Current Status of Nacala Corridor Development
2.1 Clusters of Transport Corridors
2.1.1 Propulsion Frameworks: Transport Corridors as Economic Corridors The Nacala Corridor is one of international transport corridors in Africa, which are cutting across different countries, in many cases connecting international ports with inland countries. These transport corridors are considered as “economic corridors”, which aim at not only providing the countries along the corridors with transport services, but also initiating economic development by promoting development of industries and social services in the regions along the corridors.
(1) Spatial Development Initiative (SDI) The economic corridor development is rooted in the “Spatial Development Initiative (SDI)” started by South Africa for reconstruction in the 1990s after the end of the apartheid. The programme, which intended to promote investment and improve transport efficiency, made remarkable success for the determination and leadership of politicians, government officers and development experts. Due to this success, the SDI approach was adopted by regional organisations such as SADC, African Development Bank (AfDB), and COMESA1. These regional organisations acknowledged that the SDI enables a region to achieve economic growth by attracting investment to cultivate abundant natural resources and eventually by nurturing manufacturing industry in an integrated manner2.
The Maputo Development Corridor in southern Mozambique is known as the most successful inter-regional initiative in sub-Saharan Africa among others. The SDI advocates the other corridors as follows3:
Limpopo Valley SDI (SA and Mozambique) Beira Development Corridor (SA, Mozambique and Zimbabwe) Zambezi Valley SDI (SA and Mozambique) Nacala Development Corridor (SA, Mozambique, Malawi and Zambia) Walvis Bay Development Corridor (SA and Namibia) Gariep SDI (SA’s Northern Cape Province and Namibia) Mtwara Development Corridor (SA, Tanzania, Mozambique and Malawi) Central Development Corridor (SA, Tanzania and Rwanda) Lebombo Investment Initiative (SA, Swaziland and Mozambique)
1 Gadzeni Mulenga. Developing Economic Corridors in Africa Rationale for the Participation of the African Development Bank. AfDB Regional Integration Brief. NEPAD, Regional Integration and Trade Department - No. 1. April, 2013 2 http://www.mcli.co.za/mcli-web/mdc/sdi.htm 3 http://sadcindustries.net/SDIs.html
2-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) SADC Despite the importance of the infrastructure of transport corridors, such as roads, railways, and marine waterways, only 25% of transport delays are attributed to the issues of hard infrastructure. Rather, the operation issues of the existing infrastructure cause 75% of delays. In particular, the main disturbances to the transport are bureaucratic border procedures and inefficient customs regulations, which could result in interruptions of up to 24 hours and adversely affect trade in the region4.
Therefore, SADC targets the removal of non-tariff barriers to trade, especially inconsistent and unpredictable border procedures. SADC stated in the Protocol on Trade that coherent custom procedures should be established in the entire region for the reduction of transport time and vibrant trade activities5.
At the same time, SADC launched the SDI programme on 18 corridors as an integrated planning tool for regional development with significant growth potential. In the programme, the public sector takes a role to craft a business friendly environment in order to attract investment from the private sector and/or to promote public-private partnerships. The Regional Infrastructure Development Master Plan in 2012 identified the North-South Corridor and the Dar es Salaam Corridor as high priority corridors, and the Beira Corridor and Nacala Multimodal Corridor with the medium priority for the greatest potential for growth6. The 18 corridors contain:
Eastern Corridors: Limpopo, Beira, Nacala, Mtwara, Dar es Salaam Southern Corridors: Durban-Manzini, Durban-Maseru, Durban-Phalaborwa, Maputo Western Corridors: Trans Orange, Trans Kalahari, Walvis Bay-Ndola-Lubumbashi (Trans Caprivi), Trans Cunene, Namibe, Lobito (Benguela), Mulanje, Bas Congo North South Corridor: Durban -Lubumbashi
(3) AfDB The objectives of the AfDB’s support for the development of regional transport corridors in Africa are to activate inter-regional and international trade and initiate market integration. In particular, the corridors provide inland countries with new access to international markets. Guided by the principles of the Bank’s Regional Integration Strategy, both the hard and soft infrastructure components are included in the AfDB’s approach for development of the corridors, such as construction, maintenance and rehabilitation of infrastructure, trade promotion tools and capacity-building programmes. It also includes the components for sustainability of economy, society, and environment7.
4 http://www.sadc.int/themes/infrastructure/transport/transport-corridors-spatial-development-initiatives/ 5 Ditto 6 Ditto 7 Gadzeni Mulenga. Developing Economic Corridors in Africa Rationale for the Participation of the African Development Bank. AfDB Regional Integration Brief. NEPAD, Regional Integration and Trade Department - No. 1. April, 2013
2-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
For the Nacala Road Corridor Development Project, the Bank is supporting from Phase 1 to 4 in Mozambique, Malawi and Zambia as the main donor. Phase 1 involves rehabilitation of 348 km of road from Nampula to Cuamba in Mozambique and construction of a 13 km bypass road west of Lilongwe City in Malawi; Phase 2 involves rehabilitation of 360 km of road from Luangwa Bridge to Mwami in Zambia; and Phase 3 involves rehabilitation of 175 km Cuamba -Mandimba-Lichinga road in Mozambique. Phase 4 involves rehabilitation of a 75 km road between Liwonde and Mangochi (75 km) along the Nacala Road Corridor in Malawi as well as construction and establishment of an One Stop Border Post (OSBP) between Malawi and Zambia at Mchinji/ Mwami border post.
(4) COMESA The goal of COMESA is to bring about economic benefits to the member states. By organizing themselves, the member states take actions for the common objectives, such as negotiation with non-member states or other organisations, investment attraction, and development expansion. Regional integration is a tool to achieve prosperity and poverty reduction by stimulating economic growth. Nevertheless, effective and reliable economic infrastructure is indispensable to make the regional integration successful. In fact, the member states suffer from excessively high transaction costs and weak competitiveness in markets because of lack of transport, energy, and communication infrastructure. Thus, COMESA includes development of economic infrastructure for the transaction cost reduction and improvement of competitiveness in the priority areas among others. As a strategic objective, it identified elimination of bottlenecks in infrastructure development and service improvement by enhancing infrastructure connectivity and infrastructure integration in the region8.
The components of infrastructure development in COMESA cover transport, energy and Information Communications Technology (ICT) sectors. A corridor approach adopted by COMESA focuses on consistent and coherent policy and legal framework building, and coordination and development of strategic physical infrastructure in the three sectors. Transport sector development is concerned with air transport, road and rail transport and maritime and inland water transport. The energy sector covers electricity, non-renewable (fossil fuels) and renewable energy. The ICT sector includes telecommunications, broadcasting and postal services9.
2.1.2 Transport Corridors Relevant to Malawi and Zambia Malawi is a landlocked country bordering Tanzania on the north, Zambia on the west and Mozambique on the south, east and partially on the west. Being an inland state, Malawi’s access to seaports necessary for international trade is only available via land transport. Major corridors that provide the country with access to sea include Nacala, Beira, Durban and Dar es Salaam. The first three corridors pass through Mozambique; the Durban Corridor via Zimbabwe; and the Dar es Salaam Corridor goes through Tanzania.
8 COMESA. 2013. COMESA Region Key Economic Infrastructure Development Project 9 Ditto
2-3 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Zambia, like Malawi is a landlocked country, neighboured by Malawi to the east, Mozambique to the southeast, Tanzania to the northeast, the Democratic Republic of Congo (DRC) to the north, Angola to the west, Namibia and Botswana to the southwest and Zimbabwe to the south. Like Malawi, Zambia’s economy is highly dependent on the export of natural minerals especially copper, and agricultural products which are transported primarily by road through the neighbouring countries to the main ports. Imported goods are also transported to the country by the same methods. The chief transportation routes used by Zambia include the Nacala Corridor connecting to Nacala Port through Malawi and Mozambique, the Dar es Salam Corridor to Dar es Salaam Port through Tanzania, the Mtwara Corridor through Malawi and Tanzania to Mtwara Port, the Walvis Bay Corridor to Walvis Bay Port through Namibia, the Lobito Corridor to Lobito Port through DRC and Angola, and the North-South Corridor connecting to the southern ports of Durban and Beira. The corridors going through Malawi and Zambia are shown in the figure below:
Source: JICA Study Team Figure 2.1 Corridors Supplying Zambia and Malawi
2-4 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2.1.3 Current Status of Major Transport Corridors Excluding Nacala Corridor
(1) Beira Corridor The Beira Corridor connects the Port Town of Beira to major towns in central Mozambique, Zimbabwe and Zambia. Some of the major towns within this corridor include Chimoio, Mutare and Harare. The route from southern Zambia through Harare to Beira is a major trade route for the transportation of Zambian and Zimbabwean goods between the major towns and Beira Port. Since 1980 at the height of the Mozambican Civil War, transportation through the Beira Corridor was constantly interrupted by insurgent forces, causing major setback to trade in the surrounding economies. The rehabilitation after the Civil war by the local government as well as international funding has seen Beira retake its place as Mozambique’s second city and a vital port for regional transportation.
Also from Malawi, the route through Tete in Mozambique to Beira Port is called the Beira Corridor. Beira Port handles the largest portion of Malawi’s exports and imports.
(2) North-South Corridor The North-South Corridor is a combination of two traditional corridors (the Durban Corridor and Dar es Salaam Corridor) linking the Port of Durban and major cities in Southern Africa to the Eastern Port of Dar es Salaam. The Durban Corridor also has direct links into the Beira, Maputo, Walvis Bay, Benguela and Lobito Corridors. From the Port of Dar es Salaam, the corridors link to the central region of Africa and from the border post of Tunduma in Tanzania via the Tunduma (Tanzania) – Moyale (Kenya) Corridor and Northern Corridor linking the Port of Mombasa to eastern DRC through Uganda and Rwanda thereby giving physical interconnectivity between Eastern and Southern Africa. The North-South is the busiest corridor in the region in terms of values and volumes of freight. There have been efforts by regional trade blocs to improve the road and rail infrastructure and reduce waiting times at borders and ports and thus facilitate regional and international trade.
(3) Dar es Salaam Corridor The Dar es Salaam Corridor links the Port of Dar es Salaam to the major cities of Lusaka in Zambia and Lilongwe in Malawi. Key infrastructure along the corridor includes the port, the TAZARA (Tanzania-Zambia Railway Authority) railway line and the TANZAM (Tanzania-Zambia) highway. In the 1960’s, a transport coordinating committee was founded focusing essentially on the handling of metal exports from Zambia for providers and users of the transport services. In 2003, the Dar es Salaam Corridor Coordinating Committee (DCC) was established on behalf of the transport committee, under the auspices of SADC, as a public private entity to coordinate the issues of transport services in general.
(4) Mtwara Corridor The Mtwara Corridor connects Mtwara Port on the Indian Ocean to major towns in southern Tanzania, and across Malawi to Zambia. Some of the major towns alongside this corridor include Masasi, Songea, Mbamba Bay in Tanzania, Nkhata Bay, Mzuzu in Malawi and
2-5 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chipata in Zambia, where it links with the Nacala Corridor. A section of the corridor runs southwards from Mangaka to the border with Mozambique to Mueda and links with the Pemba-Montepuez-Lichinga Corridor in northern Mozambique. The zone of influence of Mtwara Port therefore covers large areas of southern Tanzania, northern Mozambique, northern Malawi and eastern Zambia. This region, highly rich in natural minerals, is vital for trade among the respective countries.
However, according to discussions with counterparts in Malawi, the Mtwara Corridor may not become an important import-export port in future due to its limited effects for cost reduction or modal-shift. Therefore, they gave a low priority for improvement of Nkhata Bay necessary to complete the function of Mtwara Corridor.
(5) Walvis Bay Corridor The Walvis Bay Corridor consists of three trade routes linking the Port of Walvis Bay to the neighbouring countries. The three routes are namely, the Trans-Kalahari Corridor, Trans-Caprivi Corridor and Trans-Cunene Corridor. The Trans-Kalahari Corridor is a highway connecting Walvis Bay to Johannesburg and Pretoria through Botswana. The Trans-Caprivi Corridor branches off from the Trans-Kalahari Highway at Karibib, proceeding northeast wards to the Angolan border at Rundu, and further eastwards through to Katima Mulilo at the border with Zambia. The Trans-Cunene Corridor consists of the northern part of the Namibian national highway from Otavi to Oshikango, and shares the same route as the Trans-Caprivi Highway from Walvis Bay to Otavi. From Oshikango, the road continues to Lubango in Angola. The Walvis Bay Corridor suffered setbacks due to the civil war, but in its aftermath has seen growth into a leading route for the transportation of goods inland from the West African Coast. It is a key trading route connecting the landlocked countries of Botswana, Zambia and Zimbabwe to the Western Port of Walvis Bay.
(6) Lobito Corridor The Corridor of Lobito is an important route through central Angola, connecting several major towns including Lubumbashi in southern DRC and Lusaka in Zambia. Its strategic location provides the shortest connection of the West African Coast to the inland countries, playing a key role as a platform in the regional and international network system of transports in Southern Africa.
2.1.4 Institutions for Transport Corridors The following entities are boosting demand of each corridor by means of a lot of supports.
(1) Walvis Bay Corridor Group The Walvis Bay Corridor Group (WBCG) is a public-private partnership established in 2000 to promote the utilisation of the Walvis Bay Corridor and improve infrastructure. The Walvis Bay Corridor is a network of transport corridors principally comprising the Port of Walvis Bay, the Trans-Kalahari Corridor, the Walvis Bay-Ndola-Lubumbashi Development Corridor (previously known as the Trans-Caprivi Corridor), the Trans-Cunene Corridor, and the
2-6 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Trans-Oranje Corridor. The Trans-Kalahari Corridor links the Port of Walvis Bay to Botswana’s Gaborone and Gauteng in South Africa. From Gauteng, this Corridor links with the Maputo Corridor to the east coast of Southern Africa.
The Walvis Bay-Ndola-Lubumbashi Development Corridor connects Walvis Bay to DRC as well as the land locked countries of Zambia and Zimbabwe. The Trans-Cunene Corridor extends through northern Namibia into southern Angola and the Trans-Oranje Corridor links the Port of Luderitz with Northern Cape Province of South Africa.
The Walvis Bay Corridor Group’s public-private partnership set-up allows for the pooling of resources from both the regulators and operators of transport. The public sector provides guidance on the issues of regulations such as customs, transport regulation and infrastructure development whereas the private sector is responsible for business development issues and the making of operational proposals and logistical solutions. The ports and corridors are strategically positioned to give Namibia the positioning of a transport hub for regional and international trade among the SADC countries, and the rest of the world10.
(2) Beira Corridor Group The Beira Corridor Group (BCG) – this was a successful private and public sector sponsored company, which had the prime objective of trade facilitation on the Beira Corridor. The BCG operated between 1984 and 2000, but closed due to the declining economy in Zimbabwe, and has not been replaced since.
(3) Dar es Salaam Corridor Committee (DCC) The DCC is a forum for regional cooperation on cross border transport policy formulation, regulation and operation. The Committee was established in the year of 2003, under the auspices of SADC, and it is composed of public and private institutions from the member countries. Its current membership comprises the United Republic of Tanzania, the Republic of Malawi, the Republic of Zambia and DRC. The DCC headquarters are located in Tanzania, under the Secretariat established to support the implementation of interventions and measures agreed by the DCC members. The DCC serves to facilitate and promote trade in and among the member states using the corridor by promoting reduction of total transit time on the corridor and total transport costs for corridor traffic11.
(4) National Transport Corridor Coordination Secretariat of Zambia Zambia, in a step to promote economic development has established the “National Transport Corridor Coordination Secretariat” to coordinate with other institutions including DCC and Walvis Bay-Ndola-Lubumbashi Development Corridor to promote regional trade. The Secretariat operates under the Ministry of Transport and Communications (MTC), coordinating and promoting various corridors relevant to Zambia. It serves also as an advisory
10 http://www.wbcg.com.na/ 11 http://darcorridor.org/index.php/about-us
2-7 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
body to Zambia’s exporters and importers of goods and services. The proposed structure of the National Corridor Coordination Secretariat is presented below:
Source: Concept Note on the Establishment of a National Transport Corridor Coordination Secretariat (October 2016) Figure 2.2 National Transport Corridor Coordination Secretariat
2.2 Current Conditions and Status of Nacala Corridor
2.2.1 Background of Nacala Corridor The Nacala Corridor connects Nacala Port to several major towns in the regions of northern Mozambique, Malawi and Zambia. Some of the major towns connected by this corridor include Nacala, Nampula, Blantyre, Lilongwe, Chipata and Lusaka. The Nacala Corridor has been a very important route for the transportation of Malawian exports and imports. The prolonged civil war in Mozambique caused setbacks to international transport through the Nacala Corridor but rehabilitation works have been underway since the end of the war in 1992. The Nacala Corridor has been identified as one of the six international corridors by Mozambique in their third Road Sector Strategy (RSS) (2007-2014) for road development to enhance regional development and international transportation.
Chipata-Lilongwe-Salima- Nkaya Railway: NEED REHABILITATION Luangwa Bridge-Mwami Chiponde-Cuamba & Border Road Section: Mchinji/ Chiponde/ Cuamba-Malema Road UPGRADED by EU & AfDB Chipata Mwami Mandimba Sections: Nacala Port Mangochi UNPAVED REHABILITATED Mtengulani by JICA Limbe-Nkaya-Nacala Lilongwe Luangwa Railway: UPGRADED Nacala by Vale/Mitsui Bridge Balaka
Nkaya Liwonde Nayuchi/ Entre Lagos Lusaka Kachaso Blantyre Limbe Nkaya-Moatize Railway: NEWLY BUILT by Vale/ Mitsui Maraka
Source: JICA Study Team Figure 2.3 Current Conditions of Development of Nacala Corridor
2-8 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2.2.2 Status and Conditions of Nacala Corridor
(1) Road Conditions and Status
Road No. and Conditions Status Photo Section
T4: Lusaka - Carriageways have been kept in - Luangwa bridge sound condition by management of 230 km the Zambian government although pavement damage can be seen in some mountain sections of the road. Shoulders are mostly fractured and narrow making it difficult for large vehicles to overpass. Walkways in the village sections are undeveloped.
T4: Luangwa Decades after construction, the - Bridge soundness of the bridge has declined. Due to this, passage restrictions have been introduced. It has been referred to as the bottleneck of the Nacala Corridor.
T4: Luangwa One section currently under Under construction bridge - construction was scheduled to be Financed by EU/EIB Mtenguleni completed in September 2017. The and AfDB 310 Km road is a high standard road paved with asphalt and concrete along its entire length. On some sections, walkways and lights have been installed, taking into consideration of the factor of safety.
T4: Mutenguleni - In Chipata, walkways and bicycle Completed in 2016 Chipata - Mwami pathways have been installed, Financed by EU/EIB Border catering for the movement needs of and AFD 50.4 km the vulnerable road users.
2-9 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Road No. and Conditions Status Photo Section
Mwami/Mchinji The border itself has been referred to OSBP works are Border as chaotic, with the presence of many scheduled to informal traders. The border crossing commence with is operated 24 hours, however, the AfDB’s “Nacala Road border for commercial truck traffic Corridor closes earlier (around 18:00). Development Project Phase IV” On April 13th, representatives of both countries met and signed for the commencement of the works.
M12: Mwami - Although the carriageway has been - Lilongwe kept in sound condition under maintenance by the Government of Malawi (GOM), some damaged areas can be seen on the shoulders. Also, a large portion of protective fences on the bridge are damaged. Safety facilities such as walkways, etc., in the villages are undeveloped. A weighing station for vehicle loads has been installed near the border.
M1: Lilongwe It was completed in 2015 with funding Completed in 2015 Western Bypass from the AfDB. Although the road is Financed by AfDB in excellent condition, the number of large vehicles diverting to this route is less than what was expected (the function of reduction of congestion has not been fully realised).
M1: Lilongwe - After works by EU completed in 2011, Completed in 2011 Balaka the road is in excellent condition. Financed by EU Safety facilities such as walkways, etc, in the villages are undeveloped. Also, the bridges have not been improved; they are in comparatively sound condition.
2-10 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Road No. and Conditions Status Photo Section
M8: Balaka - Pavement of the existing road is in - Liwonde very poor condition and the shoulders are completely shattered.
M3: Liwonde - Pavement of the existing road is in Under Construction Mangochi very poor condition and the shoulders Financed by AfDB are completely shattered. Refurbishment works funded by AFDB have just been started.
2-11 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Road No. and Conditions Status Photo Section
M3: Mangochi This bridge was completed in works Completed in 2002 Bridge under a Japanese Grant Fund in Financed by Japan 2002. As the bridge passes through Mangochi Town and the eastern side is mountainous, there is very little use by large vehicles.
S131: Liwonde - Route M3 between the Mangochi Chiponde Bridge and Chiponde is in a mountainous area, making it difficult to travel for large vehicles and prone to accidents. Large vehicles generally avoid this mountainous route and use S131 (improvement works finished in 2004) instead. Compared to M3, S131 is relatively in good condition. Source: JICA Study Team
Generally, during heavy traffic, congestion occurs due to the delay of large vehicles in the steep uphill sections, forming bottlenecks.
Consequently, the need for climbing lanes on steep grades can be seen and the need for a bypass and Non-Motorised Transport (NMT) facilities in populated areas have been expressed in many sections.
2-12 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Rail Conditions and Status
Section Conditions Status Photo
Chipata - Petauke - Detailed feasibility - - Serenje study is ongoing by China.
Chipata Station It is operated and maintained by ZRL. Negotiation with the Terminal facilities are absent. On and EU is underway on off-loading of commodities is the construction of a conducted by trailers at the railroad terminal. crossing sections.
Chipata - Mchinji The north branch between Nkaya and The concession and Nkaya Mchinji and the Zambia border near from the Chipata is also part of the CEAR Malawi/Mozambique concession and is the longest of the border to Chipata at four routes. Its length is 12 km from Cwaba is operated Chipata to Mchinji and 110 km from by CEAR. Mchinji to Kanengo, 105.5 km from Plans are under way Kanengo to Salima and 172 km from for upgrading the Salima to Nkaya. In total that is Nkaya-Mchinji around 400 km. section in 2018 The maximum axle load is 18 tonnes under private between Chipata and Salima (via funding by Kanengo and Mchinji) and 15 tonnes Vale/Mitsui, which per axle between Salima and Nkaya. will allow for the accommodation of the18t axle load over the whole section.
2-13 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Section Conditions Status Photo
Nkaya - Limbe This section is 96 km long. The Upgrading works section between Nkaya and Limbe is were conducted on currently in operation for freight and the Nkaya - Limbe passenger traffic. route from 15t axle to 18t axle load, completed in August 2017.
Limbe- This route section is part of the CEAR From 2019, it is Makhanga-Marka- concession and forms the historically expected that CEAR Mutarara most important branch line of the will operate a Malawi railway network. The section passenger service between Limbe and Mutarara (around between Limbe and 200 km) is currently non-operational. Makhanga. This section includes the bridge at Chiromo near Bangula over the Shire River which was washed away in
1997.
Nacala Railway This railway branch line is 130.5 km Preliminary Nkaya-Kachaso long and is newly built. The line has operation of the rail been built to handle 20.5 tonnes axle was started in July loads. 2015 and full scale transportation of coal was started in January 2016.
2-14 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Section Conditions Status Photo
Nacala Railway This railway line is around 99 km long This line falls under Nkaya-Nayuchi to the Mozambique border and is the CEAR newly rebuilt. It is around 612 km concession. from the border to Nacala. The branch line has been rebuilt to handle 20.5 tonnes axle loads.
Source: JICA Study Team
2.3 Current Usage of Nacala Corridor vis-a-vis Major Corridors
2.3.1 Distance between Major Cities and Main Ports The distances of road and rail connection from the main cities of Zambia and Malawi to the Ports of Durban, Dar es Salaam, Nacala and Beira are as shown in the table below. As can be seen from the table, Beira Port occupies the most conducive location from Zambia in terms of distance. In regard to Malawi, when the rail is used, Nacala Port is the closest and can be said to be conducive. The comparison of port distances is expanded with consideration of transportation costs and time afterwards in this discussion.
2-15 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 2.1 Distance between Major Cities and Main Ports Major City Main Port Mode km No. of Border Beira Road 1,054 2 Nacala Road 1,810 2 Road 1,985 1 Lusaka Dar es Salaam Rail 2,039 1 Road 2,381 2 Durban Rail 2,638 2 Beira Road 1,400 2 Nacala Road 2,126 2 Road 1,811 1 Ndola Dar es Salaam Rail 1,992 1 Road 3,000 2 Durban Rail 2,958 2 Beira Road 930 2 Road 1,224 2 Nacala Chipata Rail 1,133 2 Dar es Salaam Road 1,811 2 Durban Road 2,431 2 Beira Road 1,096 1 Road 1,080 1 Nacala Lilongwe Rail 989 1 Dar es Salaam Road 1,667 1 Durban Road 2,650 3 Beira Road 812 1 Road 930 1 Nacala Blantyre Rail 799 1 Dar es Salaam Road 1,978 1 Durban Road 2,340 3 Source: JICA Study Team
2.3.2 Traffic Volume in Zambia and Malawi According to the data of road traffic from both Zambia’s and Malawi’s respective road authorities in 2015, the capitals of both countries as well as Kitwe in Zambia had the heaviest traffic volume. By corridor, the North-South Corridor and Lobito Corridor to DRC had the heaviest traffic volume. High traffic volume is also seen with the corridors of Nacala and Dar es Salaam near the cities as well as within Zambia, but the traffic volume is low near the borders.
In Malawi, the traffic volume is high for Routes M1 and M5 connecting the capital, Lilongwe and the country’s second largest city of Blantyre. Regarding connection to the Chiponde border on the Nacala Corridor, the area eastwards of the Mangochi Bridge by Route M3 is not suitable for the travel of large vehicles and S131 is generally used.
2-16 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Zambia Roads Development Authority and Malawi Roads Authority Figure 2.4 Traffic Volume on Main Roads in Zambia and Malawi (2015)
2.3.3 Freight Traffic at Border The freight traffic volume conditions of the major border towns are indicated in the figure below.
Source: JICA Study Team Figure 2.5 Major Border Posts related to Zambia and Malawi
2-17 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
The most border freight traffic can be seen at Livingstone and Chirundu on the North-South Corridor. The next is Nakonde on the Dar es Salaam Corridor. On the Nacala Corridor, even though traffic on the Mwami/Mchinji border between Zambia and Malawi is 300 vehicles per day - the highest in Malawi, at the Chiponde border with Mozambique, the volume is a mere 10 vehicles per day.
Table 2.2 Border Freight Traffic for Zambia and Malawi in 2015 ADT Country Border Crossing Road No. Direction (Freight Traffic) Zambia Chanida/Cassacatiza T6 101 Mozambique Zambia Nakonde/Tunduma T2 497 Tanzania Zambia Mbala M1 N/A Tanzania Zambia Zambia Livingstone T1 779 Zimbabwe Zambia Chirundu T2 556 Zimbabwe Zambia Kazungula M10 N/A Botswana Malawi 74 Songwe M1 Tanzania 55 Malawi 168 Mchinji/Mwami M12 Zambia 138 Malawi 113 Dedza M1 Mozambique 55 Malawi Malawi 126 Mwanza M6 Mozambique 100 Malawi 60 Muloza M2 Mozambique 72 Malawi 6 Chiponde M3 Mozambique 6 Source: Zambia Roads Development Authority and MNTMP
The following figure shows the proportions of road freight (light goods and heavy goods) vehicles observed in the traffic surveys in Malawi. 17% of all truck movements have an international origin or destination. Aside from these, the proportion of trucks travelling between the regions is relatively small at 8%, whilst most movements are intra-regional.
2-18 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: MNTMP Figure 2.6 Proportions of Observed Truck Movements in Malawi (2016)
2.3.4 Freight Share per Corridor The freight volume conditions of the major border are indicated in the table below.
2-19 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 2.3 Freight Share per Corridor for Zambia (Year 2016) Freight Volume (Export 2016) Corridor Border Mode (ton/year) Total (tons/year) % Road Rail Air Other Chanida 36,351 0.0 0.0 0.0 36,351 Nacala 337,694 12.9 Mwani 293,472 7,871.4 0.0 0.0 301,343 Dar es Salaam Nakonde 224,432 3.5 0.0 0.0 224,436 224,436 8.6 Chirundu 743,349 0.0 0.0 0.0 743,349 Kariba 1,762 0.0 0.0 0.0 1,762 North-South/Beira Livingstone 124,099 1,170.7 1.8 0.0 125.272 1,157,437 44.2 Victoria Falls 23,871 0.0 0.0 0.0 23,871 Kazungula 263,184 0.0 0.0 0.0 263,184 Lobito Kasumbalesa 744,115 0.0 0.0 0.0 744,115 744,115 28.4 Walvis Bay Katima Mulilo 156,546 0.0 0.0 0.0 156,546 156,546 6.0 Total 2,611,180 9,045.6 1.8 0.0 2,620,228 100.0
Freight Volume (Import 2016) Corridor Border Mode (ton/year) Total (tons/year) % Road Rail Air Road Chanida 91,394 0.0 0.0 0.0 91,394 Nacala 105,418 2.5 Mwani 14,025 0.0 0.0 0.0 14,025 Dar es Salaam Nakonde 1,923,570 106.5 0.3 0.0 1,923,676 1,923,676 45.7 Chirundu 1,378,571 0.0 0.0 0.0 1,378,571 Kariba 3,985 0.0 0.0 0.0 3,985 North-South/Beira Livingstone 6,046 0.0 453.8 0.0 6,500 1,830,240 43.5 Victoria Falls 75,144 0.0 0.0 0.0 75,144 Kazungula 366,038 0.0 3.2 0.0 366,041 Lobito Kasumbalesa 134,112 0.0 0.0 0.0 134,112 134,112 3.2 Walvis Bay Katima Mulilo 215,349 0.0 0.0 6.3 215.355 215,355 5.1 Total 106.5 457.4 6.3 4.208,802 100.0
Freight Volume (Transit 2016) Corridor Border Mode (ton/year) Total (tons/year) % Road Rail Air Road Chanida 6,114 0.0 0.0 0.0 6,114 Nacala 11,797 0.4 Mwani 5,683 0.0 0.0 0.0 5,683 Dar es Salaam Nakonde 890,119 255.7 0.0 0.0 890,374 890,374 26.8 Chirundu 921,273 0.0 0.0 0.0 921,273 Kariba 2 0.0 0.0 0.0 2 North-South/Beira Livingstone 2 0.0 0.0 0.3 2 1,093,073 32.9 Victoria Falls 7,038 3,080.3 0.0 0.0 10,118 Kazungula 161,677 0.0 0.0 0.0 161,677 Lobito Kasumbalesa 1,260,594 0.0 0.0 0.0 1,260,594 1,260,594 37.9 Walvis Bay Katima Mulilo 69,570 0.0 0.0 0.0 69,570 69,570 2.1 Total 3,336.0 0.0 0.3 3,325,409 100.0
Freight Volume (Transit 2016) Corridor Border Mode (ton/year) Total (tons/year) % Road Rail Air Road Chanida 133,859 0.0 0.0 0.0 133,859 Nacala 454,909 4.5 Mwani 313,179 7,871.4 0.0 0.0 321,051 Dar es Salaam Nakonde 3,038,121 365.7 0.3 0.0 3,038,487 3,038,487 30.0 Chirundu 3,043,193 0.0 0.0 0.0 3,043,193 Kariba 5,748 0.0 0.0 0.0 5,748 North-South/Beira Livingstone 130,147 1,170.7 455.7 0.3 131,774 4,080,750 40.2 Victoria Falls 106,053 3,080.3 0.0 0.0 109,133 Kazungula 790,898 0.0 3.2 0.0 790,902 Lobito Kasumbalesa 2,138,821 0.0 0.0 0.0 2,138,821 2,138,821 21.1 Walvis Bay Katima Mulilo 441,465 0.0 0.0 6.3 441,472 441,472 4.4 Total 12,488.1 459.2 6.6 10,141,485 100.0 Notes: As access to Chanida border obviously goes through T4 (the Nacala Corridor), Chanida border is categorized into the Nacala Corridor. Source: Zambia Revenue Authority
2-20 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Altogether, the North-South Corridor covers the highest percentage of Zambia’s freight with Dar es Salaam and Lobito also covering a significant portion. Although Dar es Salaam covers the highest percentage of imports (45.7%) and freight in transit to the surrounding nations, exports through this corridor are comparatively low (8%). Transport via the Nacala and Walvis Bay Corridors is meagre, both covering just over 4%.
Table 2.4 Freight Share per Corridor for Malawi (Year 2016) Freight Volume Corridor Border Export Import ton % ton % Nacala Chiponde 1,513 53,411 Nayuchi (Rail) 42,269 150,264 82,773 14.9% 849,383 16.0% Mchinji 20,143 524,254 Muloza 18,848 121,454 North/South/Beira Mwanza 153,984 2,497,614 408,523 73.7% 3,144,090 59.2% Dedza 254,539 646,476 Dar es Salaam Songwa 63,299 63,299 11.4% 1,320,314 1320,314 24.8% Total 554,594 100.0% 5,313,787 100.0% Note: Regarding Muloza, from a questionnaire conducted with transport companies, it was confirmed that it is used for access to the Nacala corridor. The corresponding freight share was therefore counted for the Nacala corridor. Source: Malawi Revenue Authority
In Malawi, the Nacala Corridor covers approximately 15% of both of exports and imports.
Also, in the National Transport Master Plan (MNTMP) conducted by Malawi, the share per port is classified as shown in the figure below. Beira Port covers the largest share at 56%, followed by Durban at 26%, Nacala at 10% and Dar es Salaam at 5%.
Source: MNTMP Figure 2.7 Imports and Exports by Seaport (ton)
2-21 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2.3.5 Freight Movement on Nacala Corridor Observation of the freight condition on the Nacala Corridor from the Zambian border of Mwami shows that for Zambia trade with Malawi is the highest in terms of both of exports and imports, accounting for over 70%. South Africa is the second largest for exports whereas Japan is in second place in terms of imports. Cotton is the leading export to Malawi with cement in second place. Cotton is also the chief export to South Africa. In regard to imports from Malawi to Zambia, timber is the chief import followed by foods including drinking water. From Japan as the second country with the most goods imported, the chief imported commodity is vehicles.
Table 2.5 Freight Movement on Nacala Corridor in Zambia
Border Post Origin or Destination Goods Import MWAMI BORDER POST / IMPORT RATIO CHINA OTHER UAE INDIA MAIN PARTNER COMMODITY 2% 2% 3% 2% ・Wood MALAWI ・Food/Beverages ・Parts of vehicles JAPAN 13% JAPAN ・Vehicles
・Parts of machinery MALAWI UAE 78% ・Parts of vehicles
Mwami (Zambia/Malawi) Export
MWAMI BORDER POST/ EXPORT RATIO MAIN PARTNER COMMODITY OTHER SWITZERLAND 3% 5% ・Cotton/Cotton seed MALAWI ・Cement
SOUTH AFRICA SOUTH AFRICA ・Cotton/Cotton seed 22%
MALAWI 70% SWITZERLAND ・Cotton/Cotton seed
Source: Monthly Nacala Corridor 2012 - 2016 (Zambia Revenue Authority)
From the condition of freight by rail in Malawi (imports and exports only), wheat grain and agricultural chemicals are most prominent. In regard to exports, apart from construction materials, sugar, tobacco and pigeon pea are dominant.
2-22 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 2.6 Freight Movement by Railway in Malawi (2015) CLIENT TRAFFIC Total CLIENT TRAFFIC Total MALAWI IMPORTS 104,565 MALAWI EXPORTS 86,248 Bakhresa Wheat grain 20,460 Local trader Eggs 500 Bakhresa Wheat grain 14,379 Local trader Potatoes 1,252 PIL (Sturrock) Diesel 4,984 Local trader Timber 1,480 VALE project Malawi Shouders / p/ clips 1,614 Zalco Lime 40 MANICA/ MOZ fertilizer Fertilizer 13,343 Local trader Sand 660 MANICA/ MOZ fertilizer Fertilizer 4,337 ILLOVO Sugar 924 MANICA/ MOZ fertilizer Fertilizer 1,490 ILLOVO Sugar 27,342 Transitex Maquinas VP 102 IFA Toordall 500 CORI Edible oilss 44 Export trading Pegion peas 2,120 Bridge Shipping Bagged Wheat grain 496 ALLIANCE ONE Tobacco 400 Others Various 43,316 IFA Pegion peas 215 SDV Groundnuts 125 CMA-CGM/ DELMAS Tea 8 CMA-CGM/ DELMAS Steel bars 100 Allience freight Cotton 24 Allience freight Pegion peas 270 MOTA engil - Project VALE Concrete Sleepers 38,976 Allience freight Cotton 200 Allience freight Ground nuts 792 Icon carriers Coffee 21 Agrimal Steel bars 260 Mota Engil Cotton 373 IFA Tea 100 Master Freight Ground nut 2,222 TMT Tea 50 Agro Industries Pegion peas 1,204 Glens Cotton 775 AFRISIAN Sesame 22 TMT Pegion peas 3,655 ZALCO Lime 156 IFA Macadamia Nuts 396 IFA Pegion peas 645 Others Varous 442 Source: MNTMP Team
2.3.6 Capacity of Major Ports
Durban Port The Port of Durban is South Africa’s premier multi-cargo port and is counted among the busiest ports in Africa, handling about 80 million tons of cargo per annum. The Port of Durban is the leading port in the SADC region and the premier trade gateway for Southern Africa with East and West Africa, the Far East, Europe and North America. It is the international commercial gateway to South Africa and is strategically positioned on the world shipping routes. It is one of the few ports in the world located in close proximity to the central business district. The Port of Durban occupies a focal point in the transport and logistics chain with 60% of all imports and exports passing through the port; thus, it assumes a leading role in facilitating economic growth in Southern Africa.
2-23 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Beira Port The Port of Beira lies on the northern shores of the Mozambique Channel off the Indian Ocean at the mouth of the Pungoe River in Sofala Province. Centrally located on Mozambique’s eastern shores, the Port of Beira is an important trade and transportation centre for Central African products and coastal goods. Railways from Zimbabwe, DRC, Zambia, and Malawi end in the Port of Beira, and it serves as the main port for those inland nations.
Nacala Port The Port of Nacala was granted to Corridor de Desenvolvimento de Norte (CDN) and recently Vale, a Brazilian mining company. Nacala is one of the deepest natural ports in Africa. It is certainly one of the best natural harbours in Eastern Africa. Nacala serves the Province of Nampula and would be the main gateway to Malawi. However, due to underdeveloped infrastructure in track, rolling stock and equipment, the Port is underutilised in providing transport services of high international standard.
Mtwara Port Mtwara Port is located at about 580 km southward from Dar es Salaam, and was initially developed as the base for the export of groundnuts in the 1950s. In terms of the scale of cargo handling volume, Mtwara Port is currently third after Dar es Salaam and Tanga Ports. However, its location inside the Mikindani Bay is advantageous and provides potential over the other two ports as it lies in a naturally protected harbour by the overhanging peninsular.
Dar es Salaam Port The Port of Dar es Salaam is Tanzania’s major port in Dar es Salaam, which is the centre for industry, the largest city, and the seat of government. Located on the shores of eastern Africa off the Indian Ocean, the Port of Dar es Salaam is about 41 nautical miles south-southeast of the Port of Zanzibar and some 170 nautical miles south of Kenya’s Port of Mombasa.
2-24 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 2.7 Outline of the Capacity of the Major Ports General Container Berth Total General Con- Cargo Total Maximum Number Terminal Total Number Cargo Cargo tainers Terminal Area Draft of Calls Capacity Berth Length of (2015) (2015) (2015) Development Port Capacity Operation Number Employ- Plan (Calls (1,000 (1,000 (1,000 (1,000 ton/ (1,000 ton/ ees (m) (ha) (m) per ton/ ton/ TEU/ Year) Year) Week) Year) Year) Year) TRANSNET Plans underway Durban - 3,600 59 10,933 6,000 960 12.5 80 81,219 45,255 2,664 FREIGHT for improvement RAIL of berths JJ Africa Dredging plans Beira 3,000 300 12 1,987 502 39 12 - 5,195 2,400 207 underway for the sea route Corredor Plans underway Logistico de for refurbishing of Nacala (CLN) the existing terminal and building of a new Nacala 2,000 180 6 995 223 8 14 8 2,210 900 97 terminal. Also, a terminal designated exclusively to coal is under construction. Plans for port extension are underway. Mtwara 400 - 5 385 - - 9.5 10 563 360 15 The F/S has already been completed. Tanzania Plans underway International to increase Dar es Container container berths 694 11 2,018 2,684 50 10 30 13,305 5,016 614 Salaam Terminal by two Service (TICTS) Source: JICA Study Team
From the handling records of 2015, the capacity of Durban Port was by far the highest, followed by Dar es Salaam, Beira, Nacala and Mtwara. The capacity handled at Nacala is approximately 1/6 of Dar es Salaam and 2/5 of Beira.
According to the responses to a questionnaire survey administered to cargo agents, Durban Port is the hub whereas Beira and Dar es Salaam Ports which are unsuitable for large ships are typically used for transportation by medium and small sized ships.
2.3.7 One Stop Border Posts (OSBPs) Currently, there is only one functioning OSBP at Chirundu, Zambia. Development of OSBPs at the main borders is vital for the reduction of transit time and cost, thus promoting trade. The table below shows the status for the development of OSBP at various border towns. Also, the World Bank is in the process of providing technical assistance for the development of a Single Window System to improve trade in the region.
2-25 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 2.8 Development Status of OSBPs at Various Border Towns Corridor Location Remark Dar es Salaam Tunduma/Nakonde (Tanzania/Zambia) The Governments of Tanzania and Zambia agreed between 2010 ~ 2011 to establish an OSBP at this border. According to EU/COMESA, development of an OSBP on the Tunduma Side commenced in December 2016 with the support and funding from TradeMark East Africa. Also, USAID have conducted a series of studies, training and sensitisation of border agencies and stakeholders between 2012 and 2015 with the intention of further support to the development of an OSBP at Nakonde. Kasumulo/Songwe (Tanzania/Malawi) The GOM has received financing from WB, and in April 2017 invited bids for consultancy services in regard to feasibility study, detailed design, preparation of tender documents and construction supervision for improvement of this border post to an OSBP12. Kasumbalesa (Zambia/DRC) Both governments are now considering development. Nacala Mwami/Mchinji (Zambia/Malawi) OSBP works are scheduled to commence with AfDB’s “Nacala Road Corridor Development Project Phase IV.” On April 13th, 2017, the representatives of both countries met and signed for the commencement of the works. Chiponde/Mandimba OSBP works for Chiponde/Mandimba were dropped from the same (Malawi/Mozambique) project (Phase IV). The current state is unknown. North-South Chirundu (Zambia/Zimbabwe) It was redeveloped as OSBP in 2009 to respond to the problem of chronic traffic delay at the border. Initially, as Africa’s only OSBP, Chirundu enjoyed success, being looked at as the model example of border post operation13 14. However, lately there have been reports of deterioration of the OSBP functions due to malfunctioning ICT systems, insufficient staff training, operation space, etc15. Beitbridge (SA/Zimbabwe） The Governments of Zimbabwe and South Africa agreed in 2009 to redevelop this border post as OSBP. At the second session of the Bi-National Commission (BNC) between the two nations held in October 2017, South African President Jacob Zuma reiterated the need for the 2009 agreement to be implemented and the two governments agreed to set up a joint technical committee to formulate the implementation plan16. Kazungula (Botswana/Zambia) The Governments of Botswana and Zambia agreed in 2011 to construct a road-rail bridge at the Kazungula Border, linking the two countries by crossing the Zambezi River. Funded by the two governments and AfDB, this Project was divided into three major phases: Phase 1 involving construction of the bridge, Phase 2 is the construction of OSBP facilities on the Botswanan side whereas Phase 3 involves construction of OSBP facilities on the Zambian side. There are reports that Phase 1 is almost complete, and Phase 2 is under way having been commenced in 2016. In January 2017, there were reports that the two countries had signed an agreement with a Chinese contractor for works on the OSBP on the Zambian side under Phase 317 18. Source: JICA Study Team
12 http://www.ra.org.mw/wp-content/uploads/2014/12/Songwe-Kasumulu-One-Stop-Border-Post-Expression-of-Interest.pdf 13 https://www.tralac.org/discussions/article/5338-challenges-at-chirundu-one-stop-border-post.html 14 http://unctad.org/meetings/es/Presentation/DinganiBanda_Zambia_NTFCForum_Jan2017.pdf 15 https://www.tralac.org/discussions/article/5338-challenges-at-chirundu-one-stop-border-post.html 16 https://www.enca.com/africa/south-africa-zimbabwe-push-for-one-stop-beitbridge-border-post 17 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-Social-Assessments/Botswana%20and%20 Zambia-Kazungula%20Bridge-ESIA%20Summary.pdf 18 http://www.sundaystandard.info/botswana-zambia-sign-kazungula-project-contract
2-26 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2.3.8 Transit Time and Cost The table below shows the times and costs of transit to the major towns in Zambia and Malawi from the major ports of Durban, Beira, Nacala, Mtwara and Dar es Salaam.
In regard to transit time, although Zambia’s Lusaka and Ndola lie in Durban Port’s sphere of influence, Chipata and Malawi’s Blantyre lie in Beira Port’s whereas Lilongwe lies in both Beira and Nacala Port’s sphere of influence. Comparison of the costs of transportation shows that, although Chipata, Lilongwe and Blantyre lie in Nacala Port’s sphere of influence, currently there is little reliability on railway transportation and the rate of use is low. In order to reduce the transportation cost, which is a challenge faced by both countries, it is important that the reliability of railways is improved and the transportation mode is shifted from road to railway.
2-27 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report 800 5,790 800800960945 4,843 3,174 3,572 4,668 800960945 3,462 2,853 3,288 800960945 4,919 2,877 2,836 945 4,184 945 2,356 945960 2,176 945945 2,467 2,608 1,940 800 5,415 800 4,945 1,598 3,510 1,598 3,555 (20' Dry) Average Transport Cost (USD) 995 4,590 400 3,6432,374 2,1423,253 400 2,7711,912 470 470 2,662 2071,4231,873 1,598 470 470 4,576 3,7191,6601,636 400 257 255 2,7693,0371,957 470 207 1,598 4,842 1,411 2,771 2071,231 1,5981,2501,409 4,576 257 255 4,015 600 3,545 600 2,526 2062,997 1,598 206 4,329 1,598 4,801 8 9 9 9 9 9 10 12 16 13 14 10 10 12 14 14 14 18 10 16 15 14 13 12 14 15 1 1 1 4 3 7 7 1 4 3 1 4 3 3 7 7 3 3 7 3 4 1 3 1 7 7 the Major Towns from Various Ports the Major Towns from Various Transit Time (days) 5 7 5 12 10 Way Port Total Way Charge Border Port Handling Total 930 930 989 812 799 Rail 2,958 9 Rail 2,638Rail 8 1,992Rail 7 1,133 15 Rail Rail 2,039 7 Rail Road 3,000 9 Road 1,811Road 6 1,224 7 RoadRoadRoad 2,381 1,400 2,126 7 Road 8 13 Road 1,080 6 RoadRoad 2,431 1,096 11 5 Road 1,985 7 Road 1,810 11 Road 1,811Road 9 Road 2,650Road 13 2,340 11 Road Road 1,667Road 7 1,978 8 Mode km Table 2.9 Transit Time and Costs for Beira Beira Beira Beira Road 1,054 6 4 10 1,613 470 960 3,043 Beira Nacala Durban Nacala Durban Durban Durban Nacala Durban Nacala Nacala Main Port Main Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Ndola Lusaka Chipata Blantyre Lilongwe Major City Major
Source: JICA Study Team
2-28 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2.4 Comprehensive Evaluation of the Corridors In this chapter, the current status of major transport corridors and ports were analysed, and the comparison of the corridors from the viewpoints of time and transport cost from major cities and its port are studied. In the following section, the results of hearing survey are summarised aiming to understand the advantages and disadvantages of the corridors recognised by users. Then, comprehensive evaluation of corridors is described.
2.4.1 Hearing Survey Results on Nacala Corridor As can be seen from the above data, the rate of use of the Nacala Corridor for the flow of goods to/from outside the African region is low. To understand the cause for this, a survey was conducted with local transportation and trade companies in Zambia and Malawi. The main views that arose are summarised below:
Views Obtained from Zambia Top 4 most used harbours: 1. Dar es Salaam, 2. Durban, 3. Beira, 4. Walvis Bay Market condition: Transportation routes are decided from observing the situations of the transportation costs and routes. Reason why the Nacala Corridor is currently not used: Unknown to cargo owners/ (Other companies use the Ports of Dar es Salaam and Durban mainly. Nacala is unknown, or the logistics firms have no offices there). The scale of Nacala Port is small. Challenges: 1) the railway system is inefficient and therefore unreliable, 2) the need for cargo equipment infrastructure such as dry ports and containers was raised. Currently Nacala Port is not being sufficiently used and these challenges will have to be overcome in order to enable full operation of the Port. For the utilisation of Nacala Port, improvement of railway inefficiency is necessary. Improvement of efficiency includes shortening of transportation time, punctuality, and smooth customs procedures. Introduction of OSBP is not a serious problem. Large transportation companies beforehand send documents to the border and only physical scanning is conducted at the border, which does not take much time. More than OSBP, ICT is necessary. In regard to the transportation of copper, South African transporters’ system is already strongly established and it is difficult to alter that system.
Views Obtained from Malawi Never used the Nacala Corridor at all. There has been no request by the owners of goods. The road condition in Mozambique is poor. (There are unpaved sections) Steep sections at the border sections are difficult for passage with large vehicles. Therefore, even though it’s farther, the relatively flatter Beira Corridor is preferred. (The mountain road between the border and the Mangochi Bridge is difficult for the passage of large vehicles, and dangerous. Also, the road slope over the Mangochi Bridge often presents a barrier for the large freight vehicles.)
2-29 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Compared to the Beira Corridor, management at the Nacala Corridor is poor. (Poor performance) The capacity and facilities of the main container terminals (Blantyre for example) are insufficient. The warehousing capacity around the Nacala Corridor is small. (They are not container terminals). Operation is impossible owing to the company’s not having an office at Nacala Port. If the Nacala Corridor were to be used, installation of an office would be necessary. The main port used is the Port of Beira (about 80% of all freight). The road condition for the Beira Corridor is good, furnished even with facilities for bulk vessels. On the other hand, Nacala Port is around 10% (the main form of transport to the port is the rail). The Nacala Corridor has not been sufficiently utilised so far due to the shortage of locomotives and freight vehicles as well as the underdeveloped railway operation system. The number of waiting days is about one week for Nacala Port (and maximum three days for Beira). Access to Nacala Port by road is through M2 and NR7 on the Mozambican side. NR7 is unpaved for a stretch of about 60km from the border.
Challenges with Railway Transportation The capacity of Nacala Railway is small. The capacity and facilities of main container terminals (Blantyre, for example) are insufficient. It’s inefficient and unreliable (locomotives are broken and unusable, it’s slow. ※Bolloré has own hundreds of trucks). Although the railway should be cheaper than transportation by road, the cost per tonne is approximately 5 to 10 dollars, similar to the road. From the cost point of view, there is nothing to attract cargo owners from using roads to the railway. Primarily, if it can be operated efficiently, rail should be substantially cheaper than road transportation. For example, whereas about 30 tonnes can be transported per vehicle with transportation by truck, by rail a 40 ft container can carry 40 wagons of 26 to 28 tonnes each; making it possible to transport over 1,000 tonnes. (In response to the inquiry on whether ordinary freight vehicles can use the Nacala Corridor rail line developed by Vale), the business community has not been duly informed about this development and information on the conditions of use and other details has not been sufficiently shared. CEAR (Central East African. Railways Company) need to conduct public relations activities. Reinforcement of the organisational structure and the improvement of efficiency are urgent challenges for CEAR. There are a shortage of locomotives and freight vehicles as well as the low service level from the deterioration of the tracks. Rebuilding work is necessary. Malawi continues to be in need of road improvement and must utilise the railway infrastructure already in place. Malawi has not fully utilised the railway to Lake Malawi, which is a resource they already possess, which is wasteful. Primarily the railway is a cheaper transport mean than roads and methods of utilisation should be examined.
2-30 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Expectations for the Nacala Corridor Due to the problems of poor security around Beira Port, traffic congestion, expensive warehousing, etc., increased use of Nacala Port is desired. From the geographical conditions, dredging is continuously required at Beira Port. It is used as a feeder port (with Durban as the main port). Nacala Port, as a deep East African port can be an alternative to Dar es Salaam and Durban Ports. The merits include, 1) compared to other ports, access to Nacala Port involves the shortest distance, and 2) Nacala is a deep port and use of large vessels is possible. Also, there is a lot of trade between Zambia and China, and Nacala enjoys a geographically conducive location to connection to East Asia. Although currently it is not being used, development of dry ports can be a milestone towards the use of the Port. If dry ports are developed, offices can be opening up for the preparations for the use of the Nacala Corridor. Other transportation companies have also shown interest in development of dry ports. If the Nacala Corridor can operate fully, a spin off effect in the eastern parts of Zambia can be expected. Nacala Port is largely regarded as the “port for coal exportation”. Being a deep port, shifting from other ports may be expected. Illovo, a sugar company in Malawi, has recently started using Nacala Port.
2.4.2 Comprehensive Analysis on Transport Corridors Related to Zambia and Malawi
(1) Nacala Railway Corridor and Nacala Port
1) Transit Time and Cost Under the present conditions, the Nacala Corridor has an advantage over other transport corridors in terms of transport cost when transporting goods from Chipata, Lilongwe and Blantyre to Nacala Port. However, there are no advantages when transporting goods from Lusaka and Ndola in Zambia. After upgrading the railway from Nkaya to Mchinji, as well as improvement of the operation capacity of CEAR and construction of a multi-modal dry port in Chipata, the transport cost from Lusaka to Nacala Port through the Nacala Corridor will become the cheapest among the other corridors.
On the other hand, the current challenge of the Nacala Corridor is transport time. At present, the time required for the transport of goods from Chipata and Lilongwe to Nacala Port by Nacala Railway is the longest among all the corridors. After the upgrading of the railway and installation of a dry port in Chipata, the transport time from Chipata, Lilongwe and Blantyre to the Port will become the shortest. However, despite the longest distance to its port, the North-South Corridor will maintain the shortest transport time when transporting goods from Lusaka. This is due to the improved roads which allow high speed transport by truck and the excellent efficiency of the port operation.
2-31 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) Conditions and Potentials of the Port Being one of the deepest natural ports in Africa, Nacala Port has an advantage of being able to accept large scale vessels. In addition, the Port currently has a relatively short transit time because it is less crowded than others.
On the other hand, the Port has big challenges in terms of its facilities. The infrastructure related to the railway is not developed well, and warehouses and handling facilities are also not sufficient. Because of these reasons, only a few freight service companies are located in the port, which further leads to the limited number of vessels arriving in the port.
3) Security, Safety and Other Related Conditions With difficulties in securing financial sources for maintenance of their roads, the modal shift to railway has become an urgent challenge in Zambia and Malawi. The Nacala Railway Corridor, with the upgraded railway from the port to Nkaya in Malawi and with the expected upgrading for the remaining section connecting to Chipata in Zambia which has already been committed by a private group, would provide a solution to this challenge. Moreover, a new line connecting Chipata and Serenje is also expected to be developed in the long term.
On the other hand, there are still many challenges as follows;
Nacala Port is not well known among carriers, but it is recognised as a port mainly for coal. Security in railway transport is weak due to the lack of a tracking system. Road transport with large trucks is difficult because there are unpaved roads in and around the borders of Malawi and Mozambique.
(2) Beira Corridor and Beira Port
1) Transit Time and Cost The Beira Road Corridor has an advantage in terms of transport time when transporting goods from Chipata, Lilongwe and Blantyre to Nacala Port. The transport time of the Beira Road Corridor comes in second place when transporting goods from Lusaka and also Ndola to the port, following the time required travelling to Durban Port through the North-South Corridor.
The transport cost of the Beira Corridor is also relatively low compared to the other transport corridors except for that of the Nacala Railway Corridor.
2) Conditions and Potentials of the Port The Beira Corridor connects to Zimbabwe, Zambia, Malawi and DRC with Beira Port functioning as their trading port. Zimbabwe and DRC are large countries that import many commodities, thus the access to these countries is an advantage of Beira Port.
The challenge of the port is its shallow depth and accretion of sand which requires periodical dredging. Due to its characteristics, Beira Port can only be used by small and medium scale vessels and the port is positioned as a feeder port to Durban Port. If transport time to Durban is counted in the total transport time, it will require an additional ten days.
2-32 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3) Security, Safety and Other Related Conditions The roads in the Beira Corridor are comparatively flat and large trucks can pass easily. However, safety is a large challenge in this corridor; the corridor is reported to have poor safety and terrible traffic jams in and around Beira Port. High storage cost is also a disadvantage of Beira Port. The safety of the corridor in Zimbabwe is also reported to be quite inadequate.
Furthermore, the Beira Corridor Group, which was the coordinating institution facilitating trade on the corridor, closed its operation in 2000.
(3) North – South Corridor and Durban Port
1) Transit Time and Cost Thanks to the good road conditions and highly efficient operation of Durban Port, the transport time from Lusaka to Durban Port through the North-South Road Corridor is the shortest among all the transport corridors. The railway transport of the North-South Corridor takes an additional day compared to the road transport, but the cost is cheaper; it is the same as the lowest cost of the Beira Corridor.
The challenge of the North–South Corridor is its high cost for road transport. The cost from Chipata, Lilongwe and Blantyre to Durban Port becomes higher than other corridors, corresponding to its distance.
2) Conditions and Potentials of the Port The advantage of Durban Port is its already established position as a primary hub-port in the Southern African region. The port has a very large capacity as a container terminal with a long berth length with a scale that is totally different from the other ports. Even yet, their handling charge is relatively low.
The challenge of Durban Port is that they still need to expand its capacity. Therefore, the improvement of the berths is under preparation.
3) Security, Safety and Other Related Conditions The North-South Corridor has many advantages. One is that the transport system has already been developed and established for the transportation of copper in Zambia. Many foreign companies currently operating in Zambia have established various supply systems utilising Durban Port.
Even though the North–South Corridor is an established route, the distance is long and the transport cost by truck is relatively high. Furthermore, due to high traffic on the corridor, the road conditions are getting worse in scattered sections.
Currently, many trucks from Durban Port pass through a small part of Zimbabwe and enter into Zambia through the Livingstone border post or Chirundu border post. However, it is reported that the drivers are charged with many taxes or penalties (including bribes) to pass
2-33 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
through Zimbabwe. This situation of the corridor is expected to be improved by shifting the route via Botswana after the construction of Kazungula Bridge in 2019.
(4) Dar es Salaam Corridor and Dar es Salaam Port
1) Transit Time and Cost The Dar es Salaam Corridor has competitiveness in terms of cost when transporting goods from Lusaka to Dar es Salaam Port by railway transport. However, the transport cost of the corridor for both of rail and road is basically expensive because of its long distance and transport time. Furthermore, handling charge in the port is also very high.
2) Conditions and Potentials of the Port Dar es Salaam Port is relatively shallow and is used by small and medium class vessels, thus, it is recognised as a feeder port. However, Dar es Salaam Port is located near some of the greatest ports such as the Port of Mombasa in Kenya and the Port of Zanzibar. Therefore, it is highly convenient for feeder transport.
The Port is already busy and its handling charge is high.
3) Security, Safety and Other Related Conditions There is an advantage that the DCC, a coordination institution to organise the corridor development, has been established with the support of the WB and is playing its designated role.
(5) Viewpoints from Zambia and Malawi
1) Zambia Since Zambia is a land-locked country, development of transport corridors and their effective use in accordance with their purposes are essential for development of economic sectors.
At present, the North-South Corridor with Durban Port and the Dar es Salaam Corridor with Dar es Salaam Port are Zambia’s primary corridors from the viewpoints of reliability, safety, capacity and development of supply chains.
On the other hand, the Nacala Corridor is not yet recognised as an important corridor for Zambia. This may be partly because the advantages of the Nacala Corridor are not felt in Lusaka and the central areas of Zambia. It is also partly because the transport system consisting of railways and trunk roads has not yet been improved enough. Moreover, Nacala Port has not been functioning very well, resulting that the number of vessels arriving at Nacala Port is not as high as the other major ports. However, it is expected that the volume of cargos moving through the Nacala Corridor would significantly increase when it improves its competitiveness in terms of transport cost and time between Lusaka and Nacala Port after the completion of upgrading of the railway up to Chipata and the installation of a multi-modal dry port there.
2-34 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) Malawi Similar to the case of Zambia, efficient and effective utilisation of transport corridors is important for the development of Malawi’s economic sectors.
At present, they use the Beira Corridor mainly because it is easy to get access by truck and the distance is shorter than other corridors to sea ports. The Nacala Corridor has not been used because its road conditions are poor in Mozambique, the rail section between Mchinji and Nkaya is not good in terms of infrastructure and operation, and related cargo facilities, such as warehouses, have not well developed. However, thanks to the improvement of the railway up to Nkaya from Nacala Port, Malawian cargoes have started utilising the Nacala Corridor recently. After the completion of the expected upgrading up to Mchinji from Nkaya, more cargos would use the Nacala Corridor.
2-35 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chapter 3 Present Condition of Zambia
This chapter analyses the current condition of the study area in Zambia by sector in order to explore development issues and potentials of the Nacala Corridor Region. The analysis of the study area discusses the sector wide issues, which are influential to the development of each sector in the region, as well as the regional specific issues and development potential of the sectors. The results of the analysis become important inputs for the impact analysis discussed in Chapter 5.
The Nacala Corridor Region or the study area in Zambia discussed here incudes: Eastern, Muchinga, Lusaka, Central, and Copperbelt Provinces as shown in Figure 3.1 . The demographic characteristics are presented in Table 3.1 .
Source: JICA Study Team Figure 3.1 Nacala Corridor Region in Zambia
Table 3.1 Demographic Characteristics of the Study Area Population (1,000 persons) Annual Average Growth Rate Urban Population Poverty Rate Province 2000 2010 2015 00-10 10-15 (2010) (2015) Central 1012 1307 1,515 2.59% 3.00% 25.1% 56.2% Copperbelt 1581 1972 2,362 2.23% 3.67% 80.9% 30.8% Eastern 1306 1593 1,813 2.01% 2.63% 12.6% 70.0% Lusaka 1391 2191 2,777 4.65% 4.86% 84.7% 20.2% Muchinga 524 712 895 3.11% 4.69% 17.0% 69.3% Zambia 9,886 13,093 15,474 2.85% 3.40% 39.5% 54.4% Source: Census, Central Statistics Office, Zambia, 2015 Living Conditions Monitoring Survey (LCMS)
3-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.1 Agriculture
3.1.1 Overview of the Agriculture Agriculture in Zambia is characterised by dual structures consisting of subsistence small scale agriculture and large/medium scale agribusiness (commercial farming under favourable natural condition). The sector generates approximately 10% of GDP of Zambia and provides livelihoods for more than 70% of the population. The sector absorbs about 67% of the labour force and remains the main source of income and employment for both females and males. Agriculture has led to an increase in rural incomes and contributed to poverty reduction and food and nutrition security1.
Zambia's total land area is 75 million ha (752,614 km2), of which 58% (44 million ha) is classified as medium to high potential for agricultural production in terms of natural conditions. Depending on the agro-ecological condition, various agriculture products are grown such as maize, soya beans, groundnuts, wheat, cotton, tobacco, sugar cane, coffee and horticulture crops. Livestock rearing and fisheries were complementary livelihoods next to crop production for small scale farmers, but large scale firms stared dealing as agribusiness.
In order to enhance agriculture development to contribute to economic growth, the Second National Agriculture Policy (SNAP) 2016-2020, a renewed policy of the National Agriculture Policy (NAP) 2004-2015, provides a framework that will promote sustainable agricultural diversification, agricultural commercialization, private sector participation and inclusive agricultural growth.
The SNAP is consistent with the National Agricultural Investment Plan (NAIP) 2014-2018 under the Comprehensive Africa Agriculture Development Programme (CAADP)2 framework and also in line with the Vision 2030, long term policy of Zambia.
3.1.2 Agriculture Condition
(1) Land Use and Availability Land is not fully utilised for agriculture at the present, even though Zambia still has a large expanse of vacant land. Medium-high agricultural potential land is estimated at approximately 44 million ha, 58% of Zambia land area, of which 14%, about 6 million ha, is under cultivation. Additionally, the land with potential for irrigation is estimated at around 2.75 million ha, of which no more than 156,000 ha is developed, mostly on commercial farms for sugar, wheat and plantation crops.
There are two types of land category and tenure system in the country; state land and customary land, while the tenure systems are leasehold tenure and customary tenure. The majority of state land is owned by large scale commercial farmers that cultivate over 20 ha of
1 Government of Zambia, “Second National Agricultural Policy 2016” 2 CAADP is a framework for agricultural transformation, wealth creation, food security and nutrition, economic growth and prosperity for all; Zambia CAADP focuses on six implementation areas of which agricultural marketing development and investment promotion.
3-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
land. Only 8.4% of the small scale households in Zambia own title to their land in state land3 and over 90% of them live in and use customary land without right to use under one’s own name, but just under the tradition leader’s permission.
(2) Agro-Ecological Condition and Suitable Production Most parts of the territory of Zambia belong to a humid subtropical climate (Cwa) and are located on the great central African plateau with the elevation of 1,000 to 1,200 m. Thus the temperature and rainfall are relatively suitable for many kinds of crops and animals. In particular, grassland covers respectively 65.4% of the total land. According to those conditions, land can be divided into three agro-ecological regions/zones which allow raising a broad range of crops, fish, and livestock.
AER3
AER3
AER2B AER2A AER1
Source: 2015 GAP Report Building Sustainable Breadbaskets, Global Harvest Initiative Figure 3.2 Agro-ecological Region and Vegetation Type
Table 3.2 Agriculture Products by Agro-ecological Region Classification AER 1 AER 2 (A & B) AER 3 Aras 17.3 million ha 27.4 million ha 30.6 million ha Precipitation Less than 800 mm rainfall per 800 mm to 1,000 mm rainfall per year More than 1,000 mm rainfall per year year Days of rainy 80–120 growing days 100–140 growing days More than 160 growing days season Suitable Products Suitable for millet, sorghum, Suitable for maize, sorghum, Suitable for cassava, maize, millet, lentils, bananas, paprika, baby cassava, millet, rice, groundnuts, cow sorghum, beans, groundnuts, rice, corn, small ruminants, cattle, peas, tobacco, sunflowers, irrigated coffee, tea, pineapples, cattle, dairy, dairy, aquaculture and poultry. wheat, soya beans, horticulture, poultry, small ruminants and aquaculture, cattle, dairy and poultry. aquaculture. Source: 2015 GAP Report Building Sustainable Breadbaskets, Global Harvest Initiative
3 Commercial Farms in Zambia and the Relationship with Smallholder Farms Sipangule, Kerstin Nolte, Paper prepared for presentation at the “2016 World Bank Conference on Land and Poverty” 2016, Kacana.
3-3 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Water Resources In addition Zambia has four lakes, four big rivers, many perennial rivers, dambo (marsh) dams and underground water sources. Among the Southern African countries Zambia is the most endowed country with surface and underground water supplies, with about 45% of the total water supplies in the area. However the water resources are not used efficiently for crop production, livestock rearing and fisheries except large scale agribusiness firms. Estimates from FAO (Food and Agriculture Organisation of the United Nations) suggest that of the 2.75 million ha of land with potential for irrigation development, only 155,912 ha, 5% of potential land is currently under some form of irrigation4. Due to water resources and favourable climate conditions, grazing land is abundant for livestock rearing. For fisheries, three major basins, the Zambezi, Luapula and Congo have still capacity to raise fish. By managing water resources, the crop, animal and fish production can be developed significantly.
Source: Water Resources Management Authority; http://permits.zam-water-info.com/ Figure 3.3 Water Catchment in Zambia
4 NAIP 2014-2018, Ministry of Agriculture and Livestock, 2013
3-4 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.1.3 Structure of Agriculture Producers Zambian farmers are classified into three broad categories of the national agricultural statistics, namely 1) small-scale farmers who have farmland less than 20 ha, 2) medium-scale farmers with the land of 20-100 ha, and 3) large-scale farmers who own the farmland of more than 100 ha. According to the research results of Indaba Agriculture Policy Research Institute (IAPRI), it can be said that almost 96% of farmers are small scale farmers in Zambia; 1.47 million households are small scale farmers, while only 2,000-3,000 farmers or firms are in the middle scale and large scale categories5. The small scale farmers are categorised by the holding size of farmland into three categories, more than 70% of them are Smallholder A, who have a farmland less than 2 ha as shown in the following table.
Table 3.3 Farm Structure in Zambia (2016) Landholding Size Category The numbers of farmers 0–2 ha Smallholder A 1,051,000 2–5 ha Smallholder B 350,000 5–20 ha Smallholder C 70,000 20–100 ha Medium-scale 2,000-3,000 >100 ha Large-scale Source: JICA Study Team based on the Zambia Agriculture Status Report 2016, IAPRI 2016
The small scale farmers are generally subsistence producers of staple foods and sell into local markets with occasional marketable surplus. They often trade their products with informal wholesalers or vendors in regional markets such as DRC, Zimbabwe and Malawi. Medium-scale farmers produce maize and a few other cash crops for the domestic market. Large-scale farmers produce various crops mostly for the export markets.
3.1.4 Current Situation on Agriculture Production and Distribution The main agriculture products in Zambia are maize, soya beans, groundnuts, wheat, cotton, tobacco, sugar cane, coffee, tea, horticulture crops, fish and livestock. A portion of tobacco, cotton and wheat are exported to neighbouring countries, and most of tobacco, sugar, horticulture and coffee are exported mainly to the European market. The fish and livestock are most consumed in the country. The summary of production and distribution for each commodity is described below.
(1) Crops
1) Cereals and Tubers Zambia is well-known as a ‘Grain Basket in southern Africa’ due to the production and exportation of maize. As a staple food, wheat, millet, rice and sorghum are also grown, the quantities are much lower than maize as shown in the figure below on the left. While maize production was 3.35 million tonnes in 2014, wheat, produced in second place among cereals was approximately 200,000 tonnes of production. As shown the figure on the right, the maize
5 Zambia Agriculture Status Report 2016, IAPRI
3-5 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
can be grown in more than half of the country, but the wheat can only be grown in specific areas due to climate condition.
The maize, wheat and rice are increasing those productions and productivities. By contrary, production of millet and sorghum are decreasing because farmers prefer maize for food and also cash. Cassava can also be grown largely and is easy to produce but its production is decreasing recently.
Provinces Millet Maize Sorghum Rice Cassava Wheat
Source: Zambia Agriculture Dataset: Department for international Development (DFID) 2002 Figure 3.4 Main Crop Zones of Zambia
Source: FAOSTAT Figure 3.5 Production of Maize (right) and Other Cereals (left)
3-6 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Zambia is exporting the maize to neighbouring countries such as Zimbabwe, South Africa and Malawi when food security issue is scarce in those countries. In contrast, wheat and rice are imported from Europe, South Africa and Asian counties.
2) Legumes and Oil crops Many kinds of legumes are grown in Zambia. Groundnuts used to be produced the most in the country among legumes. However the groundnuts production has declined greatly these past five years because aflatoxin is observed and cannot be sold in European market. Next to it, mixed beans are wildly grown mostly for self-consumption. Thus the production has Source: FAOSTAT been relatively stable for these past five Figure 3.6 Production of Oil Crops years.
Soya beans are also traditionally grown both for self-consumption and as cash crop. . It is also traded for export and import, even though it’s not on a large scale. It is exported mainly to Zimbabwe and South Africa, and imported from Malawi. Due to the surge of its demand, the production and area planted is increased. One of the reasons is development of oil processing manufacture inside the county. With the trend, the demand of sunflower is also gradually increasing, but the production is not well raised for the time being.
3) Export Oriented Crops Sugarcane, cotton, tobacco and coffee are produced mainly for export. Some of these products are processed in the country, but most of them are exported as a raw material except sugar.
Sugar is the most produced and exported inside Zambia. Sugar cane produced about 4 million tonnes in 2014. All sugar cane is processed to sugar in the country and this sugar is exported, mainly for Source: FAOSTAT, UN Com Trade Database Mauritius, DRC, South Africa, Kenya Figure 3.7 Production of Tobacco, Cotton and Coffee and other neighbouring countries.
Regarding tobacco, virginia and burley tobacco are produced mainly by medium and small scale farmers. The Eastern Province has largest share for both types of tobacco; especially 97% of the burley tobacco in Zambia was produced in Eastern Province in 2014. Large quantities are exported to Malawi, and other portion is China and Zimbabwe. Malawi had been
3-7 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
historically known for producing burley tobacco, but currently Zambia became the one of the largest tobacco producing countries in the world.
Cotton is among Zambia`s main crops ranking second to the staple food crop maize in terms of generated value by exporting and in terms of the number of farmers who grow it. The export amount of “cotton”, which may include both lint and seeds, was 45,000 tonnes in total, 35% of total production. Of which, more than half are exported to South Africa, and about 25% are exported to China and Singapore.
Coffee production is mainly in the Northern districts of the Muchinga Mountains encompassing the Nakonde, Kasama and Isoka regions because Zambian farmers generally produce Arabica coffee which requires cool, shady and slightly humid weather conditions. Destination countries of coffee beans export are changeable by year. While USA, Germany and UK imported coffee from Zambia in 2014, in 2015, Finland and South Africa were the main customers.
(2) Livestock Husbandry and Animal Products Most of the farmers raise a few animals, but just for animal traction or as stock as its name ‘livestock’ suggests.
In 2014, 4 million heads of cattle, 1.1 million heads of pigs and 38 million of chickens are in the country. Among them, 3.3 million of cattle and 1 million of pigs have been held by small scale farmers. The Southern Province accounted for the highest percentage of cattle population in Zambia with 31.2% and Eastern Province follows with 30.7%. Regarding the pig population in Zambia, Eastern Province accounted for the highest percentage with 51.5%.
The goat population in Zambia was estimated at about 2.6 million and the sheep population was only about 130,000. The meats produced by the live animals are mainly consumed in the domestic market, but some quantities have been exported to DRC and Angola. Traditionally pastoralist is rare in Zambia, thus the animal production is not very developed there. The quantity of animal products to export including meats and eggs is very low at the present. Most dairy products consumed in the country have been mainly imported from South Africa.
Source: FAOSTAT Figure 3.8 Number of Livestock – Cattle, Goats, Pigs, Sheep (right) and Chicken (left)
3-8 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Fishery Zambia has 15 million ha of water in the form of rivers, lakes and swamps in the major basins of the Zambezi, Luapula and Congo Rivers, which provide the basis for extensive freshwater fisheries. Fish contributes more than 53.4 percent of animal protein in the diet of Zambians. The fishery sub sector contributes to 2.95% of the Agriculture sector’s GDP. However, demand for domestic fish for consumption still outstrips production. The national demand for fish is conservatively estimated at 160,000 tonnes per year, and this gap between supply and demand is foreseen to increase further with population growth. Generally, annual fish production is to 60,000 ~ 80,000 tonnes from capture fishing and 10,000 ~ 20,000 tonnes from aquaculture. It means that around only 50-60% of annual demand (160,000 tonnes) can be covered by domestic production, but the rest is covered by the import; from South Africa, Zimbabwe and Tanzania. Eastern Province has 1,703 fish farmers operating 2,333 fish ponds, and the current annual fish production is 500 tonnes, which is around 0.7% to 0.8% of the annual national production.
(4) Forestry Forestry products are another growth area for business opportunity in Eastern Province with timber, wood, honey and bees wax being the major products. Eastern Province has a total of 65 protected forest areas, including eight National and 57 Local Forests covering a total of 460,216 ha. The province has also seen an increasing demand for timber particularly Pterocarpus chrysothrix (Mukula) which is exported to Asian countries mainly China and Thailand. This poses a great potential for the establishment of timber industries in the province. Eastern Province has also great potential for beekeeping, a practice that has been in local communities for some time now. The province has an estimated honey production capacity of 300 tonnes per year. The major honey producing districts in the province are Mambwe, Chipata, Lundazi and Petauke. The other districts however, have huge potential for beekeeping that only requires scaling up. COMACO (Community Markets for Conservation, see;3.1.6(2) 6)) is the only company promoting beekeeping among small scale farmers. The company has 3,927 trained beekeepers that produce and supply honey.
3.1.5 Agribusiness Clusters and Players Agribusiness in Zambia is mostly run by medium-large scale commercial farmers and private firms, but there is also collaboration with small scale farmers who also run agribusinesses. In fact, more than 400,000 households grow primary products or raw material as an in-grower or out-grower6 of agribusiness farms or private firms7. Some organisations or companies support the small scale farmers to develop agriculture clusters or links to investors or markets. In fact,
6 Out-grower Schemes, also known as contract farming, are broadly defined as binding arrangements through which a firm ensures its supply of agricultural products by individual or groups of farmers. (source：OECD）Such farmer who conduct a contract farming are called as 'out-grower. 7 Zambia Agriculture Status Report 2016, IAPRI 2016 and Commercial Farms in Zambia and the Relationship with Smallholder Farms Sipangule, Kerstin Nolte, Paper prepared for presentation at the “2016 World Bank Conference on Land and Poverty” 2016, Kacana
3-9 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
there are over 6,500 small and medium enterprises (SMEs)8 in agribusiness that not only produce crops or animals but also run agribusiness processing. Most of the SMEs are located in greater Lusaka, the Copperbelt and the Great East Road.
Cities above 50,000 Roads Primary (Trunk) Secondary (Main) Total manu food & bev firm 0 - 5 Kasama 6 -10 11 - 16 17 - 27 Mansa 28 -198
Solwezi Chingola Ndola
Chipata
Kabwe
Mongu Lusaka Mazabuka Kafue
Choma
Livingstone
Source: Project appraisal document of ZAMBIA AGRIBUSINESS AND TRADE PROJECT Figure 3.9 Concentration of Food Manufacturing Firms in Zambia, and the Spatial Analysis of New Entrants
Brief situations of agribusiness cluster (or supply chain players) are described below.
(1) Agricultural Input and Machinery Suppliers Numerous suppliers of agricultural input (seed, fertiliser and chemicals, etc.) and/or machinery run their business based on Lusaka corporations with foreign mother companies in regional or overseas countries such as South America, India and Zimbabwe. Most of the inputs itself or its raw material are brought from other countries. For example, Zambia Fertiliser Ltd., one of biggest fertiliser suppliers in Zambia, which produces compound fertiliser by blending imported raw materials from Durban, Beira or Dal es Salaam. Agro-dealers and suppliers’ branches such as NWK Agri-Service, which are located at the main towns in rural areas, are also selling imported inputs from South Africa. However, the import share from Asian and
8 Zambia Agribusiness and Trade Project, World Bank, 2016
3-10 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Middle East countries has increased in recent years9. The feed and medicines for livestock and fish farming are available at the agro-dealers’ store in the rural area.
As stated, most of the agricultural inputs including feed and medicines for animal and fish husbandry rely on imports or are produced in Lusaka using imported raw materials. These are, therefore, very expensive and not affordable for small scale farmers because transportation cost is added to the input price. Particularly, it is said that feed accounts for about 60% to 70% of the production costs of animals and fish so farmers cannot raise the production and productivity optimally10.
Needless to say, all equipment and machinery are also imported mainly from South Africa, EU and Asia, such as India and China, recently.
(2) Primary Producers The primary agriculture producers in Zambian provide the raw materials for agro-related industries which accounts for 84% of the manufacturing value addition in the country11. Medium/large scale commercial farmers and firms produce mostly cash crops such as tobacco, cotton, horticulture products, soya beans, wheat and a small quantity of coffee for domestic and international markets. Among farmers, there are those who process secondary products such as raw sugar and maize mills. By contrary, the latter produces mainly primary products or raw material for agribusiness firms unless they consume processed products locally.
Small scale farmers also grow the tobacco, cotton, horticulture crops, soya bean and wheat as well as maize and raise animals and fish mainly for self-consumption. However their maize is often exported to neighbouring countries such as DRC, Malawi, Zimbabwe and African Great Lake region. The fish and animals are mostly consumed in domestic markets rather than trade with neighbouring countries because domestic demand has been increasing in the recent years12.
Except for the commodities produced on companies own farms, the primary products are purchased and transported by agro-processing industry companies, general commercial firms or transporters, or sometimes farmers’ cooperatives or associations. Tobacco and cotton used to be transported to South Africa but a share destined for Asian countries has also increased recently.
(3) Agro-Processing Industry Firms The agro-processing industry has been developing in the country in recent years due to an increase of food demand in and around the country.
Due to the import restrictions of edible oil from 2015, the oil processing industry has also been developed tremendously. Sugar and edible oil are the main export commodities to regional
9 Comtrade 2010-2015 10 Draft of Livestock Policy. Ministry of Fisheries and Livestock, 2015 11 Country report to the 71st Plenary Meeting of the International Cotton Advisory Committee to be held from 7-12 October 2012 at Interlaken, Switzerland, Cotton Board of Zambia 12 According to Interview with Zambian Development Agency and Ministry of Livestock and Fishery
3-11 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
markets such as DRC, Zimbabwe and South Africa at present. However, most of the agro-industrial companies are facing a shortage of primary products as raw materials. According to Mount Meru Millers Zambia Limited, although the demand of sunflower oil has been increased in Zambia and also in Malawi, the domestic demand cannot be fulfilled due to shortage of sunflower seeds as raw material. This company has started to promote sunflower production in Central Province in order to ensure to obtain raw material. To fulfil the raw material stably, Tradekings is contracting with 830 farmers to procure Irish potatoes as raw material and processed confectioneries such as cookies and snacks.
As for animal products, Zambeef Products PLC, one of the largest agro-industry companies, also has a problem with the shortage of feeder calves for the meat products. The company purchases certain aged feeder calves from small scale farmers because the rearing calves requires a lot of time and effort. However, the company has a difficulty to purchase a large number of calves regularly because the number of calves which can be reared by one small scale farmer is limited and most of rearing places are scatted and located in remote areas; thus, it is difficult to access to a number of feeder calves at one time. Therefore, this company has not yet exported meat, the main product, while exports several products such as cereal crops and feed to Zimbabwe, Rwanda, Angola and Mozambique.
The fishery, aquaculture in particular, has not been well developed even though there is a large water body suitable to fishery in the country. One of the reasons is the difficulty of fish feed procurement which are not affordable or available. The trade of fish products is mostly by the informal sector except Yelelo, a leading company of aquaculture business exporting formally in Kasumbalesa in DRC. On the other hands, Skretting, the largest fish feed production company has opened feed plant at Siavonga near Lake Kariba in April 2017. The investment is expected to serve as a catalyst for fishery development in Zambia.
(4) Retailers The major grocery retailers in Zambia are supermarkets with South Africa’s capital such as Shoprite, Game, Spar and Pick’n Pay. Such kinds of supermarkets have procured merchandise through its own distribution line from original countries. However, other than commodities which are produced in certain quantities, those supermarkets purchase local products at the present such as perishable commodities; vegetables, fruits, meat and fish and as grocery food such as maize mealie, wheat flour and cooking oil. Shoprite and Game buy the commodities from local wholesalers and Spar contracts with farmers and buys products directly. At present, supermarkets owned by Indian, Chinese or Thai companies have increased.
Those supermarkets are oriented toward foreigners and wealthy people, while most of the Zambians use local markets and vendors who sell local products.
(5) Trading Companies Thousands of companies are trading primary products and processed food in Zambia to sell domestic or international markets. Same as the above mentioned agro-industry processing firms or retailers, some trading companies contract with farmers or local traders, while some
3-12 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
just buy products according to their own demands without contract. But the ones who need certain quantities of products regularly tend to make a contract with farmers through the cooperatives, associations or individually. In that case, the companies provide agriculture inputs and techniques for the production in many cases. For example, Cargill, one of biggest grain majors in the world, provides such services for small scale farmers as well as conducting organisation training sessions and launching a maize mill in Chipata and a soya bean crush and oil refinery factory in Lusaka to enable them to join commodity value chains. NWK Agri-Services13, handling staple food and pulse crops and cotton, provides pre-financing to small holders to allow them to access input and grow products.
Out of contract or linked with agribusiness firms, the primary products, especially maize, soya beans, and wheat produced by small scale farmers, are distributed inside and outside the country through private transport and/or logistics organisations such as AFGRI and Zambian Commodity Exchange (ZAMACE)14.
3.1.6 Related Policies, Programmes and Projects In order to achieve food security, and develop the agriculture sector driven by large scale commercial farmers or agribusiness companies, the GOZ has been preparing and reforming regulation, institutions and laws for accelerating agribusiness. In addition the GOZ also facilitates small scale farmers to obtain farming inputs and techniques with the assistance of donors and to work with the agribusiness players. Related current development policies and movement with international donors and investors are described briefly below.
(1) Development Policies, Strategies and Plans The GOZ has participated in the CAADP since 2011 through the facilitation by the COMESA. Aligned with CAADP, the GOZ has launched the revised National Agricultural Policy (NAP) and National Agricultural Investment Plan (NAIP) in 2013. The policy and the plan focus on the development of sustainable, dynamic, diversified and competitive agricultural sector, which assures food security15.
In accordance with NAIP, the main goal of agriculture programmes and projects is always food security but is shifting to market oriented agriculture including enhancement of agribusiness for export. Regarding fisheries and livestock, since the Ministry of Fisheries and Livestock (MFL) has established in 2015, the ministry has prepared its own new policies fisheries and livestock respectively. The fisheries are focusing on export the same as self-sufficiency, while the livestock sub-sector is targeting national socio-economic
13 NWK Agri-Services stated operation under the Dunavant name since May 2000 and changed its corporate name as NWK Limited, a major South African based agribusinness that acquired a majority shareholding in October 2013. NWK Limited in South Africa holds has 60% of interest of the NWK Agri-Services in Zambia and Louis Dreyfus Commodities (Middle-East and Africa) Trading (LDC) that is based in Dubai shares 40%. 14 a private limited liability company incorporated under the Companies Act in 2007 with assistance from USAIS to improve agriculture trade through the the implementation of the Warehouse Receipt System (WRS). 15 National Agricultural Policy (NAP) and National Agricultural Investment Plan (NAIP)2014-2018, MOA,2013
3-13 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
development and food and nutrition security16. In any case, diversification of production is a key issue in the agriculture policies. On that occasion, the diversification and export-oriented agriculture is the 1st outcome in the strategy of economic diversification and job creation in the new national development plan17.
In order to developer competitive agriculture sector including livestock and fisheries, the irrigation development is necessary. As above-mentioned, Zambia’s irrigation potential is estimated at 2.75 million ha of which 523,000 ha can be economically developed, this variance on figure is different by source though. If irrigation scheme is developed, yield of major crops can be increased 1.5 to 3 times more than the one with conventional production. Therefore the government has intended to develop more irrigation scheme for small scale farmers. However, most of schemes developed by the government or NGOs in the past are ruined due to poor management of facilities. It is related to instructional aspects of farmers in rural areas, most of farmers water management groups are not well functioned. Thus to promote more irrigation agriculture, it is important to identify the suitable sites and choose types of crops, as well as to organise and train thoroughly beneficially farmers considering traditional socio-economic situation of the site.
(2) Development Programmes and Projects The following points are presenting related programmes and projects at the small scale farmer level.
1) Farm Block Development Programme18 For promoting commercial agriculture for economic development by utilising the land resources, the GOZ has undertaken a number of measures to encourage domestic and international investors like reinforcement of fiscal and institutional incentives. As one of the measures, ‘Farm Block Development Programme’ was determined in 2002 aiming at poverty reduction through regional development conducted by the investment promotion. The programmes has been carried out by the Zambia Development Agency (ZDA) and many related institutions.
The programme aims to achieve economic diversification and growth, national food security and poverty reduction by developing rural areas through the commercialization of agricultural land. In the initial plan, the government is to identify a Farm Block on the scale of 100,000 ha in each province, and to provide and install basic infrastructure and facilities such as trunk roads, bridges, electricity, dams, schools and health facilities in the block. The core investor being a lead investor for each block is expected to develop the infrastructure for their business within the allocated plots in the Farm Block and to manage the appropriate agribusiness activities. They are also expected to contribute to agricultural development in the area, for
16 Based on interview with Animal Production Department in the Ministry of Fisheries and Livestock and ‘Draft Livestock Policy’ 2015 17 National Agriculture Investment Plan 2014–2018, MOA and Livestock,2013 18 Agriculture Sector Leaflet, Zambia Development Agency, 2014
3-14 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
example by supporting the small, medium and large-scale farms in and around the blocks through an Out-grower Scheme in marketing of their products. Producers who are inside of the blocks are categorized into five categories as shown below.
Table 3.4 Category of Producers inside of Farm Block Category 1 2 3 4 5 Area（ha） 5～10 11～100 101～1,000 1,001～5,000 5,001～10,000 Source: MOA
The core investors in the category 4 and 5, who are leading producters, had been expected to maintain infrastructure in the area of Farm Block, manage agribusiness and support buying and selling crops produced by large, medium and small scale local farmers categorized from 1 to 3, under the Out-grower Scheme. According to ZDA, farmers who live in the area that will be developed as a Farm Block have three options; i) to participate in projects of core investor as out-grower, ii)to continue farming as individual farmer inside of the Farm Block, or iii) to accept land acquisition and receive compensation for resettlement from an investment firm.
In the implementation of the Farm Block Programme, ZDA is in charge of planning of the programme, attracting the private investment, and public relations. In addition, a committee consisting of multiple ministries and agencies, centred in the Ministry of Agriculture (MOA), reviews and approves the business plans of the investors. The committee has three levels of the structure as shown in the table below and screen the investors’ plan with results of Environment Impact Assessment (EIA). After the ratification of the plan in the Council Minister Committee, the investors will be able to apply and acquire the land tenure.
The operators who plan to start activities in the Farm Block need to conduct an environmental and social impact assessment (EIA) in order not to negatively affect local communities and individuals by their planned activity, and the operator who might have negative impacts would not be selected. The government has the responsibility of supervising the investor’s business plans including environmental and social consideration and actual implementation in order to protect social and cultural values of community and people’s life.
Table 3.5 Roles of the three Committees for Screening the Investment Plans Committee Chair person Roles Technical Committee Director of Dept. of Agriculture Analysis of Business plan: Analysis and Evaluation in MOA of the business plan for the Farm block Steering Committee Permanent Secretary of MOA Approbation: Approval of the Business plan based on examination content Council Minister Committee The Minister of Agriculture Ratification: Business licensing based on the examination content Source: Interview with the MOA
In the Farm Block Development Plan prepared in 200519, three Farm Blocks named Nasanga, Kalumwanga and Luena were selected as targets of the first phase to develop the infrastructure
19 Farm Block Development Plan 2005-2007, Ministry of Finance and National Planning 2005
3-15 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
because of further limitation of the government budget. However, the programme has not been progressed as planned due to the limited financial resources of the government for infrastructure development. The current progress of the Farm Blocks development is summarized in the table below.
Table 3.6 Progress of the Farm Block Development Location Province District Current Status Nassanga Central Serenje Major infrastructures have been developed. Activities of the core investors An entity to utilize 6,000 ha is not determined yet. Under selection Zambia Jail utilizes 3,700 ha. Leaseholds of 352 small and middle plots (5~1000 ha) have been set. 20 percent of the applicants have been migrated. Kalumwange Western Kaoma N/A Luena Luapula Kawambwa Activities of the core investors Sunbird Bioenegy Litd. utilizes 10,000 ha for production of Biofuel made with Cassava. Kawambwa Sugar Lid utilizes 10,000 ha for sugarcane production. The small plots are under setting. Start recruiting settlers after cadastre is ready. Lusuwishi Copperbelt Lufwanyama Activities of the core investors Global Plantation (Holding an oil milling factory in Ndola) uses 10,000 ha. They produce soya bean, etc. Other entities have been allocated 4 plots with 5,000 ha/ plot (total 20,000ha) respectively. Tahal Group (Israel) plans to construct irrigation scheme and technical training centre for horticulture. AfDB is conducting a feasibility study for infrastructure development in the area for small scale farmers by grant (on scale USD 50 million). Manshya Muchinga Mpika Activities of the core investors Green 2000 Ltd. and Netafile (Israel) plan to establish the machinery training centre for agriculture value chain development Other four or five investors are already determined. Kalungwishi Northen Mporokoso Activities of the core investors China Railway Seventh Group (China) conducted agricultural development of 200,000 ha aiming to export for DRC or Asia. Source：JICA Study Team（Interviews with MOA, ZDA, IDC）
The ZDA is reviewing the plan and trying to reactivate focusing on some blocks, such as Mwanza (Southern Province) and Lufwanyama (Copperbelt Province) where Kenya and Malaysian investors are interested in agriculture investment. The AfDB supports development of the Farm Block by providing technical assistance to conduct a feasibility study on the Farm Block20 and loan for basic infrastructure development21.
Apart from the review of ZDA, other several queries are also observed for the Farm Block development. The GOZ do not have clear idea of required basic infrastructure for the Farm Block development including budget and role and responsibility of each stakeholder. Moreover, it has not been prepared yet that appropriate guidelines about required environmental and social considerations for existing small scale farmers and cooperation
20 https://www.afdb.org/en/projects-and-operations/project-portfolio/p-zm-aa0-025/ 21 https://www.afdb.org/en/projects-and-operations/project-portfolio/p-zm-aac-005/
3-16 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
methods applied between medium-large scale farmers and small scale farmers in their production and access to market from the Farm Block, etc.
2) Zambia Agribusiness and Trade Project Under the financial support of World Bank, Zambia Agribusiness and Trade Project was lunched 2016 and will be implemented until 2022. It aims to improve and develop market linkage in agribusiness for ‘emerging and poor farmers’ especially small and small-medium enterprises. The project consists of three components namely: i) Market Linkages in Agribusiness; ii) Strengthening the Regulatory and Institutional Framework for Agribusiness and Trade; and iii) Project Management and Monitoring and Evaluation. Leading by the Ministry of Commerce, Trade and Industry (Ministry of Commerce, Trade and Industry: MOCTI), MOA and MFL are implementation the project with other partners. Since the project has just started, the result has not been reported yet.
3) FISP (Farmer Input Support Programme) Electric Voucher The GOZ introduced input subsidies in 2002/03 through the creation of the Fertilizer Support Programme (FSP), and the Farmer Input Support Programme (FISP) is its successor which began in 2009/10. The Program started aiming to increase maize production through the provision of fertilizer and improved maize seed, while at the same time creating an environment for private sector input supply chains to develop. The target crop is increased to cover others such as groundnuts, soya bean, other beans, rice, cotton, etc., and the scale of its fertilizer distribution was expanded from 48,000 tonnes in 2002/03 to 214,000 tonnes in 2015/1622.
In the 2015/2016, MOA introduced the FISP Electronic Voucher initiative. The 'E-voucher' system enables farmers to receive the subsidy from the government to purchase inputs by pre-paid VISA bank card. In 2015/16, 0.24 million farmers in Southern, Lusaka, Central and Copperbelt districts received subsidy of the FISP through E-voucher not physical inputs purchased by the government. The ‘E-voucher’ system promotes private sector’s participation in agricultural inputs, enables small scale farmers to obtain inputs timely and purchase a wide range of recommended inputs such as veterinary drugs, agricultural equipment, livestock and juvenile fish. Therefore, the 'E-voucher' system can be said to have the potential to accelerate diversification of the small scale farmers. Now, the GOZ has extended the program to 39 additional districts covering 602,521 farmers during the 2016/2017 season23. Provided that, due to the review of the concept of the FISP program to help farmers with the potential to grow, farmers have to raise the ZMW400 deposit fees to access inputs.
22 Statement by Minister of Agriculture and Livestock on “The Preparedness of the Farmer Input Support Program (FISP) for the 2015/16 Agricultural Season." 23 http://www.musika.org.zm/article/84-fisp-electronic-voucher-program-to-promote-diversification
3-17 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4) Smallholder Agribusiness Promotion Programme (SAPP)24 The Smallholder Agribusiness Promotion Programme (SAPP) is a seven years programme from 2011 to 2017 costing approximately USD 25 million under the support of IFAD. The goal of SAPP is to “increase the income levels of poor rural households involved in production, value adding and trade of agricultural commodities including animal products”. The purpose is to “increase the volume and value of agribusiness based on the output of small-scale producers”. The programme has two main components as i) More Efficient Value Chains and ii) Enabling Environment for Agribusiness Development, which have two sub-components respectively.
5) Enhanced Smallholder Livestock Investment Project (E-SLIP)25 The Enhanced-Smallholder Livestock Investment Project (E-SLIP) is a seven years programme from May 2015 to April 2022 approved by MOZ in September 2014. It is a follow-on project to the Smallholder Livestock Investment Project (SLIP) which closed on 31st March 2015. The goal is to sustainably improve the production and productivity of small scale producers' livestock systems. The programme has two components namely, i) Sustainable animal disease control and ii) Sustainable livestock production. This is a nation-wide programme but the target areas are districts prone to outbreaks of Contagious Bovine Pleuropneumonia (CBPP) or East Coast Fever (ECF) and districts to which these diseases may spread.
The MFL led the implementation. However a lack of extension offers under MFL and their weak capacities were key challenges. Additionally seamless transition between SLIP and E-SLIP were not done, so it did not result in quick-wins for sustained beneficiaries trust and belief in the E-SLIP Programme.
6) Community Markets for Conservation (COMACO)26 COMACO began in 2003 in Zambia’s Luangwa Valley as an NGO activity for secure food sources and income of small scale farmers by conserving the environment and properly utilising natural resources. This activity is developed as a COMACO as a limited-by-guarantee company in collaboration with the Government of Norway, German International Cooperation Corporation (GIZ), United States Agency for International Development (USAID) and several NGOs. The COMACO extends its services to over 140,000 small scale farmers, manufactures twelve value-added products, and supports economic incentives for achieving conservation and improved livelihood results.
24Based on interviews, and the website of IFAD and Supervision Report of SAAP and Final Programme Designe Report of E-SAPP 25 Based on interviews, and the website of IFAD and Supervision Report of SAAP and Final Programme Design Report of E-SAPP 26 Based on interview results and presentation sheet provided by COMACO
3-18 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
A) Farmers learn better practices to produce surplus w/help of lead/senior lead farmers B) Surplus sold to COMACO at bulking points C) Surplus consolidated at commodity depots and later shipped to processing plants D) Value-added processing of raw materials into It’s Wild! food products E) Products sold at premium value F) Farmers receive premium value for crops when compliant with conservation targets
Source: Presentation Power Point by COMACO Figure 3.10 COMACO Value Chain Model
These are in order to manage both hunger and poverty reduction and ecosystem and wildlife protection, and the objectives are:
to get small-scale farming families out of poverty with the right skills and markets that help them become better stewards of their land; to provide consumers a range of nutritious, pesticide-free, tasty food products under the brand ‘It’s Wild! ‘and sourced from COMACO farmers
COMACO has already established and operated the exclusive value chain shown in the figure on the right as honey, Chama rice, peanut butter, yummy soy (soy milk powder), ground nuts with trademark ‘It’s Wild!’. According to the manager of COMACO, those products have been on sale in Zambia and have begun receiving trade inquiries in Malawi (Chipiku).
3.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector As described above, Zambia has a favourable agro-ecological condition for agricultural production and also big markets which need agricultural commodities in the surrounding and overseas countries. Additionally, the demands for the Zambian commodities are increasing at present in these markets. Therefore, it will be a great opportunity to reinforce the exporting of Zambian agriculture commodities and goods, if both the roads and railway along with the Nacala Corridor are well upgraded to enable overseas export and more if the railway is extended to Serenje which connects to DRC and others as mentioned later. The development potentials and challenges of agriculture and agribusiness, which can capture this opportunity without any delay and utilise it efficiently are described below.
(1) Overall Potential and Challenges of Development
1) Marketability of Agriculture Products in Zambia As a so-called a Regional Food Basket, Zambia has been supplying food to neighbouring counties and even to the Africa Great Lake region where the population and food demand are increasing. This is a great opportunity to earn foreign currency in the country.
3-19 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
The export commodity is mostly one crop, maize, which is a major staple food in the country (see details in the (2)-1)). In other words, the foreign currency income from agriculture relies on maize production. As shown in Figure 3.11, the net agricultural export value from 2011 to 2015 trended downward because maize production decreased due to erratic and poor Source: Agriculture Status Report 2016, Indaba rainfall. Additionally, in 2016, the Agriculture Policy Research Institute, 2016 GOZ announced a temporary export Figure 3.11 Net Agricultural Export Value in ban of maize grain and its products Zambia with a fear of food shortage even though Zambia was an only country in the southern African region stocking surplus maize and though its price was very high. The export ban was lifted in May 2017 but foreign currency income from maize was not as good as the previous year due to a good harvest in neighbouring countries.
In Zambia, most of the maize is produced by the small scale farmers. The Food Reserve Agency (FRA) has mandates to purchase maize from the farmers and also to to provide market access to small scale farmers27. For that purpose, the FRA sets 1,000 to 1,200 satellite buying depots in local rural areas where the private traders do not come and purchase. The purchased maize is stored in FRA’s main depots exist in 76 locations along the railway in whole country. Some of stored maize are distributed to the local area for food security aspects, and remaining is supplied to the markets and domestic milling companies with considering market demands and price28. In addition to this, private venters buy maize in market price and sell it to the milling company, feed company or drink company. The government regulates the export and import of maize. Export volumes are determined once domestic maize production has been measured for the year. Only licenced companies are allowed to export maize.
In order to utilize the marketability of Zambian commodities for the promotion of export oriented agriculture, there are two challenges to be tackled, namely; i) to establish a food trade mechanism and system in particular for maize to manage maize production and distribution balancing domestic food security and ii) to promote the diversification of agricultural commodities for export at the field level. Recently, the food security and promotion of exported orientated agriculture are certainly emphasized in the NAIP and even in the 7th National Development Plan (7NDP). Therefore, a concrete regime and action plan regards food security and diversification of the production towards export oriented agriculture are needed to carry out on the ground. Additionally the considerations for small scale farmers and rural community are also needed.
27 Agriculture, Livestock and Fisheries Sector Profile 2011, ZDA 28 Interview with FRA, 2017
3-20 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) Possibility of Diversification of Agriculture and Agribusiness Although, various agricultural products can produced under preferable natural condition in Zambia, most of the farmers, regardless their farming scale, produce only limited varieties of crops and livestock.
Under the agricultural situation, the NAIP put the crop diversification as a top priority in order to meet national needs and to promote exports, focusing on maize, legumes, oil seed crops, other cereal crops, root and tuber crops and horticultural crops. Among these crops, the legumes and oil seeds are demanded highly in both formal and informal markets. According to the Mount Meru Millers Zambian Limited and an agricultural cooperative in Petauke, the demands for the processed products like vegetable oils and flours are also increasing in domestic and international markets.
Besides, the NAIP has mentioned the importance of the livestock and aquaculture sector for agriculture and economic development. The livestock sector, in particular, has a development potential in the light of rising meat demand in and outside the country. In fact, the GOZ was concluded MOU with the government of Saudi Arabia to raise and export one million goats and sheep in 2016, and made up the Goats and Sheep Task Force in MFL, MOA and MOCTI in 201729. Since large quantities of crop residues can be expected for animal feed production in the country, by utilising the existing resources, livestock development is to be done as an agricultural diversification.
3) Rural Development Opportunities utilize Emerging of Agribusiness by Private Investment As mentioned before, the ‘Farm Block Development Programme’ to promote agribusiness by private sectors has been conducted to achieve economic diversification and growth, national food security and poverty reduction in rural areas. If the programme can promote to increase primary production and to develop agribusiness by the private entities, it is a great opportunity to develop the agricultural sector, especially to develop the value chains of the crops and integrated regional agricultural clusters.
The investors should include some activities to contribute to rural development in collaboration with local small scale farmers in their business plans in the framework of the programme. According to ZDA and MOA who are main implementation body of the programme, the core investors have no mandatory obligations to apply Out-grower Scheme, to take similar actions or to employ the farmers who request in the their business plans. However, the investors are required to involve such support activities for small scale farmers in their plan, which is one of condition to be ratified by the GOZ. Therefore, it is expected that through this program, the small scale farmers living in and around the Farm Block will be out-growers or employees of the farms or factories developed by the investments if they wish so with their own will..
29 Lusaka Time on 8th August 2017
3-21 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
At the present, the programme has not been progressed as planned due to the delay of infrastructure development caused by several reasons, but seven Farm Blocks have achieved some progress more and less particularly as mentioned in 3.1.6(2). It might need to review and reform the programme including the necessary considerations of small scale farmers to implement the programme smoothly and bring early benefits to the investor and the local communities.
The intervention of commercial farms led by private investors has the possibility to create negative impacts in rural areas, such as ‘land issue’ or ‘social discord’, although bringing positive impacts such as improved market access or job creation in rural areas. Therefore, including the progressed seven Farm Blocks, it should be considered to secure the rights of small scale farmers and communities in the implementation of the programme in order to achieve sound contribute of the investments to rural development in collaboration with local small scale farmers which supress the any negative impacts.
4) Empowerment of Small Scale Farmers and Extension System The empowerment of small scale farmers can be a key to promote export oriented agriculture and agribusiness through the collaboration between small scale farmers and private investors as described earlier. If the small scale farmers have capacity in terms of production and stability of the products, they will have bargaining power and be able to negotiate with traders, commercial farmers or private investors for trade or contract as an out-grower. Once the empowerment of small scale farmers enables the creation of a healthy and transparently relationship with traders and/or commercial farmers or firms are established, the relationship and the agribusiness may be sustainable.
In order to realise this, a problem is raised: weak extension services30 and lack of numbers and capacities of governmental officers. In fact, one extension worker should cover about 1,000 farmers who are living scattered place in rural area.
New Extension Strategy31 also raised poor extension planning, under performing livestock extension services and Farmer Training Centres (FTCs), as well as low capacity of officers, especially market oriented production systems. According to a press, MOA is going to hire additional extension workers32 to support small scale farmers and also commercial farmers. In this occasion, by reviewing capacity building programme, the government should reconstruct existent extension system; capacity of officers especially in market oriented agriculture and agribusiness, and location of FTC, etc. in collaboration with the Zambia National Farmers Union (ZNFU) dispatches its full-time staff providing various forms of extension services and also private sectors.
30 Interview with MFL 31 The National Agricultural Extension & Advisory Services Strategy, 2016-2020, MOA, 2016 32 https://www.daily-mail.co.zm/extension-officers-recruited/ , https://www.africanfarming.com/field-extension-officers/
3-22 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5) Potential of Eastern Province in Development of Agriculture-Agribusiness The Nacala Corridor itself cannot develop without distribution goods and commodities or a certain number of people to use it. The indisputable option to increase the distribution goods and people using the Corridor is the agricultural development in Eastern Province at the initial stage, where the Nacala Corridor passes through directly.
This province has a great potential of agriculture production and agribusiness due to its favourable agro-ecological condition. Moreover a large number of firms related agriculture (see Figure 3.9) are located along the Corridor. In fact, the province has been the country's top producer and exporter of tobacco33 and cotton lint. Many small scale farmers have produced those crops under contract with agribusiness firms. However, the tobacco market tends decline due to the decrease of smokers in the world, and the cotton industry has shrunk since the 1990s due to stiff global competition and policies that fail to protect domestic industries, according to UNDP34.
The farmers in the Eastern Province have been producing crops other than cotton such as maize, soya beans, ground nuts and sunflowers. Additionally, livestock rearing is relatively prosperous and the development potential of aquaculture is high in the province due to abundant water resources. Even though most of the farmers are in small scale and their agricultural production is less productive, they can increase the production utilising the natural conditions, and if the farming input and machinery can be provided at a cheap price. In addition, many firms which can buy primary agricultural products from small scale farmers are running business producing food along with the Nacala Corridor. Although the SMEs have a capacity problem, several projects by donors and banks are enhancing their capacities and functionalities at present. With such occasions, agribusiness will be developed, and then the distribution of goods and movement of people will also be increased.
(2) Potential and Challenges of Development on Primary Products
1) Maize
(a) Production and Current Trade During the farming season of 2013/2014, a total of 1,299,158 households, representing 88.2% of all agricultural households grew maize in Zambia. The annual production of maize in 2014 was 3.35 million tonnes and it was far higher than other cereals such as wheat, millet, sorghum and rice. The Eastern Province recorded the largest area among provinces with 23.7% of the total cultivated areas in Zambia.
33 Most small scale farmers' tobacco is Burley tobacco, grown in the Eastern Province under contract with four companies: Alliance One (Stancom/Dimon), Zambia Leaf Tobacco Company (ZLTC), Africa Leaf (Zambia), and Tombwe Processing Limited. Tombwe is the only tobacco processor operating in Zambia. The other firms only purchase tobacco and either ship the unprocessed leaf to Malawi or Zimbabwe or process small amounts through the Tombwe facility for a fixed charge (currently USD0.30 per kilogram of green leaf). 34 Zambia Human Development Report 2016, UNDO, 2016
3-23 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database
Figure 3.12 Production of Maize by Zambia and its Export by Country
As shown in the table below, a small amount of maize was imported but it is less than 1% of total production. Currently the export quantities of maize vary by years. Destinations are also varies by year, but more than half of the total export quantity is for Zimbabwe. South Africa, Malawi and surrounding countries are higher ranked on average for five years.
Table 3.7 Export and Import of Maize by Zambia by Country (Unit: ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export 1 Zimbabwe 304,531 376,744 98,811 49,502 567,432 279,404 2 South Africa 79,167 143,883 3,538 2,664 18,622 49,575 3 Malawi 163 2,224 28,300 18,381 103,073 30,428 4 Kenya 69,340 60,410 5,444 5,106 3,216 28,703 5 Namibia 14,261 32,848 2,191 335 8,313 11,590 6 Mozambique 7,114 31,094 4,082 6,465 8,169 11,385 7 United Rep. of Tanzania 6,312 13,131 14,636 5,859 8,159 9,619 8 Botswana 3,330 31,788 1,002 1,560 1,639 7,864 9 Burundi 2,292 17,697 2,340 0 1,201 4,706 10 Rwanda 1,435 12,532 1,364 1,351 0 3,336 11 DRC 325 221 10,386 3,161 2,333 3,285 12 Others 8,057 3,015 1,479 1,060 617 2,846 Total 496,326 725,588 173,572 95,443 722,775 442,741 Import 1 South Africa 0.71 0.83 2.78 2.05 0.96 1.46 2 Malawi 0.00 0.10 0.54 0.12 0.00 0.15 3 Zimbabwe 0.01 0.00 0.46 0.00 0.03 0.10 4 Others 0.02 0.02 0.24 0.03 0.03 0.07 Total 0.73 0.95 4.03 2.21 1.03 1.79 Source: UN Comtrade
(b) Production Potential In Zambia, Eastern Province is the largest maize producer. The province has the potential to produce about 2 million tonnes of maize to meet the annual national demand and surplus for export. Currently the province is only producing 600,000 tonnes of maize and there is a huge gap of 1.4 million tonnes. If production in Eastern Province would be increased to reach its potential by utilizing cheaper fertilizer imported through the Nacala Corridor, the province
3-24 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
would be capable of feeding the whole nation. Moreover, the import of cheaper fertiliser and promotion of appropriate fertiliser application might be a necessary condition to produce surplus for export.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC) As of September 2017, COMESA has nineteen member states, SADC has fourteen and EAC has six. If area of COMESA, SADC and EAC is assumed as one integrated regional market, it consists of 27 countries. The scale of the commodities’ market in the integrated region is estimated based on current trade volumes.
The integrated region with relatively large markets of imported maize such as Libya, South Africa and Zimbabwe have increased import, and other countries like Kenya, Botswana, Namibia, Mauritius and Swaziland have also been increasing import, although the amounts are still smaller. Therefore, Zambia can expect to increase the export of maize to these neighbouring countries.
Currently Zambia is one of the second largest exporters of maize in the region. The competitors of maize exporters are South Africa, champion of the region, and Uganda, Tanzania and others which changes year by year.
Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database Figure 3.13 Import of Maize by Country in the Integrated Region
3-25 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.8 Import of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 South Africa 109.96 308.82 4.04 86.57 697.32 2 Libya, State of 333.77 626.74 660.69 877.42 638.66 3 Zimbabwe 457.79 433.06 303.45 287.43 571.78 4 Kenya 353.31 324.62 93.47 458.94 250.35 5 Botswana 64.12 74.31 190.06 196.99 209.98 6 Namibia 58.71 66.81 166.94 104.31 140.65 7 Mauritius 92.78 89.64 99.74 90.23 109.76 8 Swaziland 0.00 80.15 75.32 84.92 95.78 9 Mozambique 87.37 6.54 38.06 151.50 119.12 10 Rwanda 66.56 101.15 62.94 89.60 0.00 11 Others 103.83 148.16 231.08 127.09 286.39 Total 1,728.21 2,260.00 1,925.78 2,555.00 3,119.78 Source; UN Comtrade, ITC35
Table 3.9 Export of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 South Africa 2,975.95 1,578.87 2,603.10 2,147.84 762.24 2 Zambia 492.52 687.79 173.57 95.44 722.78 3 Uganda 95.44 177.95 103.95 112.93 281.09 4 United Rep. of Tanzania 2.94 175.30 40.45 274.43 57.76 5 Malawi 357.25 0.83 1.86 3.85 1.51 6 Ethiopia 60.15 0.00 0.00 0.00 0.43 7 Mozambique 14.38 7.00 1.45 38.83 0.10 8 Egypt 2.26 4.40 2.46 4.10 5.86 9 Kenya 12.02 4.23 1.26 1.98 0.00 10 Rwanda 2.74 7.25 7.49 1.80 1.86 11 others 11.62 7.54 5.20 4.12 5.41 Total 4,027.27 2,651.14 2,940.78 2,685.30 1,839.04 Source; UN Comtrade, ITC
2) Soya Bean
(a) Production and Current Trade In 2014, the total amount of soya bean production was 214,179 tonnes in Zambia36 and only 36,824 tonnes was produced by small and medium scale farmers37. So, soya beans are produced mainly by medium-large scale farmers or commercial farms in Zambia. The current trade of soya beans by Zambia is not large. It is exported mainly to Zimbabwe, South Africa and Botswana, and imported from Malawi and others.
35 Data of Egypt is not included due to its uncertainness 36 FAO stat data (dated on Sep 7, 2017) 37 Post Harvest Survey 2013 – 2014 Agriculture Season (Small and Medium Scale Farms), Central Statistical office of Zambia
3-26 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database Figure 3.14 Production and Trade of Soya Bean by Zambia
Table 3.10 Export and Import of Soya Bean by Zambia by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export Zimbabwe 0.50 0.00 0.55 12.82 7.55 4.3 South Africa 0.00 0.00 0.79 9.64 2.21 2.5 Botswana 0.66 1.58 0.30 2.72 1.97 1.4 Others 0.08 0.87 0.80 0.70 0.10 0.5 Total 1.24 2.45 2.43 25.88 11.82 8.76 Import Malawi 2.37 0.33 1.45 0.66 1.45 1.25 South Africa 0.04 0.17 0.00 0.14 0.10 0.09 Others 0.02 0.00 0.00 0.10 0.00 0.03 Total 2.43 0.50 1.45 0.90 1.55 1.37 Source: UN Comtrade
(b) Production Potential Soya beans are cultivated widely in Zambia, and Eastern Province leads the country in small scale farmers’ soya production in almost every harvest season. From 2001 to 2010, 42% of soya beans produced by small scale farmers was produced in Eastern Province. Other provinces with sizeable production include Central and Northern Provinces. The total soya bean production in Eastern Province ranges from about 2,000 tonnes to about 9,000 tonnes depending on the year. If urea, which is imported and sold directly to the market, can be provided with cheaper price in Eastern Province by using Nacala railway, the production of soya beans might be increased.
Moreover, it is recommended to combine the soya beans into the crop rotation, because of its high demand in domestic and international markets, its soil improvement effect, and also its suitability for mechanized production with centre-pivot or sprinkler irrigation systems. Additionally, if the Farm Block production is vitalized as the GOZ is promoting, soya bean production might be increased.
3-27 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Soya bean production in Zambia is not met with local demand due to various challenges associated with access to inputs, production techniques, and marketing, therefore the demands are currently satisfied with imports of soya bean oil.
The demands for soya bean are mostly in domestic companies and large scale wholesalers for processing soya beans to produce soya bena oil, animal feed, and soya flour. The other demands may exist for exporting it informally to Malawi, Tanzania, or even Zimbabwe or Botswana. Therefore, there is sufficient room for public and private investment to fill the above mentioned gap. In addition, interlinked production mechanism is playing prominent role in soya markets in Eastern Province. In this production mechanism, the entities related to credit, input supply, and output sale are ‘interlinked’ in the production, and major corporates such as Cargill, NKW Agri-Services, and COMACO (main processor of soya beans at a large scale) are already involved in the activities.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC) Demands for soya bean is increasing in world-wide for oil production, feed for livestock, etc., according to the increasing life standard of the people. In the integrated region, which means countries belonging to COMESA, SADC and EAC, about 1.5 million tonnes of soya beans was imported. Most of the amount was imported by Egypt constantly (mainly importing from USA, Argentina, Ukraine, Canada, Uruguay, etc.). Following Egypt are South Africa (from Zambia and Paraguay), Libya (from Argentina), Kenya (from Uganda), Zimbabwe (from Malawi and Zambia), Burundi, Mozambique (from South Africa) and Tanzania and Botswana. Regarding the export, the total amount in the region was less than 10% of the total import in every year. South Africa, Ethiopia, Zambia and Malawi are currently exporting even in small quantities.
Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database Figure 3.15 Import of Soya Bean by Country in the Integrated Region
3-28 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.11 Import of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Egypt 1,115.80 1,922.85 1,079.71 1,331.44 1,206.49 2 South Africa 1.54 0.98 4.46 103.64 182.15 3 Libya, State of 0.00 0.13 0.03 0.20 3.30 4 Kenya 12.57 27.25 6.35 4.23 10.23 5 Zimbabwe 3.26 0.46 5.17 17.38 14.24 6 Sudan (before 2012) 6.99 0.00 0.00 0.00 0.00 7 Botswana 3.18 3.53 2.33 0.36 1.95 8 Burundi 8.80 3.77 0.00 0.01 0.00 9 Mozambique 1.61 3.22 0.84 0.72 3.49 10 United Rep. of Tanzania 0.31 0.92 0.72 3.06 0.75 11 Others 7.16 6.31 3.52 3.95 4.13 Total 1,161.21 1,969.41 1,103.12 1,464.98 1,426.73 Source; UN Comtrade, ITC
Table 3.12 Export of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 South Africa 44.73 160.20 17.65 1.92 5.68 2 Ethiopia 1.00 4.22 36.56 35.53 32.70 3 Malawi 5.04 4.56 14.33 23.24 9.56 4 Zambia 1.24 2.45 2.43 25.88 11.82 5 Uganda 1.80 2.75 2.06 1.36 7.79 6 Egypt 0.08 1.10 0.07 1.18 0.65 7 United Rep. of Tanzania 0.55 0.22 1.93 0.53 0.00 8 Mozambique 0.03 0.00 1.06 1.50 0.09 9 Kenya 0.34 1.40 0.15 0.00 0.25 10 Djibouti 0.00 0.00 0.22 0.92 0.66 11 others 0.63 0.49 0.72 1.26 0.33 Total 56.06 177.87 77.88 94.58 69.86 Source; UN Comtrade, ITC
3) Wheat
(a) Production and Current Trade Wheat is one of the important crops in Zambia. Its recent annual domestic production is between 200,000 to 270,000 tonnes. In Zambia, the production of the maize is the largest, followed by soya bean and wheat in turn. Usually, commercial farmers in large- or middle-scale prefer to produce soya beans in the rainy season and wheat (with irrigation) in the dry season.
3-29 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(1,000 tons) Production (Zambia) Export (Zambia) 300 Import 250 200 150 100 50 0 2011 2012 2013 2014 Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database Figure 3.16 Production and Trade of Wheat by Zambia
Table 3.13 Export and Import of Wheat by Zambia by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export Zimbabwe 0.00 0.00 1.76 8.70 0.00 2.09 South Africa 0.00 0.00 0.00 0.20 0.00 0.04 Others 0.00 0.09 0.02 0.03 0.02 0.03 Total 0.00 0.09 1.78 8.92 0.02 2.16 Import South Africa 12.00 0.03 0.00 0.00 29.76 8.36 Ukraine 0.00 0.00 0.00 0.00 8.28 1.66 Russian Federation 0.00 0.00 0.00 0.00 1.84 0.37 Mozambique 0.00 0.00 0.00 0.00 1.14 0.23 Zimbabwe 0.00 0.00 0.00 0.00 0.64 0.13 Brazil 2.41 0.00 0.00 0.00 0.00 0.48 others 0.21 0.00 0.00 0.00 0.22 0.09 Total 14.62 0.03 0.00 0.00 41.87 11.30 Source: UN Comtrade
(b) Production Potential In general, wheat is produced by commercial farmers because it is produced with irrigation using moving sprinklers or centre-pivot system. According to the agro-ecological classification in Zambia, production of the irrigated wheat is suitable to grown in Area IIa (See Table 3.2), which covers Central, Lusaka and parts of Southern and Eastern provinces38.
The GOZ launched a ban on wheat import in order to protect the producers from cheaper import. Even though, it may difficult for small-scale farmers to produce wheat with their own irrigation method, due to the competitiveness with large scale farmers or the cheap imported wheat. In 2006, there was only less than 100,000 tonnes of wheat production in Zambia but it became about double within five years as 171,274 tonnes in 2010. If the Farm Block programme will progress well, and rather than core investors but other larger scale farmers
38 2nd National Agriculture Policy of Zambia
3-30 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
cultivating around several hundred hectares can be active, the wheat production will be increased.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC) In the integrated region, demand for wheat is very high. Even the countries exporting wheat in the region, import larger volume than its own export. Egypt, South Africa, Libya, Kenya, Ethiopia and Tanzania are importing large volume of wheat in every year.
Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database Figure 3.17 Import of Wheat by Country in the Integrated Region
Table 3.14 Import of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Egypt 9,800.06 8,246.87 122.54 1,251.53 N/A 2 South Africa 1,824.30 1,698.08 1,401.98 1,824.63 1,192.44 3 Libya 859.35 1,623.39 1,887.69 1,694.97 1,147.38 4 Mozambique 245.36 138.76 214.04 5,942.75 383.16 5 Kenya 1,002.08 1,044.85 717.30 1,225.69 1,438.17 6 Ethiopia 1,078.30 967.75 1,234.59 937.57 1,199.89 7 Tanzania 1,057.81 680.77 782.23 901.24 846.17 8 Djibouti 521.04 615.79 383.98 487.87 684.79 9 Uganda 388.07 43.79 189.70 518.12 461.63 10 DRC 233.25 240.77 284.39 307.39 359.01 11 Others 2,250.51 688.04 952.35 997.15 955.87 Total 19,260.14 15,988.85 8,170.79 16,088.91 8,668.51 Source; UN Comtrade, ITC
3-31 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.15 Export of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporters 2011 2012 2013 2014 2015 1 South Africa 241.43 237.18 220.01 326.90 225.95 2 Tanzania, 15.00 54.92 13.14 38.95 0.08 3 Kenya 2.47 5.36 8.11 1.18 2.58 4 Egypt 2.67 0.54 11.29 0.49 0.24 5 Mozambique 3.84 0.00 0.22 4.59 4.33 6 Malawi 11.21 0.05 1.52 0.00 0.17 7 Djibouti 0.00 1.57 0.23 0.00 4.72 8 Zambia 0.00 0.09 1.78 8.92 0.02 9 Uganda 5.54 1.77 0.56 0.19 1.64 10 Libya, State of 0.00 0.00 0.00 0.00 1.89 11 others 2.66 2.58 0.57 0.92 3.39 Total 284.81 304.05 257.43 382.15 245.00 Source; UN Comtrade, ITC
4) Cotton
(a) Production and Current Trade Most of the cotton farmers in Zambia grow the cotton only through support from ginning companies in terms of seasonal input loans recoverable from the deliveries of seed cotton. The farmers are currently coordinated through the Cotton Association of Zambia (CAZ) which was formed in 2005 under an affiliation to the apex Zambian farmer organisation, the Zambia National Farmers Union (ZNFU)39.
Recently around 40,000 tonnes of cotton lint is produced in Zambia and most of them are exported to abroad.
(1,000 ton) Production Export Import 100
80
60
40
20
0 2011 2012 2013 2014
Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database Figure 3.18 Production and Trade of Cotton Lint by Zambia
39 Cotton and its by-products in Zambia, UNCTAD December 2016
3-32 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.16 Export and Import of Cotton Lint by Zambia by Country (Unit: 1,000 ton) Average Name 2011 2012 2013 2014 2015 (2011-2015) Export South Africa 7.94 27.93 21.60 13.98 18.25 17.94 Switzerland 12.62 23.45 14.83 10.09 3.54 12.90 Singapore 4.65 3.13 3.51 4.06 4.08 3.89 China 0.48 0.15 0.02 5.09 4.11 1.97 Lesotho 0.47 1.48 2.92 1.90 1.76 1.71 Swaziland 0.38 4.45 0.02 0.00 1.86 1.68 Indonesia 0.00 0.00 0.00 0.00 0.86 0.86 Hong Kong, China 0.00 1.42 0.07 0.60 1.30 0.85 United Arab Emirates 0.00 0.00 0.00 0.00 0.60 0.60 Thailand 0.00 0.02 0.00 0.00 0.19 0.10 Others 8.73 6.59 3.97 2.57 0.19 4.41 Total 35.26 68.62 46.95 38.29 36.73 46.90 IMPORT South Africa 0.00 0.03 0.00 0.04 0.10 0.03 United Arab Emirates 0.01 0.00 0.01 0.00 0.00 0.00 China 0.00 0.01 0.02 0.01 0.00 0.01 Others 0.02 0.04 0.03 0.04 0.10 0.04 Total 0.03 0.08 0.05 0.08 0.19 0.09 Source: UN Comtrade
(b) Production Potential Zambia has favourable soil and climatic conditions for cotton production. Cotton can be grown in Southern, Central, Lusaka, Eastern, parts of the Copperbelt and Western Provinces. The potential for cotton production in terms of suitable land and climate is vast, over 800,000 ha but only about 300,000 ha are currently under cotton cultivation.
The cotton is produced by small scale farmers under out-grower contracts with the ginning companies. Therefore, development of the cotton production strongly relies on the private companies. The government has expected a Farm Block in Eastern Province of about 100,000 ha of land shall be allocated for the cotton sector.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC) The cotton requires a long and warm growing season. It is, therefore, grown in majority of tropical countries and in many sub-tropical countries. The leading world producers are China (26% of world production), India (20%), USA (12%), Turkey (8%) and Pakistan (8%), Brazil (7%), Australia (4%) and Uzbekistan (3%)40.
Africa’s share in the world cotton trade is only 5%. The main cotton producing countries in Africa are Egypt, Sudan, Burkina Faso, Mali, Zimbabwe and Tanzania. Zambia is one of the important cotton growing countries in the East-South Africa.
In the integrated region, Egypt, South Africa and Mauritius are main importers of cotton. However, the market of cotton in the integrated region is smaller so that the target market of cotton may not be in the region but in the other area such as Asia.
40 Cotton and its by-products in Zambia, UNCTAD December 2016
3-33 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database Figure 3.19 Import of Cotton Lint by County in the Integrated Region
Table 3.17 Import of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Egypt 43.65 12.88 70.03 75.35 70.32 2 Mauritius 22.32 19.19 21.61 19.41 27.27 3 Mozambique 0.00 0.00 0.00 0.00 0.44 4 South Africa 32.99 39.13 41.61 28.00 9.66 5 Lesotho 16.56 8.70 N/A 1.53 1.24 6 Swaziland 0.31 0.95 1.47 1.61 2.14 7 Tanzania, United Republic of 0.02 0.01 0.00 0.00 0.00 8 Zimbabwe 0.62 5.72 8.30 0.65 1.26 9 Djibouti 0.13 0.79 1.25 1.09 0.77 10 Kenya 1.95 0.10 0.08 0.08 0.01 11 Others 2.44 3.25 5.32 9.64 4.83 Total 120.97 90.70 149.67 137.36 117.93 Source; UN Comtrade, ITC
Table 3.18 Export of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporters 2011 2012 2013 2014 2015 1 Egypt 61.22 72.97 42.03 24.76 47.83 2 Zambia 35.26 68.62 46.95 38.29 36.73 3 Tanzania, United Republic of 30.33 92.82 68.27 35.69 23.61 4 Mozambique 8.95 2.19 53.80 23.42 21.64 5 Zimbabwe 89.47 132.37 58.39 40.04 34.18 6 South Africa 11.11 12.57 4.89 3.44 4.89 7 Uganda 1.58 3.90 2.40 1.60 1.11 8 Madagascar 0.30 0.77 3.67 7.90 8.46 9 Malawi 9.46 26.25 11.45 11.47 16.09 10 Lesotho 0.01 0.02 N/A 0.09 0.00 11 Others 6.99 0.02 0.55 0.07 1.63 Total 254.67 412.49 292.39 186.77 196.16 Source; UN Comtrade, ITC
3-34 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5) Meat Production
(a) Production and Current Trade In 2014, 4 million heads of cattle, 1.1 million heads of pigs and 38 million of chickens are in the country. Among them, 3.3 million of cattle, 1 million of pigs are held by small and medium scale farmers. The Southern Province accounted for the highest percentage of cattle population at 31.2 % and Eastern Province follows at 30.7%. Regarding the pig population, Eastern Province accounted for the highest percentage at 51.5%.
The number of cattle and chickens is increasing as shown in the table below. The number of pigs has decreased since 2012, because of pandemic of African Swine Fever (ASF).
There is goat and sheep rearing mainly carried out by small scale farmers. As of September 2014, the goat population was estimated at about 2.6 million and the sheep population was about 130,000. The Southern Province accounted for the highest percentage of goats held at 34.1% and sheep held at 47.7 %.
4,500 (1,000 heads) 45,000 Cattle Pig Chicken (right) 4,000 40,000 3,500 35,000 3,000 30,000 2,500 25,000 2,000 20,000 1,500 15,000 1,000 10,000 500 5,000 0 0 2011 2012 2013 2014
Source: FAOSTAT Figure 3.20 Number of Livestock by Zambia
Source: FAOSTAT Figure 3.21 Number of Small Livestock by Zambia
3-35 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
The meats and live animals are mainly consumed in domestic markets and some quantities are exported as shown in the tables below. Import quantities of any types of meats are minimal.
Most of the bovine meat is exported to DRC. Tanzania also imported a limited amount and it is decreasing since 2013. Zambia imported some bovine meats and also live animals from South Africa constantly.
Table 3.19 Export and Import of Bovine Meat by Zambia by Country (Unit: ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015 ) Export DRC 0.41 92.98 58.13 21.60 5.63 178.75 United Rep. of Tanzania 0.25 3.01 0.00 0.08 0.10 3.43 Congo 0.33 0.00 0.00 0.00 0.00 0.33 Malawi 0.00 0.10 0.00 0.00 0.00 0.10 Total 0.99 96.09 58.13 21.67 5.73 182.61 Import South Africa 0.39 0.15 0.10 0.15 0.04 0.17 Ireland 0.00 0.29 0.00 0.00 0.00 0.06 United Rep. of Tanzania 0.00 0.13 0.00 0.00 0.00 0.03 Others 0.00 0.02 0.04 0.01 0.00 0.01 Total 0.39 0.59 0.14 0.16 0.04 0.26 Source: UN Comtrade
Table 3.20 Export and Import of Live Bovine Animal by Zambia by Country (Unit: ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export DRC 0.00 0.00 165.00 0.00 0.00 165.00 Malawi 0.00 97.20 18.20 0.00 9.90 125.30 Others 6.67 2.60 0.00 0.03 41.85 51.14 Total 6.67 99.80 183.20 0.03 51.75 341.44 Import South Africa 0.08 0.37 0.55 0.49 0.60 0.42 Namibia 0.00 0.04 1.02 0.47 0.01 0.31 Others 0.01 0.00 0.00 0.03 0.00 0.01 Total 0.09 0.40 1.56 0.99 0.61 0.73 Source: UN Comtrade
The international trade of sheep and goats by Zambia is not active at this moment, but it has a significant character that the imported number of the livestock or quantities of the meats excessed that which was exported.
3-36 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.21 Export and Import of Live Goats and Sheep and Sheep Meat by Zambia by Country (Unit: ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Goats, live Export Malawi 0.00 0.00 0.60 0.00 0.70 0.26 total 0.00 0.00 0.60 0.00 0.70 0.26 Import 0.00 0.00 0.00 0.00 0.00 0.00 South Africa 1.86 0.90 23.72 8.45 13.74 9.73 Namibia 9.00 3.75 0.00 2.50 10.64 5.18 Botswana 0.00 0.00 0.00 0.00 0.20 0.04 Total 10.86 4.65 23.72 10.95 24.58 14.95 Sheep, live Export United Rep. of Tanzania 0.00 0.55 0.00 0.00 0.00 0.11 Total 0.00 0.55 0.00 0.00 0.00 0.11 Import Namibia 0.45 9.00 0.45 0.00 0.17 2.01 South Africa 0.15 0.00 2.31 1.26 2.73 1.29 Total 0.60 9.00 2.76 1.26 2.90 3.30 Meat of sheep Export DRC 0.03 2.48 2.05 4.34 0.03 1.79 Total 0.03 2.48 2.05 4.34 0.03 1.79 Import South Africa 0.00 4.26 17.63 8.10 9.57 7.91 Lebanon 0.00 0.19 0.07 0.00 0.00 0.05 Namibia 0.00 0.00 0.50 0.00 0.00 0.10 Total 0.00 4.45 18.20 8.10 9.57 8.06 Source: UN Comtrade
In general, the amount of poultry meat exported from Zambia to DRC is increasing. Angola also imported a large amount in 2011 and 2012, and Antigua and Barbuda in 2011, but they stopped to export such large quantities. On the other hand, Zambia imports the poultry meat from South Africa and its amount is increasing. Regarding the export of live poultry, the export amounts to DRC, Zimbabwe, Botswana and Malawi are increasing. However, it is decreasing for Mozambique.
3-37 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.22 Export and Import of Meat and Edible Offal of Poultry by Zambia by Country (Unit: ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export Angola 25.00 25.00 0.00 0.00 0.00 50.00 DRC 1.00 8.37 15.15 7.29 17.44 49.24 Antigua and Barbuda 23.96 0.00 0.00 0.00 0.00 23.96 United Rep. of Tanzania 0.00 0.00 1.00 0.00 0.00 1.00 Malawi 0.00 0.00 0.00 0.01 0.00 0.01 Total 49.96 33.37 16.15 7.30 17.44 124.21 Import South Africa 181.06 45.59 155.92 2,109.51 4,043.31 1,307.08 Ireland 807.88 1,463.20 603.23 691.61 592.79 831.74 Brazil 0.00 7.00 32.48 732.37 704.84 295.34 Belgium 0.00 0.00 56.72 418.40 992.34 293.49 USA 0.00 0.00 286.24 391.33 420.42 219.60 Others 0.27 37.50 227.70 107.82 61.80 87.02 Total 989.20 1,553.28 1,362.28 4,451.04 6,815.51 3,034.26 Source: UN Comtrade
Table 3.23 Export and Import of Live Poultry41 by Zambia by Country (Unit: ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export DRC 0.00 0.00 1.00 1.12 63.75 13.17 Zimbabwe 3.03 6.77 5.53 9.02 12.13 7.30 Botswana 5.74 2.34 4.13 6.75 9.25 5.64 Malawi 1.24 1.34 1.52 4.07 3.77 2.39 Mozambique 1.36 0.45 2.29 1.34 0.00 1.09 Angola 1.23 0.63 0.63 1.53 1.25 1.05 Others 2.88 3.89 2.28 0.00 1.25 2.06 Total 15.48 15.41 17.39 23.83 91.40 32.70 Import Netherlands 19.20 18.49 17.62 25.98 1.42 16.54 United Kingdom 4.26 4.49 9.26 8.04 12.91 7.79 South Africa 2.73 2.63 6.20 2.64 5.53 3.94 Others 1.27 3.68 3.00 1.15 2.46 2.31 Total 27.47 29.29 36.07 37.80 22.32 30.59 Source: UN Comtrade
(b) Production Potential Cattle, goats and sheep – The cattle population growth is 1.3 times within five years, which is from 3.1 million heads in 2010 to 4.1 million heads in 2014. The abundance of cattle in the province provides investment opportunities in dairy farming.
Poultry – The poultry sector is one of the fastest growing sectors in Zambia. Current production has not yet saturated domestic markets, and there is considerable demand in the
41 Poultry, live (i.e., fowls of the species Gallus domesticus, ducks, geese, turkeys and guinea-fowls)
3-38 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
regional markets, such as Malawi, Mozambique and the DRC, countries in which dressed chickens and eggs are widely consumed.
Meat Processing: It was projected that Zambia’s total meat demand in 2017 would be 600,000 tonnes42, but current supply capacity is only 69,000 tonnes. Large opportunity for meat production exists in the country. Moreover, there is a potential to serve markets in Malawi and the DRC, and to supply meat and meat products (sausages, biltong, etc.) to supermarket chains, wholesalers, restaurants and tourism resorts, both locally and regionally. Shoprite currently sources locally packaged meat products, and has an interest in sourcing locally for exports43.
Moreover, there are several strong stakeholders like Zambeef, which are expected to lead development of the meat sector.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
< Bovine Meat >
Considering demands for bovine meat in the integrated region, Egypt and Angola are large markets for the bovine meat. In 2013 and 2014, the imported amount of Angola exceeds to the same of Egypt about 100,000 to 200,000 tonnes per year. South Africa also imported a certain amount, but they are decreasing the import amount gradually. Opposite to that, DRC and Mozambique have increased import although the amount is small.
With respect to the export of bovine meats, Botswana, South Africa and Namibia are the big three countries. Botswana and South Africa have increased their export amounts. Export amount by Namibia is relatively stable.
Source; UN Comtrade, ITC Figure 3.22 Import of Bovine Meat by Country in the Integrated Region
42 IAPRI, 2014 43 See the previous footnote.
3-39 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.24 Import of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Egypt 153.30 189.73 100.63 62.23 296.51 2 Angola 41.00 45.60 192.22 229.21 124.98 3 South Africa 26.53 30.35 27.81 23.78 13.38 4 Libya, State of 5.69 19.47 16.92 16.26 9.67 5 Mauritius 3.55 3.29 3.58 3.54 4.19 6 Swaziland 3.02 6.26 3.82 4.08 3.31 7 DRC 0.30 1.97 4.27 5.27 5.73 8 Lesotho 3.21 1.42 0.00 1.66 2.73 9 Mozambique 1.09 1.40 1.91 3.43 3.82 10 Comoros 0.12 0.16 0.04 2.38 2.46 11 Others 2.49 2.38 2.76 5.62 4.90 Total 240.30 302.03 353.94 357.46 471.69 Source; UN Comtrade, ITC
Table 3.25 Export of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Botswana 10.15 16.37 26.85 26.34 29.74 2 South Africa 12.76 14.64 16.03 27.79 29.57 3 Namibia 22.18 18.08 17.13 17.88 19.34 4 Kenya 0.89 1.04 1.88 2.01 0.85 5 Swaziland 0.86 0.48 1.14 0.91 1.04 6 Ethiopia 2.33 0.42 0.01 0.01 0.05 7 Egypt 0.22 0.26 1.25 1.65 0.28 8 Madagascar 0.00 0.00 0.02 1.47 1.10 9 United Rep. of Tanzania 0.00 0.17 0.00 0.03 0.03 10 Uganda 0.03 0.01 0.07 0.05 0.02 11 Others 0.85 0.16 0.12 0.06 0.02 Total 50.26 51.63 64.49 78.20 82.04 Source; UN Comtrade, ITC
< Meat of Sheep and Goat >
South Africa imported the largest amount of meat of sheep and goat in the region and it is decreasing. They imported it from Namibia, Australia and New Zealand. Mauritius, Egypt and other countries excluding Angola imported constantly. The imported amount by Angola is also increasing like their increasing of bovine meat.
3-40 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source; UN Comtrade, ITC Figure 3.23 Import of Meat of Sheep and Goat by Country in the Integrated Region
Table 3.26 Import of Meat of Sheep and Goat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 South Africa 17.68 15.55 13.35 9.73 9.01 2 Mauritius 4.98 5.11 5.00 4.83 5.71 3 Egypt 0.86 2.21 1.70 1.23 1.76 4 Libya, State of 0.49 3.62 1.18 1.33 0.47 5 Angola 0.94 0.77 1.09 1.24 2.91 6 Seychelles 0.36 0.33 0.32 0.22 0.28 7 Lesotho 0.22 0.19 0.00 0.16 0.42 8 Botswana 0.22 0.18 0.19 0.22 0.19 9 D.R Congo 0.19 0.17 0.11 0.25 0.13 10 United Rep. of Tanzania 0.10 0.11 0.11 0.32 0.11 11 Others 0.14 0.42 0.40 0.37 0.52 Total 26.17 28.64 23.45 19.89 21.49 Source; UN Comtrade, ITC
Table 3.27 Export of Meat of Sheep and Goat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Ethiopia 14.71 13.64 13.31 15.27 17.40 2 Namibia 11.75 12.06 13.59 8.04 5.76 3 Kenya 2.16 2.00 1.59 2.38 2.92 4 South Africa 2.47 0.97 1.11 1.61 1.05 5 Sudan (before 2012) 4.60 0.00 0.00 0.00 0.00 6 United Rep. of Tanzania 0.01 0.05 0.10 0.30 1.82 7 Djibouti 0.00 0.02 0.09 0.02 0.00 8 Egypt 0.10 0.01 0.01 0.02 0.01 9 Libya, State of 0.00 0.00 0.05 0.00 0.00 10 Mauritius 0.00 0.00 0.02 0.00 0.01 11 others 0.00 0.01 0.03 0.04 0.01 Total 35.79 28.76 29.90 27.68 28.99 Source; UN Comtrade, ITC
3-41 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
The imported volume in Uganda, Zambia, Tanzania, Mozambique and Zimbabwe is increasing gradually although in a small amount. The import of Botswana, Namibia and Lesotho are stable. South Africa, Zimbabwe and Zambia import the poultry meat but also export an excess amount of it, so they are basically exporters of the poultry meat.
Table 3.28 Import of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 South Africa 9.28 8.27 8.29 8.62 4.65 2 Botswana 3.28 2.67 2.94 2.72 2.98 3 Uganda 1.77 1.80 1.70 3.36 3.60 4 Zambia 1.86 2.20 2.84 2.74 3.17 5 Egypt 0.03 7.41 1.94 3.31 0.28 6 United Rep. of Tanzania 1.29 1.34 1.64 3.93 2.40 7 Mozambique 1.13 0.74 3.01 3.67 3.30 8 Namibia 1.65 2.06 2.16 2.17 1.84 9 Zimbabwe 0.92 1.70 1.59 2.26 2.79 10 Lesotho 1.91 1.49 2.61 1.43 1.41 others 10.65 11.36 10.51 10.86 12.14 Total 33.76 41.05 39.21 45.07 38.55 Source; UN Comtrade, ITC
Table 3.29 Export of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 South Africa 12.97 9.85 10.37 10.82 5.87 2 Malawi 0.16 19.64 0.12 0.29 0.57 3 Zimbabwe 1.71 1.83 2.14 2.90 3.03 4 Zambia 1.10 1.03 1.49 2.40 2.88 5 Kenya 0.99 0.99 1.76 1.68 1.84 6 Mauritius 1.43 1.67 1.08 0.68 0.81 7 Swaziland 1.04 1.59 1.10 0.44 1.18 8 Uganda 0.54 0.12 0.08 0.24 0.54 9 Egypt 0.34 0.05 0.07 0.47 0.12 10 Madagascar 0.00 0.01 0.00 0.02 0.02 Others 0.04 0.01 0.06 0.06 0.05 Total 20.31 36.79 18.25 20.00 16.93 Source; UN Comtrade, ITC
3-42 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
6) Fish
(a) Production and Current Trade
Currently the total fish production is 120 around 100,000 tonnes in Zambia. Of (1,000 tons) Production (Zambia) 100 which 60,000~80,000 tonnes is from capture fishing and 10,000~20,000 80 tonnes is from aquaculture. A small 60
amount is exported, but most of the fish 40 are consumed in domestic markets. 20 However, demand for domestic fish for 0 consumption still outstrips production. 2011 2012 2013 2014 The national demand for fish is Source: FAO conservatively estimated at 160,000 Figure 3.24 Fish Production 2011-2014 by tonnes per year, and this gap between Zambia supply and demand is filled by imported fish from neighbouring countries; South Africa, Zimbabwe and Tanzania.
Table 3.30 Export and Import of Fish by Zambia by Country (Unit: ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export 1 DRC 0.51 13.81 7.44 40.74 103.20 33.14 2 Malawi 4.00 0.00 5.58 11.61 46.80 13.60 3 Namibia 0.00 0.00 0.00 0.00 29.30 5.86 4 South Africa 22.48 0.76 0.64 1.31 0.00 5.04 5 China 4.52 5.04 1.54 4.96 4.60 4.13 6 Zimbabwe 18.00 0.00 0.00 0.00 0.00 3.60 7 Germany 4.61 1.69 2.57 0.74 1.52 2.23 8 Poland 1.25 0.59 1.85 2.75 3.99 2.08 9 China, Hong Kong SAR 1.00 3.16 1.11 0.21 1.18 1.33 10 USA 0.00 0.30 1.20 2.04 0.32 0.77 11 Others 3.52 3.41 4.07 1.63 1.93 2.91 Total 59.90 28.75 26.00 65.99 192.85 74.70 Import 1 Namibia 1,329.06 6,345.28 14,661.56 37,418.98 59,417.81 23,834.54 2 China 1,398.01 3,553.76 9,556.06 9,830.59 11,371.75 7,142.03 3 Zimbabwe 3,685.09 4,826.36 5,911.97 5,962.24 5,448.32 5,166.80 4 India 705.24 1,230.75 25.50 100.00 0.14 412.33 5 China, Hong Kong SAR 74.84 25.20 886.55 785.45 0.00 354.41 6 South Africa 134.63 244.73 276.80 210.31 571.90 287.67 7 United Kingdom 0.06 299.94 176.11 101.56 0.00 115.53 8 Viet Nam 0.00 0.00 74.58 208.00 3.00 57.12 9 Others 0.00 115.05 87.00 0.00 0.00 40.41 Total 7,326.93 16,641.07 31,656.14 54,617.12 76,812.93 37,410.84 Source; UN Comtrade, ITC
3-43 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(b) Production Potential In Zambia where has large bodies of water for freshwater fisheries, demand for domestic fish for consumption still outstrips production and the gap between supply and demand is foreseen to increase further with population growth. Investment opportunities therefore exist to produce more fish on a sustainable basis with the development of aquaculture and rational management of capture fisheries.
The main fish farming production systems applied in Zambia are cages and ponds. However, there is a huge potential to produce fish from Small Water Bodies (SWB) especially in Southern and Eastern Provinces. Aquaculture production has increased from about 4,500 tonnes in 2005 to 20,000 tonnes in 2013.
If the maize and soya bean production is developed by the effective use of the Nacala Corridor, agro-processing such as maize milling and soy oil production will also expand its activities. Residues by the processing is able to use for fish feed production; therefore, fisheries might be combined in such clusters.
(c) Potential Markets in the Integrated Region (COMESA, SADC and EAC) Generally, the import of fish is increasing in DRC, Mauritius, Mozambique, Zambia and Kenya. Angola, South Africa, Seychelles are stable. South Africa exported a higher amount of fish than its imported amount, but its export amount has been decreasing recently.
Source; UN Comtrade, ITC Figure 3.25 Import of Fish by Country in the Integrated Region
3-44 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.31 Import of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 DRC 80.66 86.37 127.75 130.32 566.23 2 Angola 194.80 114.56 137.32 222.76 180.63 3 Egypt 158.21 0.02 87.11 494.96 5.93 4 Mauritius 154.26 1.56 160.55 173.19 170.06 5 Mozambique 96.07 25.38 61.39 397.73 207.98 6 South Africa 71.25 80.92 85.67 93.64 82.96 7 Seychelles 69.88 62.93 60.69 67.01 67.62 8 Zambia 7.95 17.10 31.73 55.03 77.06 9 Namibia 69.75 9.69 12.40 14.10 17.81 10 Kenya 15.66 15.93 13.13 21.96 22.16 11 Others 54.69 52.16 72.25 88.62 71.95 Total 973.19 466.61 849.97 1,759.31 1,470.38 Source; UN Comtrade, ITC
Table 3.32 Export of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Namibia 319.06 312.47 367.72 73.62 346.30 2 South Africa 330.61 134.56 100.12 36.22 88.96 3 United Rep. of Tanzania 37.27 33.76 33.66 38.21 30.92 4 Mauritius 25.61 37.62 40.48 6.77 57.11 5 Uganda 19.30 11.42 20.18 17.94 17.97 6 Egypt 9.76 0.03 18.08 19.63 0.22 7 Kenya 9.97 10.65 8.93 7.45 6.63 8 Seychelles 9.48 0.61 7.96 0.08 0.63 9 Mozambique 3.93 4.15 4.79 8.11 8.70 10 Zimbabwe 2.01 2.52 2.01 0.08 5.82 11 Others 5.56 2.68 6.94 5.38 9.95 Total 772.55 550.47 610.86 213.49 573.21 Source; UN Comtrade, ITC
(3) Potential and Challenges of Development on Processed Products
1) Edible Oil (Sunflower oil and soya bean oil)
(a) Production and Current Trade While Zambia has a certain amount of domestic production of soya bean oil, it also has several-fold import of production; it does not have enough capacity to export. Regarding sunflower oil, it has the same or larger amount of export with/than production, although varying from year to year (main destinations are DRC, Malawi and others).
3-45 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
【Soya Bean Oil】 【Sunflower Oil】
(1,000 tons) (1,000 tons) 30 10 Production Expoｒｔ Import Expoｒｔ 25 Production Import 8 20 6 15 4 10 5 2 0 0 2011 2012 2013 2014 2011 2012 2013 2014
Source: FAOSTAT, ITC/UN Com Trade Figure 3.26 Production and Trade of Edible Oil by Zambia
Table 3.33 Export and Import of Soya Bean Oil by Zambia by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export 1 DRC 0.04 0.01 0.14 0.00 0.00 0.04 2 South Africa 0.00 0.00 0.00 0.00 0.12 0.02 3 Malawi 0.00 0.00 0.05 0.00 0.03 0.02 4 Others 0.06 0.00 0.03 0.00 0.00 0.02 Total 0.10 0.01 0.22 0.00 0.15 0.10 Import 1 South Africa 7.88 10.91 8.30 18.00 17.27 12.47 2 Mauritius 1.00 9.65 0.48 0.85 0.20 2.43 3 Singapore 1.48 3.82 1.71 0.00 0.00 1.40 4 Argentina 0.96 0.67 0.00 0.00 0.00 0.33 5 Others 0.88 1.13 0.10 0.11 0.00 0.44 Total 12.19 26.18 10.58 18.96 17.47 17.08 Source: UN Comtrade
Table 3.34 Export and Import of Sunflower Oil by Zambia by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export 1 DRC 6.21 0.25 9.33 0.20 0.18 3.24 2 Malawi 0.19 0.00 0.01 0.00 0.00 0.04 3 Other 0.05 0.00 0.02 0.01 0.00 0.01 Total 6.45 0.25 9.35 0.21 0.18 Import 1 South Africa 0.58 0.69 1.05 1.54 1.17 1.01 2 Egypt 0.03 0.07 0.14 0.38 0.03 0.13 3 Kenya 0.11 0.15 0.17 0.03 0.01 0.09 4 Oman 0.06 0.10 0.06 0.05 0.05 0.06 5 Others 0.00 0.03 0.05 0.01 0.00 0.02 Total 0.78 1.03 1.47 2.01 1.26 1.31 Source: UN Comtrade
3-46 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(b) Potential Market in the Integrated Region (COMESA, SADC and EAC) South Africa is the largest importing country of soya bean oil among the neighbouring countries (importing mainly from Europe and Argentina). Zimbabwe has been rapidly increasing import (mostly from South Africa), Mozambique and Madagascar have been also steadily increasing the import of soya bean oil (from Argentina, etc.). When Zambia can strengthen its production of soya bean oil and supply it not only to the domestic market, but also to the outside market of the above mentioned countries, it could have a possibility of export expansion.
300 (1,000 tons)
250 South Africa 200 Zimbabwe 150 Madagascar Ethiopia 100 Tanzania 50 Mozambique
0 2010 2011 2012 2013 2014 2015
Source: ITC/UN Com Trade Figure 3.27 Import of Soya Bean Oil by Country in the Integrated Region
Table 3.35 Import of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 South Africa 277.73 198.92 205.59 171.07 174.64 2 Egypt 350.10 28.97 130.47 99.74 325.19 3 Angola 272.04 87.70 124.73 27.45 3.48 4 Zimbabwe 30.98 46.92 27.33 47.76 104.66 5 Mozambique 20.95 7.71 31.97 20.93 29.16 6 Mauritius 20.35 22.22 19.50 25.83 23.72 7 Madagascar 15.50 15.14 15.28 21.24 24.43 8 Zambia 11.82 26.18 10.59 18.96 17.47 9 Malawi 17.44 9.53 7.45 10.20 9.39 10 United Rep. of Tanzania 14.40 11.61 3.00 6.82 4.17 11 Others 12.63 23.63 20.33 11.33 11.84 Total 987.88 821.30 1,060.26 974.10 904.47 Source; UN Comtrade, ITC
3-47 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.36 Export of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 South Africa 30.01 88.61 127.85 82.59 98.34 2 Egypt 29.31 60.10 63.48 40.17 87.96 3 Kenya 1.30 2.33 1.79 1.35 1.10 4 Mauritius 0.00 0.00 0.24 0.65 3.24 5 United Rep. of Tanzania 0.04 0.00 0.50 0.93 0.57 6 Mozambique 0.09 0.12 0.00 0.50 2.10 7 Uganda 0.16 0.94 0.96 0.87 0.26 8 Zambia 0.18 0.21 0.04 0.36 0.00 9 DRC 0.25 0.08 0.07 0.00 0.00 10 Namibia 0.02 0.00 0.01 0.04 0.08 11 Others 0.13 0.02 0.06 0.03 0.01 Total 61.50 152.41 195.00 127.48 193.65 Source; UN Comtrade, ITC
South Africa is also the largest importing country of sunflower oil (importing mainly from Europe and Argentina). Zimbabwe has drastically decreased its import, Botswana and Namibia have become stable importers (mainly importing from South Africa). Mozambique had increased import until 2014 (from Argentina, Romania, South Africa, etc.). Therefore, Zambia could expand export when they are able to enter into the above mentioned countries’ markets (excluding Zimbabwe).
Source: ITC/UN Com Trade Figure 3.28 Import of Sunflower Oil by Country in the Integrated Region
Table 3.37 Import of Sunflower Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Egypt 262.76 674.74 446.57 436.97 159.91 2 South Africa 87.16 200.46 132.11 138.93 78.19 3 Zimbabwe 72.31 65.33 34.80 16.64 5.04 4 Botswana 14.75 16.91 17.21 19.10 25.51 5 Namibia 12.69 17.02 14.82 19.51 19.07 6 Mozambique 2.22 3.43 12.51 24.94 6.17 7 Libya, State of 13.06 22.81 1.54 2.58 7.67 8 Mauritius 8.34 7.18 6.58 9.04 4.15 9 DRC 6.65 12.99 10.92 2.51 1.45 10 United Rep. of Tanzania 4.42 6.94 1.76 12.80 8.41 11 Others 45.689 33.45 38.462 30.741 42.163 Total 530.05 1061.25 717.28 713.75 357.72 Source; UN Comtrade, ITC
3-48 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) Sugar Cane and Sugar
(a) Production and Current Trade The process of separating sugar from the sugar cane plant is accomplished in two steps: at sugar mills and at sugar refineries. The sugar mills are located near the sugar cane fields. It is here that raw sugar and molasses is separated from the plant and shipped to a refinery. The Cane Sugar Refinery transforms raw sugar into granulated sugar, brown sugar, and other consumer and food industry products.
In Zambia, sugar cane was produced about 4 million tonnes in 2014, and 450,000 tonnes of raw sugar and 139,000 tonnes of molasses were produced with it. Almost half of the produced raw sugar and the molasses are exported to neighbouring countries. The largest amount is exported to Mauritius in general, but it varies by year. The second larger volume is exported to DRC stably. Export to South Africa and Kenya is increasing in recent years.
Source: FAOSTAT, UN Com Trade Database Figure 3.29 Production of Sugar Cane and Trade of Sugar by Zambia
3-49 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.38 Export and Import of Raw Sugar by Zambia by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export 1 Mauritius 142.34 81.31 108.13 71.69 22.54 85.20 2 DRC 64.29 62.13 54.11 76.33 81.44 67.66 3 South Africa 10.51 2.30 3.70 22.75 55.90 19.03 4 Kenya 3.99 0.55 17.65 18.01 14.35 10.91 5 Burundi 10.59 13.33 1.61 6.95 6.95 7.89 6 Rwanda 13.65 4.10 1.88 4.42 6.61 6.13 7 Zimbabwe 4.85 5.74 2.53 2.81 0.13 3.21 8 Mozambique 0.00 0.00 10.90 3.96 0.24 3.02 Others 7.51 0.82 0.94 0.76 5.76 3.16 Total 257.73 170.29 201.45 207.68 193.92 206.21 Import 1 South Africa 0.00 0.00 0.53 0.11 0.02 0.13 2 Swaziland 0.00 0.00 0.00 0.02 0.04 0.01 Others 0.00 0.00 0.00 0.01 0.01 0.00 Total 0.01 0.00 0.53 0.14 0.07 0.15 Source: UN Comtrade
Although Zambia has a substantive capacity of sugar production, their export amount of refined sugar is strictly limited. It has been capriciously exported to neighbouring countries including the Republic of Congo, DRC, Tanzania, Kenya, and Zimbabwe.
Source: FAOSTAT, ITC/UN Com Trade Figure 3.30 Production and Trade of Refined Sugar
3-50 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.39 Export and Import of Refined Sugars by Zambia by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export 1 DRC 4.23 10.21 9.42 12.20 26.81 12.57 2 Mauritius 0.00 40.14 0.00 0.00 0.00 8.03 3 Congo 0.00 0.00 0.00 2.92 1.19 0.82 4 Zimbabwe 0.00 1.20 0.00 0.07 0.04 0.26 5 others 0.01 0.07 0.00 0.15 0.07 0.06 Total 4.24 51.61 9.42 15.34 28.10 Import 1 South Africa 0.01 0.01 1.92 0.13 0.05 0.42 2 Mauritius 0.00 0.78 0.00 0.00 0.00 0.16 3 Brazil 0.00 0.00 0.42 0.00 0.00 0.08 4 Singapore 0.00 0.00 0.00 0.00 0.37 0.07 5 others 0.01 0.01 0.00 0.00 0.11 0.03 Total 0.02 0.80 2.35 0.13 0.52 0.76 Source: UN Comtrade, ITC
Export of sugar confectionery by Zambia drastically increased from 2010 to 2012, and has been shifting around 16 million dollars since then. The main destination countries are Zimbabwe, DRC and Malawi. The import value has been almost stable.
20,000 ($1,000) 18,000 16,000 Others 14,000 12,000 South Africa 10,000 Malawi 8,000 DRDRC Congo 6,000 Zimbabwe 4,000 Import 2,000 0 2010 2011 2012 2013 2014
Source: ITC/UN Com Trade Figure 3.31 Trade of Sugar Confectionery by Zambia
(b) Production Potential Sugar cane in Zambia is grown under irrigation in the northern and southern parts of the country. Miller owned estates contribute about 60% of the total sugar cane production, and 40% of the sugar cane production is from independent farmers, out-growers and contract farming schemes.
The Zambia sugar industry is dominated by three sugar milling companies, namely Zambia Sugar Plc, Kafue Sugar (Consolidated Farming Ltd) and Kalungwishi Kasama Sugar. Zambia
3-51 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Sugar Plc is the most dominant company contributing about 92.5% of the total sugar production, and its majority shareholder is Illovo Sugar Pty Ltd (South African based Sugar Company), and Kafue Sugar and Kalungwishi Kasama Sugar, both privately owned companies, contribute about 7.2% and 0.3% to the total sugar production, respectively44.
Despite of this monopolistic or oligopolistic situation of sugar production, the GOZ is seeking participation of the private sectors to be partners to develop the Farm Block in order to further enhance agro-industry development which also contributes to small scale farmers’ livelihood. Currently, in 2017, an Indian company, Nava Bharat Ventures of India, decided to set up an integrated sugar estate in the Luena Farm Block in Kawambwa District. Competition and Consumer Protection Commission (CCPC)45 is investing in order to analyse the monopolistic or oligopolistic situation which might restrict investment of the sugar industry. After the investigation, the measures will be taken if the situation restricts new investment.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC) With respect to refined sugar, the neighbouring countries with relatively large markets imported it; South Africa, Tanzania, Uganda and Kenya have increased import, and other countries like Madagascar, Mozambique, Botswana and Namibia have also been increasing import, although the amounts are still small. Therefore, Zambia can expect to increase the export to these neighbouring countries.
350 (1,000 tons) South Africa 300 Botswana
250 Namibia Zimbabwe 200 Tanzania 150 Mozambique 100 DRDRC Congo Kenya 50 Rwanda 0 Uganda 2010 2011 2012 2013 2014
Source: ITC/UN Com Trade Figure 3.32 Import of Refined Sugar by Country in the Integrated Region
44 The supply and demand for sugar in Zambia, USDA 2017 September 45 The Competition and Consumer Protection Commission (CCPC), established in 1997 under the name Zambia Competition Commission (ZCC), is a statutory body established with a unique dual mandate to protect the competition process in the Zambian Economy and also to protect consumers. CCPC regulates the Zambian economy to avoid restrictive business practices, abuse of dominant position of market power, anti-competitive mergers and acquisitions and cartels as these erode consumer welfare. The Commission is also mandated to enhance consumer welfare( cited by CCPC website)
3-52 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.40 Import of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Djibouti 158 203 260 200 216 2 United Rep. of Tanzania 162 234 222 175 210 3 Libya, State of 150 228 259 181 88 4 Kenya 121 149 177 129 200 5 Angola 156 204 228 56 11 6 South Africa 72 175 316 171 147 7 Ethiopia 13 122 162 182 228 8 Egypt 104 129 25 131 156 9 Uganda 117 162 176 130 155 10 Madagascar 49 47 60 93 95 11 Others 307 300 339 426 415 Total 1,716 2,255 2,563 2,302 2,336 Source; UN Comtrade, ITC
Table 3.41 Export of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Mauritius 318 277 335 343 346 2 Egypt 277 119 233 276 248 3 South Africa 171 258 380 333 116 4 Uganda 29 89 107 101 100 5 Swaziland 35 52 38 35 58 6 United Rep. of Tanzania 6 0 98 135 0 7 Zambia 4 52 9 15 28 8 Malawi 6 1 1 0 8 9 Zimbabwe 14 0 15 15 7 10 Madagascar 0 4 18 8 4 11 Others 3 2 11 6 4 Total 866 856 1,255 1,273 922 Source; UN Comtrade, ITC
Regarding the sugar confectionery, South Africa is the largest importing country among the neighbouring countries (mainly importing from Swaziland, China, Turkey, etc.). Other smaller importing countries are DRC, Namibia, Uganda, Tanzania and Botswana. They import from various countries including Brazil, China, South Africa, India, Kenya, etc. Zambia can expect to expand its sugar confectionery export through supplying to these countries in addition to the current market.
3-53 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
100 ($million) 90 South Africa 80 Botswana 70 Namibia 60 Zimbabwe 50 Tanzania 40 Mozambique 30 20 DRDRC Congo 10 Uganda 0 Malawi 2010 2011 2012 2013 2014
Source: ITC/UN Com Trade Figure 3.33 Import of Sugar Confectionery by Country in the Integrated Region
3) Daily Delivery Goods: Soap and Detergent In general, soap and detergent are not classified as processed food, but those goods are made from raw materials original from agriculture product. In fact, the one of biggest soap company is TRADEKING, confectionary manufactured company.
Export of Zambian soap and detergent has steadily increased, with particular increase with Zimbabwe. On the other hand, the import volume has not changed.
25,000 (tons)
20,000 Others
15,000 Mozambique Malawi 10,000 DRCDR Congo Zimbabwe 5,000 Import
0 2010 2011 2012 2013 2014
Source: ITC/UN Com Trade Figure 3.34 Trade of Soap and Detergent by Zambia
Among the neighbouring countries, DRC and Tanzania have rapidly been increasing import (DRC imports from Tanzania, South Africa, Uganda, and Tanzania imports from various countries such as Kenya, Uganda, China and Indonesia). While Zimbabwe has decreased import mainly from South Africa, countries like Malawi, South Africa and Rwanda have been gradually increasing import. Zambia could expand its export through supplying its products to these countries in addition to the current main market.
3-54 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
80 (1,000 tons) Zimbabwe 70 DRCDR Congo 60 Malawi 50 Mozambique 40 Tanzania 30 Rwanda 20 Madagascar 10 South Africa 0 Botswana 2010 2011 2012 2013 2014
Source: ITC/UN Com Trade Figure 3.35 Import of Soap and Detergent by Country in the Integrated Region
Table 3.42 Import of Soap and Detergent by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Angola 51.92 85.81 115.57 87.03 31.52 2 Zimbabwe 75.41 57.60 59.36 46.45 57.60 3 DRC 35.92 52.83 67.26 61.14 41.51 4 Egypt 44.10 23.51 55.80 47.77 21.37 5 Ethiopia 40.22 37.75 28.10 39.51 45.39 6 Djibouti 40.40 31.45 40.71 30.94 38.23 7 United Rep. of Tanzania 27.43 35.20 31.86 63.03 34.58 8 Malawi 28.18 26.30 31.45 36.89 49.68 9 South Africa 20.20 21.37 24.72 28.67 28.88 10 Botswana 19.23 20.28 21.94 21.22 20.96 11 Others 163.01 160.23 129.91 161.18 116.14 Total 546.00 552.33 606.67 623.84 485.87 Source; UN Comtrade, ITC
3.2 Industry
3.2.1 Overview of the Industry The value added of the industry sector was ZMW 39.98 billion or 32.7% of the GDP in 2016 at 2010 constant price46, while the service sector produced the largest value added of ZMW 72.88 billion or 59.6% of the total. The mining and quarrying contributed 11.1% to the total and the manufacturing did 8.5%, which are 3rd and 4th largest value among the industries. The mining and quarrying sector increased by 7% in the last year, while, the growth of the manufacturing is slower, at 2.6%, which was lower than the growth rate of the total GDP.
46 The Industry sector is including Mining and quarrying, Manufacturing, Electricity generation, Water supply and sewerage and Construction.
3-55 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
In the industry sector, 516,670 persons or 8.8% of the total employment were engaged. This is rather smaller, compared with the value added of the sector. The employment in the manufacturing and construction sectors accounted for 3.8% and 3.1% of the total employment respectively, which are equivalent to nearly 80% of the employment of the industry sector.
Table 3.43 GDP and Employment by Industry GDP 2016 2015-2016 Employment 2014 (2010 Constant Price) Growth Rate (million ZMW) (Share) Persons Share (%) Agriculture, forestry and fishing 9,483.50 7.8% 3.6% 2,864,158 48.9% Mining and quarrying 13,608.60 11.1% 7.0% 82,725 1.4% Manufacturing 10,455.70 8.5% 2.6% 223,681 3.8% Electricity generation 1,779.40 1.5% -13.6% 16,175 0.3% Water supply; sewerage 338.7 0.3% -3.9% 11,283 0.2% Construction 13,802.50 11.3% 9.3% 182,806 3.1% Wholesale and retail trade 28,651.50 23.4% 0.1% 692,078 11.8% Transportation and storage 4,204.70 3.4% -4.0% 152,052 2.6% Accommodation and food services 2,390.00 2.0% 1.0% 72,078 1.2% Information and communication 5,133.60 4.2% 18.7% 20,322 0.3% Financial and insurance 4,728.10 3.9% -2.6% 17,342 0.3% Real estate 4,429.70 3.6% 3.1% 5,154 0.1% Professional, scientific and technical 2,328.70 1.9% 6.0% 13,856 0.2% Administrative and support service 1,205.80 1.0% 6.8% 52,631 0.9% Public administration and defence 6,791.10 5.6% 9.9% 72,767 1.2% Education 9,819.50 8.0% 5.8% 158,617 2.7% Human health and social work 1,681.80 1.4% 0.8% 63,255 1.1% Arts, entertainment and recreation 513.5 0.4% -0.6% 10,163 0.2% Other services 1,001.10 0.8% 3.3% 107,310 1.8% Others - - - 1,040,774 17.8% Total Gross Value Added 122,347.40 100.0% 3.8% 5,859,227 100% Source: GDP: Central Statistical Office, The Monthly June 2017. Employment: CSO, 2014 Labour Force Survey.
3.2.2 Current Condition and Potential of Industrial Development Along Nacala Corridor Similar to agriculture, investment potentials and opportunities in some industries in Eastern Province will be further promoted by the development of the Nacala Corridor. However, industries in other provinces may have the potential for development through utilization of the corridor, as the products are more tolerant to a longer time of transportation than perishable agro-products. They include followings.
(1) Agro-Processing According to ‘Agro Processing Sector Profile 2014’ published by ZDA, the agro-processing industry and the manufacturing industry contribute about 11% to Zambia’s GDP. In 2013, the processed and refined foods sector’s export earnings rose by 35.6% from USD 417,387 in 2012 to USD 565,808. The growth in the export trend has continued to be attributed to wider market access in both regional and international markets. The SADC market is the country’s largest export market bloc. SADC alone accounted for 35% of the total non-traditional exports
3-56 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(NTEs) in 2013. South Africa accounted for 72%, followed by Tanzania and Namibia with less than 10% each. The COMESA region is also important market for Zambia’s NTEs exports. DRC is by far the largest market, followed by Zimbabwe, Malawi, Namibia and Tanzania. The total export to COMESA and SADC excluding South Africa amounted to 78% of total NTEs47.
The sector has continued to be dominated by Zambia Sugar Plc which is the largest sugar producer in Zambia with an estimated market share of about 90%. The company grows over 65% of its own cane on over 16,550 ha, and the rest of the cane is grown by Out- grower Schemes such as the Magobbo, Manyoyo and Kaleya48. Other large scale processor includes soya bean processors such as COMACO, Mount Meru and Tiger Animal Feeds, as well as meat processors such as Zambeef and TradeKing, one of the largest FMCG (fast moving consumer goods) manufacturers in the Southern African region. The expansion of the business of these companies and other small scale producers largely depends on the growth of demand in the Southern and Eastern African countries mentioned above, and the development of the Nacala Corridor will stimulate the trade of agro-processed products along the corridor.
(2) Steel, Metal Fabrication and Parts49 Zambia has identified steel and copper fabrication, among many engineering products, as targets for accelerating growth of engineering products industries in Zambia. Over the last five years, several steel making and copper fabrication companies have emerged dynamically in Zambia. Basic metals and fabricated engineering products accounted for 25% of the total manufacturing GDP. This category covers the companies’ manufacturing of products from copper and steel, include copper wire, cable and rods, alloys and ingots, carbon brushes, switch-gears, pipes and railway sleepers. Steel products include deformed bar, flat bar and metal tubes. While the recent development of the steel sector in Zambia has been remarkable, there are many opportunities for more investment to catch sharply increasing demands in both the Zambian and the regional markets. The country constantly records trade deficit in the iron and steel products, and therefore; exports of the Zambian-made steel products are to be encouraged. It is required that Zambia increases its ranges of steel products and also increases its integration along the long production (supply) chain of the iron and steel sector. As regards the resources, steel scrap is the main source of raw material for steelmaking in Zambia. However, Zambia has huge reserves of iron ores, which can be used to produce steel products using the Direct Reduced Iron (DRI) technology. When the feasibility of DRI production in Zambia becomes clearer, investment opportunities in the iron and steel sector in Zambia will
47 ZDA, “Agro Processing Sector Profile 2014” 48 Ibid. 49 The Best of Zambia http://thebestofzambia.com/directory/manufacturing-and-wholesale/materials-and-merchants/steel/; http://thebestofzambia.com/directory/manufacturing-and-wholesale/industrial-products/metal-fabrication-and-parts/ ZDA, “Sub-Sector Profile: Iron and Steel”, August 2012.
3-57 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
enormously increase in all stages of the long production (supply) chains of the sector from upstream to downstream50.
3.3 Mining
3.3.1 Overview of the Mining In 2016, the mining and quarrying sector contributed ZMW 13,609 million or 11.1% of the value added to the national economy. Since 2010, the share of the sector in the GDP has been stable between 10% and 13%; however the sector production declined by 2.3% in 2014 and then increased about 7% in 2016, reflecting the price of copper.
The mining and quarrying sector employed 82,700 people, accounting for 1.4% of the total employment in 2014, which increased from 56,227 people in 2005
Table 3.44 Contribution of the Mining and Quarrying Sector to the National Economy (Million ZMW at 2010 Constant Price) 2010 2011 2012 2013 2014 2015 2016 Mining and 12,428.70 12,435.70 12,538.00 12,985.20 12,687.20 12,716.70 13,608.60 Quarrying Total Gross Value 91,836.30 96,946.60 104,312.30 109,589.80 114,703.60 117,887.20 122,347.40 Added Share of Mining 13.5% 12.8% 12.0% 11.8% 11.1% 10.8% 11.1% Sector in GDP Growth Rate - 0.06% 0.82% 3.57% -2.29% 0.23% 7.01% Source: 2010-2014 Data: Central Statistical Office. 2016. National Accounts Gross Domestic Product (GDP) Report 2014 & 2015. 2015-2016 Data: Central Statistical Office, the Monthly June 2017.
3.3.2 Mineral Production in Zambia The production of major mineral commodities from 2009 to 2013 is presented in Table 3.45. The detailed data of production of copper, the main mineral commodity, is provided in Figure 3.36 with the copper price. Copper production has been on an upward trend in the last ten years, despite the decline of the price of copper. The production amount was indeed lower than the government’s projection. The repeated power outages and reduced investment due to the country’s weak currency were pointed out as some of the factors that may have affected the production. Zambia’s copper production was the seventh largest in 2016 in the world51.
50 Universal Mining and Chemical Industries Limited (UMCIL), a steel manufacturing subsidiary of TradeKings, plans to increase its production capacity from current 12,000 tonnes to 250,000 tonnes. According to TradeKings, it is commissioned by African Union to produce steel to be used for rail track in connection with the Integrated High Speed Train Network project indicated in the Agenda 2063. 51 USGS. 2017. Mineral Commodity Summaries. Copper. https://minerals.usgs.gov/minerals/pubs/commodity/copper/index.html#mcs
3-58 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.45 Mineral Production in Zambia from 2009 to 2013 (Metric ton unless otherwise specified) Major Commodities 2009 2010 2011 2012 2013 METALS Cobalt: Mine output, Co content 4,900 6,200 5,400 4,200 5,200 Metal1 1,506 5,026 5,746 5,665 5,000 Copper:2 Mine output, Cu content: 637,000 672,000 663,000 695,000 760,000 Metal, smelter, primary , includes low -grade electrow on 402,000 535,000 520,000 519,000 520,000 Refinery , primary : 440,000 528,000 517,000 530,000 568,000 Gold (kilograms) 3,300 3,600 3,800 4,500 4,500 Iron and steel, crude steel 10,000 40,000 50,000 50,000 55,000 Manganese: Gross w eight 40,000 120,000 120,000 120,000 120,000 Mn content 13,000 40,000 40,000 40,000 40,000 Nickel, Ni content of concentrates 280 2,482 1 2,724 1 -- 1 -- Silv er (kilograms) 6,000 6,500 6,500 6,400 6,400 INDUSTRIAL MINERALS Cement 880,000 1,126,728 1 1,200,000 1,200,000 1,200,000 Gemstones: Amethy st (kilograms) 1,400,000 1,300,000 1,000,000 1,050,000 1,150,000 Bery l (million carats) 6 13 7 10 11 Emerald (million carats) 11 20 14 17 19 Tourmaline (kilograms) 21,000 20,000 20,000 21,000 20,000 Lime, calcined (thousand metric tons) 130 140 50 200 200 Limestone: For cement and lime (thousand metric tons) 2,000 2,500 2,400 2,600 2,700 Crushed aggregate (thousand metric tons) 750 800 1,000 1,000 1,050 Sand and grav el, construction (thousand metric tons) 320 350 360 360 370 Sulfur: Gross w eight: Py rite concentrate 100,000 ------Sulfuric acid3 600,000 990,000 800,000 950,000 910,000 Sulfur content: 242,000 300,000 240,000 310,000 290,000 MINERAL FUELS AND RELATED MATERIALS Coal, bituminous 200,000 200,000 220,000 200,000 200,000 4 Petroleum, refinery products (thousand 42-gallon barrels) 3,700 3,800 4,700 -- -- 1 Reported figure. 2 Terms used are as defined by the International Copper Study Group. 3 From the Chambishi and the Nkana acid recovery plants. 4 From the U.S. Energy Information Administration. Source: USGS. 2013 Minerals Yearbook. ZAMBIA [ADVANCE RELEASE]. https://minerals.usgs.gov/minerals/pubs/country/index.html#pubs
Production Copper Price: USD (MT) per Metoric Ton 900,000 770,909 767,008 739,759 763,805 14,000 800,000 698,646 721,446 708,259 710,860 700,000 12,000 560,731 575,037 600,000 10,000
500,000 8,000 8,823 400,000 7,959 7,538 6,000 7,132 6,963 7,331 300,000 6,863 5,510 4,000 200,000 5,165 4,868 100,000 2,000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year Copper Copper Price
Source: Copper Production: Central Statistical Office Zambia. Copper Price: IMF. Primary Commodity Prices *Copper price - Copper, Grade A Cathode, LME spot price, CIF European Ports, USS per metric ton. Figure 3.36 Copper Production and Copper Price
3-59 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.3.3 Export of the Mineral Commodities The export of mineral products is an important source of earning foreign currency and has been supporting the Zambian economy. Those mining products include copper, precious and semi-precious stones, cobalt, cement, lime, and sulphur. In particular, copper export accounts for 79% of the total export value in 2016, though its export value declined by 34% since 2012. The export value of each of the other mining products is less than 5% of the total value. The second largest mineral commodities for export is precious and semi-precious stones of which export slightly increased to 4%, followed by other base metals mostly consisting of copper, cobalt, and manganese ore and concentrations.
Table 3.46 Export of Major Mineral Products from 2012 to 2016 (million USD) Product label 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Copper and articles thereof 6372.9 6890.1 7210.8 5150.8 4190.4 68% 65% 74% 74% 79% Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad ... 282.7 328.5 272.5 200.1 194.9 3% 3% 3% 3% 4% Other base metals; cermet; articles thereof 214.5 132.9 122.7 75.2 101.9 2% 1% 1% 1% 2% Ores, slag and ash 71.4 94.1 57.9 27.3 30.9 1% 1% 1% 0% 1% Iron and steel 54.8 55.0 74.5 49.7 18.9 1% 1% 1% 1% 0% Salt; sulphur; earths and stone; plastering materials, lime and cement 121.0 274.2 134.3 104.1 18.6 1% 3% 1% 1% 0% All products 9364.7 10594.1 9687.9 6979.5 5305.4 Source: ITC calculations based on UN COMTRADE statistics since January, 2012 and until January, 2015 and Central Statistical Office statistics since January, 2015. http://www.trademap.org/Index.aspx
3.3.4 Export Destinations of Mineral Commodities The export values to major destinations of mineral commodities are presented from Table 3.48 to Table 3.53. Nearly 60% of copper has been exported to Switzerland, followed by China of which export fluctuates between 20 to 30%. This is because the largest copper mine firm, Mopani Copper Mines, is owned by GLENCORE based in Switzerland. Therefore, it is said that the actual largest importer of Zambian copper is China.
According to Bolloré, the largest logistics firm in Zambia, copper produced in the Copperbelt is exported to East Asia, such as China and South Korea via Dal es Salaam Port and Durban Port. Approximately 70% of the handling volume of copper by Bolloré is transported by truck to Dal es Salaam. However, the Zambian Railway is promoting the railway for the transport of copper, and the GOZ is trying to introduce a statutory instrument to mandate the quota of railway use for transport of commodities including copper52. Currently the Copperbelt region, especially Chingola, has been emerging as a hub of copper production in Zambia and DRC to refine copper ore imported from DRC in the smelters and export the products abroad.
52 For example, 50% of usage of rail is mandated for copper transport, while, 100% is required for sulphur transport.
3-60 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.47 Export Value and Destinations of Copper from 2011 to 2015 (million USD) Importers 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 World 6,645.0 6,372.9 6,890.1 7,210.8 5,150.8 100.0% 100.0% 100.0% 100.0% 100.0% Switzerland 4,282.8 3,881.8 3,856.0 4,236.0 3,004.6 64.5% 60.9% 56.0% 58.7% 58.3% China 1,312.9 1,645.7 2,109.7 1,719.6 987.4 19.8% 25.8% 30.6% 23.8% 19.2% Singapore 0.0 0.0 14.0 265.4 486.6 0.0% 0.0% 0.2% 3.7% 9.4% Australia 0.0 0.0 0.4 348.1 198.7 0.0% 0.0% 0.0% 4.8% 3.9% South Africa 437.2 176.8 237.8 194.8 186.8 6.6% 2.8% 3.5% 2.7% 3.6% Hong Kong, China 0.6 0.0 0.0 30.0 99.8 0.0% 0.0% 0.0% 0.4% 1.9% Japan 3.6 0.8 55.9 77.1 80.6 0.1% 0.0% 0.8% 1.1% 1.6% Mozambique 50.8 0.0 9.9 14.7 22.3 0.8% 0.0% 0.1% 0.2% 0.4% United Arab 62.1 216.7 245.5 128.7 18.7 0.9% 3.4% 3.6% 1.8% 0.4% Emirates * Product: 74 Copper and articles thereof Source: ITC calculations based on UN COMTRADE statistics since January, 2012 and until January, 2015 and Central Statistical Office statistics since January, 2015. http://www.trademap.org/Index.aspx
The most of commodities except precious and semi-precious stones and manganese were exported to the regional market, namely, South Africa, DRC, Zimbabwe, and Malawi. A half of the export value of precious and semi-precious stones was exported to Singapore, Switzerland, India, and South Korea. Almost all of manganese ore and concentration was exported to China.
3-61 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.48 Export Value and Table 3.49 Export Value and Destinations Destinations of Precious Stones and of Cement in 2015 Semi-Precious Stones in 2015 Exported Value Importers Share (%) Exported Value (Thousand USD) Importers Share (%) (Thousand USD) World 25,280 100.0% DRC 18,253 72.2% World 200,109 100.0% Zimbabwe 3,422 13.5% South Africa 93,080 46.5% Malawi 2,835 11.2% Singapore 40,508 20.2% Congo 667 2.6% Switzerland 37,775 18.9% Tanzania, 80 0.3% India 16,865 8.4% South Africa 18 0.1% Korea, Republic of 9,653 4.8% Egypt 5 0.0% * Product 7103 Precious stones and semi-precious * Product 2523 Cement, incl. cement clinkers, whether or stones, whether or not worked or graded, but not not coloured strung Source: ITC calculations based on UN COMTRADE Source: ITC calculations based on UN COMTRADE statistics since January, 2012 and until January, 2015 and statistics since January, 2012 and until January, 2015 Central Statistical Office statistics since January, 2015. and Central Statistical Office statistics since January, http://www.trademap.org/Index.aspx 2015. http://www.trademap.org/Index.aspx
Table 3.50 Export Value and Table 3.51 Export Value and Destinations of Lime in 2015 Destinations of Cobalt in 2015 Exported Value Exported Value Importers Share (%) Importers Share (%) (Thousand USD) (Thousand USD) World 39,122 100.0% World 75,237 100.0% DRC 36,836 94.2% South Africa 72,668 96.6% Malawi 1,433 3.7% United Arab Emirates 2,569 3.4% Zimbabwe 853 2.2% *Product: 8105 Cobalt mattes and other intermediate * Product: 2522 Quicklime, slaked lime and hydraulic products of cobalt metallurgy; cobalt and articles lime thereof, ... Source: ITC calculations based on UN COMTRADE Source: ITC calculations based on UN COMTRADE statistics since January, 2012 and until January, 2015 and statistics since January, 2012 and until January, 2015 Central Statistical Office statistics since January, 2015. and Central Statistical Office statistics since January, http://www.trademap.org/Index.aspx 2015. http://www.trademap.org/Index.aspx
Table 3.52 Export Value and Destination Table 3.53 Export Value and Destination of Sulphur in 2015 of Manganese in 2016 Exported Value Exported Value Importers Share (%) Importers Share (%) (Thousand USD) (Thousand USD) World 9,046 100.0% World 3,965 100.0% DRC 8,994 99.4% China 3,745 94.5% Russian Federation 52 0.6% South Africa 220 5.5% * Product: 2503 Sulphur of all kinds (excluding sublimed *Product: 2602 Manganese ores and concentrates, incl. sulphur, precipitated sulphur and colloidal sulphur ferruginous manganese ores and concentrates, with a ... Source: ITC calculations based on UN COMTRADE Source: ITC calculations based on UN COMTRADE statistics since January, 2012 and until January, 2015 and statistics since January, 2012 and until January, 2015 and Central Statistical Office statistics since January, 2015. Central Statistical Office statistics since January, 2015. http://www.trademap.org/Index.aspx http://www.trademap.org/Index.aspx
3-62 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.3.5 Government Policy of Mining Sector The economic development of Zambia is dependent on mining. Copper contributes approximately 77% to total exports. The government has considered that the diversification of the economic development is essential.
In the 7NDP 2017-2021, “A Diversified and Export-Oriented Mining Sector” is the 2nd Development Outcome to achieve the goal. The Plan emphasises on broadening the range of minerals to cover non-traditional mining of gemstones, gold and industrial minerals as well as promotion of value addition to mining products and include energy and material efficiency strategies to increase productivity and reduce environmental pollution. In addition, the Plan also focuses on formalising and empowering small-scale miners to make them more productive, supporting the development of lapidaries and local auction sales of gemstones and enhancing the capacity of local businesses to participate in the mining value chains and boost export revenue.
The following are the strategies and programmes identified under the Development Outcome.
Strategy 1: Promote the exploitation of gemstones and industrial minerals Programmes: a) Geological information generation and provision; b) Mineral processing technology development; c) Small-scale miners’ empowerment; d) Small-scale mines regulatory framework enforcement; e) Market linkages development; f) Strategic environmental assessment and risk management; and g) Mineral exploration promotion Strategy 2: Promote local and foreign participation in mining value chains and industrialisation Programmes: a) Capacity development; b) Policy and regulatory framework review and enhancement; c) Access to finance promotion; d) Mining value-chain development; e) Research, innovation and technology promotion; and f) Investment Promotion Strategy 3: Promote petroleum and gas exploration Programmes: a) Policy and regulatory framework review and enhancement; b) Capacity development; c) Geological and geophysical information generation and provision; and d) Environmental management Strategy 4: Promote small-scale mining Programmes: a) Small-scale miners’ empowerment;
3-63 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
b) Small-scale miners access to finance promotion; c) Occupational health, safety and environment strengthening; d) Small-scale mining skills development; and e) Small-scale miners and investors partnerships promotion.
3.3.6 Development Potential of the Mining Sector in the Nacala Corridor Region Eastern Province has a variety of mineral deposits, which are not fully exploited. Gemstone mining dominates most of the current mining activity in the Province. Aquamarine and tourmaline are mined in Lundazi and Nyimba, amethyst is also currently being mined in Lundazi District. Other gemstones available for economic exploitation include: tourmaline, granite, garnets, aquamarine amethyst and quartz. The Province also has the potential for the mining of gold in the Chadiza and Vubwi Districts. The province’s broad spectrum of mineral resources such as copper, gold and gemstones present excellent investment opportunities in the extraction and processing of these minerals53.
3.4 Trade
3.4.1 Overview of the International Trade The international trade of Zambia had expanded since the mid-2000s until 2013, except the time of the global financial crisis in 2009, and the amounts of the export and import nearly tripled. However, after 2013, the trade amounts, especially the value of the export, declined. In 2015, the import value, USD 8.4 billion, exceeded the amount of the export, USD 7.0 billion. The trade deficit was recorded.
12,000 10,594 9,365 9,688 10,000 9,001 10,162 8,420 7,200 9,539 8,000 8,805
6,000 5,099 7,178 million) 4,617 4,312 6,983 3,770
(US$ 4,000 5,060 5,321 4,007 3,793 2,000 3,074
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Export Import Source: WITS - UNSD Comtrade Figure 3.37 Export and Import Values from 2006 to 2015
53 The provincial administration of the Eastern Province, “Eastern Province Investment Potentials and Opportunities”.
3-64 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Zambia’s top export partner was Switzerland where USD 3.1 billion or 44% of the total value was exported, followed by China (14%) and Singapore (8%). The Top Ten Partners consisted of European, Asian, and African countries. The export values to Malawi and Mozambique, two countries along the Nacala Corridor, were USD 107.2 million (1.5%) and USD 40.2 million (0.6%) or 8th and 15th respectively in the ranking of the export volume. Zambia’s African export partners in the Top Ten, including South Africa, the Democratic Republic of the Congo, Zimbabwe, and Malawi accounted for 20% of the total export value.
On the other hand, Zambia’s major import partners were African countries. The top import partner was South Africa where USD 2.6 billion or 31% of the total value was imported from. Zambia imported 53% of the total values from Top Four African countries including South Africa, DRC, Mauritius, and Kenya. However, imports from Malawi and Mozambique were USD 17.5 million and USD 82 million respectively, of which ranking were 42nd and 18th in terms of the imported value. Thus, the trade among Zambia, Malawi, and Mozambique is less active compared with the other neighbouring countries such as DRC, Zimbabwe or Kenya. The development of the Nacala Corridor can enhance the trade opportunities among the three countries by improving transport infrastructure as well as custom procedures.
3,500 3,500 3,091 3,000 3,000 2,604 2,500 2,500
2,000 2,000 million) million)
1,500 1,500 (US$ 1,009 (US$ 947 1,000 1,000 689 545 534 523 475 412 394 363 500 267 209 500 213 107 103 82 191 182 0 0 SAR DRC DRC
India Spain China Japan Africa China Japan Africa Kenya
Congo
Congo Kuwait
Malawi Kingdom Australia
Mauritius Ko ng
Singapore the the Zimbabwe
Switzerland South South of of
Hong United
Rep. Rep.
China, Dem. Dem. Source: WITS - UNSD Comtrade Source: WITS - UNSD Comtrade Figure 3.38 Top 10 Export Partners in 2015 Figure 3.39 Top 10 Import Partners in 2015
3.4.2 Traded Commodities In the last decade, both traditional and non-traditional export expanded. The traditional export e.g., copper is dominant and its value reached ZMW 4,468 million. Though the share of traditional export was increased from 62% to 77% of the total value, non-traditional export such as maize, gemstone and industrial metals is expanded by 21.4% per annum, which is faster than that of the traditional export, 11.7%. To minimize the impacts of the price
3-65 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
fluctuation of copper and diversify the export commodities, the government adopted a policy to increase the non-traditional export54.
9,000
8,000
7,000
6,000 ZMW)
5,000
4,000 (Million 3,000
2,000
1,000
0 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan JanMay 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20172017 Total‐Exports (fob) Non‐Traditional Ex ports (fob) Traditional Exports (fob) Source: Central Statistics Office Figure 3.40 Traditional and Non-Traditional Export from 2007 to 2017
The dominant exported goods of Zambia in the last ten years were intermediate goods, which accounted for 84% of the total export in 2015. It is assumed to be copper products as discussed below. The imported goods consisted of capital goods, consumer goods, and intermediate goods relatively equally. The share of consumer goods increased from 25% in 2006 to 32% in 2015, while, the share of capital goods declined from 36% to 26%. From the mid-2000s, the Zambian economy grew rapidly and the GDP per capita increased from USD 1,163 to USD 1,607 per capita in ten years. The economic growth of the country increased demands for the import of consumer goods.
The Zambian economy depends on the export of copper. Among the exported commodities in 2015, the exported value of copper products reached USD 5.2 billion or 74% of the total exported value. The share of each of the other commodities was less than 3%. The second dominant commodity was cereals (maize), followed by precious or semi-precious stones or metals, and then sugar. Among the imported commodities, mineral fuels, mineral oils and their distillation products or simply fuels accounted for USD 1.6 billion or 18.7% of the total imported value, followed by the categories of boilers, machinery and mechanical appliances (14.6%) and then ores, slag and ash (7.6%).
54 Ministry of National Development Planning. Seventh National Development Plan 2017-2021
3-66 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
12,000
10,000
） 8,000
6,000 million
US$
（ 4,000
2,000
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Capital goods Consumer goods Intermediate goods Raw materials Source: WITS - UNSD Comtrade Figure 3.41 Export by Product Category from 2006 to 2015
12,000
10,000
8,000
million) 6,000
US$
（ 4,000
2,000
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Capital goods Consumer goods Intermediate goods Raw materials Source: WITS - UNSD Comtrade. Figure 3.42 Import by Product Category from 2006 to 2015
3-67 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.54 Top Ten Export and Import Commodities in 2015 Export Import USD USD Rank Commodities (HS description) Share Rank Commodities (HS description) Share million million Mineral fuels, mineral oils and products of their distillation; 1 Copper and articles thereof 5,153.41 73.8% 1 1,577.70 18.7% bituminous substances; mineral waxes Nuclear reactors, boilers, machinery 2 Cereals 204.63 2.9% 2 and mechanical appliances; parts 1,225.32 14.6% thereof Natural or cultured pearls, precious or semi-precious stones, 3 precious metals, metals clad with 200.23 2.9% 3 Ores, slag and ash 613.07 7.3% precious metal, and articles thereof; imitation jewellery; coin Vehicles other than railway or 4 Sugars and sugar confectionery 134.79 1.9% 4 tramway rolling-stock, and parts and 552.26 6.6% accessories thereof Electrical machinery and equipment Mineral fuels, mineral oils and and parts thereof; sound recorders products of their distillation; and reproducers, television image 5 110.87 1.6% 5 538.14 6.4% bituminous substances; mineral and sound recorders and waxes reproducers, and parts and accessories of such articles Inorganic chemicals; organic or Tobacco and manufactured inorganic compounds of precious 6 106.48 1.5% 6 391.28 4.6% tobacco substitutes metals, of rare-earth metals, of radioactive elements or of isotopes Salt; sulphur; earths and stone; 7 plastering materials, lime and 104.19 1.5% 7 Fertilisers 361.21 4.3% cement Nuclear reactors, boilers, 8 machinery and mechanical 93.64 1.3% 8 Articles of iron or steel 332.75 4.0% appliances; parts thereof Inorganic chemicals; organic or inorganic compounds of precious 9 83.44 1.2% 9 Rubber and articles thereof 329.75 3.9% metals, of rare-earth metals, of radioactive elements or of isotopes Other base metals; cements; 10 75.28 1.1% 10 Plastics and articles thereof 231.93 2.8% articles thereof Source: WITS - UNSD Comtrade.
3.4.3 Trade Along Nacala Corridor At the Mwami Border Post, on the Zambian side of the border with Malawi, the trade values of both export and import showed a declining trend since 2013 to 2016, which probably reflected the decreasing international trade of Zambia as described above. The exported value from Zambia far exceeded the import values to Zambia as shown in Table 3.55.
Regarding the export, almost all the goods of the export passing through Mwami Border Post were exported to Malawi (see Table 3.54). In 2015 and 2016, 98% of the value of the exported goods was for Malawi. However, the shares of the imports from Malawi to Zambia shifted in the rage between 45% and 64% in the four years. The imports from China and Japan, reached
3-68 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report nearly 35% in 2014 and 2015. Though there is no data available, these goods from the Far East might be imported from Nacala Port in Mozambique.
According to the export and import trends from 2013 to 2016 presented in Table 3.55 the major export commodities from Zambia include tobacco and maize of which export values ranged between 40% and 65%, while the imported goods are groundnuts, transformers, vehicles, urea, etc.
Therefore, these data indicate that the development of the Nacala Corridor could further encourage the export from Zambia to Malawi and the Nacala Corridor has a potential to be a transport route of the imported goods from Asia to Zambia. A caveat is that because this analysis is based on the export and import values, the trade volume should be examined to consider the better use of the Nacala Corridor.
250,000 205,868 200,000
142,327 150,000 105,798 107,083 Thousand) 100,000 (US 46,870 47,792 37,868 50,000 13,646
0 2013 2014 2015 2016
Export Import Source: Central Statistics Office. Figure 3.43 Export and Import Values at Mwami Border Post
3-69 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.55 Top Five Destinations of Export and Import at Mwami Border Post from 2013 to 2016 2013 Rank Export USD (1,000) Share Rank Import USD (1,000) Share 1 Malawi 182,506.8 88.7% 1 Malawi 25,417.5 54.2% 2 South Africa 19,193.4 9.3% 2 China 6,060.2 12.9% 3 Switzerland 3,234.2 1.6% 3 Japan 5,271.3 11.2% 4 Republic of Thailand 434.0 0.2% 4 United Arab Emirates 4,078.2 8.7% 5 Germany 419.8 0.2% 5 Tanzania 2,097.2 4.5% Export Total 205,868.2 Import Total 46,870.0 2014 Rank Export USD (1,000) Share Rank Import USD (1,000) Share 1 Malawi 135,485.1 95.2% 1 Malawi 21,521.2 45.0% 2 Republic of Thailand 1,977.4 1.4% 2 China 10,269.0 21.5% 3 Switzerland 1,379.1 1.0% 3 Japan 5,421.8 11.3% 4 Mozambique 1,043.2 0.7% 4 Tanzania 2,732.0 5.7% 5 South Africa 796.2 0.6% 5 Saudi Arabia 2,590.6 5.4% Export Total 142,326.9 Import Total 47,792.2 2015 Rank Export USD (1,000) Share Rank Import USD (1,000) Share 1 Malawi 103,737.4 98.1% 1 Malawi 16,999.2 44.9% 2 Mozambique 980.6 0.9% 2 China 9,714.6 25.7% 3 China 420.8 0.4% 3 Japan 3,519.6 9.3% 4 South Africa 367.9 0.3% 4 India 3,472.3 9.2% 5 Republic of Thailand 105.3 0.1% 5 United Arab Emirates 1,657.0 4.4% Export Total 105,798.0 Import Total 37,868.2 2016 Rank Export USD (1,000) Share Rank Import USD (1,000) Share 1 Malawi 105,599.6 98.6% 1 Malawi 8,758.7 64.2% 2 South Africa 1,217.2 1.1% 2 Japan 1,239.4 9.1% 3 Mozambique 83.4 0.1% 3 South Africa 1,200.0 8.8% 4 Rwanda 67.5 0.1% 4 China 802.7 5.9% 5 Uganda 48.3 0.0% 5 United Arab Emirates 769.0 5.6% Export Total 107,083.0 Import Total 13,646.0 Source: Central Statistics Office.
3-70 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.56 Top Five Exported and Imported Commodities at Mwami Border Post from 2013 to 2016 2013 USD USD Rank Export Share Rank Import Share (1,000) (1,000) Groundnuts, shelled, whether or not 7,871 16.8% 1 Tobacco, not stemmed/stripped 77,065 37.4% 1 broken Vehicles with engine capacity exceeding 5,016 10.7% 2 Maize (excl. seed) 38,472 18.7% 2 1,500 cc but not exceeding 3,000 cc - OTHER. Mixtures of urea and ammonium nitrate in 4,089 8.7% 3 Cotton, not carded or combed 16,621 8.1% 3 aqueous or ammoniacal solution Mineral or chemical fertilizers with 2,013 4.3% 4 Portland cement (excl. white) 16,136 7.8% 4 nitrogen, phosphorus and potassium Vehicles with engine capacity exceeding 1,650 3.5% 5 Cotton seeds 7,524 3.7% 5 1,000 cc but not exceeding 1,500 cc: OTHER Export Total 205,868 Import Total 46,870 2014 USD USD Rank Export Share Rank Import Share (1,000) (1,000) Groundnuts, shelled, whether or not 1 Tobacco, not stemmed/stripped 45,650 32.1% 1 5,641 11.8% broken Liquid dielectric transformers, power 2 Candles, tapers and the like 24,126 17.0% 2 3,924 8.2% handling capacity >10,000 kVA Self-propelled bulldozers, excavators, 3 12,359 8.7% 3 Urea 3,710 7.8% nes Knotted netting of man-made textile 4 Maize (excl. seed) 9,045 6.4% 4 2,684 5.6% materials (excl. fishing nets) Vehicles with engine capacity exceeding 5 Soap in other forms, nes - Other 5,968 4.2% 5 1,500 cc but not exceeding 3,000 cc - 2,418 5.1% OTHER. Export Total 142,327 Import Total 47,792 2015 USD USD Rank Export Share Rank Import Share (1,000) (1,000) Liquid dielectric transformers, power 6,370 16.8% 1 Tobacco, not stemmed/stripped 44,107 41.7% 1 handling capacity >10,000 kVA Groundnuts, shelled, whether or not 3,200 8.4% 2 Maize (excl. seed) 26,352 24.9% 2 broken Prefabricated structural components for 1,824 4.8% 3 Soap in other forms, nes - Other 5,851 5.5% 3 building, etc., of cement... Vehicles with engine capacity exceeding 1,673 4.4% Cartons, boxes and cases, of corrugated 4 4,316 4.1% 4 1,500 cc but not exceeding 3,000 cc - paper or paperboard OTHER. L sections of iron/steel, hot-rolled..., <80 1,565 4.1% 5 2,021 1.9% 5 Urea mm high Export Total 105,798 Import Total 37,868 2016 USD USD Rank Export Share Rank Import Share (1,000) (1,000) Groundnuts, shelled, whether or not 1 Maize (excl. seed) 22,947 21.4% 1 1,118 8.2% broken Tobacco, partly or wholly Sacks and bags, for packing goods, of 2 21,047 19.7% 2 955 7.0% stemmed/stripped polyethylene / polypropylene strip nes Plywood, veneered panels and similar 3 Portland cement (excl. white) 11,194 10.5% 3 861 6.3% laminated wood nes Cartons, boxes and cases, of corrugated 4 Tobacco, not stemmed/stripped 9,111 8.5% 4 826 6.1% paper or paperboard Iron/steel bars & rods, hot rolled, Vehicles with engine capacity exceeding 5 twisted/with deformtns from rolling proc. 5,518 5.2% 5 1,500 cc but not exceeding 3,000 cc - 628 4.6% - Other OTHER. Export Total 107,083 Import Total 13,646 Source: Central Statistics Office.
3-71 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.4.4 Development Potential and Challenges of the Trade Sector in the Nacala Corridor Region A long-standing development issue of the trade sector in Zambia is diversification of the export commodities. The expansion of non-traditional export of agricultural and mining commodities and tourism is strongly needed for economic diversification. The 7NDP identified eight constraints to economic diversification, including inadequate infrastructure, cost and limited availability of the long-term finance, inadequate water resource and supply, lower labour productivity, limited access to land, inadequate skills and innovation, high cost of transportation, and insufficient market information system and economy wide coordination. To address these constraints, while the 7NDP suggests three strategies for trade promotion relevant to this study namely:
1) Improvement of trade facilitation: transport infrastructure development, corridor development, border management, and OSBP establishment; 2) Improvement of logistics management: intercountry trade centre and dry port development; and 3) International cooperation: COMESA, EAC-SADC Tripartite Framework implementation etc.
The development of the Nacala Corridor Region with the Nacala Corridor is in line with this newly published plan. Eastern Province has a great development potential of agriculture and the mining sector. With the development of the Nacala Corridor, therefore, the expansion of exports of cereals such as maize and non-traditional mining products such as precious and non-precious stones can be expected, although the current exported values are less than 3% of the total. In particular, maize and tobacco are two major commodities exported through Mwami Border Post to Malawi. The improvement of the Nacala Corridor, including OSBP and extension of the railway from Chipata can contribute to increase of the export of these commodities to Malawi.
In the neighbouring countries of Zambia, the integrated region trade with Malawi and Mozambique is less active, compared with DRC and Zimbabwe. The development of the Nacala Corridor connecting Zambia with Malawi and Mozambique can increase a trade opportunity with these two countries, especially with Mozambique.
Nevertheless, the trade on the Nacala Corridor is not expanding as discussed. This is because the Corridor is primarily used for the trade with Malawi where the market is not large. Thus, it is crucial to promote international trade through the Nacala Corridor, in addition to the intra-region trade with the neighbouring countries. Moreover, the cost reduction of the transport of the fuel, the largest value of the imported commodity by the use of the railway of the Nacala Corridor can contribute to the reduction of the trade deficit.
Thus, a strategy to expand international trade, both export and import on the Nacala Corridor is required for Zambia’s trade sector. The rehabilitation and upgrading of the railway of the Malawi section is a necessary component to support the promotion of international trade between Zambia and Malawi and Mozambique.
3-72 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.5 Tourism
3.5.1 Overview of the Tourism In Zambia, the direct contribution of the tourism sector to GDP was ZMW 6.9 billion (USD 600 million) or 3.2% of the total and the total contribution of the sector to GDP was estimated ZMW 15.2 billion (USD 1.4 billion), or 7.0% of GDP in 2016. The increase of 4.4% is expected in 201755.
Tourist arrivals in Zambia increased from 859,088 persons in 2012 to 931,782 persons in 2015. The annual earning of the tourism sector in 2015 was ZMW 4,408 million or USD 401 million. The earning increased in local currency, though it was decline by about 9% in USD.
Africans account for 76% of the total tourists in 2015, followed by Europeans and Asians who accounts for 10% and 8% respectively. The share of African tourists has gradually increased from 2011.
More than half of the tourists came to Zambia for business purposes. In 2015, 54% of the tourists arrived in Zambia for business, followed by the purpose of leisure or holidays accounting for 25%. Though the total number of tourist arrivals and the number of tourists coming for leisure have shown a slight increasing trend from 2011 to 2015, the share of each of the purposes of visits remained stable.
Table 3.57 Tourist Arrivals and Annual Tourism Earnings Average Annual 2012 2013 2014 2015 Growth Rate Tourist Arrival (persons) 859,088 914,576 946,969 931,782 2.1% ZMW (million) 2,271.47 2,971.15 3,945.71 4,408.16 18.0% USD (million) 441.06 540.21 616.52 401.11 -2.3% Exchange Rate (ZMW/1USD) 5.15 5.5 6.41 10.99 Source: Ministry of Tourism and Arts, Republic of Zambia., 2015 Tourism Statistical Digest. July 2016.
1,000 64 82 72 900 90 97 10 11 12 800 13 41 45 49 11 78 52 32 79 89 persons) 700 114 66 600 Asia (1000 500 Australia 400 America 720 732 710
Number 654
625 300 Europe 200 Africa
Tourists 100 0 2011 2012 2013 2014 2015 Year Source: Ministry of Tourism and Arts, Republic of Zambia., 2015 Tourism Statistical Digest. July 2016. Figure 3.44 Tourist Arrivals by Continent
55 World Travel & Tourism Council. Travel & Tourism Ravel & Tourism & Tourism Economic Impact ZAMBIA. https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2017/zambia2017.pdf
3-73 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
1,000 900 86 85 90 94 800 69 104 43 63 60 17 17 21 47 58 Other 700 1 39 21 23 23 600 8 VFR Study 500 480 506 500 501 465 400 Conference 300 Business 200 Leisure/Holiday 100 194 223 252 250 235 0 2011 2012 2013 2014 2015
Source: Ministry of Tourism and Arts, Republic of Zambia. 2015 Tourism Statistical Digest. July 2016. Figure 3.45 Tourist Arrivals by Purpose of Visit
Tourist arrivals by Top Ten Oversea markets and by Top Ten African markets in 2015 are shown in Figures bellow. Among the oversea markets, about 37,000 to 39,000 came from the United States and United Kingdom each. On the other hand, a large number of tourists visited Zambia from neighbouring countries, especially Zimbabwe and Tanzania, which are 225,500 persons and 168,800 persons respectively. However, only 31,500 Malawian came to Zambia in 2015.
45,000 38,496 40,000 36,997 35,000 30,000 25,517 25,000 20,648 20,000 Persons 15,000 10,193 8,742 8,025 10,000 6,310 4,861 4,165 5,000 0
Source: Ministry of Tourism and Arts, Republic of Zambia. 2015 Tourism Statistical Digest. July 2016. Figure 3.46 Tourist Arrivals by Top Ten Overseas Markets in 2015
3-74 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
250,000 225,527
200,000 166,833
150,000
96,201 94,030
Persons 100,000
50,000 31,539 22,311 15,120 14,968 10,190 8,242 0
Source: Ministry of Tourism and Arts, Republic of Zambia. 2015 Tourism Statistical Digest. July 2016. Figure 3.47 Tourist Arrivals by Top Ten Africa Markets in 2015
In Zambia, national parks are the most popular tourist attraction. There are 20 National Parks and 36 Game Management Areas (GMAs), the total area of which is 31.4% of the land of the country, or 236,400 km2 56.
The visitors to four major national parks were increasing from 2012 to 2015 as shown in Figure 3.48. South Luangwa National Park covering Eastern, Muchinga and Central Provinces is the most popular park. The visitors to South Luangwa National Park accounted for 49%, though its share declined from 57% in 2012.
50,000 45,000 43,653 40,943 41,970 40,000 35,480 35,000 30,000 South Luangwa 23,083 (person) 25,000 Mosi‐oa‐Tunya 20,985 20,000 17,883 Lower Zambezi
Visitrs 14,659 12,960 15,000 9,718 Kafue 9,371 9,289 9,011 10,000 6,937 9,085 5,000 5,461
0 2012 2013 2014 2015 Source: Ministry of Tourism and Arts, Republic of Zambia. 2015 Tourism Statistical Digest. July 2016. Figure 3.48 Tourists Visited Major National Parks
56 Ministry of Tourism and Arts, Republic of Zambia. National Tourism Policy 2015
3-75 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.5.2 Tourism Sector of the Nacala Corridor Region Tourism, including arts and culture, is the second major economic activity (next to agriculture/agribusiness sector) in Eastern Province. Tourism is a major contributor to socioeconomic development in the province as it is an important source of jobs, and generation in both the private and public sectors. The main tourism activities in the province include hotel and lodge accommodation, game viewing, safari walking, game hunting and cultural ceremonies.
Eastern Province has three National Wildlife Parks–South Luangwa (9,050 km2), Lukusuzi (2,720 km2) and Luambe (254 km2), and four Game Management Areas (GMAs)–Lupande (4,840 km2), Lumimba (4,500 km2), West Petauke (4,140 km2) and Sandwe (1,530 km2)– which act as buffer zones to the National Wildlife Parks, allowing for free movement of animals between the Parks and GMAs. The National Wildlife Parks and GMAs in the province have the largest variety of animals and bird life in Africa. Although most of the South Luangwa National Wildlife Park lies outside Eastern Province, its management and the only public road access is from the province.
In the country, Naconde, on the border with Tanzania, and Kenneth Kaunda International Airport in Lusaka are the two busiest ports to receive tourists in 2015. Among 932,000 tourist arrivals in 2015, about 20% entered the country through each of the two ports, followed by Chirundu, on the border with Zimbabwe where 15% of the tourists arrived.
There are three ports of entry in Eastern Province, namely Chanida, the border with Mozambique, Mfuwe International Airport at South Luangwa National Park, and Mwami, the border with Malawi on the Nacala Corridor. The number of tourists who entered Zambia through the Mwami border in 2015 was 30,063 tourists and the largest visitors at the border, 45,370 tourists recorded in 2013 during the last five years.
3-76 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.58 Tourist Arrivals by Port of Entry in 2015 PROVINCE PORTS OF ENTRY Tourists (%) Copperbelt Kasumbalesa 91,186 9.79 Mokambo 5,188 0.56 Sakania 4,314 0.46 Simon Mwansa Kapwepwe International Airport 35,207 3.78 Eastern Chanida 3,879 0.42 Mfuwe International Airport 762 0.08 Mwami 30,063 3.23 Northern Nakonde 194,851 20.91 Mpulungu 2,764 0.30 Nsumbu 418 0.04 Southern Harry Mwaanga Nkumbula International Airport 56,013 6.01 Kariba 46,829 5.03 Kazungula 28,441 3.05 Victoria Falls 67,321 7.22 Western Katima Mulilo 32,285 3.46 North-Western Jimbe 208 0.02 Kipushi 5,507 0.59 Lusaka Kenneth Kaunda International Airport 180,795 19.40 Feira/Luangwa 7,398 0.79 Chirundu 138,353 14.85 Total 931,782 100.00 Source: Ministry of Tourism and Arts, Republic of Zambia., 2015 Tourism Statistical Digest. July 2016.
Table 3.59 Tourist Arrivals in Eastern Province from 2011 to 2015 Ports of Entry 2011 2012 2013 2014 2015 Chanida 7,630 4,704 3,879 Mwami 31,016 35,754 45,370 37,783 30,063 Mfuwe 878 697 782 820 762 Source: Ministry of Tourism and Arts, Republic of Zambia., 2015 Tourism Statistical Digest. July 2016.
In Eastern Province, there are 6,644 rooms with 8,764 beds, which account for 15.4% and 11.6% of the country’s total rooms and beds respectively in 2015. Eastern Province has the third largest accommodation capacity, following Lusaka and Southern Provinces, because of the existence of the most popular national park, South Luangwa National Park, though the Southern Province where Victoria Fall is located has the second largest accommodation capacity. The annual average room occupancy rate in Eastern Province, 79.1%, is higher than the national average of 69.8%, probably due to the increasing visitors to the South Luangwa National Park. The tourism industry created 57,384 jobs in 2015 and 6,522 people were engaged in Eastern Province, which accounted for 11.4% of the total employment of the sector. The accommodation annual direct earning in Eastern Province was ZMW 53.3 million (USD 4.85 million). This was significantly low, compared with Lusaka and Southern Province, and implies that the tourism sector did not benefit the accommodations in Eastern Province very much, but probably other domains such as tourist agencies or transportation. Thus, one of the issues of the tourism sector in the Nacala Corridor Region is how to increase the direct contribution of the tourism sector to the region.
3-77 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.60 Tourism Statistics by Province in 2015 Accommodation Number of No. of Bed Annual Average Room Employees Annual Direct Earnings Rooms Spaces Occupancy Rates (million ZMW) Central 3,396 6,791 64.6 2,620 4.14 Copperbelt 2,298 4,276 72.8 1,895 61.51 Eastern 6,644 8,764 79.1 6,522 53.30 Luapula 737 1,074 73.8 958 3.20 Lusaka 13,671 29,062 53.1 18,679 1,842.14 Muchinga 855 1,390 77.8 857 6.84 North Western 1,134 1,204 87.8 1,197 31.77 Northern 962 1,713 59.2 836 4.66 Western 880 1,263 57.9 948 3.03 Southern 12,542 19,716 71.7 22,872 1,993.35 Country 43,119 75,253 69.8 57,384 4,003.94 Source: Ministry of Tourism and Arts, Republic of Zambia., 2015 Tourism Statistical Digest. July 2016.
3.5.3 Policy Direction and Challenges of Tourism Sector The tourism sector is expected to be one of the driving forces of the country’s economy to become a middle income nation as stated in the Vision 2030. According to the Tourism Sector Policy 2015, the tourism sector vision is defined, “Make Zambia an exciting and growing destination that realizes its full potential and rewards tourists with unique, authentic and treasured experiences.” The objective is to be among the top five tourist destinations in Sub-Saharan Africa by 2030.
The Ministry identified the development issues of the sector in:
a) infrastructure b) limited tourism products c) domestic tourism d) community participation e) marketing and promotion f) perceived high cost of the destination g) inter-ministerial and institutional coordination h) sector investment i) standards, inspections and licensing j) skills training in tourism and hospitality industry k) institutional capacity l) gaming industry
In order to achieve the sector vision and objective and address the development issues, the government proposed eight guiding principles and fourteen measures shown in Table 3.61.
3-78 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.61 Guiding Principles and Measures for Tourism Sector Development Guiding Principles Measures 1) Sustainable Tourism Development 1) Policy Coordination, Consultation and Inter-Sectoral Linkages. 2) Rural Development 2) Gender Issues 3) Inter-Agency Cooperation and Coordination 3) Tourism Planning and Development 4) Conservation and preservation of nature and culture 4) Domestic tourism 5) Ethical and transparent tourism development 5) Tourism related infrastructure 6) Quality and value 6) Tourism Investment 7) Communities Involvement 7) Environmental Management and Conservation 8) Improved quality of life 8) Empowerment of Local Communities in tourism development 9) Public Awareness, Sensitization and Education 10) Product Development and Diversification. 11) Tourism Marketing and Research 12) Skills in Tourism and Hospitality Industry 13) Quality Assurance 14) Management of the Tourism Sector Source: Ministry of Tourism and Arts, Republic of Zambia., Tourism Sector Policy 2015
3.5.4 Development Potential and Challenges of the Tourism Sector in the Nacala Corridor Region The Nacala Corridor Region in Zambia, Eastern Province in particular has high potential for the tourism development. There are the South Luangwa National Park and Lukusuzi National Park in Eastern Province, North Luangwa National Park and Nyika National Park in Muchinga Province, and Lower Zambezi National Park in Lusaka. South Luangwa National Park is the most popular national park in Zambia as described. However, the contribution of the visitors to South Luangwa National Park to the region is not so large, because they do not visit other places in the region and the annual accommodation earning is low. Thus, a strategy to promote the tourism sector in the Nacala Corridor Region would be to develop various tourism attractions in the region and network them with the South Luangwa National Park in order to divert the tourist destinations and lengthen their stay in the region. Considering the current development of Chipata City, development of cultural tourist attractions in Chipata such as cultural events, a museum or cultural village would be one option to divert the tourists from the National Park. In the long-run, the planned railway from Chipata or Petauke to Serenje can be developed as a tourist train, though the impacts of the development of the railway on environment and the wildlife should be carefully examined since the railway alignment may pass near the South Luangwa National Park.
Malawi-Zambia (Nyika) Transfrontier Conservation Area, which is established between Zambia and Malawi, offers a good model for tourism development and international collaboration in the Nacala Region. Transfrontier Conservation Areas (TFCAs) are established across the boundaries for collaboration on the management of natural and cultural resources for biodiversity conservation and socio-economic development under the support from Southern African Development Community. The TFCA has the area of 19,280 km2 including Nyika National Park, Lundazi, Mitenge and Mikuti Forest Reserves and Musalangu Game Management Area in Zambia, and Nyika National Park and Vwaza Marsh Wildlife Reserve in Malawi. Because improvement of the Nacala Corridor can contribute to the promotion of
3-79 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
inter-country tourism in Zambia and Malawi, TFCAs and similar inter-country collaboration should be sought and initiated for the tourism development of the Nacala Region. For example, in addition to the TFCAs, a tourism route from South Luangwa National Pak to Lake Malawi can be proposed, using the Nacala Corridor, and inter-county tourism promotion arrangements such as single visa entry to the two countries should be negotiated between the countries involved. In any case, infrastructure improvement for the smooth mobility of tourists is indispensable to promote tourism development in the region.
3.6 Energy
3.6.1 Current Situations of the Electricity Sub-Sector A goal of the universal access to electricity by 2030 is set by the government. However, the access to power supply is still limited in Zambia. Only 3.8% of the rural population has access to electricity, compared with 61.5% of the urban population who has access to electricity. At the national level, 27.9% of the population has access to electricity.
Table 3.62 Electricity Access 1990 2000 2010 2014 Access to electricity (% of population) 13.9 16.7 22.0 27.9 Access to electricity, rural (% of rural population) 1.8 2.2 3.1 3.8 Access to electricity, urban (% of urban population) 34.7 44.1 49.8 61.5 Source: World Development Indicators
The energy sector of Zambia has the installed capacity of 2,827 megawatts (MW) and increased from 2,411 MW in 2015 with stating operation of two new plants, Maamba coal power plant (300 MW) and Itezhi-Tezhi hydro power plant (120 MW). 84% of the power plants are hydro power generation, followed by coal generation of 11%. The diesel and heavy fuel oil generation (HFO) accounted for 3% and 2% only respectively. With the economic growth, the demand for power has been expanded in Zambia. Compared with the installed capacity of 2,811 MW, the peak demand for the power was estimated to exceed 2,500 MW by 201557. The power generation plants owned by ZESCO and independent power producers (IPPs) are listed in Table 3.63.
The total power generation in 2015 was 13,440 GWh, which was a 7% decline from the generation of the year 2014, 14,453 GWh and the generation further declined to 11,696 GWh in 2016 with reduction of 13%, because the shortage of rainfall in the year 2015 and 2016 affected the generation of the hydro power plants. As shown in Figure 3.49, two hydropower plants, Kafue North and Kafue Gorge, produce 80% of the total power.
57 Ministry of Energy and Water Development. Power System Development Master Plan for Zambia 2010 – 2030. February 2010.
3-80 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Energy Regulation Board. Statistical Bulletin 2016. Figure 3.49 Installed Capacity by Type of Generation
Table 3.63 Power Generations in Zambia Installed Type of Operator Power Station Capacity Generation Kafue Gorge 990 Hydro Kariba North Bank 720 Hydro Kariba North Bank Extension 360 Hydro ZESCO Victoria Falls 108 Hydro Small and Mini Hydro Power Plants (Lusiwasi, 33.5 Hydro Chishimba, Shiwang'andu, Mosonda falls, and Lunzua) Itzhi-Tezhi Power Corporation Itzhi-Tezhi 120 Hydro Lunsemfwa Hydro Power Company Mulunguish 32 Hydro (LHPC) Lusemfwa 24 Hydro Zengamina Power Limited (ZPL). Ikelengi 0.75 Hydro Maamba Collieries Limited Maamba 300 Coal Diesel Power Plants (Zambezi, Kabompo, Lukulu, ZESCO 8.6 Diesel Luangwa, Mufumbwe, and Chavuma) Bancroft 20 Diesel Luano 40 Diesel Copperbelt Energy Generation Plants Luanshya 10 Diesel Mufulira 10 Diesel Ndola Energy Company Limited Ndola 50 HFO (NECL) Rural Electrification Authority Samfya 0.06 Solar Total 2826.91 Source: Energy Regulation Board, Statistical Bulletin 2016.
3-81 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
16,000
14,000
12,000
10,000
8,000 (GWh) 6,000
4,000
2,000
0 2010 2011 2012 2013 2014 2015
Kariba North Kafue Gorge Kariba North Bank Extension Victoria falls Diesel power generation Small & Mini Hydro Independent Power Producers
Source: Energy Regulation Board, Energy Sector Report 2015 Figure 3.50 Power Generation by Power Plant
The current consumption by economic sector is shown in Table 3.64. The mining sector consumed 55% of the total power, followed by the domestic sector. The power consumption of the two dominant sectors accounted for 85% of the total. Thus, how to respond to the power demand from the mining sector, the country’s leading economic sector and the domestic sector is a key to the development of the energy sector in Zambia.
Table 3.64 Consumption of Power by Sector in 2015 Consumption (GWh) Proportion (%) Mining 6,245.6 55% Domestic 3,482.0 30% Finance & Property 516.9 5% Manufacturing 530.8 5% Agriculture 260.4 2% Others 98.5 1% Trade 109.8 1% Energy & Water 89.1 1% Quarries 68.2 1% Transport 33.4 0% Construction 15.2 0% Total 11,449.9 100% Source: Energy Regulation Board, Energy Sector Report 2015.
Zambia is a member of the Southern Africa Power Pool (SAPP) scheme. As part of the system and through bilateral agreements, Zambia traded power with the other countries as shown in Figure 3.51. From 2010 to 2016, Zambia’s power export gradually increased and reached 1,256 GWh in 2014. However, import of power in 2016 jumped to 2,185 GWh due to the power shortage caused by the lack of rainfall.
3-82 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Energy Regulation Board, Energy Sector Report 2015 and Statistical Bulletin 2016. Figure 3.51 Power Import and Export
3.6.2 Current Situations of the Petroleum Sub-Sector The Zambia imports petroleum through Tanzania-Zambia Mafuta (TAZAMA) Pipelines Limited, the share of which was jointly owned by the governments of Zambia and Tanzania. TAZAM has 1,705 kilometre long pipelines to transport petroleum feedstock from Dar es Salaam to Ndola, Zambia, which is processed by INDENI Refinery. The processed various petroleum products are distributed to the Ndola Fuel Terminal and Government storage depots and then to Oil Marketing Companies (OMCs)58.
The petroleum that Zambia imports is divided into two categories: feedstock and refined petroleum. Refined petroleum such as refined petroleum and diesel is transported by road. As Figure 3.52 shows, the government import of feedstock exhibits a decreasing trend. The amount of the import of feedstock dropped to 483,887 tonnes in 2016. On the other hand, the import of finished products from 2011 to 2016, steadily increased, though with slight fluctuations. The import of diesel became more than doubled to 415,796 m3 from 2010, while the import of refined petroleum was 259,905 m3 in 2016. The enactment of S.I. No 21 of 2016 which permits the import of diesel by authorized OMCs resulted in the reduction of the import of diesel by the government in 2016.
The largest amount of petroleum product refined by INDENI in 2016 was diesel of 261,829 tonnes, followed by petrol 95,285 tonnes and kerosene of 15,737 tonnes. INDENI production and the imported refined petroleum account for 50% each of the total petrol and diesel of the country. The international oil prices and the exchange rate of the Zambian Kwacha to USD are two key factors to determine the prices of the petroleum products59.
58 Energy Regulation Board. Statistical Bulletin 2016. http://www.tazama.co.zm/ 59 Ministry of National Development Planning. Seventh National Development Plan 2017-2021
3-83 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
600,000 642,683 643,180 700,000 606,463 577,098 559,916 500,000 600,000 429,378 519,948 483,887 (MT)
389,183 500,000
(m3) 415,796 400,000 Stok 400,000 283,759 Petrol 300,000 Feed 300,000 and 197,442 200,000 200,000 Diesel
100,000 100,000 Petroleum 71,005 145,374 249,208 264,777 294,876 259,905 0 0 201120122013201420152016
Diesel Petrol Petroluem feedstock Source: Energy Regulation Board, Energy Sector Report 2015 and Statistical Bulletin 2016. Figure 3.52 Government Import of Petroleum Feedstock and Finished Products from 2011 to 2016
250,000 212,638 200,000
150,000
(MT) 95,285 102,133 100,000
50,000 18,499 9,464 4,839 0 PETROL DIESEL KEROSENE JET A1 B HFO UTANE/LPG Source: Energy Regulation Board, Statistical Bulletin 2016. Figure 3.53 Refinery Production of Petroleum Products in 2016
In 2015, the total national consumption of petroleum products was 1,379,781 tonnes. Diesel was the most consumed at 818,418 tonnes, followed by petrol at 366,524 tonnes and Heavy Fuel Oils at 129,149 tonnes. The consumption of these products rapidly increased from 2010 to 2015 due to the economic growth and the increase of vehicles. The least amount consumed product was LPG at 3,230 tonnes, though the consumption of LPG and Jet-A1 are growing. Only the consumption of kerosene is remained stable at 18,300 tonnes60.
60 Energy Regulation Board. Energy Sector Report 2015
3-84 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.65 National Fuel Consumption from 2010 to 2015 (metric ton) Heavy Fuel Unleaded M LP Gas Jet-A1 Kerosene Diesel Total Oils Petrol 2010 46,845 1,848 29,130 17,330 160,982 496,568 752,703 2011 49,461 2,424 32,593 19,898 182,123 577,836 864,335 2012 60,222 658 49,477 14,669 234,224 675,756 1,035,006 2013 50,793 3,021 49,613 12,315 275,604 676,078 1,067,425 2014 116,821 3,680 38,049 13,776 304,562 700,577 1,177,465 2015 129,149 3,230 44,160 18,300 366,524 818,418 1,379,781 Annual Average Growth 22.5% 11.8% 8.7% 1.1% 17.9% 10.5% 12.9% Rate 2010-2015 Source: Energy Regulation Board. Energy Sector Report 2015.
3.6.3 Development Potential and Challenges of the Energy Sector The primary issue that the energy sector in Zambia is facing is to increase the capacity of power generation. Despite 6,000 MW potential of the hydropower resources in the country, the current capacity is only 2,827 MW. The country has uncultivated coal reserves to be developed. With the expected demand increase of 150 to 200 MW per year, the peak demand will reach 3,000 MW by 2020. Lack of investment in power plants and transmission due to the deficient of incentives, with climate change, severely affect the capacity to generate sufficient power. Moreover, diversification of the energy mix including coal and renewable energy is strongly required to cope with the impact of the climate change. Meanwhile, in the petroleum sub-sector, inefficient petroleum supply value chain and fluctuation of the prices of fuel are identified as major challenges61.
The major projects under implementation and planned to address the development issues and implement the energy policy are listed in Table 3.66. Among the project, “the Construction of the Mozambique - Zambia Interconnector, Telecommunications and a Coal Generation Power Plant” and “the project of a 300 megawatts power plant in Chipata” could significantly increase the development potential of the Nacala Corridor Region. The Mozambique-Zambia Power Interconnector Project is currently in the tendering process of a consultant for the feasibility studies under the SAPP. The F/S will be financed by AfDB through the NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF)62.
In the petroleum sub-sector, Zambia has only one pipeline owned by TAZAMA running from Dar es Salaam, which was constructed in 1968. In addition to the import through TAZAM, fuel is imported through road. For example, ZESCO imported over 100 tonnes of natural gas per month in 2015 via Beira Port63. Currently TAZAMA is proposing two projects for pipeline construction for gas and finished petroleum to meet increasing demands and to secure the supply of the energy in the country, both of which intend to import fuel from Dar es Salaam. According to the interview, the Ministry of Energy has a plan to develop a gas pipeline from
61 Ministry of National Development Planning. Seventh National Development Plan 2017-2021 62 Southern African Power Pool Website. http://www.sapp.co.zw/docs/24-04-17_Mozambique-Zambia_Request%20for%20Expression%20of%20Interest_rev.pdf 63 ZESCO imported a total of 148 MW in September, 2015 via Beira Port. http://www.zambiainvest.com/energy/zambia-proposes-natural-gas-pipeline-from-mozambique-to-boost-energy-imports
3-85 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Tete to Chipata. In terms of energy security from a geographical perspective, it may be preferable to construct another gas pipeline in the south-east region, which is much shorter than Dar es Salaam pipeline and close to Lusaka as well. This pipeline is also able to provide the energy to Malawian market and then benefit the Nacala Corridor Region.
Table 3.66 Major Projects in the Energy Sector Project Name Description 1 Development of Kafue The Kafue Gorge lower hydro power project will be located in Kafue Gorge, about 65 km upstream of the Gorge lower hydro confluence of the Kafue and Zambezi Rivers and 9 km downstream of the existing 990 MW Kafue Gorge power project*1 hydropower plant. Once developed, the power plant will have an installed capacity of 750 MW. The project is estimated to cost USD1.94 billion and will be developed under a PPP on a Build, Own, Operate and Transfer (BOOT) basis with ZESCO. 2 Construction of the The project is to interconnect ZESCO’s transmission system to that of EdM through a 330 kV or 400kV Mozambique – transmission line from Chipata West substation in Zambia to the existing Songo Substation or the new Zambia proposed Cataxa Substation in Mozambique. EdM and ZESCO may establish a partnership to develop Interconnector, suitable new coal power generation up to 1200 MW, utilising the natural resource in the Tete Province for Telecommunications power generation to the domestic and regional markets. The aforesaid interconnections shall make it and a Coal possible for bilateral power and telecommunications trade between EdM and ZESCO Limited as well as Generation Power trade with other members of the Southern African Power Pool (SAPP), the East African Power Pool Plant*2 (EAPP) and any other interested entity. 3 Kariba Dam The project includes a series of rehabilitation works for its continued safe operation. The works will Rehabilitation include 1. reshaping of the plunge pool to limit scouring and erosion that could potentially undermine the Project*3 dam foundations; and, 2. refurbishment of the spillway and associated infrastructure to improve the dam’s stability and operations. The total cost of the works of works is estimated at USD294 million. The Governments of Zambia and Zimbabwe have mobilized financing from the African Development Bank, the European Union, the Government of Sweden, and the World Bank to support the Zambezi River Authority in implementation of the project. 4 Batoka Energy The project is to develop 2,400 MW Batoka Gorge hydroelectric schemes, the cost of which is estimated Project*4 USD6 billion financed by AfDB. The construction phase is expected to begin later this year or in early 2018 under an arrangement between Zambezi River Authority. 5 Electricity The project will reinforce and upgrade the power transmission and distribution infrastructure in Lusaka Transmission and Area as a priority to increase the capacity and improve the reliability of the electricity network for Distribution System consumers throughout the area. This programme is expected to provide access to reliable, clean and Rehabilitation Project affordable electricity services to at least 63,000 households, or about 300,000 people, to social and for Zambia*5 public infrastructure and to eligible Micro Small Enterprises (MSEs). 2013-2019. Co-financed by European Investment Bank, the World Bank and ZESCO Limited. 6 ElectriFI ElectriFI is a financing scheme to bridge the gaps in structuring and financing, stimulate the private (Electrification sector, and mobilise financiers. ElectriFI provides financial support primarily through risk capital and Financing Initiative)*6 encourages the adoption of renewable energy, with a particular emphasis on decentralised energy solutions by providing interim financing solutions to help projects overcome obstacles or otherwise reach a sufficiently mature stage that could attract private financiers. The maximum amount of any financing solution is EUR 10 million (or local currency equivalent). 7 300 megawatts Power The project is to develop 300 a megawatts coal thermal power plant in Chipata by a South African Plant Development in company. A potential site is a site along Mwami border road just after the railway line crossing. The coal Chipata*7 is imported from Tete in Mozambique via the Nacala Corridor. The project cost would be USD 900 million. F/S is currently conducted and completed by 2019. The construction is expected to start in 2020. 8 Combined cycle gas TAZAMA proposes to construct a combined cycle gas fired power plant in Chinsali by importing and fired power plant*8 transmitting gas from Tanzania and Mozambique through Dar es Salaam via a 36-inch pipeline. The plant could have 400 MW to 1,200 MW capacities and the pipeline will be 1,100 km length to be built alongside the existing TAZAMA crude oil pipeline. The estimated cost is USD 900 million including USD 400 million for a 400 MW power plant and USD 500 million for a 1,100 km length Dar es Salaam-Chinsali pipeline. 9 Petroleum Pipeline The project is to build an 18-inch finished product pipeline with a delivery capacity of 4.0 million tonnes Project*8 per annum with depots at Morogoro, Makambako, Mbeya and Mpika for the supply of diesel and petroleum products to southern Tanzania, Malawi, Zambia and Congo. The pipeline will be possibly extended to Solwezi and Lusaka depots. The cost is estimated to be USD 1.5 billion including an 18-inch pipeline complete with pump stations and a supervisory control and data acquisition system. 10 Rural Electrification 1,217 Rural Growth Centres (RGCs) are targeted throughout the country for electrification during the Projects*9 period 2008 to 2030. The project scheme includes grid extension, mini hydro (from 200 kw to 10 mw) development, solar mini grids, solar home system installations, biomass and biogas, and wind. A total of 413 RGCs are targeted to be implemented from 2017 to 2021 at a total cost of ZMW1, 302.4 million. Source: *1 Energy Regulation Board, Energy Sector Report 2015. P. 17.
3-86 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
*2 Inter - Governmental Memorandum of Understanding for the Construction of The Mozambique - Zambia Interconnector, Telecommunications and a Coal Generation Power Plant between the Government of the Republic of Mozambique and the Government of the Republic of Zambia, March 2016. *3 http://www.worldbank.org/en/region/afr/brief/the-kariba-dam-rehabilitation-project-fact-sheet. *4 http://www.hydroworld.com/articles/2017/04/afdb-named-lead-coordinator-for-2-400-mw-batoka-gorge-hydropower-pro ject-in-africa; .htmlhttps://www.afdb.org/en/news-and-events/afdb-pledges-support-to-batoka-energy-project-at-investors -conference-in-zambia-16917/ *5 http://projects.worldbank.org/P133184/zambia-electricity-transmission-distribution-system-rehabilitation-project?lang=e n; http://ec.europa.eu/europeaid/news-and-events/eu-signs-eu65-million-grant-zambia-improve-access-energy_en *6 http://electrifi.org/what-we-do/ *7 http://breezefmchipata.com/?p=8793; https://www.daily-mail.co.zm/chipata-to-have-thermal-power-plant/. Ministry of Energy. Interview. July, 2017. *8 Ministry of National Development Planning. Seventh National Development Plan 2017-2021. *9 http://eepafrica.org/wp-content/uploads/Presentation-Status-of-Rural-Electrification-In-Zambia-KEF.pdf
3.7 Foreign and Domestic Investment
3.7.1 Investment in Zambia Figure 3.54 shows the investment data (pledged investment amount and number of pledged investment projects) from 2010 to 2016 in Zambia, based on the information provided by ZDA. The data includes both foreign and domestic investment. 2012 has seen substantial increase in the pledged investment both in terms of amount and number – 354 investment projects amounting to USD 8,485 million in total. This was due to the drastic increase in mining sector – USD 4,277 million which accounted for 50% of the pledged total investment amount in 2012. For other years, investment amount generally remained on the same level except in 2015 and 2016 when potential investors awaited the outcomes of the presidential and parliamentary elections for making investment decisions. According to ZDA, potential investors postponed their investment applications to wait and see the situation of the new political administration.
3-87 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
（million USD） （Number of Pledges） 9,000 400
8,000 354 Others 332 350 332 328 Transport 315 328 7,000 Tourism 300 Service 6,000 Real Estate 250 Mining 5,000 222 Manufacturing 200 ICT 4,000 Health 150 Finance 3,000 Energy 100 2,000 Education Construction 1,000 50 Agriculture Number of Pledges 0 0 2010 2011 2012 2013 2014 2015 2016
Source: Prepared by the study team based on the information provided by ZDA Figure 3.54 Investment in Zambia (Pledged base, 2010-2016)
Figure 3.55 shows the pledged investment data from 2010 to 2016 by sector (for both foreign and domestic investment). In terms of amount, manufacturing occupies a largest share (22%), followed by mining (19%), energy (17%) and construction (13%). The share of agriculture is 7%, which is about one third of manufacturing. In terms of number of investment pledges, manufacturing also has the largest share (28%), followed by service (13%), agriculture (12%), construction (10%), real estate (9%) and tourism (9%). The share of mining is 7% and that of energy is only 2%. This indicates that investment amount per project is large in mining and energy sector where as agriculture sector investment per project is relatively small.
Transport Others Agriculture Transport Others Service 1% 0% 7% 6% 0% 2% Tourism 6% Agriculture Tourism 12% Education 9% 1% Real Estate Construction 10% 13% Education Construction Energy 1% Service 10% 2% 13% Finance 1% Mining Energy Health 19% 17% Real Estate 1% 9% Manufacturing ICT 28% 1% Manufacturing Mining Finance 22% 7% 1% ICT Health 1% 0% a. Investment Amount b. Number of Investment Pledges Source: Prepared by the study team based on the information provided by ZDA Figure 3.55 Investment in Zambia (Pledged base, 2010-2016) by Sector
3-88 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 3.56 shows the pledged investment data in 2016 by area (for both foreign and domestic investment). Lusaka is attracting the biggest share of investment in terms of amount (64%) and number (68%), followed by Copperbelt (amount: 9%, number: 14%) and Central (amount: 4%, number: 9%).
Northern N/Western Eastern Western N.A. Luapula Northern N/Western Eastern Western N.A. 2% 0% 0% 0% 0% 1% 0% 2% 0% 0% 1% Southern 5% Luapula 10% Central 9% Southern 11% Central Copperbelt 4% 14% Copperbelt 9% Lusaka Lusaka 64% 68%
a. Investment Amount b. Number of Investment Projects Source: Prepared by the study team based on the information provided by ZDA Figure 3.56 Investment in Zambia (Pledged base, 2016) by Area
Figure 3.57 shows the stock of FDI liabilities by source country in 2014 and 2015. Canada, UK, China and Switzerland collectively accounted for 71.3% in 2014 and 73.1% in 2015 Figures declined in 2015 compared with the previous year for countries such as Ireland, South Africa, Bermuda, Netherlands, Nigeria, USA and Botswana.
618.6 Others 933.8 123.0 Botswana 177.7 146.1 USA 292.3 152.3 Congo DR 152.0 195.9 Nigeria 316.1
DRC 234.2 France 107.2 283.2 Netherlands 362.1 311.6 Bermuda 318.0 707.8 South Africa 724.2 708.9 Mauritius 485.5 736.0 Ireland 765.4 1,908.7 Switzerland 1,724.6 2,244.3 China 2,192.6 3,146.8 UK 3,456.5 4,187.2 Canada 4,141.3 0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 3,500.0 4,000.0 4,500.0
2015 2014 million USD
Source: Foreign Private Investment & Investor Perceptions in Zambia – 2016 by Balance of Payment Statistical Committee Figure 3.57 FDI Liabilities Stocks by Source Country, 2014-2015
3-89 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 3.58 shows the stock of FDI liabilities by industry in 2014 and 2015. Mining and quarrying dominated 60.7% of the total stock in 2014 and 70.9% in 2015. This was followed by manufacturing, deposit taking corporations, wholesale and retail trade, real estate.
Others 18.6 22.5 Information &Communication 70.2 76.6 Transport & Storage 58.3 93.7 Construction 99.6 144.1 Accommodation & Fod 123.6 155.6 Agriculture, Forestry and Fishing 181.9 163.1 Insurance & Other Financial Services 109.4 164.0 Electricity 263.1 337.4 Real Estate 382.4 343.7 Wholesale & Retail Trade 537.2 668.9 Deposit Taking Corporations 539.0 852.1 Manufacturing 2,189.2 2,108.2 Mining and Quarrying 11,132.3 11,019.3 0.0 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 12,000.0
2015 2014 million USD
Source: Foreign Private Investment & Investor Perceptions in Zambia – 2016 by Balance of Payment Statistical Committee Figure 3.58 FDI Liabilities Stocks by Industry, 2014-2015
3.7.2 Investment in Eastern Province Figure 3.59 shows the investment data (pledged investment amount and number of pledged investment projects) from 2010 to 2016 in Eastern Province, based on the information provided by ZDA. The data includes both foreign and domestic investment. 2012 has seen a substantial increase of investment amount. In fact, China Africa Cotton received investment approval in 2012, which has pushed up the pledged amount. In 2013, an agriculture company of Indian capital received investment approval. For subsequent years, the investment amount remained low, partly due to the effect of the presidential and parliamentary elections. (According to ZDA, potential investors postponed their investment applications to wait and see the situation of the new political administration.)
3-90 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Amount（USD） Number of Pledges 45,000,000 5
40,000,000 4 4 4
35,000,000 4
Servivce 30,000,000 3 3 Energy 25,000,000 3 Manufacturing 2 Construction 20,000,000 2 2 2 Tourism 15,000,000 2 Agriculture Number of Pledges 10,000,000 1 1
5,000,000 1
0 0 2010 2011 2012 2013 2014 2015 2016
Source: Prepared by the Study Team based on the information provided by ZDA Figure 3.59 Investment in Eastern Province (Pledged base, 2010-2016)
Table 3.67 shows the investment trend in Eastern Province in comparison with the entire country. So far, investment in Eastern Province, both in terms of amount and number is very limited (less than or around 1% of the entire country). In fact, concerns have been pointed out regarding the low level of investment and limited value added especially in the agriculture and agribusiness sector in the interview survey with the Provincial government of Eastern Province and Eastern Province Chamber of Commerce & Industry.
Table 3.67 Investment in Eastern Province in Comparison with the Whole Country (Pledged base, 2010-2016) 2010 2011 2012 2013 2014 2015 2016
Investment amount to Eastern Province (million USD) 1 13 39 30 1 3 3 Investment amount to the whole country (million USD) 4,835 5,579 8,485 4,920 5,162 3,322 3,272 Ratio (%) 0.03 0.24 0.46 0.62 0.01 0.09 0.10
Number of investment projects in Eastern Province 2 4 3 2 2 4 1 Number of investment projects in the whole country 222 332 354 332 315 328 328 Ratio (%) 0.90 1.20 0.85 0.60 0.63 1.22 0.30 Source: Prepared by the Study Team based on the information provided by ZDA
3-91 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.8 Transport Infrastructure and Logistics This section analyses the current situation of the transport and logistic sector of Zambia and the study area in general, since the current situation of the Nacala Corridor was discussed in Chapter 2.
3.8.1 Current Transport Sector
(1) Plans and Policies MTC has published the 2016 National Transport Policy (ZNTP) based on review of 2002 National Transport Policy in order to ensure that it responds to emerging challenges of the transport infrastructure and service provision.
ZNTP recognises the importance of an efficient transport system in the country especially since Zambia is a landlocked country and serves as a transport hub for transit traffic entering other nations. Furthermore, the Policy also states that transport is critical to the economic development of Zambia and highlights that railway transport is the backbone of Zambia's transport system. As part of the solutions to the current transport problems, the policy outlines the under-listed measures:
Strengthen the Ministry responsible for transport to ensure that it plays its role of effective coordination and regulation of the transport sector; Create capacity commensurate with the transport requirements of the economy by ensuring that sufficient resources are invested in the transport sector; Allocate available resources among the various transport modes so that the resultant modal mix meets transport requirements at optimum cost to both the provider and the user; Promote transport pricing that will ensure a reasonable return on transport investments; Recognise and account for environmental concerns within the transport sector in line with the National Environmental Action Plan; Introduce sound management through appropriate policies and institutions in the transport sector that will lead to rapid sustainable development and poverty reduction.
In 2017, the GOZ prepared the National Transport Master Plan (ZNTMP). ZNTMP aims to support the achievement of this vision by providing a guide for the development of the transport sector over the next twenty years, by addressing the strategic considerations.
1) Transport Modes To sustain the growth, Zambia needs to upgrade its transportation infrastructure. Zambia is a landlocked country in the centre of the Southern African Region, and to this effect heavily relies on her neighbours for vital routes to various import and export destinations. The transport sector consists of five modes:
Roads Railways Aviation
3-92 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Waterway Pipeline: TAZAMA pipeline for crude oil importation
The state of transport infrastructure, however, remains inadequate to sustain and match the desired levels of growth due to weak structural and management capacity resulting in over commitments, high cost of construction and low investment.
Table 3.68 Yearly Finding Requirement (USD) for the Transport Sector 2013-2016 Sector 2013 2014 2015 2016 Total Roads 4,254,494 7,694,155 11,444,202 8,359,32 31,752,171 Railway 812,765 432,865 142,560 - 1,526,640 Air 1,265,840 1,305,612 - - 2,571,455 Water 18,176 21,900 25,125 27,867 93,068 Total 6,351,275 9,454,535 11,611,887 8,522,637 35,940,334 Source: ZNTMP
2) Responsible Organisation for Transport Sector The overall management and responsibility for the transport sector in Zambia is under the authority of the MTC, Ministry of Works & Supply (MWS) and Ministry of Housing & Infrastructure Development (MHID). The roles of each Ministry are as follows:
MTC: Policy and programme planning MWS: Asset management MHID: Implementation management
3.8.2 Road Sub-Sector
(1) Key Agencies for Road Sub-Sector Zambia’s road network is currently managed by The Road Development Agency (RDA), which reports to the MHID. The Road Transportation & Safety Agency (RTSA) and the National Road Fund Agency (NRFA) are responsible for road safety and managing the sector funds respectively.
1) Road Development Agency (RDA), set up under the Public Road Act No. 12, 2002 RDA is the most important agency in Zambia, concerning the Road Sector. RDA is mandated with and actually issues, selects, and supervises all road construction and maintenance contracts (with private contractors), as well as managing weigh bridges and highway operation. RDA also assesses road conditions and conducts annual traffic counts as part of its highway management.
3-93 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) Road Transportation & Safety Agency (RTSA), set up under the Road Transport Act No.11, 2002 The Road Transport Safety Agency (RTSA) is responsible for "coordinating road safety programs that are aimed at reducing the likelihood and impacts of road crashes". Road safety is a significant problem in Zambia.
3) National Road Fund Agency (NRFA), set up under the Road fund Act 2002 The National Road Fund Agency (NRFA), established under Road fund Act 2002, was mandated to manage the provision of direct funds to the road sector, derived from various users of the roads, in particular the levy on petrol and diesel by road users. The idea behind the Road Fund was to develop an independent source of revenue for the roads sector, which will ensure sufficient funds for construction, and perhaps even more importantly, the constant flow of funds for road maintenance. This is to ensure appropriate road maintenance, and prevent road deterioration, due to insufficient maintenance funds.
(2) Road Network Zambia has a total classified network of 67,671 km of public roads comprising Trunk (3,088 km), Main Road (3,691 km), District (13,707 km), Urban (5,294 km), Primary Feeder (15,800 km), Secondary Feeder (10,060 km), Tertiary (4,424 km), Park Roads (6,607 km); and Community roads (5,000 km).
Source: ZNTMP Figure 3.60 Core Road Network in Zambia
3-94 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Road Conditions The core road network is estimated at around 41,000 km of which less than 7,000 km is paved. Of the paved roads, the majority were estimated to be in good to fair condition, however only 30% of the unpaved TMD (Trunk, Main and District Roads) were estimated to be fully travelable throughout the year. Feeder roads, both paved and unpaved, which make up the largest portion of the national road network are generally in poor condition. This directly impacts a large part of the population who live in rural area for securing their traffic needs.
Table 3.69 Road Conditions by Road Type for 2014 (RDA 2014) Road Type Poor Fair Good Trend from Previous Years Paved Trunk Road 3% 7% 90% Increase in good road from 32% in 2006 1 Paved Main Road 3% 8% 89% Increase in good road from 32% in 2006 Paved District Road 14% 7% 79% Increase in good road from 15% in 2006 2 Unpaved TMD 70% 24% 6% Decrease in quality of unpaved roads since 2006 Increase in good road from 6% since 2009 and 3 Paved Urban Roads 35% 19% 46% improvement in number of poor road 4 Unpaved Urban Road 87% 10% 3% Decrease in overall road quality since 2009 5 Primary Feeder Network 82% 14% 4% Decrease in overall road quality since 2011 Source: ZNTMP
(4) Road Maintenance The NRFA has been mandated to manage and administer the Road Fund which comprise two main sources of revenue, namely, Local Resources (Tolling Revenue, Fuel Levy, Other Road User Charges and Government of the Republic of Zambia Project Direct Allocations) and External Resources from Cooperating Partners (CPs).
The Local Resources of Tolling Revenue, Fuel Levy and ORUCs are contributions by the road user, while the External Resources from CPs are dedicated to the routine and periodic maintenance of the road network. Following tables show the funding sources and budget allocation by type of activities in 2016.
Table 3.70 Funding Sources for Road Works in 2016 No. Fund Sources Final Budget 2016 [1,000 ZMW] Percent [%] 1 External 3,216,100.657 48.51% 2 GRZ Direct Financing 1,584,223.00 23.89% 3 Road Fund (Fuel Levy and ORUC) 1,829,615.12 27.60% Grand Total 6,629,938.78 100.00% Source: NRTA
3-95 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 3.71 Budget Allocation by Programme in 2016 Type/Programme Budget 2016 [1,000 ZMW] Percent Other 197,709.00 3% Transport & Safety 194,000.00 3% Designs & Studies 144,796.00 2% Axile Load 105,010.00 2% Toll Programme 52,000.00 1% Maintenance 862,750.00 13% Upgrading 2,298,940.97 35% Rehabilitation 2,457,464.67 37% Bridges 317,268.14 5% Total 6,629,938.78 100% Source: NRTA
(5) Major Challenges on Road Sub-Sector
1) Motorization Rate and Congestion Road congestion as yet, is not a major problem in Zambia. However, the bigger cities such as Kitwe and Lusaka as well as a few main intercity road links suffer some degree of congestion. RDA traffic counts 2007-2015, show the highest traffic on the following roadways:
Table 3.72 Areas of Congestion and their Causes Area of Congestion Current Status Causes ・High private vehicle use Lusaka Metropolitan Area Congestion during AM and ・Low quality urban roads PM peak periods ・Concentrated peak travel times Kitwe and Ndola ・Heavy trucking moving through city centre Trunk roads leading into Luska : Congestion during AM and ・Single carriageway roads T-2 and T-4 roads PM peak periods ・Heavy trucking moving along roads ・Single carriageway roads Pockets of congestion Copperbelt to Lusaka ・Heavy trucking moving along roads throughout the day ・Frequent road accidents Source: ZNTMP
2) Rural Transportation The condition of the Primary Feeder Roads (PFR) has deteriorated significantly. According to ZNTMP, more than 80% of primary feeder roads are categorized as being in a poor condition. Furthermore, the survey results of 2013 also showed that only 74.4 per cent of this network is passable by a 2-wheel drive vehicle while the remaining 25 per cent is impassable for the most part of the year. This condition has acted as a deterrent to the movement of goods and services on these roads and thus negatively impacting on economic development in the affected areas. The Primary Feeder Roads Network in Zambia plays a critical role to farming communities in rural areas by providing access to transportation for the movement of farm produce from farm sites to marketing centres. They also feed into the Trunk, Main and District Roads Network. Agriculture is an important part of the livelihoods of many poor people, and it is frequently argued that agricultural growth is a fundamental pre-requisite for widespread poverty reduction.
3-96 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: ZNTMP Figure 3.61 Feeder Road Density
Source: ZNTMP Figure 3.62 Road Network and Per Capita Agricultural Production for 2015
3-97 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3) Key Sector Development Projects In this context, the GOZ has been forging the way ahead with the following projects.
RDA annual maintenance: Annual maintenance projects for the RDA (ongoing) Link Zambia 8000: Strategic road improvement project for all of Zambia (in progress) LSK 400: Strategic road improvement project for Lusaka (in progress) CB 400: Strategic road improvement project for Copper-belt (in progress) Urban Roads Program: 40 projects for 700 km upgrading local road networks (in progress) Pave Zambia 2000: Urban road project utilizing cost effective materials to improve urban roads across Zambia (in progress) Lusaka Decongestion Project: Lusaka Traffic Decongestion Project Implementation (in progress) Feeder Roads Program (Countrywide Roll-Out of the Output and Performance based Road Contracts - OPRC Region I (Eastern, Luanpula, Northern and Muchinga Provinces) financed by WB): 20 projects for 650 km of rural access roads (in progress) City Bypass Road Program: Bypass roads at major urban areas to remove through traffic from urban centres (Lusaka, Kabwe, Kapiri Mposhi, Kitwe, Chingola, Choma, Mazabuka, Livingstone) (planning) T2 Road Upgrade: Upgrade of T2 road to dual carriageway between Lusaka to Ndola (approx. 350 km) (procurement) Toll Roads Program: Comprehensive toll gates program including operations (in progress)
3.8.3 Rail Sub-Sector
(1) Key Agencies for Rail Sub-Sector The main railway lines are Zambia Railways Limited (ZRL) which is owned by the Government and the TAZARA line which links Zambia with Tanzania, and is jointly owned by the Zambian and Tanzanian governments. In 2003, the operations of the ZRL were given concession to Railway Systems of Zambia (RSZ). However, in 2012, ZRL replaced the concession by RSZ.
According to the latest information, GOZ intends to divide ZRL into ZRL and ZRA (Zambia Railway Authority). Functions and roles of ZRA will be same as RDA of road sector.
1) Railway Network
(a) Main Lines ZRL: 1,248 km in total Mainline – Victoria Falls Bridge to Kitwe: 848 km Various Branch Lines: 149 km Choma – Masuku Line: 65 km Mulobezi Line: 162 km Chipata – Mchinii Line: 24 km
3-98 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
TAZARA Railway: 891 km in Zambia, New Kapiri Mposhi-Mpika-Kasama-Dar es Salaam.
(b) Branch Lines Maamba Colliery Railway: Choma to Masuka Mulobezi Railway: Mulobezi to Livingstone Njanji Commuter Line Nacala Corridor: Chipata to Malawi border
Source: ZNTMP Figure 3.63 Railway Network in Zambia
(2) Rolling Stocks and Human Resources
1) Rolling Stocks ZRL owns a total of 37 Locomotives and 2,094 wagons out of which 25 Locomotives and 1,353 wagons are active. The active fleet of locomotives and wagons represents a hauling capacity of close to 1,000,000 tonnes. However, ZRL recently entered into a re-manufacturing agreement with SMH-Rail for the re-engineering of a further ten locomotives. This additional fleet of locomotives will give ZRL an extra 1,200,000 tonnes in capacity per annum.
3-99 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) Human Resources Currently ZRL has a total workforce of 1,124 employees of which 89% of the total staff establishment are directly linked to operations. There is a staff reservoir with rail operations experience in total around 1,000 employees.
(a) Service Provided ZRL – Zambia Railways Limited The current ZRL total route length is 1,248 km of single track mainline. It provides service along seven mainline routes, only two of which provide passenger services, the rest being reserved for freight trains. Although there is growth in usage and passenger ridership, the market share has decreased preventing ZRL from increasing its supply to match the increasing demand. In order to truly compete with road borne freight transport, the railway sector needs to increase its operating frequency and speeds to reduce the costs borne by the shipper. This however requires accurate investment in the railroad, completion of maintenance backlogging, etc.
TAZARA – Tanzania - Zambia Railway Authority The TAZARA system connects Zambia with the port of Dar es Salaam in Tanzania, the route has a length of 1,860 km and connects with Zambia Railway Line (ZRL) at New Kapiri - Mposhi. The average travel time according to TAZARA management is roughly 48 hours. Freight train travel times are even longer at approximately 3 - 4 days, this is a result of difficult track conditions and low priority status on the mainline. TAZARA has fallen into a dilapidated state both in terms of rolling stock and track maintenance resulting in low speeds and market share, the route fails to compete with road borne cargo hauling.
(3) Major Challenges on Rail Sub-Sector The Zambian railways generally operate well below their original design capacity, and cannot increase their volume due to poor track condition, lack of locomotive and wagon availability and low operating capital. The rail network remains the dominant mode of transportation for goods on the local and international routes. The biggest single setback suffered by the rail mode against road, in terms of competing for the market share is the low average speeds of rail transport, resulting from the poor state of the rail track, rolling stock and signalling system. There are two major railway systems operating ZRL and the TAZARA.
Table 3.73 ZRL Market Share in 2013 Market Share Achieveme Sector of the Economy Market Share Year Mining Sector (Imports and Exports of Mining Products) 9% Target nt by ZRL Inter-mine Movements 15% 2013 8% 9% 2014 10% 11% Agriculture Sector 5% Construction Sector 2% Energy 15% Others and Over Boarder Traffic 25% Average Market Share 12%
Freight Passenger Source: ZNTMP
3-100 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
ZRL’s Strategic Business Plan, 2013 indicates the following weaknesses and threats to ZRL, in the period 2014 - 2018:
Poor State of the Rail Track – Due to the current condition of the rail track, freight and passenger trains move at an average speed of only 20 km/hr. This has resulted in long transit time, and overall inefficiency of the train service.
Lack of Reliable and Adequate Rolling Stock – The current rolling stock (wagons and locomotives) are also in a deplorable state, and therefore cannot fully support the transportation of both freight and passengers in a sustainable manner.
Problems in Contiguous Rail Administrations – Zambia being a land locked country, ZRL is linked to neighbouring railway administrations and, therefore, the performance of these rail entities have a great impact on ZRL as over-border traffic must be hauled through other countries to different ports, such as, Durban and Dar-E-Salaam.
(4) Key Sector Development Projects The Government intends to expand its railway network in the country to develop the surface transport sector. The development of rail routes linking important exit points is not only vital for facilitating smooth access to the outside world but also for the overall boosting of trade in the sub region and making Zambia a competitive country for doing business.
The main railway lines are Zambia Railways which is owned by the government and the TAZARA line which links Zambia with Tanzania, jointly owned by the Zambian and Tanzanian governments. The recent opening of the Chipata-Mchinji railway link provides connectivity into the Malawi railway network and further connects Zambia to the northern Mozambique railway network thereby opening up new and exciting opportunities for the private sector in Zambia, Malawi, and Mozambique. The government is seeking private sector participation in the development and rehabilitation of the railway infrastructure. Key sector development projects in the Rail Sub-Sectors include:
TAZARA - Kasama-Nkonde Rerouting: Rerouting and upgrading of rail section for safety and speed (contracting) TAZARA - Kapiri-Kasama track rehabilitation :Rehabilitation of rail sections (contracting) ZRL - annual maintenance: Maintenance of all aspects of ZRL infrastructure (ongoing) ZRL - Comprehensive rehabilitation: Rehabilitation of essential infrastructures and rolling stock (in progress) ZRL - Mainline signalling: 2 Phase project implementing signalling systems on ZRL mainline (in progress) Serenje - Chipata greenfield railway: 388 km of track providing connection to the Port of Beira, Mozambique (procurement) Greenfield freight railways: Kafue - Lion’s Den, Potential connections to Mpulungu, and Shesheke (planning) Fast passenger rail: Upgraded passenger rail between Kafue - Chingola (planning) Establishment of the Railway Development Agency (planning)
3-101 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(5) New Transport Quota System proposed by ZRL The total heavy bulky cargo market in the transport sector is around 11 million tonnes and is expected to grow to 18 million tonnes by 2020. The prevailing market share for rail is 9%. Further, the Zambian transport sector is largely composed of foreign road haulers that account for about 85% of the total road fleet currently traversing Zambia’s road network. This entails that the revenue generated by these foreign road companies is all externalised to their countries of origin but the cost of maintaining roads in Zambia is financed by the people of Zambia thereby creating a huge economic imbalance and a negative contribution to the economic development of Zambia.
Given this background, considering the expected benefits of using rail transport for heavy and bulky cargo hauling, ZRA proposes the enactment of a statutory instrument in the Zambian transport sector to regulate the movement of cargo in the country.
Table 3.74 Proposed New Transport Quota System by ZRL Current Estimated Expected Guaranteed Commodity Proposed Rail Quota Annual Tonnage Rail Tonnage Copper/ Copper-Cobalt 1,300,000 50% 650,000 Concentrates Sugar 400,000 50% 200,000 Coal - Local 350,000 50% 175,000 Coal – Imported 340,000 50% 170,000 Cement 3,300,000 50% 1,650,000 Sulphur 100,000 100% 100,000 Fuels – Local 500,000 50% 250,00 Fuels – Imported 700,000 60% 420,000 Total 6,990,000 － 3,765,000 Other Commodities (Lime, － 4,010,000 Status - Quo fertiliser, Maize etc.) Grand Total 11,000,000 － － Source: ZRL
3.8.4 Aviation Sub-Sector
(1) Key Agencies for Aviation Sub-Sector The aviation sub sector is regulated by the Civil Aviation Authority (CAA) which is an Agent of the Government under the MTC. The CAA took over the responsibility of the predecessor Department of Civil Aviation (DCA) in charge of regulation, certification and licensing of the aviation industry in Zambia.
(2) Aviation Network There are four international airports, five secondary airfields and five airstrips serving the international and domestic flights. The Kenneth Kaunda International Airport is Zambia’s main airport connecting the country with the rest of the world. This is complimented by three smaller airports at Ndola, Livingstone and Mfuwe, as well as secondary airfields at Chipata, Kitwe, Kasama, Mongu, Solwezi and Mansa.
3-102 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
1) Service Provided Zambia has no national airline but is served by a number of airlines that connect to international routes via Johannesburg, Durban, Cape Town, Addis Ababa, Nairobi, London, Amsterdam, Dubai and Dar es Salaam. Proflight Zambia is a privately run airline with proposed regional flights to Johannesburg and Congo DRC as well as local flights to various destinations within the country. The country recently adapted an “open sky policy” and is currently promoting the establishment of an air cargo hub for the Southern African region.
2) Key Sector Development Projects In 2011, Jacobs Consultancy prepared for the then National Airports Corporation limited a "Feasibility Study for the Zambia Airport Master Plan". The Study includes detailed feasibility studies for each of the four International Airports.
Based on this Study, GOZ has embarked on a programme to improve the infrastructure at all the international airports. This is being done in collaboration with private sector participation. The developments include runways, terminals and auxiliary facilities in and around the airports such as hotels, shopping malls, conference facilities etc. The scope for private sector participation in the development of airports also exists in the identified airfields at Chipata, Kitwe, Kasama, Mongu, Solwezi and Mansa.
Kenneth Kaunda International Airport Upgrade Project: This airport will serve the Lusaka provinces in carrying both passengers and goods (in progress) Copperbelt International Airport: This airport will serve the Copperbelt and Northwestern provinces in carrying both passengers and goods (in progress) Mfuwe International Airport: This airport will serve Eastern and Muchinga Provinces in carrying both passengers and goods (financing/negotiation) Provincial Aerodrome Program: Ten key provincial airports for rehabilitation, organised into Lots 1, 2 and 3 (in progress) CAA Expansion and Capacity Building: There is a need for the capacity building of technical personnel, especially with regard to Economic Regulation, Approved Training Organisation (ATO) Certification, General Surveillance and Resolution of Safety Concerns. (planning) ZASTI Capacity Building: Four projects focused on bringing ZASTI up to international standards as a centre of excellence for aviation training in the region (in progress) Nationwide adaptation or design of road portions as emergency landing areas to facilitate for the Zambia Aeronautical Search and Rescue Organisation (ZASARO): There is need for nationwide adaptation or design of road portions as emergency landing areas for aircraft in distress or search and rescue missions. The Road Development Agency (RDA) should be mandated to spearhead this project. (planning)
3-103 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3.8.5 Waterway Sub-Sector
(1) Key Agencies for Waterway Sub-Sector The Department of Maritime and Inland Waterways was established in the Ministry of Communications and Transport by a Ministerial Administrative Directive in 1994 without any legal instrument. However, the Harbour Master and the surveyor of Vessels are mandated through Cap 466 of the laws of Zambia to enforce safety regulation on waterways and ports. Plans are underway to review Inland Waterways Act Cap 466 and the Merchant Shipping Act Cap 468 of the laws of Zambia. The Department is however responsible for all matters relating to the Inland Water Transport and ports & shipping.
(2) Waterway Network Zambia has an approximately 2,700 km network of navigational canals and waterways. However, the water transport mode has not been utilized to a significant degree due to the lack of maintenance of inland waterways and canals. Zambia has a large portion of its population dependent on waterways for their basic transport needs. The management, regulation and funding of this sub-sector is under the authority of the Department of Maritime and Inland Waterways which is part of the MTC.
(3) Key Sector Development Project Canals are a major issue in the navigability of Zambia’s waterways. This is especially the case in swamp areas where changing water levels and canal conditions can cut off dependent populations. Dredgers are used to clear canals but this equipment is in disrepair. A small number of dredgers are able to work although their capacity is insufficient to keep up with demand. Overall, the resources needed to maintain the canals in a good state of repair have not been allocated. The following projects are ongoing.
Mupulungu Harbour Modernization: Complete modernization of Mupulungu Harbour on Lake Tanganyika (in progress) Port Terminal Facilities (Inland Container Depot, ICD) Rehabilitation Program: Dar es Salaam - Mukuba Depot, Mumbasa Copper Yard, Walvis Bay ICD (privately financed) (in progress) Harbor rehabilitation projects: Projects distributed across Zambia for harbor rehabilitation: Lake Tanganika, Lake Mweru, Lake Banguelu, Lake Kariba, Zambezi River, Kafue River, Chambeshi River (in progress) Canal Rehabilitation projects: Provincial canal projects distributed across Zambia including a limited number of large scale canal projects (in progress) Inland Waterways Master Plan: Long term strategy and prioritization of investments (conceptual)
(4) Dry Port Project Zambia does not have direct access to the sea. However, it does have numerous overland connections to foreign ports. At the most important of these ports, Walvis Bay and the Port of
3-104 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Dar es Salaam, Zambia owns inland container depots. These depots allow containers and other cargo to be unloaded from ships and eventually be sent toward Zambia. Unfortunately, due to competition in these ports for freight handling, Zambia bound cargo often is handled by other depots or directly shipped via truck. This point further marginalizes more sustainable modes of transport such as railways.
Table 3.75 Dry Port and ICD Facilities and Select Information Connection to Dry Port/ICD Facility Status Location Relevant Sea Port Zambia Road and Rail Mukuba Depo Operational Kurasini, Tanzania Dar es Salaam (TAZARA) Walvis Bay Dry Port Operational Walvis Bay, Namibia Walvis Bay Road Zambia Copper Yard Not Operational Mombasa, Kenya Mombasa Road Lusaka Dry Port Planned Lusaka All Road and Rail Chipata Dry Port Planned Chipata Beira Road and Rail Ndola Dry Port Planned Ndola All Road and Rail Walvis Bay Livingstone Planned Livingstone Road and Rail S. African Ports Source: ZNTMP
3-105 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chapter 4 Present Condition of Malawi
The existing condition of the Nacala Corridor Region in Malawi is analysed in this chapter. Because the Nacala Corridor Region or the study area covers the entire country of Malawi (see Figure 4.1), the analysis discusses the sector wide issues in general, but with the attentions to the role of the Nacala Corridor in relation to each sector, such as the current use of the Nacala Corridor by sector and potential bottlenecks to the usage of the Nacala Corridor for the sector. The results of the analysis provide valuable inputs for the impact analysis discussed in the next chapter.
The demographic characteristics are presented in Table 4.1. The population of the study area has grown at 3.21% since 2008. This high population growth over 3% is expected to continue until 2032 according to the population projects1. Source: JICA Study Team Figure 4.1 The Nacala Corridor Region in Malawi
Table 4.1 Demographic Characteristics Annual Average Urban Population (thousand persons) Poverty Region Growth Rate Population (2011) 1998 2008 2016* 98-08 08-16 (2008) Northern 1,234 1,709 2,235 3.31% 3.41% 14.1% 79.9 Central 4,066 5,510 7,316 3.09% 3.61% 15.1% 63.4 Southern 4,634 5,858 7,282 2.37% 2.76% 15.9% 85.0 Malawi 9,934 13,077 16,833 2.79% 3.21% 15.3% 75.2 Source: Population 1998 and 2008: Malawi Population and Housing Census, 2016 data: Population Projections Malawi (based on 2008 Census) Poverty: Integrated Household Survey (HIS-3) 2011
1 National Statistics Office, Malawi.2008. Population Projections Malawi. http://www.nsomalawi.mw/images/stories/data_on_line/demography/census_2008/Main%20Report/ThematicReports/Pop ulation%20Projections%20Malawi.pdf
4-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.1 Agriculture
4.1.1 Overview of the Agriculture2 Malawi is characterised as ‘an agriculture-based economy’. According to the 2016 Annual Economic Report of Ministry of Finance, Economic Planning and Development in Malawi, agriculture, including forestry and fishery, accounted for 28.6% of the GDP in 2015 and generated over 80% of national export earnings in 2014. The 2013 Malawi Labour Force Survey report indicates that agriculture employs 64.1% of the country’s workforce between 15-64 years.
The agriculture sector in Malawi is comprised of the small scale farmers operating less than 5 ha of land and the commercial agriculture (estate) sub-sector, with more than 70% of agricultural GDP coming from small scale farmers. These farmers mostly grow food crops, such as maize, rice, cassava, sweet and irish potatoes, and legumes to meet the subsistence requirements of their households, as well as cash crops, such as tobacco, tea, sugarcane and coffee. The estate subsector focuses primarily on the commercial production of high-value cash crops as tobacco, tea, sugarcane, coffee, and macadamia, all of which contribute significantly to the agricultural exports of the country. The estate subsector also provides opportunities of contract farming called Out-grower Scheme for small scale farmers.
The total land area under cultivation is about 2.5 million ha, of which 0.1 million ha are irrigated as of 2014. Most of crop production is practiced under rain-fed condition and affected by erratic rain, drought and flood as well as by low access of farm inputs and agricultural technologies. Hence the crop production and productivity always low, which is a critical issue in the country.
In the light of current situation and in alignment with several international agreements and protocols on agriculture, including CAADP and regional commitments under SADC and the COMESA, the National Agriculture Policy in Malawi (NAP) defined the vision for development of the agricultural sector in Malawi for the five years (2016 to 2020). The emphasis of this policy is on achieving farmer-led agriculture transformation and commercialization that entails treating farming as a business.
4.1.2 Agriculture Condition
(1) Land Use and Availability The arable land is mostly used for agriculture production by small scale farmers under rain-fed conditions in Malawi. The country has approximately 12 million ha of which 2.4 million ha is water area thus 9.4 million is land. Among the land area, according to the FAO data in 2014, about 60% of total land is used for agriculture (5.9 million ha), 34% is forestry (1.7 million ha) and 6% is for other use (0.4 million ha) 3. With the increasing human population recently, the
2 Based on the Ministry of Agriculture, Irrigation and Water Development (MOAIWD,) “National Agriculture Policy”, September 2016. 3 FAOSTAT Country Indicators (http://www.fao.org/faostat/en/#country/130)
4-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
pressures have limited renewable natural resources (land, soils, water, fisheries, forests and wildlife). Most of the arable land in Malawi has already been reclaimed and the land should be subdivided when the land is inherited among family members, which causes a decrease in areas attributed to small scale farmers. In fact, the population growth rate is over 3% in the most recent seven years, and farmland area per household became 0.61 ha (1.5 acres) by 20144. Some studies or organisations reported that land conflicts are occurring, especially in the southern region5.
The land tenure in Malawi is classified into three categories: ‘Public Land,’ which is managed by the Government; ‘Private Land,’ ownership of which is secured by the British monarch in the colonial era; and ‘Customary Land,’ which is managed by village heads or traditional chiefs. The former Land Act did not grant a right of land tenure to individuals and most of the land used by small scale farmers belong to the Customary Land. The small scale farmers have a right to posse or use a part of Customary Land traditionally but not to own it. Therefore, the small scale farmers could not increase agricultural productivity by improving farmland condition until the present. The implementation of the measures toward such land tenure system which impedes to raise the productivity of the individual farmers, and to develop agriculture sector in the country is mentioned in the NAP.
Accordingly, the conventional land law has been reviewed from 2017 and will be revised in the near future. As a feature of the New Land Law, traditional Customary Land will be abolished, and that individual small scale farmers, organisations and corporations that Malawian are participating in can register their lands as ‘Customary estate’. In addition, the lands for commercial agribusiness will be identified, and Malawi Investment and Trade Centre (MITC) will manage allocation and promotion of the lands for commercial farming6.
(2) Agro-Ecological Condition Malawi is a country with significant agro-ecological diversity reflecting the diverse landforms associated with the Great Rift Valley which runs the length of the country 7 . The agro-ecological zone in Malawi used to be classified into three types based mainly on elevation: i) the Lower Shire valley with an elevation of less than 250 m, ii) the lake shore plains with an elevation of 250~650 m and iii) the Upper Shire valley and the mid-altitude plateau and (sometimes) the highlands, with an elevation of more than 650 m. Recently, however, six classifications were made up based on agro-ecology as well as the market situation including population density to identify agricultural development potentials as shown the following figure.
4 Integrated Household Survey 2016-2017, National Statistic Office 5 For example, Challenges of Land Conflict Negotiation in Mulanje District of Malawi,Felix Benson Mwatani Editor Lombe, University of the Western Cape, 2009 and Land Governance in Malawi: Lessons from Large-Scale Acquisition, Joseph Gausi and Emmanuel Mlaka Land Net Malawi, Institute for Poverty, Land and Agrarian Studies 2015c, etc. 6 New Land Acts and Implications on Customary land holding, access to land for large commercial agriculture, women’s and youth access to land, James Namfuko, Ministry of Lands, Housing and Urban Development (MoLUHD) 2017 7 Detailed Crop Suitability Maps and an Agricultural Zonation Scheme for Malawi, Todd Benson, Athur Mabiso, and Flora Nankhuni, IFPRI 2016
4-3 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Development Lower Shire Valley, District poor market access, domain low population density Lower Shire valley, Nsanje, Lakeshore & Upper Shire Valley, poor market Chikwawa poor market access, access, low population density low population Lakeshore & Upper Shire Valley, density good market access, low population density Lakeshore & Upper Karonga, Shire valley, Likoma, Mid-attitude plateau, poor market access, poor market Nkhata Bay, low population density access, Nkhotakota, Mid-attitude plateau, low population Mangochi, good market access, density Neno, low population density Mwanza Mid-attitude plateau, Lakeshore & Upper Salima, good market access, Shire valley, Balaka high population density good market access, low population density Mid-altitude Chitipa, plateau, Rumphi, poor market Mzimba, access, Kasungu, low population Mchinji, density Ntcheu, Machinga Mid-altitude Ntchisi, plateau, Dowa, good market Dedza access, low population density Mid-altitude Lilongwe, plateau, Zomba, good market Blantyre, access, Chiradzulu, high population Mulanje, density Phalombe, Thyolo
Source: Detailed Crop Suitability Maps and an Agricultural Zonation Scheme for Malawi, IFPRI 2017 Figure 4.2 Agricultural Development Domains for Malawi
4-4 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Water Resources8 It is said that Malawi has significant volume of water resources, which are stocked in its lakes, rivers and aquifers. However, as the surface water is limited, seasonally distributed and increasingly becoming scarce, it utilisation is competed over by individuals and various social and economic sectors due to population pressure, deforestation and successive droughts by climate change.
About 3,000 cubic metres of water per capita are renewed by rainfall etc. in rivers and lakes annually. However, only 300 cubic metres per capita are available in the Source: Journal of Water, Sanitation and Hygiene for development dry season due to seasonal variable Figure 4.3 Distribution of Water distribution of rainfall and water resources9.
On the other hand, groundwater sources are widespread throughout the country but have not been well developed. The development and utilisation and management of groundwater lacked sustainable strategies for a long time. In accordance with the Water Resources Act in 2013, the National Water Resources Authority (NWRA) was established to control and manage the country’s water resources10. For agriculture purposes, it will be expected to use abundant water resources properly to promote irrigated agriculture and fisheries.
4.1.3 Structure of Agriculture Producers More than 98% of agriculture producers are small scale farmers with less than 5 ha of farmland and a small number of large farmers and firms called estate subsectors in Malawi.
In order to obtain staple food, 80% of small scale farmers focus on growing maize and to some extent legumes and vegetables interred or mixed in maize field under a ‘Maize Based Farming System’. In fact, maize production occupied 67% of all cultivated land by 2014 and approximately 80% shared by staple crop production including maize, cassava and rice. As a cash crop, tobacco is grown dominantly the same as maize, which shares about 55% of all income from agricultural export in 201511. However, the demand of tobacco has been decreasing. In Malawi, there are few cash crops can be replaced to the tobacco and other cash
8 Analysis of water governance in Malawi: Towards as favourable enable environment?, Journal of Water, Sanitation and Hygiene for development, June 2014 9 Policies Influencing Patterns of use of Water Resources in Malawi, D. H. Ng'ong'ola Mvalo & Company, Legal Practitioners and Consultants,1999 10 Water Resources Act 2013, Parliament 15th March 2013, Government of Malawi 11 UN Comtrade, https://comtrade.un.org/data/
4-5 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
crops are not profitable like the tobacco, and thus it is said that revenue of farmers has been decreasing in recent years.
Table 4.2 Distribution of Landholdings and Cultivated Area by Farm Size Small Scale Farmer Estate Subsectors Area of Land per Household Total 0–2 ha 2–5 ha 5–10 ha >10 ha # of farms 2,355,461 217,757 18,446 10,230 2,601,893 % of total # of farms 90.53% 8.37% 0.71% 0.39% 100% Total area cultivated (ha) 1,496,465 567,556 113,241.6 776,407.6 2,953,670 Total landholdings (ha) 1,693,828 619,700.7 116,838.7 897,553.8 3,327,921 Mean farm size (ha/HH) 0.72 2.85 6.33 87.74 1.28 Mean ratio of land cultivated to 0.86 0.92 0.97 0.87 0.89 land owned % of total landholdings 50.9% 18.6% 3.5% 27.0% 100% % of total cultivated land 50.7% 19.2% 3.8% 26.3% 100% N.B. This table is made based on the results of the Integrated Household Panel Survey 2013 conducted by National Statistical Office of Malawi and of reports published by World Bank. Source: The Quiet Rise of Medium-Scale Farms in Malawi, Ward Anseeuw et al, Land 2016, 5, 19; doi: 10.3390/ land 5030019 provided from World Bank 2013
4.1.4 Current Situation of Agriculture Production and Distribution The main agriculture products are grown by small scale farmers in Malawi, which are maize, rice, cassava, sweet and irish potatoes, and legumes, to meet the subsistence requirements of their households. As cash crops, tobacco, sugar cane, tea and coffee are grown. There are also efforts to increase their engagement in other commercial crops such as cotton, horticulture, and fruit production (mango, banana and citrus). The large scale farms or firms focus primarily on the commercial production of high-value cash crops such as tobacco, tea, sugar cane and macadamia nuts, all of which contribute to export expansion12. The livestock, including beef, dairy cow, goat, sheep, pig, chicken and eggs, was not well developed in the past, but have steadily increased. Fishery is considered more important in the country because it is practiced for both consumption and income generation. The summary of the production and distribution for each commodity is described below.
(1) Crops
1) Cereals and Tubers Malawi is a maize dominant country, depending on the climate condition, but produces approximately 2.8 to 3.6 million tonnes per year. In accordance with NAP, the Government of Malawi (GOM) aims at increasing self-sufficiency of maize to several programmes and projects from 2006. The second major cereal is rice, producing 100,000 to 120,000 tonnes per year, twenty times less than maize. Millet and sorghum are produced for consumption but mostly as an ingredient of local beer. Cassava production has nearly tripled in ten years because it is becoming commercially important as a raw material of a staple food called ‘Nshima’ when maize cannot be produced enough.
12 National Irrigation Policy, MOAIWD, September 2016
4-6 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: FAOSTAT Figure 4.4 Production of Maize (left) and Other Cereals (right)
These staple food products are mostly distributed in domestic markets after self-consumption by farmers. Maize is sometimes exported to neighbouring countries when there is a surplus at national level. For instance, 360,000 tonnes of maize was exported to Kenya in 2011, while only about 2,000 tonnes was exported in 2014 due to a deficit in the country.
2) Legumes The major legumes grown in Malawi are groundnuts, pigeon peas, soya beans and mixed beans. Those are mainly produced by small scale farmers for self-consumption and for cash income. Even there is not surplus, small scale farmers tend to sell the legumes to wholesalers or small vendors to gain income, groundnuts in particular. Groundnuts used as a source of income at the household level as well as a source of foreign currency at the national level. However, high level of aflatoxin contamination were detected in groundnuts produced in Malawi, and then they could not be sold to the EU and USA13 (see details in 4.1.7 (4) ).
Instead of groundnuts, the production and export value of pigeon peas is increasing, even if there is no official statistic data. This is marketable domestically and internationally because Malawians consume it and Indian traders are recently buying it in a large quantity.
13 Saving Malawi’s groundnuts from Aflatoxin ( http://www.times.mw/saving-malawis-groundnuts-from-aflatoxin/)
4-7 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: FAOSTAT Figure 4.5 Production (left), Import and Export (right) of Legumes
3) Cash Crops The main cash crops are tobacco, sugar cane, tea, coffee, cotton, horticulture and fruits at the present. The productions of the main three crops in 2014 are 126,000 tonnes for tobacco, 45,000 tonnes for tea and 2.8 million tonnes for sugar cane. Seeing the production, the production of horticulture crops such as vegetables and fruits are slightly increased, accounting for 200,000 tonnes for each. In particular, tomatoes and irish potatoes are sold not only in the domestic but also in sub-regional markets such as 40,000 tonnes and 1.0 million tonnes14.
Malawi is well known as one of the leading tobacco producers in the world, which has been contributing to export expansion in the country15. Tobacco export earnings increased by 23% from USD 292 million in 2010/11 to USD 361 million in 2013/14. The demand for tobacco tends to decrease gradually in the international market. Therefore it is necessary to diversify cash crop production especially export oriented ones in order to ensure farmers’ income and acquisition of national foreign currency.
14 Comparative analysis of tomato value chain competitiveness in selected areas of Malawi and Mozambique, Nelson Mango et al, Mango et al., Cogent Economics & Finance (2015), 3: 1088429, 2015 15 Malawi Growth and Development Strategy (MGDS) II Review and Country Situation Analysis Report, Ministry of Finance, Economic Planning and Development (MFEPD), 2016
4-8 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: FAOSTAT Source: FAOSTAT Figure 4.6 Production of Cash Crops Figure 4.7 Volume of Export Crops
(2) Livestock The livestock sub-sector is basically not so strong in Malawi. Because of a number of challenges, including limited pasture land due to population pressure, inadequate production and storage technologies in feed and breeding programmes, and insufficient animal health support infrastructure and services, such as dip tanks.
Source: FAOSTAT Figure 4.8 Number of Livestock - Cattle, Goats, Pigs and Sheep (left), Chickens (right)
Due to their adaptability to dry weather conditions, the number of goats and pigs were superior to other animals. Goats were stocked at over 6 million heads and pigs were 2.8 million heads in 2014. The number of cattle was increased slightly, to over 1.3 million cattle in the country. The chickens, the number of which have surged, were raised to 18 million heads that same year, because of a high demand in domestic and sub-regional markets, such as Zambia and DRC. Even the self-consumption is lower than the standard of Africa.
There are a large number of animals apparently, though the meat productions of all ruminants were very small, 25,000 to 30,000 tonnes according FAOSTAT. Therefore export is also very small, less than 600 tonnes for chicken meat at maximum. The trade of live animals is also a
4-9 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
small number, less than 300 heads of cattle. Both small scale farmers and estate subsectors are involved in animal production, with more intensive production systems found on estate farms.
(3) Fishery The fishery sub-sector could have been developed in Malawi since one fifth of national land is water area, but the production of commercial fishery has not been increased until the present. One of the major problems identified with commercial aquaculture is that the species cultured are slow growing and have a poor feed conversion, making the products of aquaculture expensive to produce16.
The fish production in capture fisheries varies annually with estimates by year, but averaging 70,000 tonnes per year. The estimated fish production has increased for the past decade mainly due to the promotion of offshore deep water fishing in Lake Malawi. The aquaculture has not been developed even though it has potential for fishery development in order to increase the production. Thus fish production by the aquaculture has estimated at 4,800 tonnes in 2014, even total fish production was reached around 100,000 tonnes17.
The fish provided 70% of the animal protein intake of the Malawi population and 40% of total protein supply for the country twenty years ago. These figures have declined as rapid population growth over the last thirty years. The per capita consumption of fish in Malawi has subsequently fallen by more than 60%, from 14 kg per person per year in the 1970s, to about 5.6 kg in 201118.
(4) Forestry The forests plays a critical role in the country, the same as other sub-Saharan countries, as a source of food and livelihood; timber, fruit, firewood, and charcoal production, etc.
As mentioned above, Malawi’s forest cover is about 3.2 million ha, 34% of the total land area in 2014, while 13% of forest has disappeared compared to 5.6 million ha, 47% of the total land in 197519. That deforestation is the major challenge associated with land cleaning (slash and burn) and the increasing demand for charcoal and firewood as fuel20.
In the light of this situation, the GOM has been promoting plantation and agroforestry, which can improve soil fertility, reduce soil erosion, and help addressing climate change. Nevertheless, the adoption of agroforestry among farmers is low due to the long time horizon for obtaining a return on the investments in trees.
16 National Agriculture Policy, MOAIWD, September 2016 17 National Agriculture Policy, MOAIWD, September 2016 18 National Fisheries Policy 2012-2017, Ministry of Agriculture and Food Security (former name of MOAIWD), 2012 19 Status of Forests and Tree Management in Malawi, Coordination Union for Rehabilitation of the Environment (CURE),2010 20 National Agriculture Policy, MOAIWD, September 2016
4-10 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.1.5 Agribusiness Clusters and Players Since the national economy in Malawi is dependent on agriculture, related business is developed in the country. The major stakeholders of agribusiness are suppliers of agricultural inputs and materials, farmers producing primary products, large scale agro-processing industries, retailers, and transport companies. Farmers produce primary products in rural areas, while medium and large companies, which sell agricultural inputs, trade commodities or process foods in a large quantity, are located in urban areas such as Lilongwe and Blantyre, or primary production places such as Salima. Agro-dealers, who sell agricultural inputs and also trade as a retailer or wholesaler are located in rural areas, but some of them do not function well due to the lack of financial sources and business capacity21. Instead of agribusiness companies, National Smallholder Farmers Association (NASFAM) and Farmers Union of Malawi (FUM) are trying to provide agricultural inputs and technical and marketing services in rural areas22. Brief situations of agribusiness clusters (or supply chain players) are described below.
(1) Agricultural Input and Machinery Suppliers Farmers World is one of the biggest Malawian agribusiness companies providing farming inputs and technical services in cooperation with the governmental and non-governmental programmes and projects. Most farmers obtain farming input through NASFAM, FUM or governmental projects such as the Fertiliser Support Programme (see 4.1.6 (2) 4)), or purchase those inputs within the realms of possibility in financial source or market accessibility. More than the financial situation of individual farmers, it should be noted that the inputs, especially fertiliser, are too expensive for small scale farmers to obtain due to transportation cost; there is no fertiliser manufacturing companies in Malawi. All input, equipment and machinery are imported mainly from South Africa, EU and Asia, such as India and China, recently.
(2) Primary Producers As mentioned above, most of the exported commodities are primary products such as tobacco, tea, sugar, coffee, maize, rice and groundnuts. The number of medium and large scale producers is increasing in Malawi recently by consolidating small scale farmers’ land by themselves or the government for producing certain quantity of products. The small scale farmers used to sell their agriculture products to small vendors or agro dealers individually right after harvesting, but there are several types of production and marketing methods recently. For example, the small scale farmers grow and trade under the In-grower23 or Out-grower Scheme associating with commercial farms or trading or processing firms, or
21 Agribusiness SMEs in Malawi, USAID, 2014 22 According to interview with NASFAM and FUM 23 The out-grower is an individual farmer or farmers groups which agree on trading agriculture products with a company, whereas the in-grower is a farmer who grows certain products autonomously using farm field, technical services and inputs provided by landowner (large scale farmer or company). Generally the products or the amount sold are shared in a certain percentage(i.g. 50:50) between in-grower and the land owner, which is similar to ‘Tenant Farmer’ in Japan, (Reference: Grow Africa Smallholder working Group Briefing paper "Women smallholders" :https://www.growafrica.com/groups/smallholder-working-group-briefing-paper-women-smallholders)
4-11 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
collective selling with farmers associations or cooperatives, or selling products through private wholesalers such as the Agricultural Development and Marketing Corporation (ADMARC) and commodity exchanges companies (see detail in the sections below).
(3) Agro Processing Industry Firms Except sugar processed in the southern region, Malawi has been mostly exporting the primary commodities for the gain of foreign currency. In recent years, several agro- processing companies are established in major cities such as Blantyre, Lilongwe and Salima.
In the case of cooking oil, only traders which are permitted to import by the GOM can import the cooking oil. Such import licenced traders are mainly based in Blantyre and distribute their products to the whole country. Small and medium enterprises (SMEs), which occupy 90% of all manufactures24, are starting to process cooking oil to supply domestic and regional markets at present25.
The agro processing industry has been active in Salima in the Central Region. Mtalimanja Holdings has been producing, threshing, polishing and selling rice in Nkhotakota since its establishment in 2011. 10,000 farmer households which are formed into four cooperatives are producing rice as out growers under the contract with the company. With the assistance of the land procurement by the Green Belt Initiative (GBI, see details in 4.1.6), the Malawi Mangoes (operation) Limited established also in 2011 focuses on producing fruit juice with high market value such as mango juice, and have established a new value chain of mango juice including a network of mango farmers. Salima Sugar Company was established in 2016 with the assistance of the GBI as PPP between an Indian company and the GOM for sugar production mainly for exporting to regional markets.
(4) Retailers Currently many grocery retailers run businesses in Malawi. Most of the supermarkets are from South Africa such as Shoprite, Game and Spar, but Chipiku store is originally from Malawi. Those supermarkets purchase local products at the present such as perishable commodities; vegetables, fruits, meat and fish and grocery food such as maize flour, wheat flour and cooking oil. Additionally the Chipiku store purchases confectioneries such as biscuits, candy and chewing gum from South Africa and Zambia because these are not produced in the country.
(5) Trading Companies Thousands of commodity traders are running their own businesses formally and informally in Malawi and in regional markets. Since most of the agribusiness players are small scale farmers and SEMs in Malawi, there is particularity of trade system of commodities.
24 Malawi Country Commercial Guide, https://www.export.gov/article?id=Malawi-agricultural-products 25 Trade Policy Reviews, Government of Malawi and WTO, 2016
4-12 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Before the liberalisation in 1900s, ADMARC, a governmental agency, has contributed to the trade of agriculture commodities produced by small scale farmers within most areas, especially in unexploited areas which were nearly inaccessible to private traders26. The ADMARC are no longer officially in full operation, but it is still functions in reality.
In 2004, focusing on making grain business in Malawi and to increase transparency both to sellers and buyers by identifying the basic standard grades being offered for sale, the Agricultural Commodity Exchange in Malawi (ACE) was formed by a working group, comprising of both private and public sector stakeholders of Malawi’s maize market27. The ACE provides farmers market information, facilitates the trade of their products and enhance the agriculture production though the Warehouse Receipt System28.
In 2013, another commodities exchange company, AHL Commodities Exchange Limited called ‘AHCX’ was founded as a platform to aim at the transparency of commodities transaction and formalisation of agriculture trade. The AHCX has warehouses in twelve sites over the country, including Blantyre, Balaka and Liwonde for export. The membership consists of 30,000 households and cooperatives who receive market information and credit services from AHCX.
4.1.6 Related Policies, Programmes and Projects
(1) Development Policies, Strategies and Plan In order to improve the current situation of agriculture production and agribusiness, the NAP defines the vision for development of the agricultural sector in Malawi over the five years (2016 to 2020) in alignment with several international agreements and protocols on agriculture development under NEPAD, SADC and the COMESA. The NAP emphasizes achieving farmer-led agricultural transformation and commercialization that entails treating farming as a business targeting not only the domestic market but also regional and international markets by
2020. Source: Department of Irrigation, MOAIWD The movement of commercial agriculture has Figure 4.9 Potential Irrigation Area
26 National Agriculture Policy, MOAIWD, September 2016 27 Malawi Agricultural Commodity Exchange: Converting Growth into Sustainable Success, ACE, 2015 28 This system gives a farmer the ability not to sell immediately after harvest when prices are traditionally too low. Farmers and other clients can deposit and safely store their commodities at ACE certified warehouses (cited by web site :http://www.aceafrica.org/ )
4-13 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
already been stated in the country’s Vision 2020 document and the Second Malawi Growth and Development Strategy (MGDS II). This is also in line with other sub-sectoral and cross-sectoral policies and strategic documents of the government of Malawi, including the National Export Strategy (NES). Within the agriculture sector, the NAP is linked to the Agriculture Sector Wide Approach (ASWAp) investment plan and all sub-sectoral policies.
In order to realise those policies and strategies on the ground, two significant directions are established in 2016 and 2017 summarised as follows.
1) Irrigation Development Master Plan and National Irrigation Policy The ministry of Agriculture, Irrigation and Water Development (MOAIWD) launched the National Irrigation Master Plan in 2015 and National Irrigation Policy 2016 to promote the irrigation scheme development. In Malawi, as mentioned above, the total irrigated lands were 104,000 ha in 2014 which benefited 56,600 farmers’ households29. In the Master Plan, the top 30 ranked irrigation schemes are mentioned as priority. The MOAIWD have already found financial sources to develop about half of the 30 irrigation schemes, where crop production will be started within five years30. If it will happen, the total irrigated areas in Malawi will increase 40% from that in 2014. The average yield of unmilled rice in Malawi is about 2.0 tonnes/ha, while the yield in properly managed irrigation schemes is about 5 to 6 tonnes/ha, according to the interview with the MOAIWD31. Thus, assuming that rice is produced at half of the newly developed irrigation scheme and its average yield is about 3.0 tonnes/ha, the rice production can be increased 600,000 tonnes per year.
Table 4.3 Top 30 Ranked Irrigation Schemes and Current States of their Financing Area Capital Costs Financial Scheme District Rank # (ha) (1,000 USD) agreement Dowa Dambo Dowa 375 1,033 1 Done Nkawinda/Bakasala Blantyre 560 790 2 Done Nthiramanja Mulanje 6,316 22,223 3 Mlooka Zomba 153 730 4 Done Ruo - Diversion Thyolo/Nsanje 8,858 16,811 5 SVIP Chikwawa 26,653 193,770 6 Done Dwambazi Nkhata bay/Nkhotakota 1,769 3,466 7 Done Matoponi Zomba 115 590 8 Done Welusi Karonga 1,742 3,756 9 On discussion Linga Nkhata bay 1,514 4,054 10 Done Chipofya Diversion Rumphi 369 1,379 11 Done Msenga Nkhata bay 836 3,232 12 Likabula/Kholiwe Mulanje 628 3,947 13 Done Marko Chitipa 727 3,763 14 Done Ukanga Karonga 3,690 9,529 15 On discussion Mpamba Nkhata bay 788 4,246 16 Done Likhubula/Nthumbula Chikwawa 419 3,410 17 Done Lembani Ntcheu 1,624 4,125 18 Ilengo Chitipa 2,367 9,857 19 Mwambazi Nkhata bay 3,015 15,932 20 Kholongo Dowa 2,238 13,983 21 Lichenya Mulanje 1,249 7,619 22
29 National Irrigation Master Plan, MOAIWID, 2015 30 Interview with the Chief Irrigation Engineer of Department of Irrigation Headquarters, MOAIWD 2017 31 Interviewed with Department of Irrigation Headquarters, MOAIWD, August 2017
4-14 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Area Capital Costs Financial Scheme District Rank # (ha) (1,000 USD) agreement Mteperera Nkhata bay 1,415 10,299 23 Bwanje Dam Ntcheu 800 7,223 24 Done Ngazi Nkhata bay 1,190 2,933 25 Makwangwala Zomba 1,734 10,158 26 Mwenelupembe Karonga 1,943 4,794 27 Nkhulambe/Wowo Phalombe 300 1,444 28 Done Ngemela Karonga 4,019 28,581 29 Mtuwa Mangochi 1,194 11,024 30 Total 78,100 404,701 Total of irrigation scheme where financially agreed (Done) 35,170 229,845 Total of irrigation scheme where under discussion 5,432 13,285 Source : MOAIWD
2) Green Belt Initiative (GBI) In order to increase agricultural production, productivity, incomes and to achieve food security both at household and national levels, and then to spur economic growth and development, the Government planned the Green Belt Initiative in 2009. This initiative was to realise the said objective though the development of small and large scale irrigation and production maximization by rain-fed agriculture practices32.
The government has committed itself to offer domestic and international investors land for irrigated agriculture lying within 20 km of the country’s three lakes and thirteen perennial rivers (which exhibit a continuous flow of water throughout the year). Target areas to be developed were identified namely;
i) Karonga/ Hora-Ntora-Ilola-Ngoch in the northern region, ii) Salima/ Chikwawa in the central region and iii) Mangochi/Malonbe and Chikwawa/Chilengo in the southern region.
The implementation has not progressed as planned due to the lack of budget. Nevertheless, the GBI has facilitated a land procurement for Malawi Mango (Operation) Limited launched in 2011 and also supported the implementation of the entire project of Salima Sugar Company under the Indian-Malawian PPP launched in 2016 as the first project. It is expected that 20,000 tonnes of sugar will be produced by Salima Sugar Company and exported to Tanzania and Mozambique in 2018. Besides sugar manufacturing, soya beans, chicken and goats raising are also planned to be exported overseas.
In 2017, the government decided to turn the GBI into a governmental authority, which would possess a blend of private and public sector orientations to attract Public Private Partnerships and joint ventures.
32 Chingaipe, H., Chasukwa, M., Chinsinga, B., Chirwa, E., (2011) ,The Political Economy of Land Alienation: Exploring Land Grabs in the Green Belt Initiative in Malawi, A Research Report for the FAC-PLAAS Country Study: University of Western Cape, South Africa
4-15 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Development Projects and Programmes Various projects are planned and implemented to develop the agriculture sector by the Malawi government and donors. Some of these projects are expected to promote the utilization of the Nacala Corridor, or to be promoted by the further utilization of the corridor. These are described as follows.
1) Shire Valley Irrigation Project33 The Shire Valley Irrigation Project (SVIP) will be the largest single investment in the agricultural sector in Malawi. The SVIP will ensure irrigated agriculture and stable production not depended on rainfall. The SVIP is expected to be transformational investment not only for the Shire Valley but also for Malawi by enabling fully commercial agricultural production with irrigation, supporting establishment of land ownership for small scale farmers under the modern land tenure system and utilising a private operator for the provision of irrigated water supply services. The project lasts from 2017 to 2021, including detailed design, works, construction supervision, community engagement, land demarcation, agricultural development, support for farmers’ organisations and Out-grower Schemes, relocation and compensation of affected households. The tentative total cost estimates currently stand at around USD 260 million covering an area of about 21,500 ha, which will be financed by the GOM, World Bank, AfDB, other donors, funds and investment agencies.
2) Malawi Agricultural Commercialisation Project34 The objective of the Agricultural Commercialization Project for Malawi (AGCOM) is to accelerate the commercialization of agriculture value chain products selected under the project, with close synergy with the SVIP. This project is expected to support 70,000 farmers and 300 producer organisations. In order to create a conductive environment for farmers and agribusinesses to operate in, the project will support last-mile infrastructure such as feeder roads and electricity, as well as supporting agribusiness reforms and strengthening the warehouse receipt system in Malawi. A major activity of the project will be to help establish productive alliances between producer organisations, other value chain actors and product off-takers. AGCOM will also support the creation of business enabling services by improving access to finance, standards and certification, and trade facilitation. The project (USD 95 million) is funded from the World Bank’s International Development Association (IDA), and is expected to close in 2023. It will be implemented under the joint leadership of the MOAIWD and the Ministry of Industry, Trade and Tourism (MOITT).
3) Agro-Processing Special Economic Zone (AP-SEZ) The MITC has planned to develop an Agro-Processing Special Economic Zone (AP-SEZ) in order to support the promotion of commercial farming for priority crops identified in the NES.
33 World Bank, “Malawi: Shire Valley Irrigation Project (WB-P158805) Joint AfDB Preparation-WB/FAO Pre-Appraisal Mission (October 31-November 18, 2016)” 34 World Bank, “World Bank Helps Malawi Commercialize Agriculture”, May 23, 2017. (http://www.worldbank.org/en/news/press-release/2017/05/23/world-bank-helps-malawi-commercialize-agriculture)
4-16 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
It aims at promoting value added products through the Nacala Corridor to Malawi's regional markets comprising of Mozambique, Zambia, South Africa, DRC, Zimbabwe and Tanzania. MITC has also established an office in Tete, Mozambique in order to facilitate exporting of Malawi's products beyond Nacala corridor zones35.
The AP-SEZ was proposed to EIF (Enhanced Integrated Framework, a multi-donor financed financial and technical support programme under the auspices of the WTO) in 2014, as a three years project, costing around USD 3 million. It set three prioritized export-oriented clusters for diversification: i) oil seed products : cooking oil, soaps, lubricants, fertilizer, snacks, confectionery, etc., ii) sugar cane products : sugar, high value sugar through branding and sugar confectionery, and iii) manufactures : beverages, agro-processing (including value added dairy and maize, wheat, horticulture and legume products), plastics and packaging, assembly36.
However, the proposal was rejected and the MITC is currently discussing with the World Bank to revise the plan including candidate sites for SEZ, policy for operation, related legislations and organisations of SEZ37.
4) Farm Inputs Subsidy Programme (FISP) In order to enhance food self-sufficiency by small scale farmers, the FISP launched in 2005 to enable farmers access to improved agricultural inputs such as fertiliser, hybrid seed and pesticides at reduced prices in exchange of vouchers or coupons.
According to a country report FAO38, Maize productivity has risen significantly to two times more and increased crop income 8.2% more than those who were not beneficiaries of the programme. However, it is necessary to target and distribute the vouchers to the poorest and most venerable farmers. The FISP is criticised as creating the dependency of farmers39 and impeding private input market development40.
According to Review and Country Situation Analysis Report of MGDS II, a question is raised whether to target to poorest and most venerable farmers or to focus more on high growth sub-sectors with potential for more widespread benefits for a larger number of Malawians and to generate higher agricultural value added. The latter approach would necessarily involve
35 AfDB,” Invitation to Express Interest in Consultancy Services – MALAWI - Agro-Processing Special Economic Zone (AP-SEZ)”, August 2, 2015 (https://www.afdb.org/en/documents/document/eoi-malawi-consultancy-services-agro-processing-special-economic-zone- ap-sez-08-2015-54796/); “MITC in awareness campaign drive on value-added export amid COMESA and SADC's demand for Malawi's products”, The Maravi Post, April 27, 2016 (http://menafn.com/1094730031/MITC-in-awareness-caign-drive-on-value-added-export-amid-COMESA-and-SADCs-de mand-for-Malawis-products) 36 MOITT, “Enhanced Integrated Framework – Tier 2 Project Proposal: Malawi Agro-Processing and Value Addition Project”, April 2014. 37 Based on the interview with MITC in July 2017. 38 Review of food and agricultural policies in Malawi Country Report 2014, FAO 2015 39 Impact of the input Subsidy Programmes in Malawi on the Food Security Status of Smallholders Households, Elizabeth Tendai Mukozho, 2015 40 Measuring the impacts of Malawi’s farm input subsidy programme, Christopher Chibwana, US Agency for International Development, African Journal of Agriculture and Resource Economics Volume 9 Number 2 pages 132-147
4-17 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
diversifying from the heavy bias on maize and tobacco, creating space for the development of other agricultural value chains with identified high export potential41.
5) Projects for Aflatoxin Control Aflatoxins are highly toxic to humans and animals. Aflatoxin-producing moulds affect grain and other food crops – maize and groundnuts in particular. It is not only in Malawi, millions of people living in Africa are exposed to high, unsafe levels of aflatoxins through their diet. Even though food safety standards have been established in each country, some of them do not conform to the international standard on food safety. Meanwhile, even the standard conforms to the international standard is set in a country, farmers cannot produce commodities satisfied the requirements due to several reasons ; the standard is not recognized among local farmers. Therefore, farmers miss out on export opportunities42.
On 2012, the African Union launched the Partnership for Aflatoxin Control in Africa (PACA) that aimed to protect the products from the effects of aflatoxins, and prepared PACA Strategy 2013-2022. The Malawi was selected as one of the six countries where implement pilot activities. One of the pilot activities is called Country-led Situation Analysis and Action Planning (C-SAAP), and based on this results, the GOM centred by MOITT prepared a Malawi Programme for Aflatoxin Control (MAPAC) as national program to control the aflatoxins’ affects.
The MAPAC has a vision that “MAPAC envisions Malawian farmers, farm households and consumers living healthier and more prosperous lives as a result of reducing aflatoxin exposure to achieve safe levels.” And it sets goals that 1) Increase Malawian farmers’ (with a particular emphasis on small scale ones) income by enabling sustained market access; 2) Improve Malawian consumers’ health & nutrition by reducing their aflatoxin exposure to safe levels, and 3) Support food security through improving the quality and safety of groundnuts and maize (and other crops) produced by Malawian farmers.
The major objective to prepare the MAPAC is to set an integrated vision, priority of the activities, coordination among related institutions and implementation structure. For that reason, their activities are mainly pilot investigations rather than implementation of concrete measures. At the end of 2017, they will prepare the MAPAC II including more detailed activities.
So far, the activities related to the aflatoxin control in Malawi have been supported by USAID or Bill & Melinda Gates Foundation, etc. Since the MAPAC prepared in 2014, the World Bank, IFAD, EU, etc., as shown in the table below are supporting the activities in several projects.
41 Malawi Growth and Development Strategy (MGDS) II Review and Country Situation Analysis Report, Ministry of Finance, Economic Planning and Development (MFEPD), March 2016 42 http://www.aflatoxinpartnership.org/?q=aflatoxins
4-18 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.4 Recent Implemented Projects Related to Aflatoxins Control43 Country/ Date Activity Partners Funders Region Providing trainings for farmer on different interventions to 2013- MOAIWD, Academia Multi donor Agencies control and manage aflatoxin during pre and post-harvest Malawi 2016 and NGOs (ASWAP - SP) period. Mainly improving access to quality groundnuts seed, Rural Livelihood and 2014- developing capacities on public staff and beneficiary in good economic IFAD Malawi 2016 groundnut production practices, enhancing market access Enhancement and reducing aflatoxin contamination level Programme Reducing mycotoxin contamination of maize, groundnuts, Malawi, 2014- Lilongwe University and beans to improve food safety and enhance health and World Bank Mozambique, 2017 (Malawi),Zambia trade. Zambia The Malawi Programme of Aflatoxin Control (MAPAC) MOAIWD, Ministry of 2016- PACA and Malawi Conducting aflatoxin studies and mapping, testing, Health, ICRISAT, Malawi 2017 Government awareness creation and sensitization NASFAM, PACA Providing training and awareness creation campaigns to farmers for proper grain handling from production field to Government extension 2014- drying and storage to prevent aflatoxins. workers, lead farmers Private Business Malawi 2019 Monitoring progress through extension workers. and local chiefs Offering seed of resistant varieties to cooperatives for aflatoxin-free yields Twin Trading UK, The Going Nuts Project: 2015- Nasfam Malawi, Training for farmers on handling groundnuts to avoid aflatoxin Malawi 2020 Exagris Africa Malawi, and grading of nuts INVC Malawi The project for stemming aflatoxin in pre- and post-harvest waste in the groundnuts value chain (GnVC) in Malawi and NASFAM, ZARI, 2014- Zambia: Malawi, University of EU 2017 Aiming to reduce pre and post-harvest waste in the Zambia Greenwich, EPFC groundnuts value chain and thereby increasing food and nutrition security of small scale farmers. Integrated management of Aflatoxin in maize and groundnuts in Malawi using ‘aflasafe’ technology. Developing promotion Directorate of and commercialization of biological control in the groundnuts 2014 Agricultural Research FtF-USAID Malawi and maize value chains to improve public health, increase Services Malawi trade, increase of small scale farmers’ income, and enhance food security in Malawi. The Aflatoxin Proficiency Testing and Control in for Eastern and Central Africa (APTECA) program Performing 3rd party verification activities to provide interested parties (i.e. millers, other industry, government REC agencies) with objective evidence of a laboratory’s capability Texas A&M Agrilife COMESA to produce data that is both accurate and repeatable. 2014- Research, Office of REC EAC The program also provides biannual global proficiency many 2018 the Texas State REC ECCAS testing, working controls samples of known aflatoxin Chemist and theirs concentration for internal quality control, and the APTECA Malawi seal (Aflatoxin tested Process verified by APTECA), which can be used to demonstrate a laboratory’s competence to clients, potential customers, accreditation bodies and other external entities. NASFAM, EPFC, Reducing pre and post-harvest waste in the groundnuts value FANRPAN, Natural chain (GnVC) and thereby increase food and nutrition Resources security of small scale farmers in the focal countries by Institute-University of addressing main constraining factors of technology Greenwich, Malawi Malawi, 2014- dissemination and adoption, knowledge and information Department of PAEPARD Mozambique, 2017 sharing, and policies. Conducting research on aflatoxin Agricultural Research Zambia reduction practices and technologies to benefit small scale Services (DARS), farmers, reach scale and sustainability, and address policy Zambia Agricultural constraints. Research Institute (ZARI) Source: PACA web site
43 http://www.aflatoxinpartnership.org/?q=malawi&page=2
4-19 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector The development of the Nacala Corridor and the railway in particular, is ardently desired by Malawian exporters and entrepreneurs as a more prioritized route for export, which enables the reduction of transport time and cost, as well as the risk of delay in delivery44. At the same time, the development of the Nacala Corridor is also expected to reduce input cost for the agriculture and agro-process industry, as it reduces transportation cost45.
The development of agriculture sector in accordance with national policy is influenced strongly by domestic trade and export expansion and diversification dependent the convenience of the Nacala Corridor. Based on the current situation of agriculture production in Malawi, which is dominated by small scale farmers, the following section summarize development potential and challenges by analysing the current usability of the Nacala Corridor and the demand of the agriculture markets in and outside country. Additionally, several agriculture and agro-processing products which are identified as potential commodities for export and economic growth in the previous study46 are shown below.
(1) Overall Potentials and Challenges of Development
1) Irrigation Development As shown in 4.1.6 above, in collaboration with private sector, agricultural infrastructure and activities to reinforce market linkage have been implemented for the promotion of market (or export) oriented agriculture that one of the objectives of the NAS at the present in Malawi. If the irrigation development promoted by MOAIWD is accomplished as planned, the irrigable areas will increase by 40% from those in 2014, expecting the increase and stable agriculture production. In addition, if the linkage between farmers and markets progresses in these irrigated areas, farmers can sell agricultural products sustainably without fear of food shortages. As a result, this will contribute to the development of farmers and local economies.
Meanwhile, aiming at the agribusiness development, GBI has been developing large and small irrigation schemes and improving productivity of rain-fed agriculture under the PPP. In fact, the Salima Sugar Company, which started business under the GBI, employs 350 local small scale farmers as in-growers and is going to expand out-growers, and plans to develop agribusiness with local small scale farmers in the future. The program such as irrigation development should be planned and implemented considering the protection of rights of small scale farmers and rural communities.
44 According to the Export Development Fund of Malawi, delays in delivery through the Beira corridor cause default of contract by traders, that lead to bad debt loss for the Fund 45 Some companies such as Farmers World (agro-dealer) and Optichem (fertilizer manufacturer) already use the Nacala railway for import and export. They expect the improvement of cost and reliability of the railway transportation. 46 JICA (Mitsubishi UFJ Research and Consulting/PADECO), “Data Collection Survey for Potential Industries in Malawi”, August 2013
4-20 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) Diversification of Extension Service Considering the importance of the access to agriculture advisory service for agriculture development, the current situation on extension service has been apparently improved in late years through reinforcement of the extension system like the “Pluralistic and Demand-Driven Extension System47” by utilising farmer’s cooperatives, associations, and NGOs as extension service providers and “Farmer to Farmer Extension Approach” defined as the provision of technical trainings extension by lead farmers to other farmers. The farmers are requiring advices for the increase of agricultural production and market information in order to change their subsistence agriculture to market oriented one. However, the extension officers of MOAIWD, as well as farmers’ organisations and lead farmers have less opportunity to learn such updated technologies and information, which is the critical issue to be solved48. Recently, not only the government and farmers organisations, but also the private companies including traders and distributors are expected to provide such information of commodity markets and agriculture techniques related to ‘market oriented agriculture’ to farmers to link them with markets both in the country and overseas.
3) Functionality Reinforcement of Farmers Organisations FUM and NASFAM have been implementing several good practices such as collective procurement of inputs, farming experience and knowledge sharing, and market linkage, which have become certain good results. Due to the limited number of public agriculture extension officers, the GOM is considering the cooperatives as an important player for agriculture extension and development. The GOM is also trying to duplicate good practices of FUM and NASFAM though the capacity building of farmers and cooperatives in cooperation with donors and NGOs.
In this way, farmers’ organisations (cooperatives and associations) are strengthened functionally as agri-business operators in order to maintain small scale farmers’ livelihood and then create a proper market competition with private traders. It is effective to collect products through farmer’s organisations for agro processing business and export, as one of their fundamental activities. For this purpose, many farmers’ organisations have been established with the support of the government and NGOs, or by farmers themselves. However, only 234 organisations were active among the 681 organisations registered formally by 2012, meaning that more than half of them are not functional at present according to the Department of Agriculture Extension Services49.
47 The GOM introduced a policy that promotes the provision of decentralized, demand-driven services and encourages the participation of many service providers in agricultural extension in new extension policy in 2000. Farmers Organizations, NGOs and private sectors have been providing technical services not only technics as well as management skills or financial services for rural farmers. However, government officers are always vacant in rural area, it is difficult to support farmers and to coordinate among all extension player to emerge synergy. A new extension strategy which is compiled and dev underway in 2017 is expected to tackle challenges of such extension services for agriculture development. 48 Malawi Growth and Development Strategy (MGDS) II Review and Country Situation Analysis Report, Ministry of Finance, Economic Planning and Development (MFEPD), March 2016 49 The Malawian co-operative movement: insights for resilience, Alexander Borda-Rodriguez and Sara Vicari, February 2014
4-21 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
As one of the reasons, many farmer’s organizations have financial problems to operate marketing and provide training on capacity development of the members in the organisations. Therefore it is favourable to raise farmer’s organisations by supporting them in finance and capacity.
4) Linking between Farmers and Markets with Rural Infrastructure Despite of all efforts made by the government for market access improvement, market linkage with the small scale farmers remains weak. In the light of this circumstance, ACE and AHCX have been trying to enhance market access to farmers by setting up shipping points and warehouses in the local cities, providing market information though SMS and creating credit access, etc.50. In addition to such kind of activities by private traders, the infrastructure development related to land transportation, air transportation, and water transport is also necessary in order to reinforce linkage between small scale farmers to the markets.
At present, small scale farmers dispersed in rural areas carry their products with a high transportation cost to the market and sell, because investment and development of the necessary infrastructures such as warehouses to collect products and rural roads are not sufficiently done especially in rural areas. As a result, small scale farmers should sell small-lot of products to vendors coming irregularly and/or informal markets near their production areas. In consequence, the profitability of agriculture will decline, and it will be impossible to buy expensive agricultural inputs. In this way, the small scale farmers will fall into a vicious circle as less agriculture investment brings lower productivity, which leads less income from agriculture. The traders also cannot collect a certain amount of agricultural products and sell it to domestic and overseas markets taking advantage of scale with cheaper cost of transport.
If warehouses and rural roads to facilitate access to main roads including Nacala Corridor are developed, farmers can accumulate a certain amount of their products with cheaper transportation costs from the production place to the collection site. If this brings sufficient agricultural income to the farmers, they stop "informal" sales and distributors will be able to collect a certain amount of crops more efficiently and steadily. Furthermore, if the distributors are able to select sales markets to maximise profit by trading the agricultural products, it can be leading to raise income of farmers as virtuous circle.
5) Accumulation of Knowledge on Aflatoxin Control As mentioned in the 4.1.6 (2)-5), through implementation of various projects at present, knowledges on technical measures concerning production and post-harvest at the farmer level has been gathered and tried in fields such as the utilization of aflatoxin free seed or improvement of shelled method in post-harvest. Meanwhile, challenges in the value chain such as the inability to test and certify the aflatoxin in Malawi are also apparent. From now on, it is necessary to consider how to combine these findings to create a comprehensive countermeasure with considering incentives for exporters who finally owning risks in the
50 Interview from MOAIWD and Auction Holdings Limited Commodity Exchange (AHCX)
4-22 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
event of exporting, and how to reduce the risks from the production site level in the value chain.
(2) Potential and Challenges of Development on Primary Products
1) Groundnuts
(a) Production and Current Trade
Groundnut production in Malawi is dominated by female-headed households and vulnerable farmers. This is because groundnuts are easy to produce, requires few cash inputs, and can be consumed by producing households where nutritional and flavour benefits are recognized. The groundnuts also have the benefit of being an easily tradable cash crop in local markets51. In 2014, total amount of groundnuts production was approximately 296,000 tonnes.
In general, 10% of the produced groundnuts are kept as seeds for next season, 20 to 40% are used for food and processing as roasted nuts, peanut butter, and ‘Ready to Use Therapeutic Foods’ (RUTF), 10 % are consumed as loss and the remaining 20 to 40% are exported to neighbouring countries.
The groundnuts are exported to Tanzania, Kenya, Zambia, and Zimbabwe, though its import is very limited. In the past, Malawi’s groundnuts could be exported to UK and the EU. However, the exports have dwindled with the introduction of stringent measures on aflatoxin levels allowable in Europe and other developed countries’ markets. Despite this, it is exported formally to South Africa and other regional markets. In addition to the formal exports, there is a thriving informal groundnuts trade to Tanzania and Kenya, where aflatoxin testing requirements are not enforced52. Furthermore, during the field survey, it was heard that many groundnuts are exported informally to DRC through Zambia in these days.
Source: FAOSTAT, UN Com Trade Database Figure 4.10 Production and Trade of Groundnuts by Malawi
51 Malawi Oilseeds Sector Transformation http://www.most.mw/sectors/groundnut 52 Malawi Oilseeds Sector Transformation http://www.most.mw/sectors/groundnut
4-23 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.5 Export and Import of Groundnuts by Malawi by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export United Rep. of Tanzania 15.90 11.50 15.99 10.81 0.43 10.93 Kenya 9.10 10.53 14.76 14.38 5.12 10.78 Zambia 1.29 7.76 7.94 3.46 0.76 4.24 Zimbabwe 0.86 4.36 5.03 5.98 2.72 3.79 South Africa 5.95 3.15 2.08 0.72 0.31 2.44 Others 0.51 4.83 1.40 0.67 0.19 1.52 Total 33.61 42.13 47.21 36.03 9.53 33.70 Import USA 2.55 0.00 0.00 0.00 0.00 0.51 Zambia 0.13 0.00 0.00 0.00 0.03 0.03 Others 0.00 0.00 0.00 0.04 0.00 0.01 Total 2.67 0.00 0.00 0.04 0.03 0.55 Source: UN Comtrade
(b) Production Potential
Groundnuts are one of the widely grown legumes in Malawi. The crop has a potential to contribute to food and income security, because regional demand of the groundnuts is strong and farmers in Malawi are already quite familiar with improved methods for its production.
The export volume of groundnuts grew by 18% per year between 2004 and 201453. However, extreme drought in 2014/2015 impacted negatively on yield and its export. Meantime, the strict regulation for testing on aflatoxin was applied in EU and other developed countries in 2014. As the results, the export quantities of groundnuts from Malawi to the countries including South Africa were decreased. Currently, the groundnuts are exported to the countries where the aflatoxin test for imported groundnuts is not carried out or informal trade is commonly observed. Nevertheless, Malawi is still a greater exporter of groundnuts in the region. The government should offer incentives to stakeholders related to the groundnut value chain in order to produce low-aflatoxin contaminated groundnuts for national economy development though re-vitalizing its export and also for people’s health in Malawi.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
Rwanda (Imported mainly from Uganda and Tanzania) decreased the importing amount in 2012 and 2015. Kenya imported it mainly from Uganda and Malawi, and their import was decreased in 2013 and 2014 but slightly recovered it in 2015. The import of South Africa was increased in 2013 mainly from Malawi and Mozambique, but they have virtually banned the import of untested groundnuts and thus their import has decreased. Tanzania and Zambia are also relatively large importers of the groundnuts (imported from Malawi).
53 International Trade Centre, 2014; Malawi Revenue Authority, 2014
4-24 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: FAOSTAT, UN Com Trade Database Figure 4.11 Import of Groundnuts by Country in the Integrated Region
Table 4.6 Import of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Rwanda 21.46 9.66 15.88 16.29 4.19 2 Kenya 14.09 21.01 7.60 1.80 9.99 3 South Africa 8.61 16.04 19.67 10.40 8.49 4 United Rep. of Tanzania 10.86 10.03 7.12 16.86 1.99 5 Egypt 3.83 6.99 3.24 5.36 4.32 6 Zambia 4.35 7.73 6.93 3.96 3.77 7 Zimbabwe 0.27 2.32 3.50 6.07 7.69 8 Uganda 1.47 0.15 6.14 4.28 1.73 9 Libya, State of 1.06 2.77 2.05 2.70 3.77 10 Angola 0.68 1.24 1.98 2.13 1.54 Others 7.74 4.38 6.37 5.26 6.21 Total 74.41 82.30 80.48 75.10 53.69 Source: UN Comtrade, ITC
Regarding the export of groundnut, Malawi and Egypt were major countries in the region. However, their exports were decreased since 2014. Tanzania, Mozambique and Ethiopia are also decreasing their exports due to the impact of drought in the region54. In contrary, South Africa, Madagascar and Uganda increased the export. In simple term, the increased amount of the export of South Africa in 2014 was the export for Tanzania and Mozambique. Basically, they export the groundnuts to South Africa, because production of the groundnuts needs labour intensive work, and the labour cost is relatively high in South Africa as their challenge, so that surrounding countries including Malawi has competitiveness. Moreover, cause of the increasing export in Madagascar is the export to Vietnam, which became more than 90% of total groundnuts export in Madagascar.
54 USDA GRAIN Report, The potential import market for peanuts in South Africa, April 2015
4-25 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: FAOSTAT, UN Com Trade Database Figure 4.12 Export of Groundnuts by Country in the Integrated Region
Table 4.7 Export of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Malawi 33.58 42.13 47.25 39.69 9.53 2 Egypt 30.97 31.12 16.45 20.25 6.28 3 South Africa 16.91 10.65 9.02 9.84 22.18 4 United Rep. of Tanzania 4.93 23.50 0.36 2.62 0.31 5 Mozambique 6.85 4.47 24.15 14.14 2.79 6 Madagascar 2.13 10.29 11.35 14.93 17.72 7 Ethiopia 2.13 23.45 3.68 0.24 0.09 8 Uganda 0.36 3.30 4.28 0.80 8.84 9 Zambia 1.10 0.60 1.69 3.56 1.12 10 DRC 0.04 0.01 0.02 0.18 0.84 Others 2.48 0.83 0.69 0.72 1.05 Total 101.47 150.35 118.94 106.97 70.74 Source: UN Comtrade, ITC
2) Rice
(a) Production and Current Trade
The recent total rice production of Malawi, including both productions in irrigation schemes and in local swamps (dambo), is around 110,000 to 125,000 tonnes. About 93% of the produced rice is consumed in Malawi. Only 1,000 to 2,000 tonnes is exported and also similar quantities are imported every year. This means the domestic supply and demand of rice is balanced under current prices.
4-26 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
140 2.5
120 2 Production (1,000 100 tons. left) 80 1.5 Area harvested (ha, left) 60 1 Yield (ton/ha, right) 40 0.5 Export (1,000 tons, 20 right)
0 0 2010 2011 2012 2013 2014
Source: FAOSTAT Figure 4.13 Production, Area Harvested, Yield and Export of Rice by Malawi
Table 4.8 Export and Import of Rice by Malawi by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export Zambia 0.17 1.99 1.50 0.54 0.04 0.85 Zimbabwe 0.20 0.25 0.22 0.15 0.05 0.17 United Rep. of Tanzania 0.50 0.06 0.10 0.01 0.00 0.13 United Kingdom 0.04 0.10 0.04 0.04 0.02 0.05 South Africa 0.04 0.00 0.00 0.00 0.02 0.01 Mozambique 0.02 0.00 0.00 0.00 0.00 0.00 Others 0.00 0.01 0.00 0.00 0.00 0.00 Total 0.97 2.41 1.87 0.74 0.12 1.22 Import India 0.01 0.53 0.03 0.14 0.13 0.17 Pakistan 0.14 0.08 0.20 0.07 0.28 0.16 United Rep. of Tanzania 0.03 0.00 0.60 0.00 0.00 0.13 South Africa 0.04 0.03 0.04 0.04 0.31 0.09 USA 0.06 0.03 0.07 0.05 0.00 0.04 others 0.05 0.05 0.04 0.02 0.02 0.03 Total 0.33 0.73 0.98 0.32 0.75 0.62 Source: UN Comtrade
(b) Production Potential
Rice in Malawi (aromatic rice) is known as its high quality and currently exported to neighbouring counties (mainly Zambia and Zimbabwe). Although the productivity of unmilled rice in Malawi is around 2.0 tonnes per ha, which is lower compared to the major rice producing countries, it is supposed to be possible to increase it to 5.0 to 6.0 tonnes per ha.
Furthermore, as described before, about 40,000 ha of new irrigation schemes, developed under the National Irrigation Master Plan, will commence production within five years, which means the total irrigated areas in Malawi will increase 40% from the same in 2014. The average yield of unmilled rice in Malawi is about 2.0 ton/ha, and the yield in matured irrigation schemes are about 5.0 to 6.0 tonnes/ha, based on the field interview. Thus, assuming that rice is produced at half of the newly developed irrigation scheme and its average yield becomes about 3.0
4-27 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
ton/ha, the rice production will be increased 600,000 tonnes per year. Therefore the rice has a huge potential for export. In addition to rice, husk and bran can be sold for as material of feed-stuff in the regional and the domestic markets.
Neighbouring countries, Tanzania and Mozambique in particular, have increased the import of rice. Therefore, rice has high potential to be further exported to neighbouring countries through the Nacala Corridor, if its productivity and production in Malawi are improved. For instance, it is worthy to note that Mtalimanja Holdings, a private agribusiness company with farmer shareholders, is supporting 10,000 small scale farmers in Nkhotakota and Dowa through buying rice from them and operating a large scale rice-milling factory with 10,000 tonnes of production capacity55. Mutalimanja has signed a memorandum of understanding (MOU) with Export Development Fund (EDF) and AHCX to provide financing to 1,000 farmers to grow rice for the export market56.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
Rice has become one of the major food commodities in Africa. Demands for rice in the surrounding countries are also high as shown in the figures below. South Africa imports around 1 million tonnes in general (mainly from Thailand, India and China). Mozambique, a neighbouring country of Malawi, also imports rice. They imported very huge amounts in 2013 and 2014 and reduced the amounts in 2015 (from Thailand, India and Pakistan). Kenya, Madagascar, Ethiopia, and Zimbabwe are also increasing the imported amounts. Hence, it can be said that concrete demands for rice is existing in these area.
Source: FAOSTAT Figure 4.14 Import of Rice by Country in the Integrated Region
55 Based on the interview with Mtalimanja Holdings in April 2017. 56 “Malawi could earn USD400m from rice – Mtalimanja”, The Nation, August 25, 2017 (http://mwnation.com/malawi-earn-400m-rice-mtalimanja/)
4-28 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.9 Import of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 South Africa 885.87 1,228.89 1,267.83 910.52 717.77 2 Mozambique 400.98 100.79 1,713.58 1,820.04 432.18 3 Kenya 337.45 399.70 409.58 459.17 542.15 4 Angola 295.08 328.47 526.16 55.32 16.78 5 Madagascar 182.78 183.89 318.15 366.00 259.48 6 Ethiopia 80.39 122.88 153.76 187.72 275.47 7 Zimbabwe 129.14 153.30 159.93 175.71 201.88 8 Libya, State of 205.11 223.39 225.97 33.98 136.79 9 Uganda 92.84 133.96 115.64 172.05 122.87 10 Djibouti 49.18 68.87 108.54 112.14 180.73 Total 3,115.59 3,523.98 5,486.95 2,682.30 3,272.14 Source: UN Comtrade, ITC
Table 4.10 Export of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Egypt 17.10 84.61 199.32 30.00 77.06 2 South Africa 75.94 74.85 75.81 71.39 70.28 3 Uganda 18.44 38.89 36.97 28.69 24.19 4 Tanzania, United Republic of 12.72 5.43 20.00 19.19 1.05 5 Rwanda 0.12 3.59 12.33 14.90 16.62 6 Botswana 0.98 1.06 16.48 0.50 0.47 7 Kenya 5.35 7.47 1.63 0.74 0.11 8 Mozambique 1.90 0.00 0.12 0.46 0.00 9 Mauritius 0.84 0.07 1.31 1.91 0.05 10 Malawi 0.73 0.75 1.63 0.50 0.05 Total 135.28 218.84 366.53 169.18 190.80 Source: UN Comtrade, ITC
3) Legumes
(a) Production and Current Trade
Production of legumes in Malawi has been increasing in the last decade, because legumes are important food for nutrition, especially for small scale farmers. The legumes produced in Malawi are exported mainly for India, UAE and Zimbabwe. In general Malawi imports a certain amount of legumes from Mozambique, but depending on the year it may export in contrary.
4-29 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
400 16 Chick pea (e) Pigeon pea (e) 350 14 (1,000 tons) 300 12
250 10 Chick pea (p) 200 8 Cow pea (p) 150 6 Pigeon pea (p) 100 4
50 2
0 0 2011 2012 2013 2014
Source: FAOSTAT, UN Com Trade Database Figure 4.15 Production and Export of Legumes by Malawi
Table 4.11 Export and Import of Legumes by Malawi by County (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export India 27.59 25.98 14.07 0.00 36.46 20.82 United Arab Emirates 0.00 2.05 3.00 7.33 8.65 4.21 Zimbabwe 0.85 2.88 7.84 5.29 0.00 3.37 United Kingdom 1.45 1.00 0.76 1.96 0.89 1.21 Mozambique 3.41 1.20 0.01 0.00 0.00 0.92 Singapore 0.69 1.07 0.71 0.81 1.11 1.02 Malaysia 0.93 0.77 0.78 0.87 0.67 0.81 South Africa 0.54 0.70 0.74 0.71 0.68 0.68 Others 1.56 0.64 0.87 0.80 1.21 1.02 Total 37.01 36.30 28.79 17.77 49.67 33.91 Import Mozambique 0.07 0.12 0.08 3.03 2.27 1.11 Others 0.00 0.05 0.00 0.01 0.00 0.01 Total 0.07 0.16 0.08 3.04 2.27 1.13 Source: UN Comtrade
(b) Production Potential
Demand for legumes has existed in various countries. There are growing markets of pigeon peas in India and the United Arab Emirates. These two countries also have markets for chickpeas. South Africa has a demand for cowpeas and chickpeas. Since legumes have a nitrogen fixation effect, they are suitable for cultivation combined with other crops. Therefore, legumes have a high potential to be produced and exported to the region and overseas markets. However, India imposes a 10% tariff on imported pigeon peas, unless a MOU is agreed with India to obtain a status of the least developed countries so that the tariff is exempted. Mozambique already signed the MOU with India and has started exporting 350,000 tonnes
4-30 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
from the Nacala Port. An urgent action is awaited to prepare the MOU between India and Malawi57.
Pigeon peas are used extensively in preparation of ‘dhal’ (simmered ground peas). ADMARC, a state owned company for commodity trading, has a processing factory and exports such value-added products as 10,000 tonnes of dhal in 2016 and also other private companies can produce it.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
Egypt decreased the imported amount of chickpeas in 2013 and 2014 (imported from UK Australia and Canada), but it was raised again in 2015. Angola is also decreasing the imported amount (from Canada, Mexico and Portugal). The imported amounts in Libya and South Africa are slightly increasing.
Source: FAOSTAT, UN Com Trade Database Figure 4.16 Import of Chickpeas by Country in the Integrated Region
Table 4.12 Import of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Egypt 22.27 26.09 12.12 0.65 21.95 2 Angola 28.03 12.94 4.92 1.18 0.28 3 Libya, State of 2.86 2.33 7.14 7.21 6.21 4 South Africa 1.76 1.64 2.33 1.90 2.53 5 Zimbabwe 0.91 0.00 0.01 0.00 1.65 6 Sudan (before 2012) 0.85 0.00 0.00 0.00 0.00 7 Mauritius 0.41 0.42 0.71 0.44 0.39 8 Madagascar 0.85 0.35 0.00 0.01 0.01 9 Seychelles 0.25 0.33 0.07 0.01 0.03 10 Ethiopia 0.00 0.99 0.00 0.00 0.00 Others 0.83 0.53 0.32 0.33 0.49 Total 59.02 45.61 27.62 11.73 33.54 Source: UN Comtrade, ITC
57 Interview with Malawi Confederation of Chambers of Commerce and Industry (MCCCI) in May 2017.
4-31 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.13 Export of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Ethiopia 49.50 73.89 61.62 48.74 41.95 2 Tanzania, United Republic of 21.38 29.04 31.24 42.48 51.87 3 Egypt 3.03 7.50 7.17 9.78 15.55 4 Malawi 8.28 10.25 8.50 5.84 0.43 5 Sudan (before 2012) 9.70 0.00 0.00 0.00 0.00 6 Uganda 0.02 0.00 0.00 1.11 0.01 7 Djibouti 0.45 0.02 0.17 0.05 0.10 8 South Africa 0.05 0.08 0.13 0.07 0.04 9 Kenya 0.00 0.00 0.07 0.08 0.13 10 Botswana 0.08 0.07 0.02 0.09 0.13 Others 0.02 0.06 0.03 0.00 0.00 Total 92.50 120.91 108.97 108.24 110.19 Source: UN Comtrade, ITC
Regarding the pigeon peas, Tanzania increased its export amount rapidly in the region. Kenya and Ethiopia are also increasing the amount of their exports. Malawi could export about 50,000 tonnes in 2016.
Source: FAOSTAT, UN Com Trade Database Figure 4.17 Export of Pigeon Pea by Country in the Integrated Region
Table 4.14 Export of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Tanzania, United Republic of 0.00 0.00 1.59 18.44 44.29 2 Malawi 0.00 0.00 0.00 0.50 0.00 3 Kenya 0.00 0.00 0.00 1.34 9.37 4 Uganda 0.00 0.00 0.00 0.00 5.03 5 Ethiopia 0.00 0.00 0.00 0.07 0.95 6 South Africa 0.00 0.02 0.01 0.06 0.02 7 Zambia 0.00 0.00 0.00 0.00 0.06 Others 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.02 1.61 20.41 59.73 Source: UN Comtrade, ITC
Table 4.15 Import of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Kenya 0.00 0.00 0.38 4.50 3.51 2 Zimbabwe 0.00 1.47 5.72 0.01 0.70 3 Djibouti 0.00 0.00 0.00 0.01 0.11 4 South Africa 0.00 0.00 0.00 0.00 0.08 Others 0.00 0.03 0.06 0.07 0.09 Total 0.00 1.50 6.15 4.58 4.48 Source: UN Comtrade, ITC
4-32 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4) Cotton
(a) Production and Current Trade
Among the largest export agricultural products in Malawi, cotton is the fourth largest crop after tobacco, sugar and tea. The cotton sector produces not only lint but also crude and refined cotton oil and cotton cake to domestic markets for human and animal consumption respectively. As same as in Zambia, cotton is produced by small scale farmers by Out-grower Scheme.
In 2011, the contract farming that ginneries supply inputs for farmers was replaced to the contract-based system that the input is delivered only for the registered producers. This change was carried out with the GOM’s Cotton Up-scaling initiative. The cotton production in Malawi had been steadily maintained below 20,000 tonnes until 2011, but it was increased around 60,000 tonnes in 2012 due to the injection of the fund by the initiative. However, the export of Cotton Lint is not following the increase of the production. Most of the cotton lint is exported to Asia or Europe. At this moment, Malawi import only little amount of cotton lint.
(1000 ton) Production Export Import 70 60 50 40 30 20 10 0 2011 2012 2013 2014 Source: FAOSTAT, UN Com Trade Database Figure 4.18 Production and Export of Cotton Lint by Malawi
Table 4.16 Export of Cotton Lint by Malawi by Country (Unit: 1,000 tons) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export United Arab Emirates 0.00 4.68 2.68 1.43 4.47 2.65 Hong Kong, China 0.00 0.00 0.02 2.34 3.58 1.19 South Africa 1.31 2.52 3.15 3.28 3.52 2.76 Singapore 0.00 1.00 0.00 0.00 2.39 0.68 United Kingdom 0.40 1.88 3.46 2.47 0.88 1.82 Zimbabwe 0.79 1.80 0.78 0.00 0.49 0.77 Bangladesh 1.61 3.02 0.52 0.82 0.29 1.25 Mozambique 0.10 0.00 0.00 0.00 0.28 0.08 Portugal 0.00 0.00 0.00 0.68 0.10 0.16 Switzerland 0.00 0.09 0.07 0.00 0.05 0.04 China 1.63 7.92 0.00 0.00 0.04 1.92 Others 3.63 3.35 0.77 0.44 0.00 1.64 Total 9.46 26.25 11.45 11.47 16.09 14.94 Source: UN Comtrade
4-33 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(b) Production Potential
The production potential of cotton in Malawi is high, but it has faced several issues in recent years. Its production in Malawi peaked in the 2011/2012 season, because the GOM injected a huge budget into the cotton sector for financing. The funds were supposed to revolve in the sector but ended up being depleted58. It may be caused by the dysfunctional levy system for input procurement. Because of that, the cotton production in Malawi faced trouble in the 2016/2017 season that seven of the total eight ginners in Malawi had refused to give farm inputs to cotton farmers on credit. The reason for that is because the farmers did not repay their own loans in the last year. In total the Cotton Ginners gave out MWK 2 billion loan in inputs to cotton farmers in 2016 and have only managed to recover MWK 700 million.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
Egypt, South Africa and Mauritius are main importers of cotton in the integrated region. However, demand of the cotton in the integrated region is smaller than the ones in overseas such as Asia and Middle East. Thus the target market of the cotton may be overseas markets. Please refer the details in section 3.1.7 in the Chapter of Zambia.
5) Tobacco
(a) Production and Current Trade
Tobacco is a main export crop in Malawi, and Malawi is historically famous for burley tobacco. However, tobacco production in Malawi has declined after its peak in 2009 and the export quantity is also in same trend. In 2012, the export quantity was over the production, which means stock was used to fill up the demand.
Malawi has been one of largest tobacco exporting countries, therefore export partner countries are varied, but Belgium is the first partner. Malawi collects tobacco from Zambia and Mozambique and exports it to EU.
Source: FAOSTAT Figure 4.19 Production and Trade of Tobacco by Malawi
58 Malawi cotton farmers cry foul, The Nation, http://mwnation.com/malawi-cotton-farmers-cry-foul/ Sep. 21, 2017
4-34 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.17 Export and Import of Tobacco by Malawi by Country (Unit: 1000 tons) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Export Belgium 22.76 60.27 17.96 34.61 27.53 32.62 Poland 6.09 6.83 5.94 109.84 6.36 27.01 Egypt 13.60 16.96 2.81 16.52 15.69 13.12 Russian Federation 10.65 14.64 15.18 13.43 10.52 12.88 Germany 12.32 10.78 9.94 11.08 10.42 10.91 United States of America 11.93 13.99 11.32 9.61 6.58 10.69 Switzerland 4.54 17.62 4.46 3.85 2.41 6.57 China 5.59 4.90 7.54 7.68 6.72 6.49 Netherlands 5.70 8.92 8.29 3.78 4.96 6.33 Korea, Republic of 5.70 6.84 5.98 3.13 2.88 4.91 Others 60.42 60.33 46.31 42.58 32.17 48.36 Total 159.29 222.09 135.73 256.10 126.23 179.89 Import Zambia 17.34 5.96 21.06 14.12 13.29 18.84 Mozambique 5.09 3.08 3.38 2.26 1.91 4.09 Tanzania, United Republic of 4.01 3.19 0.10 0.00 0.00 1.93 South Africa 0.34 0.01 0.00 0.00 0.00 0.14 Others 0.21 0.00 0.02 0.61 1.13 0.52 Total 26.98 12.23 24.56 17.00 16.32 25.52 Source: UN Comtrade
(b) Production Potential
Tobacco is a main export product in Malawi. However, it seems that the total global demand of tobacco is going to decrease gradually in the middle- to long-term with considering the decreasing its demand in developed countries under the global anti-tobacco movement and increasing its demand from middle income countries.
The products are transported in bulk to EU and Asian countries. Therefore, it will easily get benefit of cost reduction by the Nacala Corridor development, in both terms of production export and input import.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
South Africa imported tobacco from Zimbabwe, Brazil and India and is decreasing the amount slightly. The imported amount of Egypt is largely increasing (from Greece, Germany, India and Malawi). Kenya, Mozambique and Ethiopia export constantly. But Zimbabwe’s import is decreasing drastically. Malawi and Zambia were major exporters to the Zimbabwe.
4-35 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: FAOSTAT, UN Com Trade Database Figure 4.20 Import of Tobacco by Country in the Integrated Region
Table 4.18 Import of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 South Africa 40.37 33.59 23.85 32.06 28.97 2 Egypt 10.33 24.09 16.92 40.30 31.73 3 Zimbabwe 29.59 43.30 19.18 15.44 1.72 4 Kenya 21.80 11.11 19.92 18.80 16.78 5 Malawi 26.98 12.23 24.56 17.00 16.32 6 United Rep. of Tanzania 3.02 2.32 2.47 4.40 4.11 7 Mozambique 2.18 1.49 4.48 2.66 2.21 8 Ethiopia 1.87 1.54 1.99 2.00 1.55 9 DRC 4.14 4.72 0.97 0.64 0.45 10 Angola 2.10 2.15 2.72 0.20 2.05 Others 9.64 4.16 4.62 4.14 3.51 Total 152.02 140.69 121.67 137.64 109.40 Source: UN Comtrade, ITC
Table 4.19 Export of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Malawi 159.29 222.11 135.73 256.10 126.24 2 Zimbabwe 134.47 131.85 147.87 141.56 148.27 3 United Rep. of Tanzania 74.02 107.59 69.45 76.53 65.68 4 Mozambique 58.38 55.94 58.94 58.61 67.67 5 Zambia 31.11 37.91 41.62 32.08 26.09 6 Uganda 17.40 17.54 32.55 24.01 23.36 7 Kenya 22.03 17.87 10.12 20.29 4.66 8 South Africa 4.15 2.80 1.70 4.40 2.71 9 DRC 8.60 2.83 1.28 1.26 0.03 10 Egypt 0.35 0.38 1.49 3.49 0.93 Others 0.38 0.73 0.55 0.26 0.25 Total 510.17 597.55 501.28 618.58 465.87 Source: UN Comtrade, ITC
4-36 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Potential and Challenges of Development on Processed Products
1) Sugar Cane and Sugar
(a) Production and Current Trade
As explained in sub chapter 3.1 for Zambia, processing to produce sugar is in two steps: to make raw sugar and refine the raw sugar into granulated sugar and others.
Source: FAOSTAT, UN Com Trade Database Figure 4.21 Production and Trade of Raw Sugar by Malawi
Table 4.20 Export and Import of Raw Sugar by Malawi by Country (Unit: 1,000 ton) Average 2011 2012 2013 2014 2015 (2011-2015) Export Portugal 35.69 72.30 97.50 37.35 0.00 48.57 United Kingdom 60.64 3.25 29.94 9.57 58.87 32.46 Zimbabwe 60.09 6.54 5.82 0.51 15.02 17.60 Spain 30.43 7.14 4.19 11.50 11.59 12.97 USA 18.85 0.61 17.29 5.75 4.70 9.44 Belgium 7.42 0.00 10.17 6.60 6.72 6.18 Kenya 22.24 2.28 0.76 3.00 0.21 5.70 United Rep. of Tanzania 12.67 0.86 0.00 0.00 9.18 4.54 Others 26.37 1.09 10.26 12.91 47.35 19.60 Total 274.39 94.07 175.93 87.18 153.64 157.04 Import Zambia 0.00 0.60 0.00 0.18 0.00 0.16 South Africa 0.05 0.02 0.01 0.01 0.10 0.04 China 0.00 0.00 0.01 0.01 0.08 0.02 Others 0.01 0.01 0.00 0.01 0.00 0.00 Total 0.06 0.62 0.02 0.20 0.18 0.22 Source: UN Comtrade
4-37 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
350 7 Production Export (right) Import (right) 300 6
250 5
200 4
150 3
100 2
50 1
0 0 2010 2011 2012 2013 2014
Source: FAOSTAT, ITC/UN Com Trade Figure 4.22 Production, and Trade of Refined Sugar by Malawi
Table 4.21 Export and Import of Refined Sugars by Malawi by Country (Unit: 1,000 ton) Average Export 2011 2012 2013 2014 2015 (2011-2015) Export 1 South Africa 0.00 0.00 0.00 0.00 6.34 1.27 2 United Rep. of Tanzania 1.80 0.83 0.00 0.00 0.51 0.63 3 Kenya 1.74 0.48 0.00 0.00 0.00 0.44 4 Congo 2.02 0.00 0.00 0.00 0.00 0.40 5 Zimbabwe 0.20 0.27 0.00 0.00 0.84 0.26 6 Others 0.66 0.03 0.00 0.00 0.00 0.14 Total 6.41 1.61 0.00 0.00 7.69 3.14 Import 1 South Africa 0.05 0.01 0.01 0.01 0.09 0.04 2 China 0.00 0.00 0.01 0.01 0.06 0.01 3 Others 0.00 0.01 0.00 0.00 0.00 0.00 Total 0.05 0.02 0.02 0.02 0.15 0.05 Source: UN Comtrade, ITC
(b) Production Potential
The sugar cane market is almost monopolized except for a few small scale companies. The products are exported to the EU and surrounding countries. As Malawi has the highest productivity of sugar cane among the neighbouring countries and other export countries and the sugar cane can be processed into rum, confectionery and ethanol, the demand of sugar is increasing according to the economic development in the neighbouring countries. Malawi’s export of processed products from sugar cane is expected to expand. The current concern of the sugar industry is the abolition of EU’s sugar production quota in October 2017. Due to that, the Malawian sugar industry may lose main sugar export market which will be hardest hit.
4-38 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
The neighbouring countries with either a relatively large market or small have increased import. Therefore, Zambia and Malawi can expect to increase the export to these neighbouring countries.
2) Tea
(a) Production and Current Trade
Tea production in Malawi was 45,000 tonne in 2014. Tea is a major export crop in Malawi and most of the products are exported. About one third of the products are exported to South Africa. The U.K is the second partner for tea export.
Source: FAOSTAT, UN Com Trade Database Figure 4.23 Production and Export of Tea by Malawi
Table 4.22 Export and Import of Tea by Malawi by Country (Unit: 1,000 ton) Average 2011 2012 2013 2014 2015 (2011-2015) Export South Africa 15.65 14.04 14.10 17.57 14.02 15.07 United Kingdom 11.32 13.33 10.11 9.93 11.97 11.33 Kenya 6.96 4.99 3.36 6.12 1.55 4.60 USA 2.75 3.64 4.95 1.79 1.24 2.87 Netherlands 2.02 0.94 2.27 2.55 3.18 2.19 Germany 1.00 0.63 0.62 1.24 1.08 0.91 United Arab Emirates 0.09 1.15 1.10 1.03 0.87 0.85 Pakistan 0.76 0.76 0.44 1.70 0.05 0.74 Botswana 0.81 0.65 0.80 0.72 0.65 0.73 Singapore 0.00 0.09 1.33 1.42 0.24 0.62 Others 4.65 5.21 4.18 3.44 3.94 4.28 Total 46.01 45.44 43.25 47.51 38.79 44.20 Import South Africa 0.07 0.04 0.05 0.04 0.09 0.06 Mozambique 0.03 0.02 0.11 0.00 0.00 0.03 Others 0.03 0.01 0.07 0.08 0.04 0.05 Total 0.13 0.07 0.23 0.13 0.13 0.14 Source: UN Comtrade
4-39 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(b) Production Potential
Tea is a major export product in Malawi, but Malawian tea is not famous yet in the global market. The factors surrounding tea production such as decreasing production and an ageing labour force will be obstacles in developing and expanding the product. Recently a coalition of the stakeholders in the tea sector launched a programme called “Malawi Tea 2020” to improve productivity and competitiveness of the industry as well as the living standard of the workers59. These products are transported in bulk and are easy to get the benefit of cost reduction by the Nacala Corridor development, in both terms of production export and input import.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
Egypt imports a large quantity of tea from Kenya, then Sri Lanka, India and other countries. South Africa increases the import amount slightly and the volumes of import and also export by other countries are very stable. As described above, Malawi’s tea is not very famous currently, but toward the outside market of the above mentioned countries, it have a possibility of export expansion.
Source: FAOSTAT, UN Com Trade Database Figure 4.24 Import of Tea by Country in the Integrated Region
Table 4.23 Import of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Importer 2011 2012 2013 2014 2015 1 Egypt 100.42 109.38 104.70 103.25 87.95 2 Kenya 7.69 8.75 12.67 10.93 97.01 3 South Africa 24.05 24.08 25.56 27.00 26.05 4 Libya, State of 9.44 22.77 7.55 16.93 16.41 5 Angola 1.24 16.16 1.41 3.37 2.18 6 Botswana 1.83 2.21 1.92 1.65 1.76 7 Namibia 2.29 1.29 1.28 1.09 1.67 8 Djibouti 1.00 1.73 1.34 1.07 0.08 9 Zambia 0.80 1.10 1.14 1.26 1.17 10 Swaziland 0.00 1.12 0.69 0.83 0.88 Others 3.30 2.98 3.03 3.81 3.86 Total 152.05 191.57 161.28 171.20 239.01 Source: UN Comtrade, ITC
59 Malawi Tea 2020. http://www.malawitea2020.com
4-40 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.24 Export of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) Exporter 2011 2012 2013 2014 2015 1 Kenya 388.34 380.36 448.81 458.73 412.13 2 Uganda 55.26 55.21 62.02 59.69 53.32 3 Malawi 46.01 42.49 43.25 48.23 38.79 4 Tanzania, United Republic of 27.11 27.78 26.37 26.78 29.29 5 Rwanda 23.21 23.01 22.34 24.03 16.55 6 Zimbabwe 11.22 11.54 11.86 12.79 13.96 7 Burundi 9.41 9.73 10.06 10.44 10.03 8 South Africa 7.10 10.41 7.81 7.13 6.12 9 Egypt 4.70 5.13 2.18 2.55 3.25 10 Mozambique 1.60 2.43 4.00 4.08 0.47 Others 1.16 0.72 0.72 2.06 1.39 Total 575.11 568.82 639.42 656.51 585.29 Source: UN Comtrade, ITC
3) Edible Oil
(a) Production and Current Trade
In 2014, the total amount of soya bean production was 120,900 tonnes. The soya bean is mainly used for oil processing in domestic markets and some quantities are exported to neighbouring countries like Zimbabwe, Botswana, South Africa, Kenya and Zambia. Regarding the import, only a limited quantity is imported from Zimbabwe and other countries.
500 Sunflower (e) Ground nuts (e) 50 Soya (e) Cottonseed (e) (1,000tons) 400 40
300 30 Sunflower (p) Ground nuts (p) 200 20 Soya (p) Cottonseed (p) 100 10
0 0 2011 2012 2013 2014
Source: FAOSTAT, UN Com Trade Database Figure 4.25 Production and Export of Oil Seeds in Malawi
4-41 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.25 Export and Import of Soya Beans by Malawi by Country (Unit: 1,000 ton) Average 2011 2012 2013 2014 2015 (2011-2015) Export Zimbabwe 2.21 0.45 6.39 9.68 6.75 5.09 Botswana 0.95 1.72 6.38 1.67 0.00 2.14 South Africa 0.16 0.03 0.51 5.71 0.98 1.48 Kenya 0.34 0.03 0.15 3.59 0.24 0.87 Zambia 1.06 0.02 0.85 0.69 1.47 0.82 Others 0.33 2.31 0.06 1.15 0.12 0.79 Total 5.04 4.56 14.33 22.48 9.56 11.19 Import Zimbabwe 0.05 0.74 0.11 0.08 0.02 0.20 USA 0.00 0.60 0.36 0.00 0.00 0.19 Italy 0.00 0.40 0.00 0.49 0.00 0.18 Zambia 0.03 0.52 0.13 0.03 0.00 0.14 South Africa 0.01 0.00 0.00 0.40 0.03 0.09 Mozambique 0.00 0.02 0.00 0.11 0.00 0.03 Others 0.00 0.00 0.00 0.01 0.00 0.00 Total 0.09 2.28 0.60 1.12 0.05 0.83 Source: UN Comtrade
Malawi totally depends on import for soya bean oil and has only a negligible amount of sunflower oil export, with almost the same amount of domestic production and import.
【Soya Bean Oil】 【Sunflower Oil】
20 (1,000 tons) 4 (1,000 tons) Production Expoｒｔ Import
15 3
10 2
5 1 Production Expoｒｔ Import 0 0 2011 2012 2013 2014 2011 2012 2013 2014 Source: FAOSTAT, ITC/UN Com Trade Figure 4.26 Production and Trade of Edible Oil by Malawi
Table 4.26 Import of Soya Bean Oil by Malawi by Country (Unit: 1,000 ton) Average Countries 2011 2012 2013 2014 2015 (2011-2015) Argentina 14.07 5.85 3.82 6.20 4.41 6.87 South Africa 1.33 1.20 0.90 2.63 1.47 1.50 Kenya 0.75 2.28 0.00 0.00 0.00 0.61 Malaysia 0.00 0.00 0.35 0.46 2.17 0.59 Zambia 0.00 0.06 0.21 0.21 0.32 0.16 Others 1.29 0.15 2.17 0.70 1.01 1.07 Total 17.44 9.53 7.45 10.20 9.39 10.80 Source: UN Comtrade
4-42 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(b) Production Potential
Four kinds of oil seeds (sunflower, groundnut, soya, and cotton) listed in NES have a high demand both from domestic and international markets since they can be processed into various products including cooking oil. Although most of the companies processing oil seed in Malawi produce and sell their products for local markets in an oligopolistic structure, it would be possible for the companies who could acquire sufficient production capacity of edible oil to meet the demand in the surrounding countries.
(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)
As described in 3.1.7, the market of edible oils is expanding in neighbouring countries, therefore, Malawi could expand its export when they are able to enter into the countries’ markets.
4.2 Industry
4.2.1 Overview of the Industry In Malawi, the industry sector has not yet developed, vis-à-vis the service and the agriculture sector. The value added of the industry sector was MWK 187.82 billion or 14.4% of the GDP in 2016 at the 2010 constant price, whereas the service sector made the largest contribution of MWK 665.45 billion or 50.9% of the value added to the national economy, followed by the primary sector of which accounted for 28.6% of the GDP. The industry grew at 1.62% from 2015 to 2016, which is slightly lower than the growth of GDP, 2.74%. In the industry sector, the manufacturing sector contributed MWK 123.16 billion or 9.4% to the GDP, which accounted for 65.6% of the total of the industry sector. However, the construction sector has grown much faster than the manufacturing from 2015 to 2016.
In 2016, 472,332 persons or 7.4% of the total employment were engaged in the industry sector. The manufacturing sector employed 261,697 persons or 4.1% of the total, followed by the construction sector accounting for 2.6% of the total employment. The majority of the population in Malawi is still engaged in the primary industry of agriculture, forestry and fishery, the share of which exceeded 60% of the total employment.
4-43 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.27 GDP 2016 at 2010 Constant Price GDP 2016 (2010 Constant Price) 2015-2016 Sector (million MWK) (Share) Growth Rate Agriculture, forestry and fishing 364,471 27.9% -0.17% Mining and quarrying 11,647 0.9% 0.43% Manufacturing 123,159 9.4% 1.37% Electricity, gas and water supply 16,020 1.2% 0.41% Construction 37,002 2.8% 3.41% Wholesale and retail trade 208,044 15.9% 2.04% Transportation and storage 35,580 2.7% 4.66% Accommodation and food services 25,957 2.0% 5.71% Information and communication 57,844 4.4% 4.80% Financial and insurance services 68,320 5.2% 5.48% Real estate activities 101,287 7.7% 3.05% Professional and support services 4,001 0.3% 3.71% Public administration and defence 27,123 2.1% 6.24% Education 35,308 2.7% 7.92% Health and social work activities 35,777 2.7% 7.18% Other Services 66,210 5.1% 5.48% GDP at constant market prices 1,306,937 100.0% 2.74% Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017.
Table 4.28 Employment by Industry 2013 Employment 2013 Sector Persons Share (%) Agriculture, forestry and fishing 4,091,415 64.1% Mining and quarrying 19,149 0.3% Manufacturing 261,697 4.1% Electricity, gas, steam and air conditioning supply 12,766 0.2% Water supply, sewerage, waste management and remediation activities 12,766 0.2% Construction 165,954 2.6% Wholesale and retail trade and repair of motor vehicles 1,034,024 16.2% Transport, storage and communication 127,657 2.0% Accommodation and food services activities 44,680 0.7% Professional, scientific and technical 12,766 0.2% Administrative and support services 44,680 0.7% Public administration and defence 127,657 2.0% Education 140,423 2.2% Human health and social work 89,360 1.4% Other service 114,892 1.8% Activities of households as employers 82,977 1.3% Total 6,382,863 100.0% Source: National Statistical Office. Labour Force Survey 2013
4.2.2 Current Condition and Potential of Industrial Development Along Nacala Corridor Similar to agriculture, a previous study shows the potential for growth and export of some industry sectors60. Among them, the following are considered to be promoted through the development of the Nacala Corridor.
60 JICA (Mitsubishi UFJ Research and Consulting/PADECO), “Data Collection Survey for Potential Industries in Malawi”, August 2013.
4-44 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(1) Agro-processing Apart from the agro-processing products mentioned in the previous section, the following products has the potential for growth with fulfilling the increasing demand in domestic and neighbouring countries’ markets.
Beer: The Carlsberg Malawi Ltd, 60% invested by the headquarters in Denmark and 40% by local Press Corporation, produces beer in Malawi which is the only production base of Carlsberg in Africa61. As the NES also regards beverages including beer as high value added products with high export potential and gives policy support, the Nacala Corridor is expected to be utilized as one of the main export routes for the product. Although 1,000 to 2,500 tons of beer has been exported per year mainly to Mozambique, a high tariff rate on imported beer in Mozambique (20%) has to be reduced for further facilitation and expansion of Malawi’s beer exports.
(2) Plastic Packaging Plastic Packages produced in Malawi have a certain export share to neighbouring counties. The NES regards the plastic packaging industry as a necessary sector for the export of agro-processing products with add-valuing. A working group on packaging is organised under the Trade, Industry and Private Sector Development Sector Wide Approach (TIP SWAp) of NES to introduce a strategy to increase added value of packaging, through the collaboration and division of labour between expert agro-processors and packaging manufacturers. When this strategy is successfully implemented, further expansion of distribution of the products in the region through the Nacala Corridor could be expected. At the same time, the distribution of the material for packaging (pellet) which is mostly imported via the Beira Port, is expected to fully shift to the Nacala Corridor when it is developed.
4.3 Mining
4.3.1 Overview of the Mining Unlike Zambia, the mining and quarrying sector in Malawi brings about limited contribution to the national economy, of which accounts for 1% or less from 2011 to 2016. In 2016, the contribution of the mining sector to GDP was 0.9%. The activities related to the mineral production in Malawi is artisanal and small scale and mostly for domestic consumption.
Table 4.29 Contribution of Mining and Quarrying Sector to the National Economy (Million MWK at 2010 Constant Price) 2011 2012 2013 2014 2015 2016 Mining and Quarrying 9,786 11,240 12,091 11,467 11,597 11,647 GDP at constant market prices 1,069,252 1,091,543 1,157,601 1,231,911 1,272,067 1,306,937 Mining Sector Share in GDP 0.92% 1.03% 1.04% 0.93% 0.91% 0.89% Mining Sector Growth Rate - 15% 8% -5% 1% 0% Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2014 and 2017.
61 In August 2016, the ownership was sold to the French private company, Groupe Castel.
4-45 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.3.2 Mineral Production in Malawi Malawi produces cement, crushed stone, agricultural lime, limestone, salt, phosphate, gemstones and stones for decorative and/or dimensional use. Most of the mineral production except coal and rock phosphate expanded in 2016. Coal production was 43,338 tonnes in 2016, which declined from 58,774 tonnes in 2015, due to the cheap coal import from Moatize in Mozambique. Major coal mines including Mchenga, Malcoal and Kaziwiziwi Mines produce coals for domestic industry use. The coal reserves are estimated over 22 million tonnes of proven coal reserves in the country. Cement and rock aggregates productions significantly increased to 188,946 tonnes and about 20 million tonnes respectively, to meet a growing demand from the expanding economic activities. The production of agricultural and hydrated lime was also expanded to 38,278 tonnes. Gemstones production reached 1,300 tonnes in 2016 and is expected to increase up to 2,000 tonnes in 201762.
The uranium production at Kayelekera Uranium Mine has been stopped still. The first large-scale mining project in Malawi, Kayelekera Uranium Mine, opened in 2009 in the northern part of Malawi by an Australian company, Paladin Energy Ltd. Due to the project, the contribution of the mining sector to GDP improved from 3% in 2008 to around 10% in 2009, and further increase was expected to at least 20% by 2020 in MGDS II. However, the production of uranium has been suspended since 2014, because of the crash in uranium prices to below USD 40/lb. The Kayelekera Uranium Mine was sold to a Chinese firm in 2015. The production shall not be resumed before the price of uranium rises around USD 70 - USD 75 per pound63.
Table 4.30 Mineral Production in 2015 and 2016 2015 2016 Type of Mineral Quantity Value Quantity Value (ton) (million MWK) (ton) (million MWK) Coal 58,774.00 791.16 43,338.00 638.92 Cement 65,560.00 71.10 188,946.00 12,500.00 Agricultural and Hydrated Lime 33,158.00 433.00 38,278.00 499.86 Uranium Concentrates - - - - Rock Phosphate 12,400.00 205.00 2,500.00 12,400.00 Rock aggregate 1,158,742.00 1,566.00 19,990,000.00 3,309.00 Gemstones 136.00 102.50 1,300.00 205.72 Dimension stone 40,500.00 13.25 70,000.00 15.87 Iron ore - - 3,800.00 9.59 Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017.
4.3.3 Export of Mineral Commodities Mineral commodities of coal, agricultural and calcite lime, dimension stones, and gemstones were mainly exported from Malawi. The dominant export destination of coal and agricultural lime are Rwanda and Mozambique respectively. Importers of gemstones are mostly Asian
62 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 63 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017
4-46 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
countries, in addition to South Africa, USA, and European countries. Though the export value of the mineral commodities was marginal, approximately MWK 400 million was earned from royalties, licence processing and ground fees from July 2016 to March 201764.
Table 4.31 Mineral Export in 2015 and 2016 2015 2016 Type Quantity Value Quantity Value (ton) (million MWK) (ton) (million MWK) Coal 7,520 85.01 8,071 159.76 Agricultural/calcite lime - - 1,550 310 Dimension stones 40,500 13.25 41,218 0.12 Rock aggregate 35 1750 Gemstones 150 185.62 292.6 382.48 Rock/Soil samples 86 4.52 32.2 8.04 Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017.
4.3.4 Government Policy of Mining Sector The agriculture sector had been prioritized in the history of economic development in Malawi. However, the government started recognising the mining sector as important sector for the economic development of the country. The mining sector was selected as one of nine key priority areas in the MGDS 2006-2011 and MGDS II 2011-2015. In the MGDS II, it is mentioned that the development of the mining industry can significantly boost the economic growth of the country through employment creation and generation of foreign exchange.
In order to achieve the goal of the MGDS, the Mines and Mineral Policy of Malawi was formulated by the Ministry of Mining in 2013. The policy statements mentioned in the Policy are shown below. In the newly drafted MGDS III 2017-2022, however, the mining sector is not identified as a key priority area, but one of the components in industrial development. Mineral Development Generate, collect and disseminate baseline geological information Promote and market the mineral sector Encourage joint ventures in mining involving local and foreign companies Ensure that supporting infrastructure and essential services are in place Set up research and development institution for high-level skills in mineral development technology Provide an enabling environment in order to develop the artisanal and small scale mining sub-sector Promote downstream value-addition of minerals Investment Climate in the mineral sector Continue to maintain policies conductive to high economic growth in order to attract more investments into the mineral sector
64 Ditto.
4-47 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Introduce and maintain competitive fees which will be reviewed regularly to always be comparable to those obtainable internationally Governance Strengthen institutions in the mineral sector Review the mineral legislation Put in place a clear, transparent and equitable regulatory framework Environmental Management Enforce environmentally sustainable mining practices Social Issues Address social issues in the mining and mineral sector Regional and International Co-operation Promote regional and international co-operation in the mineral sector
4.3.5 Increased Mining Projects in Recent Years The government is promoting foreign investments for the mining sector according to the MGDS and the sector policy mentioned above. Recently, the potential of rare metal and rare earth elements in Malawi is recognized by some foreign investors in addition to uranium. Some projects are under exploration and study by foreign companies from Australia, Canada, China, etc. Among them, the major projects are the Kanyika Niobium Project and the Songwe Rare Earth Element project, which are expected to improve the outputs of the mining sector drastically. The outlines of the projects are shown below: Kanyika Niobium Project Company: Globe Metals and Mining (Australian Company) Location: Mzimba District in the Northern Region Products: niobium (3,000 tonnes/year), tantalum, uranium and zircon. Production: niobium - 3,000 tonnes/year Employment: 1,000 employment openings, including 100 expats. Status: - Mining agreement have been made between Malawi Government and the company - Feasibility Study and Environmental Impact Assessment: EIA have been conducted Concerns: - Relocation of community is delaying because of the relocation of the customary land ownership and compensation to the community - The problem of power supply to the project was solved by constructing a small-scale hydroelectric power plant at Bua River. The thermal power plant at Salima also can be also used. Songwe Rare Earth Element Project Company: Mkango Resources (Canadian Company) Location: Songwe Hill, Phalombe District in the Southern Region Products: Rare Earth Element (Element 39) Production: 2,840 tonnes/year
4-48 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Employment: 20 expats and 200 jobs Status: - Pre-Feasibility Study has been conducted - Bankable Feasibility Study is being carried out - EIA is not approved Concerns: - Having good relations with the community and conducting some community projects - Issues on the power supply – high-voltage power is needed and brought from ESCOM substation in Mulanje
4.4 Trade
4.4.1 Overview of the International Trade The international trade of Malawi has been expanded in the last decade. The export and import values were almost doubled from 2006 to 2015. The values of the exported and imported goods exceeded USD 2.3 billion and USD 1 billion, though the trade deficit also doubled to USD 1.2 billion.
Malawi’s leading export partner in 2015 was Belgium, followed by Zimbabwe and Mozambique. The export value to each of these top three countries exceeded USD 100 million and the share of the total value of the export to the three countries reached nearly 30%. On the other hand, Malawi imported USD 417 million or 18.1% of the total from South Africa, followed by China (13.1%), the United Arab Emirates (11.0%) and India (10.3%).
The exported value to Zambia was USD 19 million, 16th largest amount, while the imported value from Zambia ranked 5th among the partners. Among the neighbouring countries, the trade between Malawi and Mozambique is more active than trade with Zambia. The Nacala Corridor development can expand trade with Zambia and contribute to the growth of export to ameliorate the trade deficit with Zambia.
3,000 2,845 2,774 2,428 2,330 2,312 2,500 2,204 2,173 2,022 2,000 1,378 1,500 million) 1,207
1,425 (US$ 1,000 1,342 1,188 1,183 1,208 1,066 1,080 879 500 869 666
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Export Import Source: WITS - UNSD Comtrade Figure 4.27 Export and Import Values from 2006 to 2015
4-49 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
200 450 417 180 400
160 350 304 140 300 254 238 120 114 250 100100 million) 100 200 million) 80 80 (US$ 150 (US$ 64 118 57 56 60 52 50 48 100 77 73 72 71 52 40 50
20 0
0 India China Japan Africa States
Zambia Emirates Kingdom
India Egypt China Africa States
Switzerland
South Belgium Mozambique United Kingdom Arab Germany
Zimbabwe United South Mozambique United United United Source: WITS - UNSD Comtrade Source: WITS - UNSD Comtrade Figure 4.28 Top 10 Export Partners in 2015 Figure 4.29 Top 10 Import Partners in 2015
4.4.2 Traded Commodities Raw materials have been the primary goods among the exported goods from Malawi. Although the share of the raw materials declined from around 75% at the peak years such as 2008 or 2012, it was still high, 56% in 2015. This is because the Malawi economy is characterized by mono-culture, depending on exporting tobacco. As described in Table 4.32, the tobacco export value was USD 496 million and accounted for 46% of the value of the export commodities in 2015, followed by sugar (9%) and coffee and tea (7%). Thus, it is an urgent task to develop the industry to process raw materials and to export the value added goods.
Similar to the situation in Zambia, import of consumer goods increased from 36% in 2006 to 42% in 2015. The intermediate goods consisted of 31% of the total of the imported goods by product category. The share of the imports of the capital goods and raw materials were 18% and 7%, showing a slight decreasing trend in the last decade.
In terms of commodities, the import of fuels including oil and coal accounted for the largest value of USD 250 million or 11%, then followed by fertilizer, pharmaceutical products, and the category of boilers, machinery and mechanical appliances, the share of which was about 8 to 10% each. The import of cereals including maize was 6% of the total value. In 2015, 48.9% of fuels were imported from the UAE, followed by South Africa (21.6%), Mozambique
4-50 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(13.9%) and Kuwait (10.4%). While, two major supplies of fertilizer to Malawi are the UAE and China accounting for 27% and 25% respectively65.
2,000 1,800 1,600 1,400 1,200 1,000 million)
800 (US$ 600 400 200 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Capital goods Consumer goods Intermediate goods Raw materials
Source: WITS - UNSD Comtrade Figure 4.30 Export by Product Category from 2006 to 2015
3,000
2,500
2,000
1,500 million)
(US$ 1,000
500
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Capital goods Consumer goods Intermediate goods Raw materials
Source: WITS - UNSD Comtrade Figure 4.31 Import by Product Category from 2006 to 2015
65 Market Analysis and Research, International Trade Centre (ITC) calculation based on National Statistical Office (NSO) of Malawi statistics. http://www.trademap.org/Index.aspx#
4-51 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.32 Top Ten Export and Import Commodities in 2015 Export Import million million Rank Commodities (HS description) Share Rank Commodities (HS description) Share USD USD Mineral fuels, mineral oils and products Tobacco and manufactured tobacco 1 495.67 45.9% 1 of their distillation; bituminous 250.21 10.8% substitutes substances; mineral waxes 2 Sugars and sugar confectionery 98.26 9.1% 2 Fertilisers 223.57 9.7% 3 Coffee, tea, mate and spices 71.53 6.6% 3 Pharmaceutical products 194.20 8.4% Edible vegetables and certain roots Nuclear reactors, boilers, machinery and 4 64.73 6.0% 4 187.46 8.1% and tubers mechanical appliances; parts thereof Vehicles other than railway or tramway Residues and waste from the food 5 43.99 4.1% 5 rolling-stock, and parts and accessories 149.52 6.5% industries; prepared animal fodder thereof Nuclear reactors, boilers, machinery 6 and mechanical appliances; parts 39.15 3.6% 6 Cereals 128.97 5.6% thereof Electrical machinery and equipment and Dairy produce; birds' eggs; natural parts thereof; sound recorders and honey; edible products of animal 7 35.56 3.3% 7 reproducers, television image and sound 118.49 5.1% origin, not elsewhere specified or recorders and reproducers, and parts included and accessories of such articles 8 Plastics and articles thereof 29.97 2.8% 8 Plastics and articles thereof 101.08 4.4% Other made up textile articles; sets; worn 9 Cotton 24.34 2.3% 9 92.91 4.0% clothing and worn textile articles; rags Printed books, newspapers, pictures and 10 Fertilisers 22.75 2.1% 10 other products of the printing industry; 69.91 3.0% manuscripts, typescripts and plans Source: WITS - UNSD Comtrade
Table 4.33 Top Five Importers and Exporters of Top Five Traded Commodities in 2015 Commodities Top Five Countries EXPORT Belgium (21.9%); Egypt (11.4%); China (10.2%); Germany (8.8%); 1 Tobacco and manufactured tobacco substitutes Russian Federation (7.6%) United Kingdom (36.7%); South Africa (10.7%); Zimbabwe (9.4%); 2 Sugars and sugar confectionery Spain (9.1%); Italy (8.3%) South Africa (39.3%); United Kingdom (28.7%); Netherlands 3 Coffee, tea, mate and spices (7.4%); United States of America (4.1%); Germany (3.6%) India (78.1%); United Arab Emirates (8.5%); Singapore (2.6%); 4 Edible vegetables and certain roots and tubers Indonesia (1.8%); United Kingdom (1.7%) Residues and waste from the food industries; prepared Zimbabwe (68.6%); Kenya (14.8%); South Africa (7.7%); Tanzania, 5 animal fodder United Republic of (7.0%); Mozambique (1.2%) IMPORT Mineral fuels, mineral oils and products of their United Arab Emirates (48.9%); South Africa (21.6%); Mozambique 1 distillation; bituminous substances; mineral waxes (13.9%); Kuwait (10.4%); Switzerland (3.3%) United Arab Emirates (27.1%); China (23.9%); Mauritius (6.8%); 2 Fertilisers Switzerland (6.8%); South Africa (5.0%) India (53.8%); Belgium (9.4%); Denmark (9.3%); United States of 3 Pharmaceutical products America (7.0%); United Arab Emirates (4.9%) Nuclear reactors, boilers, machinery and mechanical South Africa (25.4%); China (21.9%); India (16.1%); United Arab 4 appliances; parts thereof Emirates (5.3%); Germany (5.3%) Vehicles other than railway or tramway rolling-stock, Japan (40.7%); South Africa (21.8%); India (9.7%); United 5 and parts and accessories thereof Kingdom (7.2%); United States of America (4.8%) Sources: ITC calculations based on National Statistical Office (NSO) of Malawi statistics since January, 2011. http://www.trademap.org/Index.aspx
4-52 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.4.3 Development Potential and Challenges of the Trade Sector in the Nacala Corridor Region For Malawi’s trade sector, the reduction of the persistent trade deficit is a crucial issue. In order to expand the export values, industry development is indispensable to produce and export the value added products, not the raw materials. Although the future of the tobacco industry is unknown, the development of high-quality tobacco products and establishing a Malawian brand image of tobacco and tea could contribute to value addition to and the export of these traditional commodities. Moreover, regarding the expansion of the production of stable food, maize is important not only for the reduction of the import of maize from Zambia but also for food security. The development of agro-processing industry development and capacity building for that purpose is in urgent need.
The development of the Nacala Corridor can promote the export of the agricultural products, such as tobacco, sugar, tea, and groundnuts by the improved access and reduction of the transport cost. According to the interviews with the tobacco industry and logistics firms, the improvement and rehabilitation of the railways of the Nacala Corridor and construction and expansion of container terminals can significantly improve the transport and expand the export of tobacco, sugar, and other commodities such as pigeon peas. Meanwhile, the railways have a potential to reduce the transport cost of the fuel, the largest imported commodity. As discussed in the trade sector of Zambia, groundnuts are the major commodity exported to Zambia from Malawi through the Nacala Corridor. The improvement of the Nacala Corridor may be able to contribute to expansion of the export of groundnuts and other products. The establishment of the OSBP can reduce the trade barriers by improving the custom procedure, so that the development of the OSBP on the border with Mozambique should be encouraged as well. However, the corridor development might have a potential to also increase the import from Zambia.
4.5 Tourism
4.5.1 Overview of the Tourism The tourism sector in Malawi contributed MWK 138 billion (USD 194.9 million) to GDP directly, and MWK 290 billion (USD 409.0 million) to GDP totally, which accounted for 3.4% and 7.2% of total GDP in 2016. The sector is expected to grow by 4.1% in 201766.
The tourist arrival was 804,900 persons in 2015 and has increased by the annual average growth rate of 1.53% since 2010. Nearly 80% of the tourists came from Africa, followed by those from Europe, which accounted for 12%. The primary purpose of the visit to Malawi was work or business related. The visitors coming for business reached 73% of the visitors in 2015 and increased by 15% since 2010, while the tourists for holidays and vacation and for visiting friends and relatives declined by 7% each.
66 World Travel & Tourism Council. TRAVEL & TOURISM ECONOMIC IMPACT 2017 MALAWI. https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2017/malawi2017.pdf
4-53 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.34 Tourist Arrivals Annual Average 2010 2011 2012 2013 2014 2015 Growth Rate 2010-2015 Visitors (1,000 persons) 746.1 766.9 770.3 795 819.2 804.9 - Growth Rate - 2.79% 0.44% 3.21% 3.04% -1.75% 1.53% Source: Department of Tourism, 2015 Tourism Statistics Report.
Australia Asia 1% 2% Europe 12% America 6%
Africa 79%
Source: Department of Tourism, 2015 Tourism Statistics Report. Figure 4.32 Tourist Arrivals in 2005 by Continent
900
800 68.9 75 70.2 700 100.8 82.1 121.9 165 145.6 600 252.7 206.1 206.1 persons) 500 189.2 Visit Friends or Relatives Holiday/ Vacation
(1000 400
Work or Business 300 579.1 589.1
Visitors 482.1 473.4 200 434.9 460
100
0 2010 2011 2012 2013 2014 2015 + Source: Department of Tourism, 2015 Tourism Statistics Report. Source: Department of Tourism, 2015 Tourism Statistics Report. Figure 4.33 Tourist Arrivals by Purpose of Visit
In 2015, the tourists from Mozambique, 274,122 visitors, accounted for 34% of the total tourists, the largest share among all visitors, followed by the visitors from South Africa (14%), Zimbabwe (12%), and Zambia (9%). The purpose of the visits of the visitors from African countries was business and work. In particular, about 85% of the visitors from the neighbouring countries, Mozambique and Zambia visited for business and work.
4-54 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
300,000
250,000
200,000 (Persons)
150,000 Arrivals 100,000
50,000 Tourist 0
Holiday/ Vacation Work or Business Visit Friends or Relatives Source: Department of Tourism, 2015 Tourism Statistics Report. Figure 4.34 Tourist Arrivals by Top Ten African Markets
Most of the international tourists were from European countries. Among the top ten international markets, the largest number of tourists, 44,886 people, originated from the United Kingdom, followed by tourists from the United States, 35,995 people, and from the Netherlands, 11,315 people. 55% to nearly 70% of tourists from the international markets visited Malawi for business/ work.
50,000 45,000 40,000 35,000 (Persons) 30,000 25,000 20,000 Arrivals 15,000 10,000
Tourist 5,000 0
Holiday/ Vacation Work or Business Visit Friends or Relatives Figure 4.35 Tourist Arrivals by Top Ten International Markets in 2015
The expenditure by purpose of visits and average number of nights spent are described in Table 4.35 below. The average expenditure per visitor was MWK 116,600 (USD 265) and total expenditure was MWK 94 billion (USD 212.7 million). The average number of nights spent in Malawi was 8.8 nights. The annual average room and bed occupancy rates in 2015, 53% and 44% respectively were not high.
4-55 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.35 Expenditures by Purpose of Visit and Average Number of Nights in 2015 Average Number of Average Expenditure Total Expenditure Total Nights Spent (night) (1000 MWK) (million MWK) Holiday/ Vacation 145,644 12.2 290.0 42,201 Work or Business 589,071 8 85.0 50,059 Visit Friends or Relatives 70,197 8.7 22.0 1,539 All Visitors 804,912 8.8 116.6 93,799 Source: Department of Tourism, 2015 Tourism Statistics Report.
Table 4.36 Annual Average Room and Bed Occupancy Rates in 2015 Room Occupancy Bed Occupancy Annual Average Occupancy Rate 53% 44% Source: Department of Tourism, 2015 Tourism Statistics Report.
Among the nine ports of entry in the country, 247,720 visitors or 31% of the total visitors entered through Mwanza, followed by Lilongwe Airport, which accounted for 16% in 2015. The tourist arrivals via two ports on the Nacala Corridor, Mchinji/Chimaliro border with Zambia and Chiponde border with Mozambique are 10% and 8% of the total tourists, as presented in Table below. Nearly 85% of the visitors passing through the two borders came for business and work purpose.
300,000 247,720 250,000
200,000 132,092 150,000 78,128 100,000 88,554 65,408 51,354 67,573 50,000 36,296 10,655 0
Source: Department of Tourism, 2015 Tourism Statistics Report. Figure 4.36 Tourist Arrivals by Port of Entry in 2015
Table 4.37 Tourist Arrivals by Port of Entry Along Nacala Corridor in 2015 Visit Friends or Holiday/Vacation Work or Business Total Relatives Mchinji/Chimaliro 9,307 65,107 3,714 78,128 Chiponde 9,078 57,764 731 67,573 Total Visitors 145,644 589,071 70,197 804,912 Source: Department of Tourism, 2015 Tourism Statistics Report.
4-56 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.5.2 Policy Direction of Tourism Sector For the promotion of the tourism sector, the Malawian government prepared “Malawi 2020 Tourism Development Strategy” and “Malawi Tourism Marketing Strategy Framework (2017-2021).” The tourism sector is planned to be one of the priority sectors in the MGDS III. The visions and objectives with numerical targets by 2020 are summarized in Table 4.38.
Table 4.38 Visions and Objectives in Malawi 2020 Tourism Development Strategy Visions Goals Malawi will be a world-class sustainable tourism destination Double total aggregate number of visitors coming from key that professionally manages and actively conserves its markets in Europe, North America, South Africa and the natural and cultural heritage through vibrant collaboration Middle East with communities, business, and government. Increase contribution of tourism to GDP by 15% Malawi will be well-known among the world’s most Add 10,000 tourism-benefited jobs enthusiastic travellers as one of southern Africa’s premier Increase average length of stay by 1 day tourism experiences. Increase average annual occupancy rates of licenced Malawi will showcase its leadership in African hospitality accommodations by 10% through high-quality services and facilities. Increase tourism traffic throughout the country, with 20% Malawi will embrace tourism as one of the country’s leading more visitation to national parks in the Northern and Southern vehicles for economic growth through a highly competitive Region. environment of exemplary education, entrepreneurship, Increase the percentage of national territory under infrastructure and investment. conservation by 15% Attract USD 100 million in new private tourism-related investment Improve Malawi’s “ease of doing business” ranking by 20 points Open one new airline route to a major international hub 60% of licenced tourism business committing to sustainable tourism principles and best practices Source: Malawi 2020 Tourism Development Strategy, Early Draft. P. 8-9.
With the articulation of the strategy and marketing under the brand name of “the Warm Heart of Africa,” the government aims to increase tourist arrivals by 1.2 million per year by 202067. Three strategies proposed include:
Improving the enabling environment by reducing barriers for new and operating businesses, addressing infrastructure challenges, strengthening public-private sector dialogue, and incentivising investment; Strengthening Malawi’s tourism offer by building a network of regional tourism committees to address gaps in tourism products and services and Growing international tourism demand for Malawi through the establishment of a public-private partnership destination marketing organisation that engages in best practices to inspire visitation by high-value travellers68.
The Malawi Tourism Marketing Strategy Framework (2017-2021) identified that the priority international markets including the United Kingdom, the United States, Germany, and
67 Interview with Department of Tourism on May 12, 2017 68 Malawi 2020 Tourism Development Strategy. Early Draft. P. 4.
4-57 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Netherlands, and priority regional markets such as Mozambique, South Africa, Tanzania, Zambia and Zimbabwe. It proposes the strategic goals for development of product lines and destination branding, and the strategic marketing action plan from 2017 to 2021.
4.5.3 Development Potential and Challenges of the Tourism Sector in the Nacala Corridor Region There are a number of tourism resources in Malawi including lakes, mountains, forests, wildlife, cultural artefacts, etc. However, the development potentials of the tourism sector in Malawi were not fully cultivated yet. The development of the tourism sector of Malawi was hampered by the lack of sufficient investment because the sector was not identified as a priority sector for development. The sector also did not have effective marketing strategy to attract tourists. The Malawi Tourism Marketing Strategy Framework (2017-2021) identified issues from a lack of marketing vision and well-defined policies, activities without strategies, missing the evaluation of the marketing efforts, and a lack of a consistent tourism marketing strategy. As a result, the priority areas for tourism development were not specified; human resources for the hospitality industry were not enough and infrastructure such as roads and airports was not developed to support the tourism industries 69 . The challenges to the development of the tourism sector are summarized in Table 4.39.
Table 4.39 Challenges to the Tourism Sector Policy Level Sector Level Law enforcement Underdeveloped product Weak Tourism Regulatory Framework Weak co-ordination and information flow amongst Fluctuating, inconsistent and uncompetitive investment stakeholders incentives Lack of zoning of land for multisector use and unavailability Undeveloped cultural assets of ready land for tourism development Substandard structures and incompatible land use on Inconsistent and conflicting investment guidelines prime land for tourism development. Accessibility Inadequate supporting infrastructure and services Health risks Environmental degradation of areas Source: Ministry of Finance, Economic Planning and Development, Final Report Malawi Growth And Development Strategy (MGDS) II Review and Country Situation Analysis Report, 25 March, 2016.
The tourism sector is identified as a priority in the new MGDS III which is under preparation. As described, the sector-wide efforts were initiated with the development of “Malawi 2020 Tourism Development Strategy” and “Malawi Tourism Marketing Strategy Framework (2017-2021).” Therefore, the current environment of the tourism sector is more conducive to the promotion of tourism. By coordinating the development of the Nacala Corridor with these newly prepared strategies, it is possible and necessary to promote the domestic tourism, to develop and improve infrastructure, especially transport for better access and mobility, and to initiate collaboration with Zambia and Mozambique on inter-country tourism as described in the Zambian section.
69 Interview with Department of Tourism on May 12, 2017
4-58 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.6 Energy
4.6.1 Current Situations of the Electricity Sub-Sector In Malawi, only one-tenth of the population had access to electricity in 2014. The access rate to electricity in Malawi was 46% in urban areas; however, only 5% of the rural population accounting for 84% of the total population had the access to electricity.
Table 4.40 Access to Electricity 1990 2000 2010 2014 Access to electricity (% of population) 1.9 4.8 8.7 11.9 Access to electricity, rural (% of rural population) 0.3 1.0 3.5 4.7 Access to electricity, urban (% of urban population) .. 28.7 34.7 46.1 Source: World Development Indicators
The installed capacity of energy in 2016 was 351 MW and increased by 85 MW in the last decade. While, the peak demand increased from 251 MW in 2007 to 328 MW in 2016. The capacity was never sufficient, compared with the demand as shown in Table 4.41. The existing power stations owned by Electricity Supply Corporation of Malawi Limited (ESCOM) were listed in Table 4.42. Most of the power stations are hydropower generation.
Table 4.41 Installed Capacity and Peak Demand from 2007 to 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Installed Hydro Capacity (MW) 265.9 285.9 285.9 285.9 285.9 285.9 285.9 351.0 351.0 351.0 Maximum (Peak) Demand (MW) 251.0 241.9 256.7 273.0 277.8 277.9 279.7 323.9 335.3 328.3 Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017
Table 4.42 Existing Power Stations Power Station Total Installed Capacity Type Kapichira Falls 129.6 MW Hydro Nkula 124 MW Hydro Tedzani 92.7 MW Hydro Wovwe Mini Hydro 4.35 MW Hydro Mzuzu Diesel Unit 1.1 MW Diesel Likoma Islands Diesel Units 1.050MW Diesel Chizumulu Islands Diesel Units 2 Units at 150 KW each Diesel Total 353.1 MW Source: Electricity Supply Corporation of Malawi Limited (ESCOM). http://www.escom.mw/generation.php
The energy generation and consumption by consumer category are shown in Figure 4.37. The energy generation grew from 1,453 GWh in 2007 to 1,977 GWh in 2016, while the total consumption increased from 1,154 GWh to 1,528 GWh during the same period. The average annual growth rate of the generation amount 1.63% is higher than that of the consumption annual growth rate, 1.48%. However, the domestic consumption, which accounted for 50% of the total consumption in 2016, increased rapidly in the last decade by 3.03%. In 2016, the second largest consumption was made by the power demand category customers, primarily for
4-59 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report industry use (40%) (see Figure 4.38). According to the peak demand forecast for electricity shown in Table 4.43, the peak demand already exceeded the installed capacity of 352 MW in 2015. The current installed capacity does not meet the demand for the power and its demand is expected to keep on rising in future.
2,500 1,975 1,977 1,872 1,912 1,907 2,000 1,809 1,828 1,642 1,543 1,453 1,500 19 21 24 22 24
ｈ） 21 24 16 17 620 GW 12 581 612 605 614 639 620 （ 1,000 527 578 512 117 254 250 244 183 150 226 215 500 198 214 614 699 766 435 462 502 572 594 596 578 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Domestic Consumption (GWh) General (GWh) Power Demand (GWh) ‐ Export (GWh) Energy Generation (GWh) Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 Figure 4.37 Power Generation and Consumption from 2007 to 2016
Source: Ministry of Finance, Economic Planning and Development, Annual Economic Report 2017 Figure 4.38 Consumption by Customer Category of ESCOM in 2016
Table 4.43 Peak Demand Forecast Year Low Scenario Base Scenario High Scenario 2015 462.32 462.32 462.32 2020 567 719 982 2030 1,236 1,873 2,591 2037 2,245 3,566 5,217 2040 2,841 4,620 6,946 Source: Data of 2015: Mini Integrated Resource Plan (IRP) for Electricity in Annual Economic Report 2017; other data: Integrated Resource Plan (IRP) for Malawi, Volume I - Main Report. Final Report - May 2017. Ministry of Natural Resources, Energy and Mining.
4-60 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
In order to deal with the power shortage, the industries install their own power supply system. Nearly half of the industries have their own power system as shown in Table 4.44. More than 70% of the industries in mining and quarrying and financial institutions have their power supply systems, followed by distribution, hotels, lodges, and restaurants, and transport and communications, around 60% of which have a supply system. The industries in the category of hotels, lodges, and restaurants generated the largest quantity of electricity, 824 kVA and have the third highest maximum demand of 468 kVA. The second largest net mean quantity of electricity generator is transport and communication institutions (793 kVA). The industries in mining and quarrying sector have the largest maximum demand of 800 kVA, followed by the manufacturing sector institutions, 513 kVA.
Table 4.44 Stand-by Power Supply Installation, Electricity Generation and Demand by Industry in 2012 Proportion of institutions Net quantity of Maximum demand of Industry having standby power supply electricity generated electricity (%) Mean (net_kVA) Mean (net_kVA) Mining and Quarrying 75.0 420.0 800.0 Financial Institutions (Banking, 71.8 118.0 163.7 Insurance) Distribution (Wholesale and Retail) 63.5 85.9 124.0 Hotels, Lodges and Restaurants 62.0 824.0 468.8 Transport and Communications 58.3 792.9 80.0 Agriculture 48.1 62.8 79.8 Public Services 40.0 247.2 168.4 Construction 36.4 229.5 286.6 Electricity and Water 35.7 52.3 122.8 Manufacturing 35.4 427.9 513.3 Agro-Processing 30.0 177.4 210.8 Total 47.7 352.2 236.1 Source: Malawi Energy Regulatory Authority and National Statistical Office, Malawi Energy Survey Report 2012
4.6.2 Current Situations of the Liquid Fuel and Gas Sub-Sector In 2016, Malawi imported 366.5 million litters fuel, mainly consisting of diesel (52%) and petrol (45%). The total fuel import expanded by 2.46% per year since 2000. Petrol and diesel import increased by 4.29% and 2.67% per annum from 2000 to 2016. In particular, rapid import of petrol was observed after 2010 for cheap fuel prices. On the other hand, the import of paraffin significantly dropped since 2000, because of increasing use of other lighting resources70 (See Table 4.45 and Figure 4.39).
70 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017
4-61 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.45 Fuel Import from 2000 to 2016 Year Petrol Diesel Jet A-1 Paraffin Avgas Total 2000 84,896.1 124,905.9 7,238.7 31,397.2 107.3 248,545.2 2005 84,024.0 152,664.6 9,267.8 21,838.8 235.5 258,527.4 Fuel Import 2010 101,173.6 186,539.6 11,710.6 10,639.5 318.1 310,381.4 (Thousand litres) 2015 133,103.7 166,402.2 8,766.3 506.3 176.1 308,954.5 2016 166,190.2 190,395.2 8,841.8 851.8 176.2 366,455.2 2000-2005 -0.21% 4.10% 5.07% -7.00% 17.04% 0.79% Annual Average 2005-2010 3.78% 4.09% 4.79% -13.40% 6.19% 3.72% Growth Rate 2010-2006 8.62% 0.34% -4.58% -34.35% -9.38% 2.81% 2000-2016 4.29% 2.67% 1.26% -20.18% 3.15% 2.46% Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017
400,000
350,000
300,000
250,000 liters) 200,000
(1000 150,000
100,000
50,000
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Petrol Diesel Jet A‐1 Paraffin Avgas
Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 Figure 4.39 Fuel Import from 1999 to 2016
Currently, fuel is transported from mainly three corridors of Beira, Nacala, and Dar es Salaam. The Beira has been predominantly used for fuel import since 2000. In 2016, 58% of fuel was imported via Beira, followed by Dar es Salaam (29%) and Nacala (4%) (see Figure 4.40). However, the fuel import of Beira dropped from 76% in 2015 to 58% in 2016 due to security reasons, while the import from Dar es Salam and Nacala increased71. The share of the Nacala Corridor use has fluctuated from 0.4% in 2007 to 15% in 2000 (see Table 4.46).
71 Interview with Department of Energy Affairs in May2017
4-62 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 Figure 4.40 Fuel Import by Corridor in 2016
Table 4.46 Fuel Import by Corridor from 2000 to 2016 (Thousand Litres) Fuel Import (Thousand litres) Share of Corridor Dar es Dar es Beira Nacala Mbeya Gweru Msasa Total Beira Nacala Mbeya Gweru Msasa Total Salaam Salaam 2000 126,761 42,150 51,807 20,482 41,199 282,398 44.9% 14.9% 18.3% 7.3% 0.0% 14.6% 100.0% 2001 130,586 16,134 66,136 21,369 0 234,225 55.8% 6.9% 28.2% 9.1% 0.0% 0.0% 100.0% 2002 130,763 10,140 77,013 28,880 0 246,797 53.0% 4.1% 31.2% 11.7% 0.0% 0.0% 100.0% 2003 158,653 35,988 39,857 31,998 1,066 0 267,562 59.3% 13.5% 14.9% 12.0% 0.4% 0.0% 100.0% 2004 160,122 37,362 37,362 32,024 0 0 266,871 60.0% 14.0% 14.0% 12.0% 0.0% 0.0% 100.0% 2005 182,862 6,862 43,545 25,258 0 0 258,527 70.7% 2.7% 16.8% 9.8% 0.0% 0.0% 100.0% 2006 88,509 2,718 53,337 14,595 0 59,158 218,316 40.5% 1.2% 24.4% 6.7% 0.0% 27.1% 100.0% 2007 197,010 1,164 60,114 18,356 0 0 276,643 71.2% 0.4% 21.7% 6.6% 0.0% 0.0% 100.0% 2008 214,597 20,688 56,619 28,309 0 0 320,213 67.0% 6.5% 17.7% 8.8% 0.0% 0.0% 100.0% 2009 198,528 43,640 86,012 1,276 0 0 329,456 60.3% 13.2% 26.1% 0.4% 0.0% 0.0% 100.0% 2010 211,144 21,708 42,803 22,297 0 0 298,353 70.8% 7.3% 14.3% 7.5% 0.0% 0.0% 99.9% 2011 167,766 17,241 50,846 13,343 0 0 249,196 67.3% 6.9% 20.4% 5.4% 0.0% 0.0% 100.0% 2012 258,443 7,553 35,918 9,459 0 311,373 83.0% 2.4% 11.5% 0.0% 3.0% 0.0% 100.0% 2013 268,560 10,715 43,820 0 323,095 83.1% 3.3% 13.6% 0.0% 0.0% 0.0% 100.0% 2014 225,767 11,368 41,001 0 0 0 278,136 81.2% 4.1% 14.7% 0.0% 0.0% 0.0% 100.0% 2015 233,480 6,250 69,224 0 0 0 308,955 75.6% 2.0% 22.4% 0.0% 0.0% 0.0% 100.0% 2016 213,462 15,172 104,462 32,967 0 0 366,455 58.3% 4.1% 28.5% 9.0% 0.0% 0.0% 99.9% Source: Ministry of Finance, Economic Planning and Development, Annual Economic Report 2017
4.6.3 Development Potential and Challenges of the Energy Sector The government set the target to increase electricity access from current 10% to between 30% and 50% by 2030 and initiated various attempts to achieve the objectives. Among them, a Mini Integrated Resource Plan (IRP) for Electricity was prepared as a road map from 2015 to 2020 and based on that, the Integrated Resource Plan was formulated with a long-term investment plan targeting from 2017 to 2037. The peak demand forecast in Table 4.43 was estimated for the IRP. In the forecast, a low scenario shows the current trend; a base scenario aims to achieve 30% access; and a high scenario is for 50% access rate. The install capacity must be expanded by 62% by 2020 in order to achieve the base scenario. According to the IRP, the estimated maximum demand will increase to be 719 MW by 2020 by the annual average growth rate of 17.5% and then 1,873 MW by 2030 by the annual average growth rate of 10%.
4-63 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
In order to improve the power supply and achieve the stated objective, a number of projects are proposed and on-going. Major projects are listed in Table 4.47. These projects will contribute to the expansion of the power supply that benefits development of industry and welfare of people. Because no projects will be completed until 2020, however, the power shortage is expected to continue for the coming three years72.
Among them, two transmission line projects between Malawi and Mozambique and Zambia not only take advantage of the Nacala Corridor development, but also promote development of the Nacala Corridor Region, while strengthening inter-region cooperation and collaboration.
According to the Malawi Energy Policy 2003, the fuel haulage is determined as 50% from Nacala, 20% from Dar es Salam ad 30% from Beira, in consideration of transport mode and geographical distribution. The target of the fuel imports from the Nacala Corridor is high because rail transport on the corridor is supposed to offer lower cost and sufficient capacity; however, various problems concerned with capacities, costs, efficiency and functions of the port handling, infrastructure, etc. inhibit the use of the corridor for fuel imports. The number of interviews with the government officials and logistics firms confirmed that the import of the rail transport of the Nacala Corridor is even higher than that of the road transport of Beira. One of the reasons is because only single supplier of fuels, Mozambique National Petro Company (PetroMoc) operating in the Nacala results in a lack of competition. The Nacala Port is not equipped with sufficient infrastructure and facilities such as depot and handling facilities73. However, it is no doubt that rail transport of the Nacala has the great potential for cost saving and expansion of fuel imports and the Nacala Port, a natural deep-sea port, has more advantage over the Beira Port, which is located at the river mouth and needs periodical dredging. Therefore, it is necessary to improve the functions of the Nacala Port by installing new facilities and improving its operation, with effort to lower the total cost of the corridor transport including both rail and port related cost, in order to increase the use of the Nacala Corridor for fuel import to Malawi.
72 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 73 Interviews with Department of Energy Affairs and Malawi Energy Regulation Authority in May2017
4-64 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.47 Major On-Going and Planned Projects and Investments Proposed in IRP Project Description 1 Rural Electrification The programme has been implemented since the 1980s. MAREP Phase 7 electrified 81 trading Programme (MAREP)*1 centres and over 51 beneficiary centres. 336 centres will be electrified n Phase 8. The estimated cost is MWK 8 billion. 2 Projects by ESCOM* 10 MW diesel peaking plant in Lilongwe (on line by 2016). 6 MW diesel peaking plant in Mzuzu currently under procurement. (on line by 2017) 3 Tedzani IV Power 18MW power station will be additionally constructed with Japanese grant aid of a 5.772 billion yen. Station Construction* 4 300 MW Kammwamba China’s Gezhouba Group Corporation (CGGC) will develop a coal-fired power plant at Coal Fired plant*2 Kam’mwamba in Neno. The project cost will be USD 667 million. A 300 MW plant will be developed in the first stage and expanded up to 1000 MW. Plans will start partial operation by 2019 and be fully operational by 2021. 5 Nkula A hydropower The project will modernise, rehabilitate and upgrade the existing Hydropower Plant from the current plant*3 24 Megawatts (MW) to 36 MW under the US fund scheme of the Millennium Challenge Corporation. 6 Songwe River Basin The project will be implemented by Malawi and Tanzania governments and includes construction of Hydro Electric Project a multipurpose dam to impound water for a 180-MW hydro powerhouse, irrigation of 3,000 ha in Phase I*4 each country, and flood control in the densely populated lower part of the basin. The F/S and design studies were funded by African Development Bank. 7 Mpatamanga Hydro Construction of 350 MW Mpatamanga hydro plant. The World Bank funded the feasibility study as a Electric Project* part of the Energy Sector Support Project. It is expected to benefit downstream like Kapichira Power station, the future Hamilton Falls Hydro Electric Project, and also the Lower Shire Irrigation Project. It is planned to start operation from 2021. 8 Kholombidzo Hydro AfDB funded the feasibility and design studies of construction of 100MW plant and probably some Electric Project* storage. 9 Lower Fufu Hydro The World Bank funded the feasibility study as a part of the Energy Sector Support Project. The Electric Project* project will be construction of the plant on South Rukuru River with North Rumphi and Lower Fufu River transfer. 10 Cogeneration The proposal is to use bagasse from sugarcane mills at Dwangwa and Nchalo to generate power for (Renewable)* the grid. The World Bank funded the feasibility study as a part of the Energy Sector Support Project. 11 Mozambique – Malawi The first phase is to connect Tete in Mozambique and Phombeya in Malawi at 400 kV, with the fund Interconnection* from World Bank. The initial design was to construct a line with a transmission capacity of 280MW during drought conditions. The feasibility and design studies are being updated and the line will start operation in 2018. EDM (Mozambique Power Supply Company) will provide 50MW. The second phase will be the construction of a 400kV line from Phombeya in Malawi to Nampula (Nacala) Province. As a result, Malawi will be able to import and transmit power from Tete Province to Nampula Province. This interconnection is not only for power import and export, but also may provide an opportunity for railway electrification from Phombeya substation. 12 Zambia – Malawi A MoU was signed between the Governments of Malawi and Zambia in August 2015. The project to Interconnection* develop a 330 kV line connecting Chipata in Zambia to Nkhoma in Malawi. 13 Renewable Power Development of renewable power of solar (CSP), solar photovoltaic (PV), and wind for grid Development*5 connection or off-grid use. The World Bank and the University of Strathclyde are supporting the government. 14 Recommended Projects Kapichira III hydropower: 70 MW by 2020 in IRP*1 New double circuit 132 kV overhead line from Nkhoma substation in Lilongwe and via a substation in Salima 15 IPP Projects* 40-100 MW solar energy project by U.S. company Atlas Energies 40 MW hydropower project on the Bua River at Mbongozi with local firm HE Power 30 MW solar energy project with Canadian firm JCM Capital 50 MW solar energy project with Tanzania company Grow Mine Africa * https://www.export.gov/article?id=Malawi-Energy *1 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 *2 http://www.nyasatimes.com/malawi-in-coal-fired-power-plant-mou-with-china-group-to-boost-economy/ *3 http://malawianonline.com/economy/nkula-a-project-kicks-off-to-increase-power/ *4 http://www.hydroworld.com/articles/2017/05/mou-signed-to-develop-songwe-river-basin-program-including-180-mw-hy dropower-facility.html *5 University of Strathclyde website, https://www.strath.ac.uk/media/departments/eee/cred/Scoping_Study.pdf
4-65 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.7 Foreign and Domestic Investment Inflow of foreign direct investment to Malawi is shown in Figure 4.41 and Figure 4.42. 2014 saw a substantial increase in the investment due to the large investment in the energy sector, which was 77% of the total investment amount in the same year. Apart from the energy, agriculture, mining, infrastructure and ICT sectors attracted MWK 80-120 million investments respectively in 2014, which amounted 4-6% of the total investment.
Source: COMESA RIA (Regional Investment Agency) (http://www.comesaria.org/site/en/fdi-inflows.79.html) Figure 4.41 FDI Inflow to Malawi (2011-2014)
Source: COMESA RIA (Regional Investment Agency) Figure 4.42 FDI Inflow to Malawi by Sector (2014)
According to the investment database of MITC, the number of authorised investment project by domestic and foreign investors in 2016 was 57, amounted 933 million MWK. Its breakdown by sector in terms of number and amount are as followings.
4-66 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Construction Infrastructure Construction Infrastructure Agriculture & Real Estate 5% 3% 1% Tourism 5% Agro‐ 1% Service 5% processing 3% 19% Real Estate Agriculture & 4% Mining Agro‐ 2% processing 28% Manufacturin Service Energy g Mining 26% 46% 27% 15%
Manufacturin Energy g 3% 7% a. Number of Investment Projects b. Investment Amount Source: Prepared by the study team based on the information provided by MITC Figure 4.43 Authorized Investment in Malawi (2016) by Sector
In terms of number or the project, agriculture & agro-processing, manufacturing and service have the major share (72% on aggregate). However, in terms of amount, mining and energy share 61%, and agriculture & agro-processing shares 28%. These sectors involve the following large scale projects.
Table 4.48 Major Large Scale Investment Projects in 2016 Investment Amount Sector Company Origin (million MWK) Tianjin Teda Dafeng Cereals Company Malawi 10%, China 90% 100 Limited Agriculture & Nyasa Agro Limited India 70 Agro-processing China Grand Holding Cigarettee China 50 Corporation Mining Volantis Mining Company Limited USA/Turkey 139 Water Wheel International, Inc. USA 170 Sustainable Energy Services Energy Malawi/New Zealand 120 International Limited Reliable Electricity Limited Malawi 100 Source: MITC
According to the AfDB, there are some investment plans in the agriculture sector prepared by private companies and organisations in Malawi, which may have substantial impact on the Malawi economy. They include the followings.
- Agribusiness plan by the Press Agriculture: The Press Agriculture ltd., a subsidiary of the Press Trust, aims to strengthen agriculture production through irrigation, processing, contract farming and so on. - Agro-processing promotion by NASFAM: NASFAM plans to set up warehouses in the Northern region to expand agriculture and agro-processing production.
4-67 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.8 Transport Infrastructure and Logistics This section analyses the current situation of the transport and logistics sector of the study area, namely the entire Malawi, in general, since the current situation of the Nacala Corridor is discussed in Chapter 2.
4.8.1 Current Transport Sector
(1) Malawi Growth and Development Strategy Transport infrastructure plays a major role to the Malawian economy in terms of the distribution of exports and imports. In MGDS II (2011 – 2016), infrastructure was identified as a key component for creating an enabling environment for private sector driven growth and provision of timely and quality social services. There are five sub themes under infrastructure development, namely: energy, transport, water development, information and communication, and housing and urban development. According to the MGDS II review and country situation analysis report, in the absence of a more visionary and long term strategy upon which the national development strategy is anchored, coupled with very limited investment during the implementation of MGDS II, the major challenges and binding constraints in the transport infrastructure sector have barely been tackled.
The MGDS III 2017 has been prepared based on the above reviews. With the expected GDP growth of 6.2% from 2017 to 2022, the MGDS III focuses on five key priority areas (KPAs): Agriculture and Climate Change Management; Education and Skills Development; Energy, Industry and Tourism Development; Transport and ICT infrastructure; and Health and Population Management.
Development of the transport corridors is specified as a strategy to improve the competitiveness of Malawian goods and services on the regional and international markets, under the Outcome of enhanced access to the local and international markets in the KPA of transport and ICT infrastructure. For that purpose, the identified action proposed is to ensure maintenance and rehabilitation of infrastructure along the major corridors for improved access to ports.
Recognizing the efficiency and effectiveness of rail transport for transport cost reduction, MGDS III directs transport development toward a multi-modal transport consisting of road, rail, air, and water transport. The improvement of Nacala Corridor by the private sector is expected, to achieve the Outcome of increased private sector investment in the operation and management of rail transport infrastructure in the KPA of Rail Transport. The reduction of travel time and transport cost between Blantyre and Nacala Port is adopted as key performance indicators to measure the progress in achieving the outcome toward MGDS Goal 4, “development of a safe, affordable, reliable, equitable and sustainable transport system and ICT infrastructure, and to manage and promote a vibrant tourism industry.”
4-68 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) National Transport Policy (MNTP) The improvement of Malawi’s transport infrastructure is a priority of MGDS II, which highlights the link between transport infrastructure and growth and development. The 2015 MNTP is linked to, and reflects the priorities of the National Vision, MGDS II and Economic Recovery Plan and outlines eight priority areas mentioned below that collectively provide a comprehensive set of policies, all of which contain policies and strategies for each transport sub-sector. The vision of MNTP is the development of a coordinated and efficient transport infrastructure that fosters the safe and competitive operation of viable, affordable, equitable and sustainable transport services.
The eight priority areas of the MNTP are: transport infrastructure; transport services provision; NMT; international transport corridors; private sector participation; good governance; strengthening of institutional framework, and; crosscutting issues.
(3) National Transport Master Plan (MNTMP) The GOM recognizes the significant role played by the transport sector in attainment of the sustainable economic and social development of the country. Ministry of Transport and Public Works (MOTPW) has therefore formulated a comprehensive MNTMP designed to achieve this goal in 2017. The scope of the master plan covers all modes of transport: roads and road transport, urban and rural transport, railways, marine, civil aviation and pipeline
The national transport goal is to ensure the provision of a coordinated transport environment that fosters a safe and competitive operation of commercially viable, financially sustainable, and environmentally friendly transport services and enterprises. The approach adopted to achieve this goal is to move from a highly controlled transport sector to a more liberalized market oriented transport sector. In this liberalized environment, private sector participation in the provision and operation of transport infrastructure is emphasized, including promotion of effective and fair competition among and within all modes of transport. The role of the government becomes that of providing an enabling environment in which the private sector or other bodies operating commercially can succeed.
MNTMP has been developed with the primary objective of guiding the sustainable development of an integrated multi modal transport sector over the next twenty years. The plan provides measures to reduce transport costs and improve GDP. It not only addresses the current pressing issues such as road safety, but looks forward to meeting the transport needs of a changed economy in which growth sectors such as mining, oil and tourism will be fostered through improved transport links.
(4) Transport Modes Malawi is served by four transport modes namely road, rail, lake and air transport which consists of a road network with an estimated distance of 15,451 km; 797 km of railway track from Mchinji border with Zambia to Nsanje boarder with Mozambique and further to the east from Nkaya to Nayuchi (Entre Lagos) at the Mozambican border; five (major) harbours on
4-69 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Lake Malawi that handle cargo mainly from Mtwara in Tanzania; and five commercial airports (two major international airports in Lilongwe and Blantyre) including 33 aerodromes.
Although the modes of transport include road, rail and water transport, dependency on road transport is high (93% in 2015). Next is transportation by rail at 7%. Therefore, as shown in Table 4.50, of the budget allocated to the traffic and transportation section, 81% goes to the road sub sector.
Table 4.49 Freight Demand by Mode in 2015 (1,000 ton) Volume % Road 2,574.0 93 Rail 180.0 7 Waterway 2.0 0 Air 3.8 0 Total 2,759.8 100 Source: MNTMP
Table 4.50 2016/17 Transport Sector Budget (billion MWK)
Source: MNTMP
(5) Responsible Organisation for Transport Sector The overall management and responsibility for the transport sector in Malawi is under the authority of MOTPW.
Ministry of Transport & Public Works
Department of Roads Department of Department Department Department Transport Department Road Traffic & of Rail of Marine of Civil Planning Safety Services Services Services Aviation
Source: JICA Study Team Figure 4.44 Organization Structure of MOTPW
4-70 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.8.2 Road Sub-Sector
(1) Key Agencies for Road Sub-Sector There are a number of institutions which have road traffic responsibilities as summarised below.
Source: MNTMP Figure 4.45 Institutions Relating to Road Traffic
1) Ministry of Transport and Public Works (MOTPW) The Ministry has a role through its Principal Secretary to guide the overall implementation of the national road safety strategy, ensuring that a National Steering Committee and technical working groups are established for its successful implementation. The National Steering Committee comprises the Principal Secretaries (Chief Executive Officers) of the MOTPW and the Technical Working Group (TWG) comprises directors and senior managers on road safety to monitor and report on progress of the implementation of the road safety strategy. The TWG will also build partnerships to enhance coordinated planning, implementation, monitoring and evaluation and act as technical advisors to the National Steering Committee.
2) Directorate of Road Traffic and Safety Services (DRTSS) The DRTSS has statutory powers to manage road traffic as derived from the Road Traffic Act (1997) and provisions in the MNTP (2004).
The Director of Road Traffic is subject to general directions of the Minister and exercises powers and duties to ensure the Road Traffic Act is upheld, and can delegate duties to
4-71 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
authorised officers. Furthermore, the Ministry has established a Committee for Road Traffic Law Enforcement who ensures the laws under the Road Traffic Act are enforced.
3) Road Authority (RA) The RA is a statutory body. RA is the primary agency responsible for the maintenance and rehabilitation of Malawi’s roads. A Board of Directors governs the RA. Most of the actual road maintenance and rehabilitation work will be done by contract. The RA is funded by a dedicated road fund currently financed through user charges. This fund may be supplemented by the addition of licensing and registration fees currently collected by the Road Traffic Department. At present the road fund is supplemented by a government subvention plan which prepares road works programmes for construction, rehabilitation and maintenance annually. The RA has a significant safety-engineering role in road design, markings, and signs. Improved road shoulders, for example, might help keep bicycles out of the main traffic lanes where they are more likely to be involved in road accidents.
4) National Construction Industry Council (NCIC) The NCIC was established under the NCIC Act (CAP 53.05) 1996 to regulate, promote and develop the construction industry in Malawi. Its role within the transport sector is to register all transport infrastructure projects and to provide support to local contractors for road infrastructure projects. It registers contractors, consultants, material suppliers and manufacturers and monitors their progress.
5) Road Fund Administration The Road Fund Administration is a statutory body whose mandates are to raise and administer funds for construction, maintenance and rehabilitation of public roads, and to account it to the Ministry of Finance. This institution also manages, administers and accounts the Roads Fund (comprising of proceeds from fuel levy and transit fees).
(2) Road Network The classified road network comprises 15,451 km of roads. These include main, secondary, tertiary, urban and district roads. Figure 4.46 shows the main and secondary roads, which constitute a comprehensive network. The national highway, M1, spans the length of the country from Nsanje in the south to Karonga in the north. Malawi’s classified road network is complemented by another 9,478 km of undesignated community roads, which were identified in 2005 as being an essential part of the highway infrastructure, and by a wider network of tracks.
4-72 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Tanzania
Mizuzu
Zambia
Mozambique Lichinga
Lilongwe
Zomba
Blantyre
Source: MNTMP Figure 4.46 Road Network in Malawi
(3) Road Conditions The public road network coverage remained at 15,451 km of which about 28% are paved and the rest (72%) being unpaved and mostly of earth standard. The condition of the paved road network is considerably better than that of the unpaved road network, and while the figures are out of date this is indicated in Table 4. 52. The condition of unpaved roads tends to be compromised by dusty conditions, uneven surfacing and potholes, while paved roads across the country exhibit signs of general wear-and-tear and shoulder degradation.
4-73 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.51 Malawi's Road Network at the Time of 2009 Paved Unpaved Total Asset Asset Asset Road Class km % Value km % Value km % Value (USD/m) (USD/m) (USD/m) Main 2,809 70 2.827 548 5 114 3,357 22 2,942 Secondary 442 10 385 2,683 24 653 3,125 20 1,038 Tertiary 44 1 29 4,077 36 815 4,121 27 844 District 8 0 4 3,492 31 524 3,499 23 527 Urban 770 19 386 578 5 115 1,349 9 501 Community (undesignated) 0 - - 9,478 100 N/A 9,478 100 N/A Tracks 0 - - N/A N/A N/A N/A N/A Total Classified Rural 3,304 - 10,800 - 14,102 - (non-urban) Roads Total Classified 4,074 - 3,630 11,378 - 2,222 15,451 - 5,852 Source: MNTMP
Table 4.52 Condition of Malawi’s Classified Road Network as of June 2010 Paved Unpaved Total Road Class km % km % km % Good 2,426 60 5,000 44 7,426 48 Fair 1,361 33 2,654 23 4,015 26 Poor 286 7 3,274 33 4,010 26 Total 4,073 - 11,378 - 15,451 - Source: MNTMP
(4) Road Maintenance The main source of recurrent revenue funding for the road sub-sector is from the RFA. The 2016/17 budget provides for an allocation for road maintenance of MWK 20.6 billion. This is intended to split between national roads (MWK 12.6 billion) and urban roads (MWK 8 billion). This skewed distribution in favour of national roads reflects the lack of recent attention to urban road maintenance, and although the allocation has not been based on a formal needs assessment, it is intended to address rehabilitation as well as pressing periodic maintenance needs. In terms of recurrent revenue funding the road transport sub-sector generates income through fees for the services of vehicle registration, licensing and driver licences. Expected income from these sources for 2016/17 is expected to be around MWK 3.0 billion, against costs of MWK 0.4 billion.
The fuel levy, collected by Malawi Energy Regulatory Authority (MERA), is routed directly to the RFA’s account. The overall allocation for road maintenance is therefore non-discretionary with funding being legally ring-fenced, thereby making the funding source for road maintenance sustainable.
Table 4.53 Actual Roads Fund Income and Road Works Expenditures (million MWK) 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 Total Income 7,605 9,363 11,875 15,399 26,353 (Fuel Levy) - - - (10,687) (21,203) Road Works Expenditure 3,030 3,381 8,552 9,279 12,111 Source: Malawi Road Fund Annual Report 2016
4-74 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
The fuel levy is forecast to raise MWK 23 billion in 2016/17. The levy provides a reasonably predictable source of funds, and is sustainable to the extent that it should continue to contribute an increasing source of funds for road maintenance over the next 20 years.
According to the MNTMP, the total cost for the paved network would be USD 42.4 million annually. As such the fuel levy at present rate may not rise sufficiently to meet the expected increase in maintenance costs.
(5) Major Challenges on Road Sub-Sector Road transport is the dominant mode of transport in Malawi. In this respect, the country has over the years been constructing, rehabilitating, and upgrading the road infrastructure. However, most feeder roads still remain in poor condition especially in rural areas. Also, even in regard to trunk roads, high transportation costs remain prevalent due to insufficient road development as a result of insufficient funding. The goal is to ensure the provision of a safe, affordable, accessible and high quality road transport system. In the medium-term improved road transportation is expected to contribute to:
- Reduced lead times and cost on exports and imports and - Improved domestic and cross border mobility and connectivity.
1) Key Strategies Ensuring comprehensive and coordinating planning of road and other modes of transport; Providing an adequate network of roads based on appropriate standards; Enhancing routine road maintenance and upgrading; Building technical and institutional capacity at all levels; Promoting competition in the construction industry; Improving management of a road network throughout the country; Enhancing axle load control; Promoting high road safety standards and traffic management and Enhancing PPPs in the transport system.
2) Eight ‘Action Areas,’ proposed by MNTMP Increase resources for road sub-sector, particularly rural roads; Strengthen the domestic trucking industry to reduce transport costs; Improve road safety; Improve road infrastructure; Enhance rural roads and access to services; Strengthen regulation; Institutional reform and Axle load control.
4-75 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(6) Major Road Improvement Projects
1) Ongoing Projects
Table 4.54 Ongoing Reconstruction Projects Allocation 2017/18) Name Funding Agency Length (km) (USD/m) Mzuzu-Nkhata Bay AfDB 47 13.9 Kiwonde-Mangochi AfDB 75 16.7 Liwonde-Naminga OFID 25 - Blantyre-Zomba endopoints AfDB - 5.6 Karonga-Songwe World Bank 45 17.4 Kapahatenga-Nkhotakota- Dwangwa GOM 130 - Total 322 53.5 Source: MNTMP
2) Potential Projects
Table 4.55 Potential Reconstruction Projects Road Name Potential Funding Agency Lilongwe-Chingale-Machinga KF／BADEA／OFID Nsanje-Marka GOM Ntcheu-Kasinje GOM KIA Junction-Kasungu-Jenda-Mzimba T/O COMESA Mangochi-Chiponde AfDB Mzimba T/O-Mzuzu-Kacheche World Bank Source: MNTMP
3) Proposed Road Interventions in the MNTMP Road projects proposed on the basis of role in economic growth (Agriculture, Mining, Tourism, etc.) (Road projects for the 20 year plan period)
Table 4.56 MNTMP Capital Road Projects Project Length Cost (USD/m) Urban Lilongwe North-West bypass 18 40 Mthandizi-Mpingwe (Blantyre) 3.6 8 Ndirande-Nkolikoti (Blantyre) 3 7 Misesa-Soche Hill-Maja (Blantyre) 4 9 Lilongwe Eastern Bypass 25 60 Blantyre Elevated Expressway 8 168 Rural Rural Road Upgrading Programme 2,255 2,100 Strategic M12 NMT Demonstration project 90 30 Main road NMT upgrades 200 70 Paved road rehabilitation programme 334 167 Total 2,940.6 2,659 Source: MNTMP
4-76 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
4.8.3 Rail Sub-Sector
(1) Key Agreements for Rail Sub-Sector
1) Concession Agreement CEAR operate the railway concessions in Malawi. The first concession agreement was signed by CEAR and the Government of Malawi on 15th November 1999 with the start of operation from 1st December 1999. This was one of the first genuine private concession agreements (for rail) in Africa, and in this Malawi set a path that other countries have since followed. The new owners were the consortium CDN including RDC (Railroad Development Corporation – lead), ERL (Bermuda), MANICA (Mozambique), Mozambican private investors and CFM (Mozambique's Port and Railway Administration). CDN formed the concessionaire company CEAR and began operations on December 1, 1999. It is understood that passenger rail services were operated as part of a Public Service Obligation (“PSO”) agreement within the 1999 concession, with services subsidised by the State. As part of the 2013 Concession Agreement the Malawian Government removed the need to provide passenger services as part of a PSO requirement. Instead the concessionaire is obliged to provide a passenger service as part of their Corporate and Social Responsibility requirement, thus removing the funding requirement from the Government.
2) Malawi Railway Corridor Agreement On 22nd December 2011, the Government of Malawi made the Malawi Railway Corridor Agreement with VALE. The agreement will run for 30 years from the start of traffic until 2045 with a right to extend by an additional 20 years. In particular, the Corridor Agreement gave the Vale the powers to build the new railway from Kachaso (on the Mozambique border) to Nkaya and a requirement to upgrade the rest of the railway as specified in particular the route from Nkaya to Nayuchi.
Capacity should be reserved on “the Nacala Corridor in order to guarantee access (on the Nacala – Nkaya route for) transportation services comprising of two trains in each direction per day of up to 120 wagons per train for Malawi general freight and one (passenger train) per day...”.
CEAR should have “no obligation to allow other trains to operate over the (entire) Railway (of Malawi).” This clause gives Vale exclusive rights over this rail route for coal traffic from Moatize.
The capacity of Nacala railway is 22 million tonnes per year, 18 million of which is covered by exportation of coal. The capacity available for use by CEAR is 4 million tonnes per year, although current usages stand at five to six hundred thousand tonnes per year.
3) Tripartite Nacala Development Corridor Agreement On 27th August 2010 the Governments of Malawi, Zambia and Mozambique signed the Tripartite Railway Transport Agreement on the Nacala Development Corridor to “cultivate
4-77 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
active cooperation” in particular with regard to customs and immigration matters to allowed traffic to run unimpeded.
(2) Railway Network The railway network in Malawi consists of 797km of mainline single cape gauge. Of this network, 101km between Nkaya and Nayuchi is being upgraded by the private sector as part of the route from the coal mines at Moatize in Mozambique to Nacala on the coast. The remaining 696km from Mchinji via Salima to Marka is in poor condition because of a lack of investment by the concessionaire. Particularly, regarding the southern section of Limbe – Mutarara (approx.200km), passage has been stopped due to the area near Bangra and Chiromo Bridge over the Shire River being swept away in 1997 by heavy rainfall. Also, in February 2017, due to flooding, several bridges and a part of the road section was swept away in the 380km section between Chipata and Balaka presenting difficulty in passage, although recovery was achieved in April 2017. The locomotive equipment and rolling stock is old and unreliable. Construction of a new link from Nkaya to the coal mines at Moatize in Western Mozambique commenced in 2012 to provide mainly for coal transit traffic into the Nacala Corridor.
The condition of coal transportation via the Nacala Railway is as follows:
Up to May 2015: Completion of rail works and transportation of the first 50 tonnes (preparation start) Up to November 2015: Inspection and conduction of a test run. December 2015: Commencement of full scale. March 2016: Completion of the railway works construction. 2016: 6.5 million tonnes of coal has exported. May 2017: Official Opening Ceremony
4-78 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Salima Mchinji Lilongwe Damages by heavy rain in 2017 Feb
Nayuchi Balaka Nkaya
Kchaso Blantyre Limbe
Makka
Source: MNTMP Figure 4.47 Historic Development of the Railway Network in Malawi
4-79 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Service Provided
1) Freight Train Services The freight services have been divided into three categories: Transit, (Malawi) International and (Malawi) Domestic freight traffic, each of which are operated differently.
(a) Transit
Transit trains account for the majority of traffic on Malawi’s railway network. CLN (Corredor Logístico Integrado do Norte) are moving increasing volumes of coal traffic, which is expected to grow to up to eight trains per day each. Each coal train consists of 120 wagons and four locomotives. Each train is operated as a single block train. This is the most efficient way of operating freight trains and is consistent with international best practise. In addition, there has been some transit traffic between Chipata and Nacala although these are currently irregular. At the moment though this traffic is typically combined with Malawi wagons to/from Nacala. At the moment the operational practice for these trains is that Zambian Railways will haul the traffic between Kanengo and Chipata, CEAR haul the traffic between Kanengo and Entre Lagos, and CDN haul the trains between Entre Lagos and Nacala.
(b) International
These trains are typically formed of traffic to/from the Limbe (south) route although there is also more irregular traffic to/from the Nkaya – Chipata (north) line. Most Limbe line international trains are composed of up to 42 wagons, though often smaller, with two locomotives. The trailing load of trains from Kanengo/Mchinji/Chipata is typically 30-35 bogies. CEAR used to effectively operate a mixed traffic train on a daily (or near daily) basis but have now attempted to plan on the basis of block movements and weekly train plans. Trains from Nacala stop at Liwonde to be cleared by customs. This typically takes around one hour. This is in addition to a further one hour required at the border itself to confirm the train manifest is consistent with the actual trains seeking to cross. Westbound trains have a similar arrangement with CDN using Entre Lagos instead of Liwonde. CEAR are currently working with the Government of Malawi and Mozambique to move the customs clearance to Nkaya which will save the one hour stops as the train has been stopped at Liwonde and then the train has to be marshalled at Nkaya anyhow.
(c) Domestic
Domestic services are relatively less common. There is some cement traffic and fertilizer traffic to/from Kanengo. These wagons are generally carried along with other block movements to/from Nkaya.
2) Passenger Train Services The passenger service currently typically operates as a weekly service. It currently only operates from Limbe via Blantyre to Bilila, and then back to Balaka and then from Balaka to Nayuchi. And then back to Limbe via Balaka. The passenger service is effectively a local service only centred in the south and east of the country. In part this is because of the history
4-80 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
of the railway with the line to Lilongwe being closed north of Balaka between 2003 and 2005 and because the service is relatively slow with a large number of local stops.
3) Rolling Stocks CEAR currently have five main types of locomotive (including 2 on loan from CDN and excluding 2 locomotives that are no longer operational). Additionally, CEAR operates around 798 wagons (excluding CLN’s Moatize coal fleet and CDN’s fleet). Nearly all of which have been acquired new or have been refurbished. CEAR also regularly lend or borrow wagons with CDN on a wooden dollar arrangement to ensure that between the two concessions that the two fleets are managed optimally.
(4) Major Challenges on Rail Sub-Sector Although rail volumes as a percentage of all traffic have grown since 2005, rail as a mode accounted for only 11.7% of exports in 2015 and 5.1% of imports, and an insignificant percentage of domestic traffic. Rail, therefore, is not a vital part of the existing transport mix but it could be a vital element of helping improve the Malawi economy and giving shippers greater modal choice. This point is emphasised in the Malawi NES 2013 – 2018: “The top priority for the MOTPW is to supply a multi-modal transport system to reduce the dependence on road transport, particularly for bulk transportation.
On the other hand, the railway infrastructure in the country is in poor condition due to a lack of maintenance and inadequate investment. A study commissioned to ascertain the investment required to revamp the rail transport sub sector has revealed that there is a need for urgent financial injection into this sub-sector for emergency work before overhaul rehabilitation work can commence. The poor state of the infrastructure has greatly compromised railway safety and efficiency. The sub-sector is greatly uncompetitive despite the fact that the rail freight cost is cheaper than road and air transport. Therefore in the MNTMP, by developing efficient and effective rail networks, the following mid-term objectives have been set, and accordingly, the chief strategies and necessary projects have been suggested.
Improved regional and international connectivity; Improved regulatory and institutional framework; and Improved rail infrastructure and reliability.
1) Key Strategies Rehabilitating and expanding the railway line and related infrastructure; Creating linkages to ports, industrial sites and regional and international markets; Promoting railway safety and environmental protection; and Improving the operational efficiency and commercial viability of the existing railway infrastructure and levels of service.
2) Key Potential Investments Based on MNTMP Moatize avoiding line; Restoration of Sena (Beira) line north and south options);
4-81 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Upgrade of axle load (and line speed) of Nkaya – Chipata; *Nkaya-Salima is scheduled to be upgraded to 18t in 2018. With this, all routes will be able to bear 18t axle loads, and CEAR currently judge that that is sufficient. Upgrade of axle load (and line speed) of Nkaya – Limbe/Sandama; *Upgrading to 18t of the axle load between Nkava – Limbe will be completed in 2017. (The works will only leave the last section). However, upgrading of the structures (bridges, etc.) is not included. New line from Kanengo/Salima to north of Malawi; Provision of intermodal facility at Liwonde; Investment in freight facilities (sidings and loading/discharge equipment); Train control technology extension; Capacity building: operational and management training; and Heritage rolling stock restoration.
(5) Hearing Survey Conducted with CEAR (Summary) The following comments were received in a hearing survey with CEAR.
The capacity of Nacala railway is approximately 22 million tonnes/year, of which 18 million tonnes/year is covered by coal transportation. The CEAR capacity usable is approximately 4 million tonnes/year, of which only 500,000 to 600,000 per year is currently being used. There is a challenge of transportation of agricultural products which is high in the harvest season (January to October) but is low in the other months. Consideration is underway to increase transportation vehicles from Zambia and obtain a steady amount.
Nayuchi 350,000
300,000 102,822
250,000
200,000 133,813 (ton)
42,269 EXP 150,000 72,182
WEIGHT IMP
229,255 100,000 150,264 137,122 50,000 107,212
0 2012‐2013 2014‐2015 2015‐2016 2016‐2017 Year
Source : CEAR Figure 4.48 Freight Volume at Nayuchi from 2012 to 2016
4-82 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 4.57 2015 Annual Accumulative (ton) Total Cargo Annual JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Actual Import Cargo 104,565 4,190 5,357 1,594 2,693 6,882 14,506 10,540 7,991 8,896 11,619 14,842 15,455 Export Cargo 86,248 614 1,906 8,453 8,469 5,426 11,046 14,073 14,254 9,638 7,947 3,885 537 Local Cargo 24,146 103 54 32 29 1,405 2,642 4,696 2,858 3,385 1,905 3,561 3,476 ZR- Cargo 10,739 ------1,438 1,373 1,727 3,460 1,805 936 Total 225,698 4,907 7,317 10,079 11,191 13,713 28,194 30,747 56,476 23,646 24,931 24,093 20,404 Source : CEAR
To increase the transportation capacity of CEAR, increasing and strengthening of locomotives is necessary. The number of locomotives currently in possession is 4. Previously there were 6 locomotives in possession, but two of them suffered damage under heavy rainfall in Mozambique. Also, there is need for reinforcement with wagons. Although there is criticism that CEAR has a small capacity, this is mainly due to lack of full understanding by the users. There is no room for the expansion of Liwonde Station. Therefore, in case of increased demand in the future (increase in the number of connected wagons), it will be difficult to have freight trains in Limbe. Therefore, CEAR are exploring the idea of moving their vehicle base to Nkaya. Nkaya is thought to be having sufficient provision for site. CEAR consider that it is important to improve the vehicle handling capacity for both ends (Limbe, Lilongwe) and improve on their drawing power for companies.
4.8.4 Aviation Sub-Sector
(1) Key Agencies for Aviation Sub-Sector The aviation sub sector is regulated by the MOTPW. Given this background, MNTMP recommends the establishment of a Civil Aviation Authority as a high priority challenge. It meets both domestic needs and international obligations. The Civil Aviation Authority should be an autonomous entity for the oversight of civil aviation in Malawi. It should perform its functions without political or commercial interference. The Authority should regulate and be responsible for the safety, security, economic and technical oversight of civil aviation in Malawi generally. It should have powers to issue licences, certificates and authorization for the operation of aircraft and provision of civil aviation services.
According to the latest information, on June 13th 2017, the “Civil Aviation Bill” was approved by Parliament. The department of Civil Aviation was corporatized as “Malawi Civil Aviation Authority”. The actual process of corporatization is scheduled to take one year. Operation of the airport is being conducted by Airport Development Limited.
(2) Aviation Network The aviation infrastructure consists of two international airports at Lilongwe and Blantyre, and five domestic airports at Likoma, Karonga, Mzuzu, Salima and Club Makokola in Mangochi. International air services are provided by Kenyan, Ethiopian and South African national
4-83 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
airlines to both Kamuzu International Airport (KIA) and Chileka International Airport. The national carrier, Air Malawi, was liquidated in 2013 and a new company Malawian Airlines has been formed with Ethiopian Airlines as a strategic partner in the new arrangement. The new airline is expected to expand on the network that was serviced by Air Malawi and improve Malawi’s connectivity regionally and internationally. It should be noted that domestic services are provided by small private companies, largely in support of international tourism.
(3) Current Demand Table 4.58 shows the handling volume of passengers and luggage at Kamuzu International Airport. As can be seen from the data, the number of outbound flights and passengers in 2016 is approximately double that of 2010. Although the comparison of cargo is between 2015 and 2010, the amount handled had grown 1.5 times.
Table 4.58 Current Demand at Kamuzu Airport 2010 2011 2012 2013 2014 2015 2016 International 4,902 5,369 3,923 3,723 7,068 7,226 7,443 Number of Domestic 2,680 2,917 Services Total 3,923 3,723 7,068 7,226 7,443 7,582 8,286 as a percentage of 2010 - 95% 180% 184% 190% 193% 211% International 192,393 227,606 136,377 112,465 194,273 214,982 267,791 Domestic 28,555 52,318 Passenger Total 136,377 112,465 194,273 214,982 267,791 220,948 279,924 as a percentage of 2010 - 82% 142% 158% 196% 162% 205% International NA 3,370 4,045 4,595 5,108 5,658 NA Domestic NA 482 296 337 114 81 NA Cargo (ton) Total NA 3,852 4,341 4,932 5,222 5,739 NA as a percentage of 2011 - - 113% 128% 136% 149% - Source: JICA Study Team
(4) Major Aviation Improvement Project Interventions on Kamuzu Airport are ongoing in a JICA grant aid project. In this project, terminals at the Kamuzu International Airport will be renovated and expanded. Introduction of radar monitoring systems is included in the project, and it is scheduled to be completed in 2019.
There is information of the start of improvement works on Chileka Airport under Chinese support.
4.8.5 Waterway Sub-Sector
(1) Key Agencies for Waterway Sub-Sector A concession of the shipping services has been given to the Malawi Shipping Company which is managing and operating ships owned by the Government. The Malawi Shipping Company is the major operator providing freight and passenger transport services on the lake. However, the current concessions are not managed or implemented effectively. Sub-sector institutions need to be strengthened in order that port and lake service concessions operate to reduce transport costs, and support economic growth in Malawi.
4-84 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Waterway Network Malawi’s inland water transport system comprises of Lake Malawi, Lake Chirwa and the Shire-Zambezi inland water corridor. Lake Malawi has four ports as designated under the Inland Waters Shipping Act and some landing points along the shores. The country’s water transport system is not fully developed and faces a number of challenges including dilapidated port infrastructure, and capacity problems.
(3) Major Waterway Improvement Project Water transport is relatively cheaper than any other mode of transport. It provides a better and cheaper alternative for transporting bulky and heavy goods domestically and internationally. Malawi has an advantage in water transport as it is endowed with lakes and navigable rivers. However, the country’s water transport system is not fully developed and faces a number of challenges including dilapidated port infrastructure; ageing fleet of vessels; and capacity problems. Given the current transport constraints, this mode of transport has been prioritized to compliment other transport modes. The Government of Malawi focus on the development of Nsanje world inland port and Shire-Zambezi Waterway, construction and rehabilitation of ports along Lake Malawi and acquisition of vessels. The goal is to promote the inland water transport system and improve access to the sea, which is a goal that has also been indicated in MNTMP. The medium term expected outcomes are:
• Improved inland water transportation system; • Improved interface with rail; and road transport; and • Reduced transport costs.
(4) Key Strategies Also in the MNTMP, the following strategies have been identified to wards as “the development of efficient and productive waterway transport systems”
• Developing an efficient and productive maritime transport system; • Improving port infrastructure; • Opening up navigable rivers; • Promoting affordable and safe water transport system; and • Promoting Public Private Partnerships in the industry.
4-85 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chapter 5 Overall Issues and Impact Analysis of Nacala Corridor Development
This chapter mainly focuses on the analysis of overall issues and impact analysis of Nacala Corridor Development. In order to grasp Nacala Corridor Development in the contexts of national development and region economic integration, the existing policies and plans on national development and of regional organisations are reviewed at first, followed by an examination of currently on-going projects and plans on the ground that would be driving forces for Nacala Corridor Development. Based on the two analyses, the overall issues of Nacala Corridor Development are identified and discussed from the perspectives of development of corridor transport infrastructure and economic sectors, and regional economic integration. The impact which could be brought by Nacala Corridor Development is analysed in the end of the chapter.
5.1 Evaluation of Relevance of Nacala Corridor Development to Existing Policies and Plans The relevance of Nacala Corridor Development is evaluated in relation with the development plans of Zambia and Malawi as well as the regional economic integration policy owned by the regional organisations in this section. At first, the consistency and contribution of Nacala Corridor Development to the goals of national development as well as the transport policy in the two countries are reviewed, followed by the examination of its relevance from a broad perspective of regional market integration and trade facilitation specifically.
5.1.1 Zambia’s National Development Plan and Nacala Corridor The 7NDP is prepared to materialise the Vision 2030 that envisages becoming “a strong and dynamic, middle income industrial nation,” following the previous national development plans1. Aiming at the Vision 2030, the macroeconomic targets are also defined and some of them are listed in Table 5.1. There are several indicators which are also set, in addition to the targets, such as 25% formal employment ratio, working poverty ratio of 32%, and 10% youth employment rate in 2021.
1 Ministry of National Development Planning. 2017. Seventh National Development Plan 2017-2021. P. 51.
5-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 5.1 Macroeconomic Targets Macroeconomic Targets a) Achieve an average annual real GDP growth rate of above 5% b) Sustain single-digit inflation c) Raise domestic revenue collections to over 18% of GDP d) Reduce the budget deficit to less than 3% e) Create 1,000,000 productive and gainful job opportunities while improving the country‘s competitiveness f) Increase the share of earnings from non-mining exports to about 50% g) Improve infrastructure development in the transport and energy sectors, with emphasis on increased private sector participation
Source: Ministry of National Development Planning. 2017. Seventh National Development Plan 2017-2021. P. 41
For the sake of achieving sustainable growth and altering the socio-economic structure into the one with a focus on agriculture, mining and tourism, five strategic objectives are identified:
a) To diversify and make economic growth inclusive, b) To reduce poverty and vulnerability, c) To reduce developmental inequalities, d) To enhance human development, and e) To create a conducive governance environment for a diversified and inclusive economy.
Under the objective of diversification and inclusive economic growth, ten critical development outcomes are specified as shown in Table 5.2. For the strategy of improvement of trade facilitation to achieve Outcome 5, corridor development is identified as one of infrastructure development programmes. As a strategy of construction and rehabilitation of railways for Outcome 6, construction of the Chipata-Petauke-Serenje railway line (Eastern Railway) to connect Zambia with Nacala Port is proposed, together with the rehabilitation of Zambia Railways and revitalization of TAZARA. The identified national long-term development projects include construction of the Eastern Railway, and road infrastructure development of the Nacala Corridor, which is the first listed project among the five corridors as a mid- and long-term project. Moreover, as a strategy for Outcome 1, the production expansion of crops such as cashew nuts, coffee, maize, wheat, sugar, fish, etc., is proposed. A strategy for Outcome 2 is introduced for the mining sector, non-traditional mining of gemstones, gold and industrial minerals.
5-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 5.2 Ten Critical Development Outcomes for Diversification and Inclusive Economic Growth Ten Critical Development Outcomes 1. A diversified and export-oriented agriculture sector 2. A diversified and export-oriented mining sector 3. A diversified tourism sector 4. Improved energy production and distribution for sustainable development 5. Improved access to domestic, regional and international markets 6. Improved transport systems and infrastructure 7. Improved water resources development and management 8. Enhanced information and communication technology 9. Enhanced decent job opportunities in the economy 10. Enhanced research and development
Source: Ministry of National Development Planning. 2017. 7NDP. P. 64
5.1.2 Zambia’s National Transport Policy (ZNTP) and Nacala Corridor The ZNTP 2016 states its objective as building cost effective transport infrastructure and services that meet market demands. It clarifies a goal to develop Zambia as a regional transport and logistics hub in the SADC region. Although the policy does not clearly identify the Nacala Corridor, it does state the importance of international corridors connecting Zambia with sea ports and a preference to the corridors with multi-modal international corridor consisting of roads, railways, and waterways. The existence of international corridors, especially with the rail benefits Zambia by lowering transport costs.
Thus, the development of the Nacala Corridor is consistent with the ZNTP for the sake of transport cost reduction as well as making Zambia a regional transport and logistics hub by strengthening the connectivity of Zambia in the region. It is important to notice that the Nacala Corridor consisting of roads and railways suits the national policy favouring railways over road. In particular, construction of the Chipata-Petauke-Serenje railway that connects TAZARA Railway with the Nacala Corridor can significantly enhance Zambia’s function as a regional transport hub.
5.1.3 Zambia’s Budget Allocation Related Nacala Corridor Development According to the 2018 Budget Address, the Zambian economy has grown at over 4.0% in 2017, which is higher than the growth rate of 3.8% in 2016, due to the good performance of mining, agriculture, and manufacturing, with recovered power supply. The expansion of the export generated a large trade surplus of USD 388.3 million, compared to USD 45.8 million, the surplus in 2016. The rise in copper price from USD 4,868 per tonne to USD 5,827 per tonne contributed to the expansion of the export earnings, though the NTE indicated a slight drop.
The numerical macroeconomic targets set for 2018 include 1) minimum 5 % GDP growth, 2) inflation rate between 6 to 8%, 3) minimum foreign reserves equivalent to 3 months of import
5-3 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
value, 4) minimum 17.7% of domestic revenue, 5) maximum 6.1% of fiscal deficit, and 6) limit of domestic financing up to 4% of GDP. The budget is proposed to achieve the five strategic objectives in the 7NDP, taking an integrated multi-sectoral approach to development2.
In the 2018 budget, the expenditure is estimated to be ZMW 71.662 billion, which has grown by 11.1% from 2017 (see Table 5.3). Though a largest portion of the budget is allocated to the general public service function, the economic affairs receives 24.1% of the expenditure, followed by education (16.1%) and health (9.5%), of which order remains unchanged. Among the selected functions of economic affairs, environmental protection, and housing and community amenities, ZMW 8,660 million or 12 % of the total expenditure is distributed for development of road infrastructure. Two agricultural programmes, Farmer Input Support Programme with E-voucher and Strategic Food Reserves receive ZMW 1,785 million and ZMW 1,051 million respectively (see Figure 5.1).
For the objective of economic diversification and job creation, Farm Block development is proposed to be promoted in Copperbelt, Muchinga, and Northern Provinces, with PPP investment of USD100 million in mechanisation of agriculture. In the transport sector, in addition to road development projects under Link Zambia 8000 and other plans, revitalisation of ZRL and TAZARA, and development of the Chipata-Petauke-Serenje railway line by PPP are aimed in 2018. Though the development related to the Nacala Corridor is not specifically mentioned in the budget statement, development of roads as well as railways, especially the progress on the new Chipata-Petauke-Serenje line project will significantly contribute to Nacala Corridor Development.
The revenue of ZMW 71.662 billion is estimated, consisting of domestic revenue (68.5%), foreign grants (3.4%), and international loans and domestic financing (28.1%). Compared to the 2017 revenue, domestic revenue is expected to grow by 14.3%, while loans and financing will rise by 4.1% (see Table 5.4).
Table 5.3 Expenditure by Function in 2017 and 2018 2017 2018
Million ZMW (%) Million ZMW (%) General Public Services 17,970 27.9% 25,898 36.1% Defence 3,204 5.0% 3,498 4.9% Public Order and Safety 2,343 3.6% 2,145 3.0% Economic Affairs 20,133 31.2% 17,258 24.1% Environmental Protection 616 1.0% 951 1.3% Housing and Community Amenities 823 1.3% 816 1.1% Health 5,762 8.9% 6,782 9.5% Recreation, Culture and Religion 324 0.5% 451 0.6% Education 10,642 16.5% 11,562 16.1% Social Protection 2,693 4.2% 2,301 3.2% Total 64,510 100.0% 71,662 100.0% Source: Republic of Zambia, 2017 and 2018 Budget Address
2 See five strategic objectives of 7DNP in p. 5-2.
5-4 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: Republic of Zambia, 2018 Budget Address Figure 5.1 Expenditure for Selected Functions in 2018 (Economic Affairs, Environmental Protection and Housing and Community Amenities)
Table 5.4 Revenue in 2017 and 2018 2017 2018 Description Million (%) Million ZMW (%) ZMW A. Total Domestic Revenue and Domestic Financing 46,776 72.5% 60,240 84.1% I. Total Domestic Revenue 42,940 66.6% 49,087 68.5% Total Tax Revenue 37,622 58.3% 41,140 57.4% Income Tax 19,648 30.5% 20,338 28.4% Company Income Tax 4,858 7.5% 6,116 8.5% Personal Income Tax 9,815 15.2% 10,264 14.3% Withholding and Other 3,083 4.8% 3,958 5.5% Value Added Tax 9,463 14.7% 12,369 17.3% Customs and Excise Duties 7,993 12.4% 8,099 11.3% Customs Duty 3,224 5.0% 3,302 4.6% Excise Duty 4,700 7.3% 4,745 6.6% Export Duty 68 0.1% 52 0.1% Other Revenues 519 0.8% 334 0.5% Non Tax Revenues 5,317 8.2% 7,947 11.1% Mineral Royalty 1,891 2.9% 3,528 4.9% Other Non-Tax - - 4,420 6.2% II. Domestic Financing 3,836 5.9% 11,153 15.6% B. Total Foreign Grants and Financing 17,734 27.5% 11,422 15.9% Project Grants 2,231 3.5% 2,438 3.4% Programme Loans 8,033 12.5% 1,425 2.0% Project Loans 7,470 11.6% 7,559 10.5% Total Domestic Revenue, Grants and Financing 64,510 100.0% 71,662 100.0% Source: Republic of Zambia, 2017 and 2018 Budget Address
5-5 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.1.4 Malawi Growth and Development Strategy (MGDS) III and Nacala Corridor The MGDS III has been prepared, following the MGDS I and II, guided by the Vision 20203. With the expected GDP growth of 6.2% from 2017 to 2022, the MGDS III focuses on five KPAs: Agriculture and Climate Change Management; Education and Skills Development; Energy, Industry and Tourism Development; Transport and ICT infrastructure; and Health and Population Management.
Development of the transport corridors is specified as a strategy to improve the competitiveness of Malawian goods and services in regional and international markets, under the Outcome of Enhanced Access to the Local and International Markets in the KPA of Transport and ICT Infrastructure. For that purpose, the identified action proposed is to ensure maintenance and rehabilitation of infrastructure along the major corridors for improved access to ports.
Recognising the efficiency and effectiveness of rail transport for transport cost reduction, the MGDS III directs transport development toward multi-modal transport consisting of road, rail, air, and water transport. The improvement of the Nacala Corridor by the private sector is expected, to achieve the Outcome of Increased Private Sector Investment in the Operation and Management of Rail Transport Infrastructure in the KPA of Rail Transport. The reduction of travel time and transport cost between Blantyre and Nacala Port is adopted as key performance indicators to measure the progress in achieving the outcome toward MGDS Goal 4, “development of a safe, affordable, reliable, equitable and sustainable transport system and ICT infrastructure, and to manage and promote a vibrant tourism industry.” The indicators are presented in Table 5.5 below.
Table 5.5 Improvement of Nacala Corridor (Rail) as Indicators in MGDS III MGDS Goal 4: Development of a safe, affordable, reliable, equitable and sustainable transport system and ICT infrastructure, and to manage and promote a vibrant tourism industry. MGDS III Expected Key Performance Base Year Targets Respon- KPA Outcomes Indicator (2016/17) 2018 2019 2020 2021 2022 sible Increased private Average travel time by sector investment in rail between Blantyre 2.3 2.3 2 2 1.6 1.6 MOTPW 4.1.3 Rail the operation and and Nacala. (days) Transport management of rail Average transport cost transport by rail: Blantyre – Nacala 68 65 61 58 54 51 MOTPW infrastructure (USD/t) Source: Malawi Growth and Development Strategy (MGDS) III. July 2017.
3 Vision 2020 aims to achieve that “by the year 2020 Malawi as a God fearing nation, will be secure, democratically mature, environmentally sustainable, self-reliant with equal opportunities for and active participation by all, having social services, vibrant cultural and religious values and a technologically driven middle-income economy.
5-6 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.1.5 Malawi’s National Transport Policy and Nacala Corridor Directed by the MGDS II and the Economic Recovery Plan as well as the Vision 2020, the National Transport Policy formulated in 2015 offers the policy direction of the transport sector. The sector is one of the key priority areas in the Vision 2020 aiming to be a middle income economy by 2020 and its impact goes beyond the performance of the sector itself into development of the economy, especially the priority sectors in the MGDS II, tourism, mining and agriculture. The MNTP identifies high transport cost as the major challenge to the sector and its supporting role to the economic sectors, and adopts the goal, which is “to ensure the development of a coordinated and efficient transport infrastructure that fosters the safe and competitive operation of viable, affordable, equitable and sustainable transport services”4.
In the MNTP, as one of the main policy objectives, development of transport corridors is proposed to enhance the competitiveness of Malawian products and reduce import costs. The theme of international transport corridors is selected among eight priority areas5. The MNTP points out needs for, firstly coordination with corridor countries for consensus building on corridor development and in investments in the corridor areas and border points, and secondly, establishment of a Shipper’s Council for protection of their interests.
The policy for international transport corridors aims to:
1) Promote the establishment of inland dry ports 2) Ensure the establishment of one stop border posts where viable 3) Ensure the existence and operation of Malawi Shipper’s Council 4) Ensure that infrastructure along the major corridors is maintained and rehabilitated to improve access to ports 5) Promote efficiency in the operations of Malawi Cargo Centre Limited 6) Develop a database of statistics on corridor operations 7) Remove barriers within the transport sector to facilitate domestic and cross-border trade and travel, and ensure provision of efficient transport services 8) Integrate safeguards into corridor development and operations to prevent adverse impacts such as environmental degradation, social disruption and HIV and AIDS
The development of the Nacala Corridor is currently implemented in such a way to fulfil the policy on international transport corridors stated above. The projects related to the development of the Nacala Corridor such as transport infrastructure improvement and OSBP development will address or contribute to the mitigation of some of the causes of high transport costs, such as cumbersome border documentation and procedures, and high fuel prices, described in the policy. It will also promote improvement of the railway system and private sector participation, which are also among the eight priority areas.
4 P. 8 in the National Transport Policy. 5 Eight priority areas include: 1) transport infrastructure, 2) transport service provision, 3) non-motorised transport, 4) international transport corridors, 5) private sector participation, 6) good governance, 7) institutional framework, and 8) cross cutting issues.
5-7 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.1.6 Malawi’s National Transport Master Plan (MNTMP) and Nacala Corridor The MNTMP targeted the year of 2036 and developed three strategic objectives aiming to achieve the vision envisaged in the MNTP6 and to address the challenge of high transport costs: 1) Reduce transport costs and prices across all modes; 2) Improve the safety of transport infrastructure and services; and 3) Enhanced and sustainable passenger and freight transport systems. A modal shift from road to rail transport, intermodal integration, and development of transport system for the sectors of agriculture and mining are identified among others as operational objectives under the three strategic objectives.
In the MNTMP, the Nacala Corridor is recognised as one of the important backbones supporting the transport network in Malawi. The corridor consists of the sole railway line operational in the country currently, with roads; however, it is underutilised partly due to the limited number of shipping lines visiting Nacala Port, and for Malawi, Beira is the most preferred port that is only connected by road. Thus, the MNTMP proposes a strategy on railways to expand the railway network from Beira and other ports, for increased choices and competition among them, in addition to the improvement of operation and the existing network of CEAR. Among the three scenarios, the integrated transport network suggested by the MNTMP is presented in Figure 5.2, which is composed of the two railways of Beira-Limbe and Chilumba-Mbeya and two inland water transport links of Chilumba-Nkhata Bay-Salima-Liwonde and Nkhata Bay-Mbamba Bay. The MNTMP assumes that the Chipata-Petauke-Serenje Railway would not be connected in the planning period. Yet, a large volume of traffic demand will be induced by the construction of a dry port in Chipata in the short-term.
By 2036, the port volumes at Nacala to/from Malawi are forecasted to expand from 174,300 tonnes at the present to from 364,000 to 478,500 tonnes with the rail interventions or between 459,300 to 480,500 tonnes with the inland water transport interventions, depending on the choice of interventions.
6 The vision of the National Transport Policy is ‘the development of a coordinated and efficient transport infrastructure that fosters the safe and competitive operation of viable, affordable, equitable and sustainable transport services.’
5-8 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: MNTMP. July 2017. Page 148. Figure 5.2 Proposed Integrated National Transport Network
5.1.7 Malawi’s Budget Allocation Related Nacala Corridor Development The expenditure and revenue from 2016/17 to 2018/19 are presented in Table 5.6 and Table 5.7. The Malawi’s economic growth is expected to increase from 2.7% in 2016 to 6.1% in 2017, owing to the better weather condition. The expenditure in the fiscal year of 2017/18 is estimated to be MWK 1,301.2 billion, which is expanded by 15.2% from the previous year. The expenditure in 2018/19 is projected based on the expectation of 5% GDP growth. The development policy is guided by the MGDS and SDGs and the development expenditure accounts for 26.8% of the total expenditure in 2017/18.
The expenditure of major programmes is shown in Figure 5.3. The largest amount of MWK 139,900 billion is allocated to Road Infrastructure Management, followed by Agricultural Productivity and Risk Management (MWK 84,089 billion), Sustainable Rural Development
5-9 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(MWK 55,009 billion) and Mining, Energy Generation and Supply (MWK 44,667 billion). Despite the small amount, MWK 897.6 billion is allocated for trade development and facilitation. The Green Belt Initiative and irrigation development are included in Sustainable Rural Development programme.
In the 2017/18 budget, two projects related to Nacala Corridor Development are included. The Nacala Corridor Project Phase IV will receive MWK 4,200 million by the AfDB loan and MWK 5,100 million is allocated for Southern Africa Trade and Transport Facilitation Project as an IDA grant.
Table 5.6 Expenditure from 2016/17 to 2018/19 2016-17 Revised Budget 2017-18 Estimates 2018-19 Projection Category Million MWK (%) Million MWK (%) Million MWK (%) Recurrent Expenditure 868,929 76.9% 948,876 72.9% 982,230 73.2% Wages and salaries 270,769 24.0% 303,576 23.3% 334,342 24.9% Interest on debt 168,537 14.9% 185,835 14.3% 187,323 14.0% Foreign 12,317 1.1% 14,880 1.1% 16,368 1.2% Domestic 156,220 13.8% 170,955 13.1% 170,955 12.7% Goods, services and transfers 252,744 22.4% 258,207 19.8% 245,938 18.3% Generic goods and services 97,041 8.6% 133,044 10.2% 107,774 8.0% Storage Levy 1,595 0.1% 1,851 0.1% 2,036 0.2% Roads Maintenance 22,622 2.0% 6,229 0.5% 21,737 1.6% Other Statutory Expenditures 5,017 0.4% 3,000 0.2% 5,500 0.4% Agriculture Sector 3,861 0.3% 4,984 0.4% 5153 0.4% Health Sector 36,025 3.2% 35,635 2.7% 39,484 2.9% Education Sector 24,586 2.2% 25,255 1.9% 22414 1.7% Elections 1,500 0.1% 8,000 0.6% 7140 0.5% Public Finance and Economic 5,495 0.5% 7,007 0.5% - - Management National AIDs Commission 12,807 1.1% 7,669 0.6% 1700 0.1% Winter Cropping (Irrigation) 4,000 0.4% - - 4000 0.3% Maize Purchases 35,100 3.1% 22,000 1.7% 22,000 1.6% Housing and Population Census 0.0% 3,534 0.3% 0.0%
Subsidies and Transfers 173,880 15.4% 197,259 15.2% 204,627 15.3% Pensions and Gratuities 52,247 4.6% 70,601 5.4% 74,504 5.6% Transfer to Revenue Authorities 22,647 2.0% 27,021 2.1% 31,041 2.3% FISP 33,150 2.9% 33,150 2.5% 33,150 2.5% Fertilizer Purchases 27,000 2.4% 27,000 2.1% 0.0%
Seed Subsidy 5,150 0.5% 5,150 0.4% 5,150 0.4%
Logistics 1,000 0.1% 1,000 0.1% 0.0%
Transfer to public entities 49,677 4.4% 56,126 4.3% 58,932 4.4% Iron Sheet Subsidy 7,000 0.6% 7,000 0.5% 7,000 0.5% WB reconstruction 3,349 0.3% 3,360 0.3% - - Legume Purchases 5,810 0.5% - - - - Arrears (Small scale) 3,000 0.3% 4,000 0.3% 10,000 0.7% Development Expenditure 260,544 23.1% 348,351 26.8% 354,520 26.4% Domestically financed projects 42,715 3.8% 132,212 10.2% 166,902 12.4% Foreign financed projects 217,829 19.3% 216,139 16.6% 187,618 14.0% Net Lending 3,460 0.3% 4,000 0.3% 5,000 0.4% Total Expenditure 1,129,433 100.0% 1,301,227 100.0% 1,341,750 100.0% Source: Ministry of Finance, Economic Planning and Development. Draft 2017-18 Financial Statement
5-10 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Private Sector Development 60 Industrial Development 173 Mining and Geological Services 774 Trade Development and Facilitation 898 Urban Development 980 Wild Life Conservation and Management 1,312 Small Scale Business Development 1,365 Tourism Development 1,638 Communication and Technology Services 2,031 Livestock and Fisheries Production 2,870 Environment and Climate Change Management 4,125 Tourism and Cultural Development 4,730 Transport Infrastructure 13,045 Water Resources Development, Management and Supply 34,706 Economic and Financial Management 38,025 Mining, Energy Generation and Supply 44,667 Sustainable Rural Development 55,009 Agricultural Productivity and Risk Management 84,089 Road Infrastructure Management 139,900 0 25,000 50,000 75,000 100,000 125,000 150,000 (Billion MWK)
Source: Ministry of Finance, Economic Planning and Development. Draft 2017-18 Financial Statement Figure 5.3 Expenditure of Major Programmes
The estimated revenue in 2017/18 is MWK 1,301.2 billion, consisting of domestic revenue (75.3%), grant (9.8%), and international and domestic borrowing and financing (14.9%). The domestic revenue is expanded by 16.6% to MWK 980,157 million. With the high inflation rate, the dependency on short-term domestic lending is identified as a risk in the Draft 2017-18 Financial Statement, because it could bring about a negative impact on private sector investment, and increase a risk of defaulting of the government.7
7 The average inflation rate in 2016 was 21.8%. (Ministry of Finance, Economic Planning and Development. Draft 2017-18 Financial Statement.)
5-11 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 5.7 Revenue, Grants and Financing from 2016/17 to 2018/19 2016-17 Revised Budget 2017-18 Estimates 2018-19 Projection Category Million MWK (%) Million MWK (%) Million MWK (%) Revenue 840,463 74.4% 980,157 75.3% 1,122,082 83.6% Tax revenue 754,909 66.8% 900,714 69.2% 1,034,694 77.1% Non-tax revenue 85,554 7.6% 79,444 6.1% 87,388 6.5% Departmental receipts 22,930 2.0% 25,233 1.9% 27,756 2.1% Receipts from PIL for NRA 22,622 2.0% 26,229 2.0% 28,852 2.2% Parastatal dividends 27,863 2.5% 20,649 1.6% 22,714 1.7% Storage Levy 1,595 0.1% 1,851 0.1% 2,036 0.2% Road Tax 4,733 0.4% 5,482 0.4% 6,031 0.4% Grants 158,697 14.1% 127,736 9.8% 127,736 9.5% Program 11,500 1.0% 35,902 2.8% - - Dedicated grants 54,639 4.8% 32,539 2.5% 32,539 2.4% PFEM Pool Trust Fund 5,495 0.5% 7,007 0.5% - - (WB) Agriculture SWAp (Pool ) 18,502 1.6% 5,806 0.4% - - NAC grants 3,215 0.3% 6,169 0.5% - - Health SWAP Pool 7,045 0.6% 6,569 0.5% - - Education SWAp Pool 3,769 0.3% 6,987 0.5% - - Project Grants 92,558 8.2% 59,295 4.6% 59,295 4.4% Total Revenue and Grants 999,160 88.5% 1,107,893 85.1% 1,249,817 93.1% Foreign (net) 76,602 6.8% 165,761 12.7% 90,132 6.7% Borrowing 105,123 9.3% 194,282 14.9% 111,127 8.3% Program Loans 31,937 2.8% 71,290 5.5% 11,290 0.8% NAC 8,092 0.7% - - - - World Bank 16,193 1.4% 60,000 4.6% - - Malawi Floods (Disaster) - 0.0% 6,450 0.5% 6,450 0.5% WB Agriculture 7,653 0.7% 4,840 0.4% 4,840 0.4% Project Loans 73,186 6.5% 122,992 9.5% 99,837 7.4% Amortization -28,521 -2.5% -28,521 -2.2% -20,995 -1.6% Domestic Borrowing (Net) 42,346 3.7% 27,573 2.1% 1,801 0.1% Domestic Borrowing 85,782 7.6% 78,606 6.0% 1,801 0.1% Amortization (Promissory Notes) -32,111 -2.8% -51,033 -3.9% 0.0% Proceeds from PPP Commission 11,325 1.0% 0.0% 0.0% Total Financing 130,273 11.5% 193,334 14.9% 91,933 6.9% Total Revenue, Grants and Financing 1,129,433 100.0% 1,301,227 100.0% 1,341,750 100.0% Source: Ministry of Finance, Economic Planning and Development. Draft 2017-18 Financial Statement
5.1.8 Regional Economic Integration Policy and Nacala Corridor The regional integration agenda has been pursued by SADC, COMESA and the Tripartite Agreement among SADC, COMESA and the EAC. The goal of regional economic integration of SADC and COMESA is to establish a unified economic union sharing a common currency ultimately.
(1) SADC
SADC, which was formally founded in 1992 and has fifteen member states, aims for the development and peace and security on the principles of democracy and equitable and sustainable development. SADC formulated the Regional Indicative Strategic Development Plan (RISDP) 2005-2020, a comprehensive development and implementation framework for SADC, in 2001, for the ultimate objective of regional integration and cooperation for poverty alleviation and economic and non-economic development. In the RISDP, two groups of priority intervention areas are proposed, in relation with sectoral cooperation and integration,
5-12 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
and cross-sectoral interventions. The development of transport corridors is recognised in the interventions for infrastructure support for regional integration and poverty eradication in the sectoral cooperation and integration. It expects to contribute to building an efficient, cost-effective, safe and fully-integrated transport system that promotes investments through strengthened competitiveness and activated trade, improves production, and provides the market access to rural communities in the Region. The RISDP adopts the spatial development initiative, namely development corridors, growth triangles, growth centres and transfrontier conservation areas, as one of the implementation principles.
(2) COMESA
COMESA was organised to replace the former Preferential Trade Area (PTA) in 1994, primarily for economic cooperation and integration of member states. Currently, with the largest 21 member states in the African regional markets, it approaches to regional integration, through the three pillars of market integration, industrialisation and infrastructure development. As a priority and strategic area, infrastructure development enhancing connectivity and infrastructure integration is proposed for cost reduction and improved competitiveness. The 2016-2020 medium-term strategic plan proposed eight strategic objectives including strengthening market integration; attracting increased investments; strengthening the blue economy; harnessing the benefits of strategic co-operation; strengthening the development of economic infrastructure (energy, transport and ICT); industrialisation; fostering gender equality and social development; and ensuring regional and Secretariat readiness. The strategic objective of market integration suggests the improvement of border management on the priority regional corridors. The strategic objective of economic infrastructure development is facilitated by the corridor approach entailing three components of development of priority regional physical infrastructure, policy and regulatory harmonisation and facilitation.
(3) COMESA-EAC-SADC Tripartite Agreement
The Tripartite Agreement among COMESA, EAC and SADC was signed in June, 2011 for the establishment of COMESA-EAC-SADC Free Trade Area (FTA) for a market covering 600 million population in 26 countries and producing the GDP of USD 1 trillion. Through the Agreement, the three regional organisations aim to coordinate policies and activities in trade, customs and infrastructure development for economic integration of Southern and Eastern Africa.
The Tripartite Strategy composed of three intervention areas of market integration, infrastructure development, and industrial development is proposed to achieve economic development by removing trade barriers including both tariff and non-tariff ones. The programmes and actions will be implemented, mainly focusing on:
Harmonisation and improvement of functionality of regional trading arrangements and programmes, including establishing a Tripartite FTA; Enhancement of trade facilitation to improve the flow of goods along regional transport corridors by lowering transit times and the cost of trading; and
5-13 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Joint planning and implementation of infrastructure programmes, which mainly comprises surface (road, rail, border posts, seaports) and air transport, ICT, and energy8.
In addition to the field of trade facilitation, corridor development is identified as one of the priority areas of regional infrastructure in the Agreement.
(4) Regional Economic Integration Policy and Nacala Corridor
In short, SADC, COMESA and the COMESA-EAC-SADC Tripartite Agreement integrate corridor development into their regional integration policy as a strategy for infrastructure development. Corridor development is recognised as an effective measure to facilitate trade in the concerned regions, by lowering transport cost and improving connectivity among the areas which will otherwise be isolated. Eventually, the production, competitiveness, and attractiveness of investments in the regions connected by a transport corridor are expected to be improved with reduced trade barriers through interventions on border management, in addition to the physical infrastructure development. It is noteworthy that these organisations perceive corridor development as an approach not only for infrastructure development, but also for industry promotion and spatial development.
Nacala Corridor Development with prospective projects such as development of dry ports and OSBP is consistent to the regional economic integration policy proposed by the three organisations. The Nacala Corridor is one of the few corridors equipped with both rail and roads that may bring about a significant impact on the regional development and trade. Due to its locational advantage, it provides Zambia and Malawi with access to the Tripartite Region not only via land transport but also via maritime transport. Therefore, the Nacala Corridor has the potential to contribute to the regional economic integration among Zambia, Malawi and Mozambique. The expected impacts of the Nacala Corridor including trade facilitation and industry promotion are examined in detail in the following section.
5.2 Possible Driving Forces for Nacala Corridor Development This section aims to assess development activities and opportunities that could affect the potential of the Nacala Corridor Region. A number of on-going and planned projects and plans of various activities identified in the field survey, which can be driving forces for development of the Nacala Corridor Region are reviewed, with discussion on development opportunities that have been appearing in the regions of Zambia and Malawi.
5.2.1 Zambia In the Nacala Corridor Region of Zambia, significant projects for infrastructure development are on-going or planned, including most notably, transport and logistics infrastructure projects related to the Nacala Corridor, such as development of the Great East Road, a new rail line, an OSBP and a dry port. In addition, agricultural and industrial development initiatives are found
8 http://www.sadc.int/about-sadc/continental-interregional-integration/tripartite-cooperation/#Coordination
5-14 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
in the region, with emerging development opportunities that might be also stimulated by the infrastructure development.
(1) Infrastructure Development
1) Rehabilitation Works of the Great East Road (T4)
The on-going rehabilitation works of the Great East Road (T4) is progressing, with the support from the EU and AfDB 9 . The mid-term evaluation report of the Great East Road Rehabilitation Project by the EU pointed out that 1.3 million people will benefit from the project and that the project road will strengthen the link between Eastern Province and Lusaka - the availability of affordable farm inputs has improved, and crops can be more readily marketed in Lusaka, Malawi and Mozambique. Referring to the data from the Central Statistical Office, the report also indicated that there has been considerable development in the Eastern Province production of many of the main food and cash crops over the last ten years, although it is still too early to detect any production boost due to the road rehabilitation since the road improvement works commenced only in late 2013.
Table 5.8 Food and Cash Crop Production in Eastern Province, 2005/06–2014/15 Estimated Crop Production (1,000 ton) Crop 2005-06 2010-11 2011-12 2012-13 2013-14 2014-15 Maize 285.5 622.6 643.7 600.1 789.6 622.1 Cotton 70.3 … 139.5 … … … Groundnuts 21.3 25.2 30.3 31.8 29.4 32.5 Sunflower 10.9 13.9 18.7 24.2 19.5 28.3 Burley tobacco 6.2 … 5.7 7.9 7.3 7.4 Virginia tobacco … … 1.3 1.8 3.4 2.6 Soya beans 9.1 5.6 7.4 12.9 13.6 18.5 Sweet potatoes 7.5 … 3.5 … … … Rice 4.6 … 2.7 1.3 1.7 0.7 Source: EU, “Mid-Term Evaluation of the Great East Road Rehabilitation Project”, March 2017
The report indicated that other long-term project beneficiaries include freight forwarders, exporters and importers, transport operators, the business community and the wider population in Zambia, Malawi and Mozambique and within SADC. The report envisages further impact with the development of the Chipata-Petauke-Serenje rail line, a dry port in Chipata, and the OSBP at Mwami.
2) Construction of the Chipata-Petauke-Serenje Rail Line
The GOZ is planning to construct a new railway line from Chipata to Serenje via Petauke with assistance of China. The new section of the railway line is 388.8 km and the construction cost is estimated at USD 2.6 billion. The project is mentioned in 7NDP 2017-2021 as one of
9 T4 is divided into following sections for rehabilitation: - Luangwa Bridge-Nymba: completed with EU support (contractor: Monta Engil Engenharia E Construcao of Portugal) - Nymba-Sinda: rehabilitation work still on-going with AfDB support (contractor: Condril Engenharia SA) - Sinda-Mwami completed with EU support (contractor: Monta Engil Engenharia E Construcao of Portugal)
5-15 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report strategies to improve transport systems and infrastructure. The EIA and the feasibility study for the project are being implemented by a Chinese company.
Eastern Province is connected to the Port of Nacala by the Chipata-Mwami /Mchinji rail line (total length of about 378 km), passing through Malawi. The Chipata-Petauke-Serenje rail line which will connect to the TAZARA line will enable the province to have access to the Port of Dar es Salaam through the Dar es Salaam Corridor, thereby, creating strategic alternative routes to the Nacala, Source: JICA Survey Team. North-South, and Beira Corridors. The rail Figure 5.4 Location of Chipata- line is expected to start from Chipata and Petauke-Serenje Rail Line reach Serenje (in Central Province) through Katete, Sinda and Petauke Districts. This rail line connection will link Copperbelt, Serenje, Chipata, Mwami/Mchinji to the Port of Nacala via Malawi. According to the interview survey with the Ministry of Mines and Minerals Development, Nacala Corridor Development is critical in the sense that Lusaka can be bypassed for more efficient transportation once the Chipata-Petauke-Serenje Rail Line is developed. Copper in Zambia is refined to 99% blister copper, to be exported through Durban and Livingstone from Copperbelt, utilising the North-South Corridor. With the development of the Chipata-Petauke-Serenje route, the Nacala Corridor is expected to become an alternative route for export, enabling a bypass of Lusaka.
The plan, however, may take some time to actualise as a result of comprehensive analysis of information gathered through various interview surveys. According to the MTC, the total estimated project cost is USD 2.6 billion. Of which, the ceiling for a sovereign loan approved by the IMF is USD 1.9 billion and the remaining USD 0.7 billion needs to be secured from the private sector. Currently, the GOZ is negotiating with the Chinese government regarding USD 1.9 billion sovereign loan portion. According to the Embassy of China, once committed, this project will become the largest Chinese project in Zambia, and it will take time to implement the project – given the huge investment, and the Chinese government needs to ascertain the profitability and sustainability of the project before making a final decision.
According to ZRL head office in Kabwe, once implementation of this Chipata- Petauke-Serenje rail is realised and operation of the rail commences, corridors passing through Zambia will be connected and Zambia would become a logistics hub in Southern Africa, thereby enhancing efficiency and convenience of transportation within the region as well as facilitating further industrial promotion targeting regional market.
5-16 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3) Dry Port in Chipata
Currently Eastern Province has no operational dry port facilities but there is a plan to construct a dry port at Chipata Railway Station. According to the MTC, a feasibility study for dry port development in Chipata has been conducted; however, an EIA as well as operation and maintenance strategy have not been undertaken yet. As regards the necessary financing, an EU group is showing interest to provide support10. A dry port will benefit freight forwarders, exporters and importers, transport operators, the business community and the wider population and facilitate utilisation of the Nacala Corridor in the long-run.
4) OSBP and Inter-Country Trade Centre (ICTC) at Mwami Border Post
Regarding the development of OSBP at the Mwami Border Post, a feasibility study has been undertaken and the designs are being reviewed. The MTC expects that finalizing the OSBP should have a positive effect on the traffic levels of the Nacala Corridor as a viable alternative to other routes. According to the interview survey with the MOCTI, there is a plan to develop a Trade Centre in Mwami for the purpose of formalising and facilitating inter country trade between Zambia and Malawi.
5) Development of Coal Fired Power Plant in Chipata
According to the Department of Planning, Eastern Province, as well as the Ministry of Energy (MOE), there is a plan to develop a coal fired power plant (350 MW class) in Chipata by utilising coal in Tete, Mozambique. The coal would be imported from Tete via the Nacala Corridor. The development will be undertaken by IPP – Black Rhino Group of South African capital, according to the company’s website 11 . The company has already concluded a Memorandum of Understanding (MOU) with the government and a feasibility study is now being conducted (expected project cost is about USD 900 million). Black Rhino Group will start negotiation with ZESCO regarding off-take agreement. Given that Eastern Province has not had any power plants thus far, according to the Department of Planning, Eastern Province, the new power plant will surely contribute to increased and stable power supply in the province, which would serve as a critical boost to the business development of the area. Also the project might create an opportunity to improve the Nacala Railway of the Malawi section between Liwonde to Mchinji.
6) Gas Pipeline and Transmission Line Development
According to the interview survey with the MOE, there is a plan to put up a gas pipeline into Chipata from Mozambique. Moreover, with the vast coal plants Mozambique has, Zambia plans to construct a transmission line through the Nacala Corridor to Tete for a power connection.
10 According to interview survey with EU, the dry port design and preparation of tender documents have been conducted with EU support. European Investment Bank (EIB) is considering financial support on physical infrastructure development. EIB has a financial instrument to provide loans to private sector, since the dry port is a private facility. 11 http://blackrhinogroup.com/#Aboutus
5-17 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Economic Sector Development
1) Development of an Industrial Park and Multi Facility Economical Zone (MFEZ) in Chipata
In Chipata, an Industrial Park and MFEZ are planned for development by the private sector and the government, respectively. According to the interview survey with the MOCTI, the proposed Chipata Industrial Park is situated along Chadidza Road on a 100 hectare piece of land. The Industrial Park is being promoted by an indigenous Zambian enterprise who is a majority shareholder. The developers of the Industrial Park have already invested USD 8 million in rehabilitating infrastructure and have so far attracted three enterprises engaged in manufacturing and processing activities. It is estimated that more than twenty companies will be located in the Industrial Park with projected employment levels estimated at 4,000 employees. On the other hand, according to the Department of Planning, Eastern Province, MFEZ is planned by the government, however, there is no prospect for a financial source at the moment, and the plan is still at the concept phase.
2) Movement Toward Export Oriented Agriculture and Agribusiness Development
The GOZ has been implementing Farm Block Development Programme since 2002. If commercial farm production is carried out on the scale of 100,000 ha in the areas close to the Nacala Corridors, export oriented agricultural production and agribusiness will also be activated. In addition, it is expected that the transportation of fertiliser and the export of products will be increased by using the Nacala Corridor. On the other hand, it is necessary to pay attention to the protection of rights of small scale farmers and rural communities in the implementation of large scale agricultural development.
Especially in the area near the Nacala Corridor, according to the Department of Planning, Eastern Province, the government has already identified 100,000 ha of land in Lundazi which is high potential area for cotton production, and agro-processing development (including cotton and livestock) is expected with Out-grower Scheme to affiliate with small scale farmers.
Moreover, the private company, which is planning to develop the Chipata-Petauke-Serenje Railway, indicates an intention to develop a Farm Block in Petauke and the GOZ is examining the plan12. Additionally, the investors are identified for Manshya in Muchinga Province and Luswish in Copperbelt Province. Farm Block development is planned around Ndola in Copperbelt Province and Chongwe in Lusaka Province. After these developments progress, agricultural commodities and processed agricultural products will be distributed to the domestic and foreign markets via the rehabilitated Great East Road (T4), planned Chipata - Petauke - Serenje railway, and a dry port in and Chipata. As a result, the development of both the regional economy and the corridor infrastructure would be boosted.
12 Interview with Department of Agriculture, MOA
5-18 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Meanwhile, capacity building and market access improvement for small-scale farmers are also being implemented for promotion of export oriented agriculture in Zambia (See 3.1.6). In collaboration with agribusiness companies such as NWK Agri-Services and Cargill, enhancement of small scale farmers’ production of not only the company’s main business crops but also other crops is also developing steadily. For example, the demand of soya beans and related products like oil, soy powder, soy cake etc. is high. Thus, if the farmers in the region, mainly small scale farmers, increase these productions, the diversification of agriculture and agribusiness will be promoted (see 3.1.7 (2)). As for livestock products, the government is trying to increase the production to export one million goats and sheep a year to Saudi Arabia (see 3.1.7 (1)).
(3) Expansion of Development Opportunities
1) Rapid Growth of Chipata Urban Centre
The major urban centres existing along the Nacala Corridor in Zambia and Malawi are Lusaka, Chipata, Lilongwe and Blantyre. Populations of the urban centres are 1,747,152 (2015), 146,088 (2015), 1,098,200 (2016) and 920,200 (2016) respectively13. Chipata is growing rapidly in recent years and was declared as city in February 2017, which is the capital of Eastern Province, and the centre of trading of agricultural products such as maize, soya beans, cotton, tobacco and sunflowers, a gateway to the Nacala Port via the Mwami border post, and a tourist service town for the tourism around the Luangwa National Park. Chipata has the potential to function as an important urban centre to support and contribute to economic development of the Nacala Corridor Region, in combination with strengthening of the transport function of the Nacala Corridor.
2) Competition among the Rail Corridors
While the development potential of the Nacala Railway Corridor is expected to expand by the railway extension from Chipata to Serenje, construction and improvement of other railways are also under study or planned by the public and private sectors. Those include the construction of the Chingola-Solwezi-Jimbe Railway (600 km) to link North-Western Province of Zambia to the Port of Lobito, construction of the Livingstone-Kazungula-Sesheke Railway to link Zambia to Walvis Bay in Namibia (200 km), the Solwezi-Kaoma-Sesheke Railway to link North-Western Province of Zambia to Walvis Bay, and upgrading of the North-South Rail Corridor. In addition, the revitalisation of existing railways, Zambia Railway and TAZARA, is planned by the government with support of the World Bank, EU and China. If the railways of those corridors are developed and improved, competition among the different rail corridors could emerge and the Nacala Corridor has to make efforts to compete with the others. This competitive environment will improve transport services and costs and can promote the utilisation of the Nacala Corridor in the future.
13 Thomas Brinkhoff: City Population, http://www.citypopulation.de
5-19 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.2.2 Malawi Similar to the case of Zambia, there are several on-going projects and plans for infrastructure development and economic sector development that could affect development of the Nacala Corridor Region in Malawi. In the infrastructure sector, logistics and energy infrastructure development projects are identified, while large scale mining projects, and agriculture and industry sector related projects and initiatives are discussed in the economic sectors.
(1) Infrastructure Development
1) Dry Ports in Lilongwe and Blantyre and a Wet Port in Liwonde
The above mentioned MNTMP recommends the development of dry ports in Lilongwe and Blantyre, in addition to the proposed dry port construction in Salima. The MNTMP also suggests the construction of a wet port in Liwonde at the crossing point of the railway and Shire River water transportation route with the aim to enhance the utilisation of both railway and water transportation from Lake Malawi to the Shire River. These initiatives will enhance the usability of the Nacala Corridor, leading to further activation of the transportation of goods and services.
In fact, Vale and its partner Mitsui Corporation have shown an interest in a railway rehabilitation programme for the Nkaya-Mchinji route, and negotiation with the GOM is in the final stages14. As pointed out by the officials of the Malawi government, this initiative will help to complete the movement of goods from Nacala Port in Mozambique to Chitapa, Zambia through Lilongwe and Mchinji. Given this new initiative, Nkaya, which has enough land for development, may have a potential to be developed as rail yard or clearance point of rail transport.
2) Power Sector Development
According to the interview survey with the Ministry of Finance, Department of Economic Planning and Development, and AfDB, there is a plan to develop power generation facilities in Neno District, supported by the Chinese government (the contractor is China’s Gezhouba Group Corporation (CGGC)). The plan is to construct a 300 MW class coal-fired power plant in the Mwanza area (fist stage), utilising coal produced in Tete in Mozambique, and to be transported to Mwanza from Moatize. The plan is to eventually expand the generation capacity up to 1,000 MW. The partial operation is planned by 2019 and the plant will be fully operational by 2021. As part of a medium to long term transmission plan, a north-south backbone 400 kV system development is expected and would be connected to neighbouring utilities – Phombeya near Blantyre to be connected to Mozambique (Matambo and/or Ncondezi in Tete Province). In addition, there is another plan to develop a coal fired power plant of 80 MW class capacities in northern Malawi through IPP. Once the power plants have become operational, power supply problems, especially in the key load centres of the country
14 https://www.nyasatimes.com/vale-mitsui-plan-nkaya-mchinji-railway-line/
5-20 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
– Blantyre and Lilongwe – will be alleviated and then industrial development (including manufacturing) and investment will be facilitated. (See 4.6.3 Table 4.47)
(2) Economic Sector Development
1) Development of Special Economic Zone (SEZ) According to the interview survey with the MOITT, there is a plan to develop SEZ in the country15. The Ministry expects to prepare a feasibility study with support from development partners. The feasibility study will identify candidate location(s) and come up with operation strategies of SEZ, as well as come up with measures to improve production, expand employment, generate foreign currency, etc. According to the interview survey with the MITC, several candidate locations are under consideration – Lilongwe (with 350 ha of land in the vicinity of the airport), Blantyre (with 38 ha of land), Liwonde, Shire Valley, North Karonga, Salima, etc. The GOM expects the private sector to undertake the development and marketing of SEZ. Legal and institutional frameworks regarding SEZ development and operation, as well as selection criteria and various incentive structures for SEZ developers and operators have not been decided yet. Concrete tax incentives will be decided in coordination with pertinent authorities including the Ministry of Finance and Economic Development, MOITT, MRA, and MITC to facilitate private sector participation. According to the MITC, a private company in the USA (Water Wheels International) has proposed to develop a private SEZ, apart from the SEZ development mentioned above. The company plans to construct a 2MW power plant (through IPP) near Nkhata Bay to secure necessary power in the SEZ. The remaining power will be sold to ESCOM, and negotiation between the company and ESCOM is on-going. As such, facilitating development of power generation through promotion of IPP may be one of options to mitigate power supply problems for SEZ development.
2) Development of Irrigation Scheme
Large-scale irrigated farmland has been developed in Malawi through assistance from development partners and private business operators. Among 78,100 ha of agricultural land planned to be development of irrigation system, financial sources were identified for 35,170 ha of land. The irrigation scheme of 21,500 ha will be developed in Shire Valley Irrigation Project (see 4.1.6). Since the rain-fed agriculture is mostly practised in the country, the decrease or stagnant of the productivity and production due to unstable rainfalls and droughts are main challenges in the agriculture sector. If the irrigation can be implemented in appropriate time, increase of the productivity and production can be expected. Although the GOM (as well as the GOZ) has anticipated that the agricultural programmes promoting market oriented agriculture adversely affect national food security, the food surplus has been increasingly observed due to the recent growth of agricultural production. Therefore, if the
15 According to the MITC, the project was originally proposed as an EIF (Enhanced Integrated Framework, a multi-donor financed financial and technical support programme under the auspices of the WTO) in 2014, as a three year programme, costing around 3 million dollars. Three prioritized export-oriented clusters were identified for diversification – oil seed products, sugar cane projects and manufactured products. However, the proposal was rejected and the MITC is now discussing with the World Bank on how to revise the plan including candidate sites for SEZ, a policy for operation, related legislations and organisations of SEZ.
5-21 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
agricultural production by small scale farmers is increased and stabilised by the development of irrigation infrastructure, it may be possible to promote development of market oriented agriculture targeting the neighbouring countries while achieving the food security.
3) Functional Enhancement of Farmers Organizations and the Private Sector
As mentioned in 4.1.5 and 4.1.7, farmers’ organisations such as FUM and NASFAM, taking a role of agricultural extension workers, have been working on improving agricultural production though supporting agricultural inputs and providing technology assistance for small-scale farmers. Furthermore, they serve as an intermediary between small-scale farmers and distributors to optimise their commercial transactions, and also started exporting agricultural products.
Besides, private commodity exchangers such as ACE and AHCX are trying to improve farmers’ market access by establishing collection warehouses in local cities and by creating market information dissemination and credits systems for small-scale farmers. If the activities and functions of these organisations and operators are expanded and enriched in the future, both agricultural production and its sales by small-scale farmers are expected to be strengthened.
4) Mining Sector Development
According to the interview survey with the AfDB, major investment projects in Malawi’s mining sector are: (i) Songwe Hill Rare Earth Project, owned by Mkango Resources Ltd., which is listed on Canada’s TSX Venture Exchange and the AIM Market of the London Stock Exchange, and (ii) Kanyika Niobium Project in Mzimba and Chiziro Graphite Project in northeast of Lilongwe, run by the Australian-listed, metals and rare earths company called Globe Metals & Mining Ltd.
As regards (i) Songwe Hill Rare Earth Project, it features broad zones of outcropping rare earth elements mineralisation on the northern slopes of a steep sided hill in Phalombe, which is located about 2 km from the Mozambique border. Mkango completed a Pre-Feasibility Study for the Project in September 2014, which was subsequently updated in November 201516. EIA has not been conducted yet. According to the interview survey with Mkango Resources, a refining plant (sulphuric acid plant and flotation plant) will be constructed at the project site, and inputs necessary for the production including sulphur will be imported utilising the Nacala Railway. In regards to rare earth outputs produced from the plant, Mkango Resources is considering transporting the products to Liwonde by truck and then loading them on the Nacala Railway for exporting to Europe. Currently, the rare earth market is dominated by China – 98% of supply comes from China. Although the expected share of this project output is very small, it will create an alternative supply source other than China.
16 http://www.mkango.ca/s/songwe.asp
5-22 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Regarding (ii), Kanyika Niobium Project is Globe’s most advanced project aiming to produce high purity niobium pentoxide and tantalum pentoxide powders17. Niobium production is expected to be 3,000 tonnes per year and the company has exploitation rights for 50 years. According to the interview survey with Globe Metals & Mining, the Kanyika mining site is located in Mzimba District, which is located between Kasungu and Nkotakota. Globe Metals & Mining intends to utilise the Nacala Rail to import production materials as well as to transport Niobium via Nacala Port. As such, the company expects the rail infrastructures to be upgraded. Currently, Brazil is dominating the Niobium market – about 90 to 92% of supply (equivalent to 55,000 tonnes per year) comes from Brazil – followed by Canada (4,000 tonnes per year). Once this project is realised, it will become third place in the world.
Source: JICA Study Team Figure 5.5 Location of Possible Driving Force Projects and Plans
17 http://www.globemm.com/Projects/Kanyika-Niobium-Project.aspx#.WU-4mDuQwkI
5-23 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.3 Overall Issues on Nacala Corridor Development With the understandings of Nacala Corridor Development in the national plans and regional integration policies as well as the current initiatives for development on the ground of the Nacala Corridor Region discussed, a set of overall issues for promoting development in the Nacala Corridor Region is identified and discussed in this section. In particular, the issues are examined from three perspectives of development of corridor transport infrastructure, promotion of economic sectors, and regional economic integration.
5.3.1 Issues on the Nacala Corridor Transport (1) Incomplete Corridor Infrastructure Development
Nacala Corridor is considered as one of the most important corridors for Zambia and Malawi. Landlocked countries such as Zambia and Malawi have to rely on international corridors for their international and regional trade, and how to reduce transport costs for both export and import is the key issue for economic development of the countries. The Nacala Corridor is considered as a potential corridor to provide an alternative route of transport for Malawi and Zambia, and to reduce the cost of transport for export and import by utilising the railway.
The development of transport infrastructure of the Nacala Corridor has been progressing in these recent years by certain fundamental projects including the road construction projects between the Luangwa Bridge and Mwami border funded by EU/EIB and AfDB, construction and upgrading of the Nacala Railway between Moatize and Nacala Port via Malawi by Vale, and the rehabilitation of Nacala Port.
In spite of the expectations from the stakeholders and the progress of the infrastructure development, the actual use of the Nacala Corridor is not significantly increasing in both countries, and the share of the corridor in freight transport is still low. In Malawi, the share of freight transport of the Nacala Corridor for export and import is only around 10-20%, while the Beira and Durban Corridors account for around 50-60% and 20-30% respectively. In Zambia, the share of the Nacala Corridor in freight transport is only 5% in export and 2% in import. It can be said that the Nacala Corridor is not fully utilised as expected at present.
This is because the Nacala Corridor’s transport infrastructure is still incomplete and has not reached the level to function as an international corridor at present, although various infrastructure projects have been implemented for Nacala Corridor Development in recent years in the three countries. The railway between Chipata (Zambia) and Mchinji (Malawi) was constructed in 2010 and started its operation in 2014. In addition, the railway for coal transport from Moatize in Mozambique to Nacala Port via Malawi was constructed and upgraded by Vale and commenced the operation in the beginning of 2016. However, the railway section between Nkaya and Mchinji is still not in good condition and is frequently damaged by flooding around Salima. Due to the condition, the railway in the section is not reliable for freight transport and the speed of the trains is very slow (10-15 km/hour). The axle load of the railway between Chipata (Zambia) and Limbe (Malawi) is 18 tonnes, except for the section between Salima and Nkaya of which the axle load is 15 tonnes, while the axle load in the
5-24 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
section from Nkaya to Nayuchi, which was constructed by Vale, is 20.5 tonnes. Currently, the freight transport through the Nacala Rail Corridor is functioning only between Blantyre and Nacala Port by the upgraded railway for the coal transport. The railway section between Nkaya and Mchinji in Malawi is the bottleneck in completion of the functioning the Nacala Rail Corridor. Recently, however, it was revealed that a rehabilitation plan is prepared for the Nkaya-Mchinji section by Vale and Mitsui Corporation and is to be implemented once a contractor is selected this year.
Similar to the railway, because the Nacala Road Corridor also has bottlenecks in completion of the functioning road corridor, the traffic volume passing through the Nacala Corridor between Malawi and Mozambique is limited. These bottlenecks include the steep uphill road sections in mountainous areas in Malawi around the border with Mozambique, unpaved trunk roads between Chiponde and Cuamba and also between Cuamba and Malema in Mozambique and a lack of OSBP at the borders between Zambia and Malawi, and Malawi and Mozambique. Meanwhile, the sections of Cuamba-Nampula (348 km) and Madimba-Cuamba (160 km) have been improved under co-financing of JICA, AfDB and South Korea so that the road condition will be upgraded shortly.
Lastly, Nacala Port was rehabilitated under the Japanese grant aid and a project to upgrade its cargo handling capacity is currently underway by the Japanese ODA loan. Hence, after the completion of the project three years later, the handling capacity of the Port will be expanded to make the most of its potential.
(2) Improvement of Rail Freight Transport Services to Attract the Private Sector to Utilise the Nacala Corridor
The Nacala Corridor’s advantage to other corridors is the existence of a reliable railway from Moatize to Nacala Port, which will be maintained in good condition for the coal transport until the closure of the coal projects. An expected advantage of using railways for freight transport is the lower cost compared with the cost of truck transport. It is also the advantage that railways can haul heavy and bulky freight as well as a large volume of freight at a time.
At present, none of corridors in Zambia and Malawi are successful in taking full advantage of railways’ merit, although there are corridors which consist of both railway and road, namely the Dar es Salaam Corridor and the North-South Corridor. The price of rail transport is about the same or higher in some cases compared with truck transport. Customers do not prefer railway in consideration of cost, time, availability and security. The share of railway in the heavy bulky freight market in Zambia is only 9%. Under the concession agreement, the quota of the cargo volume of 4 million tonnes per year is granted to CEAR; however, the current volume reaches only about 500,000 tonnes, equivalent to 8% of the quota. On average, 47 wagons were carried by a train per one way, though CEAR is allowed to operate a rail carrying up to 120 wagons per one way.
There are other factors beside the infrastructure to explain the underutilised Nacala Railway. There are only a handful of ship lines calling at Nacala Port compared with other ports, and not many logistics firms have opened branch offices in Nacala. Moreover, a dry port that
5-25 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
offers an effective connection between the rail and road has not been developed yet, so that the advantage of multimodal transport of the Nacala Corridor is unexploited. A lack of locomotives and wagons owned by CEAR is another constraint to expand the operation. It is also necessary to enhance the management, operation and maintenance capacity of CEAR for improved handing capacity. The publicity of the Nacala Railway is also identified in interviews with the stakeholders. Because the opening ceremony of the Nkaya-Moatize line was only held in May 2017, one year after the commencement of the coal transport in 2016, not many people have recognised the potential of the Nacala Corridor Railway for freight transport.
The critical issue for the promotion of the Nacala Corridor is how to provide good rail freight transport services in terms of time, security and availability and how to lower the transport costs. Efforts should be made not only by improving the transport infrastructure, but also by developing supporting facilities, improving the railway operation and making good coordination among the railway operating companies in Zambia, Malawi and Mozambique.
5.3.2 Issues on Economic Sectors (1) Basic Understanding on Impacts of Transport Corridor Development on Economic Sectors
The basic understanding on the relationship between transport corridor development and economic sector development is that there is no straightforward positive association between them. Even if the railway and roads of the Nacala Corridor are developed or upgraded from Nacala Port up to Malawi, a potential of economic sectors would not emerge instantly nor be cultivated to export commodities via Nacala Port without any interventions. Likewise, in Zambia, the road development of the Nacala Corridor does not lead to a sudden surge of development potential of an industrial sector and automatic expansion of export oriented production and trade. In other words, improvement of the railway or roads on the corridor offers only a new opportunity for economic sectors through the reduction of transport costs or improvement of market access. An action for change must be initiated to cultivate the development potential of economic sectors, taking advantage of opportunities for trade or in newly connected markets by the improvement of the transport corridor. Therefore, there should be initiatives or interventions to promote the development of economic sectors, which are described as follows.
(2) Reinforcement of Export Oriented Agriculture
A primary economic sector in the Nacala Corridor Region in Malawi and Zambia is agriculture and the key issue is how to develop the agriculture sector and how to promote agribusiness for the development of the Region while protecting the rights of small scale farmers and rural communities.
As above mentioned, the use of the Nacala Corridor is still low in total freight transport; however, the corridor started being used to no small extent for the transport of agricultural inputs and materials, as well as agriculture products including processing ones. Therefore, the
5-26 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
agriculture and agribusiness sectors first benefit from the development of the railways and roads on the Nacala Corridor among others, by the reduction of transport cost added to the price of commodities. Specifically, an opportunity for expansion of regional trade with neighbouring countries is expected to emerge by newly established market access through the corridor development.
In Zambia, a cluster composed of agricultural production and processing has been under formulation. In particular, maize, soya beans, its edible oil and by-products are exported to regional markets. As described in 3.1.7, various products can be produced in Zambia because of the favourable agro-ecological condition, the demand of the products is high in the regional markets, and thus the export of agriculture products is one of the important income sources of foreign currency. The NAIP certainly mentioned that the export oriented agriculture is to be promoted. However, the current detailed strategies, initiatives and regime (system) for export oriented agriculture are less developed, hindering the promotion of export oriented agriculture development. The strategies and implementation mechanism should be modified so as to be based on the current situation that small scale farmers are dominant in the region, to consider a balance between food security and product export, and to be implementable on the ground of each of the potential crops.
In Malawi, the export of primary products such as tobacco and cotton is predominant for international markets. The export oriented agriculture has been promoted based on the NES formulated in 2012, which clarified the promotion strategy and the implementation mechanism by cluster. According to the interview with MITC, however, the implementation has not been progressed as expected, despite some attempts for export by cluster.
Among those which have not been performed well, there is a slump in the export of groundnuts. The significant amount of groundnuts after tobacco had been exported until the late 1990's; however, due to the aflatoxin problem, these are no longer exported to Europe and the United States, which used to be large markets for groundnuts. For that reason, academic scientific research and field studies on aflatoxin control are being conducted by many projects and programmes, but comprehensive countermeasures at the production site have not been implemented (see 4.1.6, 4.1.7).
(3) Development of Large Scale Agriculture and Agricultural Industries in the Nacala Corridor Region
As mentioned above, the agriculture products in Zambia and Malawi are exported to the regions and overseas counties. However, the transport cost is high and the competitiveness is low in international markets due to their location as inland countries. Thus, to promote the export of agricultural products with competitiveness enhancement from macro-aspect, it is important to attract more investment from the private sector in the large scale agriculture and agro-processing industry that can reduce the production cost by taking advantage of economy of scale, while paying attention to the rights of small scale farmers and rural communities.
In Zambia, a policy or programmes toward export-oriented production should be introduced, since until now large-scale farmers are often oriented to a domestic market, of which the scale
5-27 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
is rather limited. At present, the government is promoting the development of large-scale commercial farming as Farm Block Development Programme and has identified 100,000 ha as Farm Block in each province.
Although the government tries to carry out the programme, Farm Block development has not progressed as planned. As shown in Table 3.5, core investors have been determined for some Farm Blocks, but the most Farm Block development is not going well due to the delay of infrastructure development by the government. Moreover, the Farm Blocks had been set in each province by the programme, apart from the blocks shown in Table 3.5, and there are Farm Blocks that have not been developed such as Mwase-Mphangwe (Lundazi District) in Eastern Province, Chongwe (Chongwe District) in Lusaka Province, Solwezi in North-Western Province and Simango in Southern Province, etc. Furthermore, the consideration for local small scale farmers should be taken into account in Farm Black development. Therefore, it is necessary to examine the reasons of this stagnancy by conducting detail studies on the current situation and to propose concrete measures to make the Farm Blocks successful.
The GBI is conducted for promotion of large scale commercial farming and agricultural processing as agribusiness development in Malawi. According to the GBI, business development in three areas was planned, but only Malawi Mango and Salima Sugar in Salima are currently operating (4.1.6 (2) -2) reference).
(4) Special Consideration to Small Scale Farmers
The majority of farmers in the Nacala Corridor Region as well as in the two countries in general are small scale farmers. The important issues include how to link small scale farmers to markets, access to which may be improved by Nacala Corridor Development, and how to involve them in the regional development.
Also, the development requires continual awareness that small-scale farmers in the region should not suffer a disadvantage due to the promotion of the large-scale commercial agriculture or other development activities. Therefore, while promoting the large scale commercial farming mentioned above, various measures should be taken for the small scale farmers to improve agricultural production and market access (marketing). For instance, introduction of Out-grower scheme, and Citizens Economic Empowerment Commission (CEEC)’s cluster based loan programme for small scale investment are good examples of the interventions for small scale farmers to link with markets. However, these measures should be implemented with respect to the will of small scale farmers. Upon making such decisions, it is necessary to take sufficient measures to ensuring fairness and transparency, for example by providing information in appropriate methods with the serious consideration on the environment of small scale farmers where access to information is limited. Thus, the effective, existing interventions should be reviewed and evaluated before introducing new initiatives for small scale farmers.
5-28 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.3.3 Issues on the Relationship Between Corridor Transport and Economic Sectors (1) Creation of Demand of Transport for the Sustainability of Nacala Corridor by Making it Business Friendly
The most important issue to promote Nacala Corridor Development is the creation of enough demand of transport to sustain the transport functions of the Nacala Corridor. At present, agricultural products such as sugar, pigeon peas, tea, tobacco and macadamia nuts are exported from Malawi through the Nacala Corridor to the Nacala Port, and soap noodles, wheat, fertilizer, spare parts, bicycles, etc. are imported through the Nacala Corridor to Malawi. For Zambia, international trade through the Nacala Corridor is very limited. 70% of the freight for export and 78% of the freight for import at Mwami border with Malawi are for the trade between Zambia and Malawi. Cotton, cement, clinker, maize and tobacco are exported to Malawi. Because only about one year has passed since the commencement of the operation of the Nacala Corridor Railway and Nacala Port, activities for the publicity and advertisement of the Nacala Corridor have been rarely conducted to spur a demand for freight transport. In fact, as a result of that, the current traffic volume accounts for more or less 10% of the transport quota (two around trips per day and 120 wagons per one way) given to Malawi under the concession. Moreover, Nacala Port and transit points lack necessary equipment, handling facilities for transhipment, and warehouses. Only a handful of major logistics firms opened their branch offices in the port, such as Bolloré.
To utilise the transport functions of the Nacala Corridor for regional development, it is necessary to increase the demand of transport to the level that the infrastructure and transport services are maintained in the long term, in addition to the coal transport from Moatize to Nacala Port. It is not easy to increase the demand of transport in the short term in consideration of the current conditions of infrastructure and economic activities along the Nacala Corridor. Yet, a first step should be taken to develop support facilities and to install necessary equipment in order to make the Nacala Corridor and Port more business friendly and to induce the traffic demand from the economic sectors. Dry port development is one of those projects that bring about the benefits of the multimodal transport of the Nacala Corridor to the private sector. Meanwhile, it must be mentioned that the traffic demand to support the Nacala Corridor is not necessarily international freight toward Nacala Port. As discussed, intra-regional trade should be activated in the initial stage, not international trade. The Nacala Corridor, the rail in particular, could be sustained, should intra-regional trade generate sufficient traffic demands.
(2) Insufficient Use of the Nacala Corridor by Economic Sectors
In Malawi, the Nacala Corridor Railway started to be used from Blantyre, for export of tobacco, sugar, tea, etc., using the bay-line connected to the factories or warehouses. Fuels and fertiliser are already imported via the Nacala Corridor, though the traffic demand from the economic sectors is not sufficiently large. The transport cost of the Nacala Railway is relatively cheaper compared with truck transport, but a difference in the cost of the two modes
5-29 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
of transport is not so significant as logistics firms and customers have started considering the shifting from truck to rail transport. In Zambia, the use of the railway and road of the Nacala Corridor is not very active due to the inefficiency, unreliable operation, and security reasons.
5.3.4 Issues on Regional Economic Integration (1) Regional Coordination for Promotion of Nacala Corridor Development
Promotion of Nacala Corridor Development can be achieved by the stakeholders of all sectors throughout the Nacala Corridor Region. To promote and sustain the Nacala Corridor in the long term, it is essential to accommodate transport demand in wider areas of the Nacala Corridor Region in Zambia, Malawi and Mozambique through the utilisation of the Nacala Corridor. Necessary infrastructure development should be realised along the corridor, in order to complete the transport corridor and improve the transport/logistics functions. Economic development in the Nacala Corridor Region should be promoted by integrating the region and making links between different industrial and commercial centres. At present, there is no mechanism of regional coordination among Zambia, Malawi and Mozambique to promote Nacala Corridor Development, and it is an urgent issue to be considered.
(2) The Nacala Corridor for Regional Economic Integration
The ratification process of the COMESA-EAC-SADC Tripartite Free Trade Area that was brought into effect in June 2015 has been making slow progress in each of the member states. In the past, the efforts for regional economic integration by SADC and COMESA in the Southern African region were not successful18 so that the member states might be reluctant to take actions for the regional integration, unlike the countries in the West African region, under West African Economic and Monetary Union (UEMOA) or Economic Community of West African States (ECOWAS), or in Eastern Africa as members of EAC.
The trade barriers to export, such as a ban on export of certain commodities are found on the agricultural commodities with a potential to export via the Nacala Corridor. These trade barriers including both tariff and non-tariff should be removed to encourage the export of potential agricultural commodities. In Zambia, the 7NDP adopted a policy to promote export-oriented agriculture. Thus, the agricultural policy of the two countries should be redirected in line with the export strategies as well as the regional integration policy and trade agreements. The export oriented agriculture proposed in the 7NDP should be developed by offering incentives to the potential farmers for the expansion of commodity production for export, by archiving balanced development that brings about benefits to small scale farmers
18 SADC delayed the target years to achieve the goal of complete trade liberalization and foundation of a custom union. As the issues in achieving the goals of SADC, Mapuva and Muyengwe-Mapuva (2014) pointed out “over ambitious targets set by the SADC as a roadmap to economic regional integration; multiple and concurrent memberships of different regional economic communities (RECs); the heterogeneous nature of the SADC economies which has provided an uneven economic environment; duplication emanating from the activities of the SACU and the SADC; the intricacies of rules of origin; different levels of economic development within SADC member states; as well as the failure of the SADC Tribunal to provide recourse to justice and act as a unifying platform for member states” (25-26). Mapuva, Jephias and Loveness Muyengwa-Mapuva. (2014). “The SADC Regional Bloc: What Challenges and Prospects for Regional Integration? Law, Democracy & Development 18 (2014): 22-36.
5-30 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
dominant in this area, and at the same time by preventing negative impacts on vulnerable farmers.
5.4 Impact Analysis
5.4.1 Perspectives on Nacala Corridor Development In coming up with a development scenario, the following two perspectives were taken up for both Zambia and Malawi: (i) approaching the Nacala Corridor from the entire country perspective (i.e. from the macro perspective) and (ii) focusing on potentials of the Nacala Corridor itself (i.e. from the micro perspective).
(1) Zambia
Zambia is already connected with neighbouring countries as well as sea ports through various corridors which pass through the country. Each corridor has competitive relationships in terms of transport/logistics, regional development, industrial promotion and so on. When viewing from traffic volume/freight, the Nacala Corridor is the sixth corridor after the North-South, Beira, Lobito, Dar es Salaam and Walvis Bay.
The benefits of Nacala Corridor Development for Zambia are: (i) it connects to a sea port with the second shortest distance compared after the Beira Corridor, (ii) the Port of Nacala is the deep sea port which enables to handle giant container vessels and (iii) it can secure an alternative route from the country’s security-related point of view. On the other hand, the following issues have been pointed out: (i) the rail system is inefficient and not reliable mainly due to problems of ZRL on operation and maintenance and (ii) insufficient development of infrastructures including dry port and container handling facilities. Because of these issues, the Nacala Corridor has not been fully utilised – these bottlenecks need to be tackled with in order to improve the utilisation of the Nacala Corridor.
Looking from a regional perspective, Eastern Province in Zambia, especially the provincial capital Chipata, will benefit as the physical connection point through the road and rail network to Malawi.
The following figures summarise the industry share to the total GDP at current prices, 2015 for each province along major corridors passing through Zambia.
Nacala Corridor: Eastern Province, Lusaka Province North-South Corridor: Lusaka Province, Central Province, Southern Province Dar es Salaam Corridor: Central Province, Muchinga Province, Northern Province Lobito Corridor: Central Province, Copperbelt Province
5-31 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Art, entertainment Other service, 1.1 Mining and Human Art, entertainment Other service, 0.3 Agriculture, and recreation, 0.0 health and and recreation, 0.6 forestry and Human health and quarrying, 0.0 Public social work, fishing, 0.8 social work, 2.1 administration and Mining and 1.5 Manufacturing, 0.0 defence, 4.0 quarrying, 0.8 Agriculture, Education, Electricity Administrative and forestry and 6.5 Manufacturing, Electricity Public generation, 0.0 support, 1.5 Education, 13.2 fishing, 14.5 11.5 generation, 0.0 administration and Water supply; Professional, defence, 3.4 Sewerage, 0.1 scientific, 4.3 Water supply; Administrative and Real estate Sewerage, 0.2 support, 1.5 activities, 3.3 Construction, 14.1 Construction, 14.4 Professional, Financial and scientific, 0.4 Real estate insurance activities, activities, 10.8 5.9
Information and communication, 3.7 Wholesale and Wholesale and Financial and retail trade, 25.1 insurance retail trade, 26.8 Accommodation activities, 3.2 and food service, 4.3 Information and Accommodation Transportation communication, Transportation and and food service, and storage, 5.7 2.0 0.4 storage, 0.3 Eastern Province Lusaka Province Source: JICA Study Team, based on the data from National Accounts: Provincial Gross Domestic Product (GDP) – Charts: Industry Share to the GDP at Current Prices (Central Statistical Office, Republic of Zambia) Figure 5.6 Industry Share to the Total GDP at Current Prices, 2015: Nacala Corridor
The share of “wholesale and retail trade” is the largest for both Eastern Province and Lusaka Province. For Eastern Province, “agriculture, forestry and fishing” has the second largest share where as “construction” comes in second in Lusaka. The share of “manufacturing” is zero percent in Eastern Province where it is the third largest share in Lusaka Province.
Human Art, entertainment Agriculture, Art, entertainment Human Other service, 0.3 Other service, 0.7 health and and recreation, 0.6 forestry and and recreation, 0.0 health and Public Public social work, fishing, 0.8 social work, administration and Mining and 1.5 administration and defence, 4.0 quarrying, 0.8 1.2 Education, defence, 4.1 Mining and Administrative and 6.5 Manufacturing, Electricity Administrative Education, 10.8 quarrying, 0.0 support, 1.5 Agriculture, forestry 11.5 generation, 0.0 and support, 0.4 Manufacturing, 0.7 and fishing, 14.6 Professional, Professional, scientific, 4.3 Water supply; scientific, Water supply; Real estate Sewerage, 0.2 0.0 Sewerage, 0.1 activities, 3.3 Real estate Construction, 14.4 activities, 7.1 Construction, 8.9 Financial and Financial and Electricity insurance activities, insurance generation, 0.9 5.9 activities, 3.9
Information and Information and communication, 3.7 Wholesale and communication, 3.6 Wholesale and retail trade, 25.1 Accommodation retail trade, 32.4 Accommodation and food service, and food service, 0.3 4.3 Transportation Transportation and storage, 5.7 and storage, 2.6
Lusaka Province Central Province
Art, entertainment Other service, 0.5 Public administration Human health and and recreation, 0.2 Agriculture, forestry and defence, 3.2 social work, 1.4 and fishing, 6.8 Administrative and support, 0.2 Mining and quarrying, 0.4 Professional, Education, 9.4 scientific, 0.1 Manufacturing, 5.0
Real estate activities, 5.4 Financial and insurance activities, 1.5 Electricity Information and generation, 27.5 communication, 3.8
Accommodation and food service, 2.9 Wholesale and retail trade, 18.0 Transportation and storage, 1.0 Construction, 8.4 Water supply; Sewerage, 0.1
Southern Province Source: JICA Study Team, based on the data from National Accounts: Provincial Gross Domestic Product (GDP) – Charts: Industry Share to the GDP at Current Prices (Central Statistical Office, Republic of Zambia) Figure 5.7 Industry Share to the Total GDP at Current Prices, 2015: North-South Corridor
5-32 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
While the order is different, the top five industries in Central Province (“wholesale and retail trade”, “agriculture, forestry and fishing”, “education”, “construction” and “real estate activities”) are the same as those in Eastern Province. The share of “electricity generation” is the largest in Southern Province (27.5%).
Art, entertainment Human Art, entertainment Human health and and recreation, 0.7 Mining and quarrying, and recreation, 0.0 Other service, 0.7 health and Other service, 0.9 0.0 Manufacturing, 0.0 Public social work, 2.3 social work, Electricity generation, administration and 1.2 Agriculture, 0.0 defence, 4.1 Mining and forestry and Water supply; Administrative Education, 10.8 quarrying, 0.0 Education, 9.5 fishing, 8.7 Agriculture, forestry Sewerage, 0.1 and support, 0.4 Manufacturing, 0.7 and fishing, 14.6 Professional, scientific, Water supply; 0.0 Sewerage, 0.1 Construction, 18.0 Real estate Public administration activities, 7.1 Construction, 8.9 Financial and Electricity and defence, 17.1 insurance generation, 0.9 activities, 3.9
Administrative Information and and support, 1.0 Wholesale and retail Real estate communication, 3.6 Wholesale and trade, 22.5 Professional, activities, 8.8 Accommodation retail trade, 32.4 scientific, 0.0 and food service, Financial and 0.3 insurance activities, 2.3 Transportation Information and and storage, 2.6 communication, Accommodation and Transportation 2.9 food service, 0.0 and storage, 0.0 Central Province Muchinga Province
Human Art, entertainment Other service, 1.1 Mining and health and and recreation, 0.0 quarrying, 0.0 social work, 1.3 Agriculture, Manufacturing, 0.0 forestry and Public administration Education, 12.0 fishing, 11.3 Electricity and defence, 4.6 generation, 0.2 Administrative Water supply; and support, 0.2 Sewerage, 0.1 Construction, 8.6 Professional, scientific, 0.0 Real estate activities, Financial and 10.6 insurance activities, 0.0 Information and Wholesale and retail communication, 0.0 trade, 40.5
Accommodation and food service, 0.1
Transportation and storage, 0.0 Northern Province
Source: JICA Study Team, based on the data from National Accounts: Provincial Gross Domestic Product (GDP) –Charts: Industry Share to the GDP at Current Prices (Central Statistical Office, Republic of Zambia) Figure 5.8 Industry Share to the Total GDP at Current Prices, 2015: Dar es Salaam Corridor
A distinctive feature in Muchinga Province on the Dar es Salaam Corridor compared to other provinces is that “Public administration and defence” occupies the third largest share (17.1%). In Northern Province, “wholesale and retail trade” occupies a more than 40% of share, which is a prominent feature compared to other provinces.
5-33 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Art, entertainment Human Public Human health and Art, entertainment and recreation, 0.0 Other service, 0.7 health and administration Education, 5.3 social work, 0.8 and recreation, 0.3 Public social work, and defence, 4.7 Other service, 0.2 administration and 1.2 Administrative defence, 4.1 Mining and Professional, and support, 0.9 Agriculture, forestry scientific, 0.4 and fishing, 3.5 Administrative Education, 10.8 quarrying, 0.0 Agriculture, forestry and support, 0.4 Manufacturing, 0.7 and fishing, 14.6 Real estate Professional, activities, 2.5 Mining and scientific, Water supply; Financial and quarrying, 25.6 0.0 Sewerage, 0.1 insurance activities, Real estate 4.4 Construction, 8.9 Financial and activities, 7.1 Electricity Information and Transportation and insurance generation, 0.9 communication, 2.8 storage, 7.1 activities, 3.9 Accommodation Information and and food service, Manufacturing, 12.7 communication, 3.6 Wholesale and 0.3 Wholesale and retail Accommodation retail trade, 32.4 trade, 17.7 and food service, 0.3 Electricity Transportation generation, 0.3 and storage, 2.6 Construction, 5.9 Water supply; Sewerage, 0.4 Central Province Copperbelt Province Source: JICA Study Team, based on the data from National Accounts: Provincial Gross Domestic Product (GDP) – Charts: Industry Share to the GDP at Current Prices (Central Statistical Office, Republic of Zambia) Figure 5.9 Industry Share to the Total GDP at Current Prices, 2015: Lobito Corridor
The share of “mining and quarrying” is the largest (25.6%), followed by “wholesale and retail trade” (17.7%), and “manufacturing” (12.7%) in Copperbelt Province along the Lobito Corridor.
Table 5.9 summarises the top three industries of each province that passes through major corridors. “Wholesale and retail trade” occupies either first or second largest industry for all provinces along major corridors. For the Nacala Corridor, “agriculture, forestry and fishing” which is the second largest in Eastern Province and “manufacturing” which is the third largest in Lusaka Province can be considered as its feature. The North-South Corridor has a similar feature as the Nacala Corridor, but has “electricity generation” and “education” as additional industries. For the Dar es Salaam Corridor, “agriculture, forestry and fishing” is the third largest industry in Northern Province but it does not have “manufacturing” as in the case of the Nacala Corridor. The Lobito Corridor has a distinctive feature that it passes through Copperbelt Province with “mining and quarrying” and “manufacturing” as the first and third largest industry.
5-34 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 5.9 Top Three Industries of Each Province Passing through Major Corridors Nacala Corridor North-South Corridor Dar es Salaam Corridor Lobito Corridor Eastern 1. Wholesale and retail trade Province 2. Agriculture, forestry and fishing 3. Construction Lusaka 1. Wholesale and retail trade Province 2. Construction 3. Manufacturing Southern 1. Electricity generation Province 2. Wholesale and retail trade 3. Education Central 1. Wholesale and retail trade Province 2. Agriculture, forestry and fishing 3. Education Muchinga 1. Wholesale and retail trade Province 2. Construction 3. Public administration and defence Northern 1. Wholesale and retail trade Province 2. Education 3. Agriculture, forestry and fishing Copperbelt 1. Mining and quarrying Province 2. Wholesale and retail trade 3. Manufacturing Source: JICA Study Team
(2) Malawi
The Nacala Corridor is one of the corridors among others (including the Dar es Salaam and Beira Corridors) that Malawi utilises. On the other hand, unlike the situation in Zambia, the Nacala Corridor, the major arterial road and rail, traverses the central part of the country – through Lilongwe, the capital, and Blantyre, the central city of the country’s economic activities. The activation of the Nacala Corridor is expected to facilitate border trade with Zambia via its Eastern Province that physically connects the two countries.
In coming up with a development scenario in Malawi, a positive “external factor” has been taken into account – the expected rehabilitation programme of the Nkaya-Mchinji rail route to be undertaken by Vale Logistics and its partner Mitsui Corporation.
The benefits of Nacala Corridor Development for Malawi are: (i) it connects to a sea port with the shortest distance compared with other corridors, (ii) the Port of Nacala is the deep sea port which enables to handle giant container vessels and (iii) it can secure an alternative route for the Beira Corridor / Port of Beira. The Nacala Corridor has both a road and rail network, however, the Beira Corridor does not have rail. In addition, Beira Port is not a deep sea port (thus, it is utilised as a feeder port) and needs periodic dredging due to its geographical location.
On the other hand, the following issues have been pointed out: (i) the existing rail facilities need to be rehabilitated (the Salima-Chipoka route has been washed away due to flooding) and operation and maintenance of CEAR needs to be strengthened and (ii) the existing trunk road needs to be upgraded and the development of rural roads / feeder roads needs to be realised.
5-35 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.4.2 Impact of Railway Upgrading on Transport Cost (1) Current Situation of Transport Cost
Due to the land-locked geography and the location in the continent, international transport cost is particularly critical for Malawi. The import-export of the country heavily relies on neighbouring ports including Dar es Salaam, Nacala, Beira and Durban. The connection to the ports and intermediate transfers in and of the country rely predominantly on road and rail infrastructure. Of which the share of road transport (both domestic and international freight) as of 2015 was 93% of the total freight demand. One of the major reasons of the high proportion of road transport is due to the long distances covered by road haulers – from Durban Port to Blantyre; from Beira Port through Tete to Blantyre and Dar es Salaam to Lilongwe – that depend on trucks to transport most of Malawi’s exports and imports.
Table 5.10 Freight Demand by Mode in 2015 (1,000 ton) Mode Volume % Road 2,574.0 93 Rail 180.0 7 Waterway 2.0 0 Air 3.8 0 Total 2,759.8 100 Source: MNTMP
On the other hand, since rail transport is capable of transporting large volumes of goods at a low price on time and using a shorter route as compared to other transport corridors in Malawi, the functionality of the rail transport system is of vital importance to Malawi. Furthermore, according to MNTMP, it is estimated that rail transport is approximately 5% (import) and 30% (export) more cost-effective than road transport to Beira.
Table 5.11 Pure Transport Cost by Commodity in 2016 Pure Transport Cost by Commodity in Malawi (2016)
Import from Mode km USD/ton Fuel Fertiliser Cement Wheat Beira Road 930 118 108 164 135 Nacala Rail 1,133 116 115 134 128 Dar es Salaam Road 1,811 154 - 137 - Durban Road 2,431 - 173 - 144 Export from Mode km Tobacco Sugar Tea Cotton Food Crops Food Residues Beira Road 930 138 71 103 83 90 87 Nacala Rail 1,133 61 49 88 68 73 - Dar es Salaam Road 1,811 - - - - - 120 Durban Road 2,431 213 164 - 245 184 - Source: MNTMP
Also, the analysis results of this study, as shown on the next page are similar to the results of the MNTMP. At this moment, although the advantage is low in terms of transport time to Nacala Port by rail, comparisons of advantage in transport costs show that Nacala enjoys a high advantage when rail is used for Chipata, Lilongwe and Blantyre. However, as previously noted, although the cost advantage is high, the challenge of having a limited market share still remains.
5-36 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Total Port USAID, 2013) USAID, Handling
(20' Dry) (20' Border Charge Average Transport Cost (USD) Transport Average the Major Towns from Various Ports from Various the Major Towns Transit Time (days) Way Port Total Way
RailRail 2,039 2,638Rail 7Rail 8 1,992Rail 7 2,958 7 1 1,133 9 14Rail 7 15 9 1,957 1 989Rail 14 2,374 3 12 10 799 1,912 18 1,598 2,662 3 10 1,411 800 3,555 15 3 1,598 3,174 800 1,231 3,510 13 945 3,462 995 2,356 945 2,176 945 1,940 RoadRoadRoad 1,810 1,985 2,381 11Road 7Road 7 1,811 3Road 7 3,000 6 1 14 1,224 9 14Road 7 2,769 8 7 3,037 1,080 1 470Road 3,643 13 3 207 6 10 930 945 400 2,771 1,598 10 4,590 3 4,184 7 800 207 4,842 1,873 400 9 4,843 1,598 3 470 800 4,576 1,636 10 945 5,790 255 1,409 3,288 945 255 2,836 945 2,608 Table 5.12 Transit Time and Costs for Beira RoadBeira 1,054 Road 6Beira 1,400 4 RoadBeira 8 10 930 RoadBeira 4 1,613 5 1,096 12 Road 470 5 4 2,142 812 960 9 4 470 5 3,043 1,423 960 9 4 470 3,572 1,660 9 960 257 1,250 2,853 960 257 2,877 960 2,467 Nacala Road 2,126 13 3 16 3,253 470 945 4,668 Nacala Nacala Nacala Nacala Durban RoadDurban 2,431 RoadDurban 11 2,650 Road 1 13 2,340 12 1 11 3,719 14 1 400 4,015 12 800 600 3,545 4,919 800 600 5,415 800 4,945 Durban Durban Dar es Salaam RoadDar es Salaam 1,811 RoadDar es Salaam 9 1,667 Road 7 7 1,978 16 7 8 2,771 14 7 207 2,526 15 1,598 206 2,997 4,576 1,598 206 4,329 1,598 4,801 Dar es Salaam Dar es Salaam Ndora Lusaka Chipata Blantyre Lilongwe Major City Main Port Mode km 1. Country Presentation Bolloré Transport2. & Logistics https://www.daily-mail.co.zm/tazara-still-facing-operational-challenges/3.Transport Cost & (WB) Price Africa in 4. DELM AS: Africa Intermodal Transit Time (Q1 2016 (Based https://www.cma-cgm.com/ebusiness/tariffs/demurrage-detention5. on Q4 2015 Perf)) (WB) PROJECT MARITIME GATEWAY SALAAM ES DAR 6. Logistics Review of the Beira and Nacala CM Corridors A CGM ( Tanzania and M ozambique Tariff Book 2017 TRIFFS,Transnet (Durban) National Transport M aster Plan (Zambia, M alawi) DAL, ZAMBIA TARIFF - IMPORT (2016-2017) Source: JICA Study Team
5-37 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Necessary Interventions and Impact
1) Necessary Interventions of Railway Sub-sector
The overall objective of rehabilitating and upgrading the rail transportation system is to increase competition in the sector and open up Malawi to cheaper alternatives of transporting bulky agricultural and manufactured goods both into (imports) and out (exports) of Malawi.
However, studies, including the hearing survey by the JICA Study Team, conclude that the rail system in Malawi, in spite of providing the shortest exit route for Malawian commodities, was unreliable and inefficient. The major constraints identified include, among other things:
. Skill gaps and shortage of local expertise in significant areas of rail operation and management . Lack of operational efficiency in the rail system . Lack of marketing and approach to customers . Inadequate rail coverage within the country (inadequate transport network system) . Lack of adequate cargo handling equipment (sidings and loading/discharge equipment) . Lack of operating locomotives
In order to address the constraints identified above, major interventions include:
i) Upgrading (axle load and speed up) of the section between Salima and Nkaya ii) Construction of dry ports (Chipata, Lilongwe, Blantyre) for establishment of adequate transport system iii) Capacity building for operation, management and marketing of CEAR and the Railways Directorate of the GOM iv) Acquisition of new locomotives and wagons
Of which i) Upgrading (axle load and speed up) of the section between Salima (Chipata) and Nkaya was already committed in August 2017 by Vale/Mitsui Group which is operating the Nacala Railway.
2) Impact of Necessary Interventions
The following table shows the impact of proposed interventions to transport cost and transit time. These interventions will reduce transportation costs and transit time by railway and increase access to markets (both national and international)19.
Note: Consideration for improved efficiency of the other corridors as a result of the development of each of these corridors is not taken account of due to the limitation of the time of this study.
19 Capacity building of CEAR and Railways Directorate of the government is expected to contribute to reduction of transport time by improved operation and management of the railway and decline of transport cost through marketing that will increase cargo volume while reducing empty load. The assumption is that as a result of that, the transport cost will go down to the lowest level of railway transport in the region.
5-38 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report Towns from Various Ports at Present and Future from Various Towns Table 5.13 Transit Time and Costs for the Major Source: JICA Study Team
5-39 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
5.4.3 Impact of Nacala Corridor Development on Fuels and Fertiliser The impact of Nacala Corridor Development on the prices of fuel and fertiliser in Zambia and Malawi is a main topic in this section, focusing on the transport cost reduction. Because fuel and fertiliser account for a large portion of the imports to the two countries, the impact of the corridor development on the transport costs of fuels and fertiliser could bring about substantial impacts on the economies. At first, the impacts on fuel price are analysed followed by the impacts on fertiliser prices in the countries.
(1) Transport Cost Reduction for Analysis of Impacts on Fuels and Fertiliser
In order to evaluate the impacts of Nacala Corridor Development on the prices of fuels and fertiliser, the cost reduction rate of before and after the interventions and the share of the transport cost against the other corridors are estimated below 20 . With the necessary interventions described in the previous section, the transport cost of the Nacala Corridor will be reduced by 14 to 17%. In the case of Zambia, the transport cost is estimated to decline by 32% on average, with the improvement of the rail. The transport cost of the Nacala Corridor will be lowered to 69% in Chipata and 93% in Lusaka of the transport cost of Beira Port, which is currently the lowest. Among the four cities, Lilongwe will benefit the most by the interventions. The impact analysis in subsequent sections is conducted, based on the cost reduction rate and comparison with the Nacala Corridor and the other corridors.
Table 5.14 Impacts of Nacala Corridor Development on Transport Time and Cost Average Transport Time Average Transport Cost Comparison Cost Major including Custom Clearance (USD) with Nacala Main Port Mode km Reduction City at Entry Point (Days) (20' Dry) (Nacala/ Rate Existing Future Existing Future Corridor) Beira Road 1,054 10 10 3,043 3,043 93% Road 1,810 14 14 4,184 4,184 68% Nacala Road+Rail 568+1,133 - 9 - 2,834 32% - Lusaka Road 1,985 14 14 4,842 4,842 *Comparison 59% Dar es Salaam Rail 2,039 14 14 3,555 3,555 with Nacala 80% Road 2,381 8 8 4,843 4,843 Road 59% Durban Rail 2,638 9 9 3,174 3,174 89% Beira Road 930 9 9 2,853 2,853 69% Road 1,224 10 10 3,288 3,288 60% Nacala Chipata Rail 1,133 18 8 2,356 1,965 17% - Dar es Salaam Road 1,811 16 16 4,576 4,576 43% Durban Road 2,431 12 12 4,919 4,919 40% Beira Road 1,096 9 9 2,877 2,877 64% Road 1,080 9 9 2,836 2,836 65% Nacala Lilongwe Rail 989 15 7 2,176 1,835 16% 100% Dar es Salaam Road 1,667 14 14 4,329 4,329 42% Durban Road 2,650 14 14 5,415 5,415 34% Beira Road 812 9 9 2,467 2,467 67% Road 930 10 10 2,608 2,608 64% Nacala Blantyre Rail 799 13 7 1,940 1,664 14% - Dar es Salaam Road 1,978 15 15 4,801 4,801 35% Durban Road 2,340 12 12 4,945 4,945 34% Source: JICA Study Team
20 Please refer to 5.4.2 (2) 1) Necessary Interventions of Railway Sub-sector (page 5-38) for the contents of the interventions.
5-40 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Impact of Nacala Corridor Development on Fuel Price
1) Current Fuel Price and Transport Cost
Fuel is the most important commodity that becomes inputs not just for the energy sector but for almost all sectors. It is the largest imported commodity in terms of the value in the two countries. The fuel import accounts for 19% of the import to Zambia, while its share reaches 11% of the import in Malawi in 2015.
Being a landlocked nation, the prices of fuel in Zambia and Malawi are more expensive than the countries with a seaport, such as Kenya and Tanzania. The price of petrol was the highest in Zambia, followed by Zimbabwe and Malawi, while the highest price of diesel was recorded in Zimbabwe, followed by Zambia and Malawi. Hence, if the improvement of the Nacala Corridor can bring down the transport cost, the positive impact could be spread to all of the economic sectors. As a result, the commodity prices may become more competitive to export to regional and international markets.
Table 5.15 Regional Prices of Petrol and Diesel in US Dollars (USD/litre, as of 31st December 2016) Zambia Malawi Kenya Namibia South Africa Tanzania Zimbabwe Petrol 1.38 1.12 0.92 0.79 0.91 0.84 1.3 Diesel 1.15 1.11 0.85 0.78 0.79 0.8 1.19 Source: Zambia Energy Regulation Board. Statistical Bulletin 2016
The fuel price at the port and transport cost of fuel to Malawi by corridor are presented in Table 5.16. Unfortunately, the data for Zambia is not available. The transport cost is the lowest from Beira. Though the transport cost from Nacala Port is the second lowest cost compared to Beira, there is nearly USD 37 difference between them. According to the data in the Draft Final Report of the MNTMP, however, the transport cost from Nacala Port is the lowest. The fuel price at Beira Port, another determinant factor that influences the choice of the corridor, is much cheaper than Nacala, due to the competitions among the supplies.
Table 5.16 Fuel Price at Port and Transport Cost to Malawi by Corridor Price at Port (USD/ton) Transport Cost by Pure Transport Cost Corridor Mode Suppliers Petrol Diesel Destination (USD) (USD/ton)*1 Blantyre: 66.06 Beira Road 58 55 6 118 Lilongwe: 84.1 Dar es Salaam Road 56 43 6 Lilongwe: 115.57 154 Nacala Rail 126 118.99 1 Blantyre: 103.3 116 Source: Interviews with Malawi Energy Regulation Agency and Petroleum Importers. 2017 *1 Pure Transport Cost: Malawi MNTMP, Draft Final Report. July 2017.
2) Impact of Nacala Corridor Development on Fuel Prices
[Zambia] For Zambia, because the data of transport cost for fuel import is not available, the data of the transport cost of the Nacala Corridor is compared with the costs of the other corridors. With the maximum interventions, the transport cost of the Nacala Corridor is the lowest among the
5-41 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
five corridors in Zambia. Compared with Beira, the cost of the Nacala Corridor to Lusaka is 7% lower and the transport time is one day shorter than those of Beira. Thus, this cost reduction should be reflected in the price of the fuel. In particular, the price of petrol, which is the highest among the neighbouring countries, is expected to decline with the interventions.
[Malawi] The impact on the transport cost of fuel import to Malawi is summarised in Table 5.17. Although the transport cost to Blantyre from Nacala Port is still higher than that of Beira even with the interventions, the difference is narrowed from about USD 37 to USD 23. With the carrying capacity of the Nacala Railway and shorter transport period of seven days, the fuel import via Nacala Port has an advantage over the import from Beira. The reduction of truck traffic on roads may lead to the mitigation of traffic congestion and decline of the road maintenance needs. However, the other factors such as a number of suppliers and fuel price at the port should be addressed, in order to take full advantage of the Nacala Corridor transport in fuel import.
Table 5.17 Impact on Transport Cost in Malawi (Fuel) Transport Cost Pure Transport Travel Time Transport Transport Cost Corridor Mode Destination Reduction Cost (Days) Cost (USD) Reduction Rate Rate (USD/ton)*1 Blantyre 9 66.06 Beira Road 118 Lilongwe 9 84.1 Dar es Salaam Road Lilongwe 14 115.57 154 Nacala Rail Blantyre 13 103.3 116 Nacala with Rail Blantyre 7 88.6 14.2.% 98.7* 14.9% (Average) Interventions Source: Interviews with Malawi Energy Regulation Agency. 2017 Pure Transport Cost: Malawi MNTMP, Draft Final Report. July 2017. JICA Study Team. Note: * Destination is not specified.
(3) Impact of Nacala Corridor Development on Fertiliser Price
1) Current Fertiliser Price and Transport Cost
In general, fertiliser is expensive in landlocked countries due to the higher price of fuel and spare parts21. Though fertiliser import was only 4.3% of the total imported value in Zambia, it is the second largest, 10% in the total value in Malawi, reflecting the characteristics of an agrarian nation. The higher price of fertiliser not only could raise the prices of agricultural commodities that result in the loss of competitiveness of the products in international markets but also lead to the reduction of inputs of fertiliser, which may affect the production, because of the budget constraints of farmers.
The fertiliser prices in Zambia and Malawi are presented in Table 5.18, with the prices in neighbouring countries with a seaport, Tanzania and Kenya and the Black Sea FOB price for comparison purposes. The fertiliser price in Zambia was not very expensive in 2013, nearly
21 Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading In Zambia, Tanzania And Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015.
5-42 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
equal to the price in Tanzania, while, the fertiliser price was the highest in Malawi among the four countries, exceeding USD 1,000 per tonne.
Transport costs in the region from ports to landlocked countries were as much as USD 253 per tonne, which accounts for more than 30% of the price of fertiliser22. In Zambia, the transport cost from Beira to Lusaka is the lowest of USD 120 per tonne, followed by the Dar es Salaam-Lusaka and Durban-Lusaka Corridors, as shown in Table 5.19. The transport cost varies within the country. It rises to USD 210 in Lundazi, Eastern Province, which is almost double of the transport cost to Lusaka. The data of the transport cost of the Nacala Corridor to Zambia is not available.
There are a number of factors to explain the decline of the fertiliser price in Zambia to the price level of the countries with seaports, such as the tightened market competition due to the entrance of ETG into the Zambian fertiliser market and the presence of foreign logistics firms (especially from South Africa). Among those, one of the reasons is said that the low transport cost of Beira affected the transport cost of the other corridors23. It means that if the improvement of the Nacala Corridor offers lower transport cost for fertiliser import, then the transport costs of fertiliser via the other corridors also drop and then the fertiliser price could further decline.
In Malawi, the transport cost of the fertiliser is the lowest with the Beira Corridor, followed by the Nacala Corridor (See Table 5.20). The transport cost to Karong is slightly higher than the cost to Lilongwe, as presented in Table 5.21. The transport cost of fertiliser in Malawi is estimated about USD 110 - 150/tonnes.
The higher price of fertiliser in Malawi is attributed to several factors. Lack of competition among the supplies contributes to the higher price of fertiliser. Moreover, there might be influence from the Road Transporters Association and the price of fertiliser in the government’s subsidy programme24.
Table 5.18 Average Annual Fertiliser Price (Urea) (USD/ton) Country 2010 2013 Zambia 635 816 Malawi 696 1014 Tanzania 516 810 Kenya 509 736 Average Black Sea FOB 296 340 Source: Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading in Zambia, Tanzania and Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015.
22 Ditto. 23 Ditto. 24 Roberts, Simon and Thando Vilakazi. Regulation and rivalry in transport and fertilizer supply in Malawi, Tanzania and Zambia. Centre for Competition, Regulation and Economic Development University of Johannesburg.
5-43 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 5.19 Transport Cost of Fertiliser in Zambia From To Km Cost (USD/ton) USD/ton/km Durban Lusaka 2143 205-253 0.10-0.12 Durban Lubumbashi 2714 350 0.13 Dar es Salaam Lusaka 1951 140-220 0.07-0.11 Beira Lusaka 1048 120 0.11 Beira Lundazi - 210 - Walvis Bay Lusaka 2074 350 0.17 Source: Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading in Zambia, Tanzania and Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015.
Table 5.20 Pure Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton) Corridor Mode Fertiliser Dar es Salaam Road - Beira Road 108 Durban Road 173 Nacala Rail 115 Source: Malawi MNTMP, Draft Final Report. July 2017.
Table 5.21 Transport Cost of Fertiliser in Malawi From To Km Cost (USD/ton) USD/ton/km Commodities Dar es Salaam Lilongwe 1515 90-125 0.06-0.08 Fertiliser Beira Lilongwe 948 77 0.08 General Goods Beira Lilongwe 948 88* - Fertiliser Beira Karonga - 116* - Fertiliser Source: Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading in Zambia, Tanzania and Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015. *IFDC. Malawi Fertilizer Assessment 2013.
2) Impacts of Nacala Corridor Development on Fertiliser Prices
[Zambia] Although the exact amount of the transport cost reduction for fertiliser import to Zambia is unknown, the interventions would lower the transport cost of the Nacala Corridor until 93.1% of the current transport cost of the Beira Corridor on average. As a result, the transport cost of the fertiliser on the Nacala Corridor is estimated USD 111.8 per tonne, the lowest among the three corridors. Though the fertiliser price in Zambia is not very expensive, the transport cost reduction on fertiliser import via the Nacala Corridor could work as a pressure to lower the fertiliser price even more, which benefits a large number of farmers in the country.
5-44 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 5.22 Impact on Transport Cost of Fertiliser Import in Zambia Travel Time Transport Cost of From To Km Cost (USD/ton) (Days) Nacala against Beira Durban Lusaka 2143 14 205-253 Beira Lusaka 1048 10 120 Nacala with Interventions Lusaka 1701 9 111.8 93.1% Source: Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading in Zambia, Tanzania and Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015. JICA Study Team.
[Malawi] The impact of Nacala Corridor Development on the transport cost of fertiliser in Malawi is estimated in Table 5.23. According to the estimation of the reduction of transport cost in Table 5.23, 14.9% cost reduction is expected with the interventions on the Nacala Corridor on average. Thus, the transport cost for fertiliser import through the Nacala Corridor is expected to decline to USD 97.8, which is the lowest, USD 10.2 lower than the cost of Beira. Thus, Nacala Corridor Development could lead to the decline of the high fertiliser price in Malawi by lowering the transport cost of fertiliser import. Considering the agriculture sector as the main industry of the country, it can bring about a significant impact on the industry and the national economy by reducing the production costs and improving the competitiveness of agricultural commodities.
Table 5.23 Impact on Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton) Travel Time Fertiliser Transport Cost Corridor Mode (Days) (USD/ton) Reduction Rate Durban Road 12/ 14 173 Beira Road 9 108 Nacala Rail 13/14 115 Nacala with Intervention Rail 7 97.8 14.9% (Average) Source: Malawi MNTMP, Draft Final Report. July 2017. JICA Study Team.
5.4.4 Economic Impact on the Nacala Corridor Region Impact analysis was made based on the following perspectives – provided that the Nacala Corridor is developed, which area/sector would benefit from the development, and what would be the possible logic for this. Based on the impact analysis of (i) the Nacala Railway transportation cost – impact of the Nkaya-Chipata Railway (CEAR) upgrading on transport cost, in addition to already enhanced section between Moatize and Nkaya, and (ii) fuel and fertiliser import cost as a result of the Nacala Railway improvement, impact analysis of major economic sectors was carried out. At first the impact observed after the development of the Nacala Railway from Moatize in Tete to Nacala Port is discussed. Then the anticipated impact with the completion of planned interventions on the Nacala Corridor is examined. Due to the limitation of relevant data, qualitative analysis was adopted.
5-45 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(1) Impact of Development of the Nacala Railway from Moatize to Nacala Port
The Nacala Railway began commissioning in 2015 and commenced its full-scale operation in 2016 for the transport of coal from Moatize to Nacala Port. Though only about one year has passed since the beginning of the full-scale operation of the railway, notable impacts are observed in the industries in Malawi, responding to this improved transport means.
In Malawi, construction of the Nacala Railway from Moatize to Nacala Port made available to Blantyre an efficient railway transit to the port via Nkaya and Liwonde. Blantyre is the largest commercial centre of the country where various goods produced in Southern Region and products imported are transported. It brought about a new opportunity to logistics firms, a fertiliser company, and other industries by offering more cost-effective transport for import and export from the port. For example, logistics firms located in Chrimba Industrial Area near the Blantyre Airport started the export of sugar, tea, and pigeon peas via the Nacala Railway, and have a plan to expand their shipping operation to take full advantage of the railway. Moreover, Farmers World, a major fertiliser provider in Malawi, started import of the fertiliser inputs from Nacala Port; transport of them to their factory and warehouse in Liwonde; and export of agricultural products via Nacala Port. According to the interview, Farmers World transported 40,000 tonnes for import and export via the Nacala Railway within four months from May to July 2017. They are promoting the use of the Nacala Railway for other fertiliser companies and are willing to expand the import and export via Nacala Port, though the lack of sufficient warehouses in the port and Liwonde are identified as constraint to that plan.
The availability of the cost-effective railway transport is already taken into account by the business persons of various industries in Malawi. For example, the mining firms working on the two most promising mining projects, Mkango Resources and Globe Metals & Mining are planning to use the Nacala Corridor for import of inputs necessary for processing of extracted ores and export of the products of rare earth and niobium. China’s Gezhouba Group Corporation plans to develop a 300 MW new coal fired power plant in Neno by importing coal from Tete.
In short, the advantage of the Nacala Railway －competitive cost and capacity of bulk shipment－ compared with road transport, has been recognised by the businesses and industries in Malawi. The private sector already takes account of the use of the Nacala Corridor, particularly the Nacala Railway, in their business plans. Thus, it might be looked subtle from the surface; however, the impact of development of the Nacala Railway has started spread to the business. The industries began to change their business calculations and activities for improvement of competitiveness, taking such new business opportunities emerged with the Nacala Railway.
5-46 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Zambia
1) Agriculture and Agri-business
Reduction of Production Cost Reduced cost of fertiliser and fuel as a result of the railway upgrading (Nkaya-Chipata section) will increase the availability of more affordable inputs for agricultural production as well as improve productive efficiency. In Zambia, Eastern Province is the largest maize producing province and has favourable soil and climate conditions for cotton, oil seed crops (soya, sunflower and groundnut), and livestock (cattle, goats and sheep). Small-scale farmers are mostly involved in the production and the outputs are largely sold in domestic markets. With reduced fertiliser cost, they would be able to afford buying more agricultural inputs, which will contribute to their increased productivity. Large private firms in Eastern Province/Chipata include China Africa Cotton dealing with cotton, NWK Agri-Services and Cargill dealing with maize and soya beans. They export raw materials to China, South Africa and USA, respectively, for processing. These companies are likely to expand production as a result of improved production efficiency.
According to local interview survey, there is an expectation of importing fertilisers and fuel via Nacala, Chipata, Lusaka, and Mpika at a lower cost25. If this route turns out to be efficient, there is a good chance that agricultural productivity in Northern Province will also improve.
Improvement of Market Access Positive impacts on market access, including regional and external markets can be expected as a result of reduced transportation cost and time. Reduction of risk of delay in delivery and increased reliability can be expected as well. Maize, mainly produced by small scale farmers, was previously transported to Lusaka for government purchase and storage; however, with a lift of a maize export ban, it can be exported to Lilongwe and Nampula directly via Chipata (without going through Lusaka), utilising the Nacala Railway. Currently, utilisation of processing facilities are highly limited in Eastern Province and therefore, a large portion of agricultural outputs including oil seed crops would be transported to Lusaka using the Great East Road by truck to be processed and sold to domestic markets or to be exported. With increased productivity and expected fall in the price of agricultural crops/products as a result of reduced cost of fertiliser and fuel, domestic markets will be activated and opportunities for exporting to regional and external markets will increase. For example, soya and processed soya bean meal can be exported to Kenya and Ethiopia via Mozambique, utilising the Nacala Railway.
Increase of investment Nacala Corridor Development will contribute to increased investment in Zambia in the medium to longer term. So far, investment in Eastern Province, both in terms of amount and number is very limited (less than or around 1% of the entire country). Large private companies such as above mentioned China Africa Cotton, NWK Agri-Services and Cargill export raw
25 Interview with AFGRI Corporation Ltd., Lusaka, Zambia on July 12, 2017.
5-47 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
materials to external markets for processing which leaves very little room for value addition in the province (cotton operation is up to ginnery, and further processing is undertaken abroad). However, with increased productivity and market access, positive impacts on investment will gradually come out. These trends also conform with the government’s policy to promote diversification and enhancement of value addition in agriculture and agri-business. In fact, signs for future investment can be seen. For example, Saudi Arabia has recently shown interest to investing in the livestock industry in Zambia – breeding sheep and goats and to export them alive to the country. Although the plan is still under the conceptual phase, a MOU has been concluded between the two countries and a taskforce was established in Zambia. There is a plan to develop MFEZ in Chipata as well. Financial sources need to be secured before concretising the plan; however, such an initiative symbolises Zambian government’s willingness to attract investment to realise its development policy.
2) Mining
Limestone and Limestone Products (Quicklime, Hydrated Lime etc.) The Nacala Railway upgrading (Nkaya-Chipata section) will contribute to improved market access of limestone manufacturers. Demand of limestone and limestone products has been increasing with the activation of construction industry, copper refining and processing of sugar. Quick lime is utilised for copper refinery and a major demand centre is Copperbelt Province. Hydrated lime is utilised for sugar processing, and the majority of hydrated lime is exported to Malawi (major client is Illovo Sugar Ltd.), followed by Zimbabwe. According to a limestone processing company in Ndola, hydrated lime is transported to Illovo via Kapiri Mposhi, Lusaka, Chipata and Blantyre by truck. The company is eager to utilise the Nacala Railway once the Nkaya-Chipata section has been upgraded and realises efficient transportation. Furthermore, in the future, the company may consider utilising the railway in Zambia if construction of the Chipata-Petauke-Serenje railway is realised and turns out to be a reliable and efficient transportation means.
Copper Impacts on copper and the copper industry may be expected in the long run provided that the Chipata-Petauke-Serenje railway is realised and turns out to be reliable and efficient transportation. While Copperbelt Province is the “hub” of the copper industry, a large portion of copper ore is extracted in DRC. Processing has been carried out in Copperbelt Province (Chingola, Ndola etc.) and exported via Dar es Salaam Port (by TAZARA Railway), Beira Port or Durban Port by truck. If the Chipata-Petauke-Serenje railway is developed in the long run, processed copper may be transported to Malawi via Ndola, Kapiri Mposhi, Serenje, Petauke and Chipata, which would open up new markets and provide alternative routes for export in addition to the Dar es Salaam and Beira Corridors. In addition, currently, a large portion of necessary inputs (such as sulphur) for copper refining is imported from South Africa; however, alternative import routes may be created (via the Nacala Corridor) if the Chipata-Petauke-Serenje railway turns out to be usable.
5-48 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(3) Malawi
1) Agriculture and Agri-business
Reduction of Production Cost Reduced cost of fertiliser and fuel as a result of railway upgrading will increase the availability of more affordable inputs for agricultural production to the farmers in the region, who are mostly small scale farmers, and improve their production efficiency. In Malawi, oil seed crops (sunflower, groundnut, and soya), cotton, rice and legumes (pigeon pea, cowpea and chickpea) are mostly produced by small-scale farmers. With reduced fertiliser cost, they would be able to afford buying more agricultural inputs, which will contribute to their increased productivity. Sugar and sugar cane products, almost a monopolized market except for a few small scale companies, are likely to expand production as a result of improved production efficiency.
The planned and on-going initiatives including the SVIP, AGCOM and development of Agro-Processing Special Economic Zone will also generate synergy effects with Nacala Corridor Development. The ultimate goal of these initiatives is to diversify and deepen the production base, and to transform the economy for further economic growth. In this regard, the realisation of an increased production scale, while suppressing production cost as a result of reduced fertiliser and fuel cost is highly critical in Malawi.
Improvement of Market Access Positive impacts on market access, including regional and external markets can be expected as a result of reduced transportation cost and time. Reduction of risk of delay in delivery and increased reliability can be expected as well. Currently, traditional cash crops (including tobacco, tea, sugar and cotton) which require mass transportation are mainly using the Beira Corridor or the Dar es Salaam Corridor for export (to EU, USA, China, Egypt, Zimbabwe, Kenya etc.). Taking into account the expected reduction of transportation cost/time as a result of railway upgrading, some cargos have already shifted the transportation route and started utilising the Nacala Corridor. The result of local interview surveys has also indicated that exporters are willing to use the Nacala Corridor if transportation cost/time is lower/ shorter and efficient compared to other corridors. With the increased utilisation of the Nacala Corridor, other agriculture products (including oil seed products, rice and legumes) may also start utilising the Nacala Corridor for export, targeting regional markets (to Zimbabwe, Botswana, Zambia, South Africa etc.).
Increase of investment Nacala Corridor Development will contribute to increase investment in Malawi. There is a plan to develop Agro-Processing SEZ which prioritises three export-oriented clusters in line with the NES – oil seed products (cooking oil, soaps, lubricants, fertiliser, snacks, confectionery, etc.), sugar cane products (sugar, high value sugar through branding and sugar confectionery), and manufacturers (beverages, dairy, processed maize, wheat, horticulture and
5-49 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
pulse, plastics and packaging, assembly). Feasibility Studies to be carried out will identify candidate location(s)26 and come up with operation strategies of SEZ (incentive framework, regulatory framework, institutional framework, and physical development and management structures). Synergy effect is expected with Nacala Corridor Development provided that close coordination takes place, and conditions and incentive structures of SEZ are attractive for private investors.
2) Mining
Reduction of Production Cost The mining sector is expected to have a positive impact from the reduced cost of inputs as a result of the railway upgrading. Major investment projects under preparation are: (i) Songwe Hill Rare Earth Project, owned by Mkango Resources Ltd., which is listed on Canada’s TSX Venture Exchange and the AIM Market of the London Stock Exchange, and (ii) Kanyika Niobium Project and Chiziro Graphite Project are run by the Australian-listed, metals and rare earths company called Globe Metals & Mining Ltd. Songwe Hill Rare Earth Project is located in Phalombe, which is about 2 km from the Mozambique border. Mkango Resources Ltd. intends to utilise the Nacala Railway to import necessary inputs including sulphur. Kanyika Niobium Project is located in Mzimba and Chiziro Graphite Project is implemented in northeast of Lilongwe. Globe Metals & Mining also intends to utilise Nacala railway to import production materials. As such, investors ardently expect the rail infrastructure to be upgraded and efficiency to be improved, since the convenience and value of railway services will directly affect production cost. To this end, Mkango Resources Ltd. considers the construction of dry ports highly useful. Globe Metals & Mining Ltd. wishes to have a small-scale rail line from Lilongwe to the project site.
Improvement of Market Access By the same token, usability of the Nacala Railway will also have a significant impact on market access of the mining sector in Malawi. As regards the Songwe Hill Rare Earth Project, Mkango Resources is considering transporting rare earth outputs to Liwonde by truck and then loading them on the Nacala Railway for exporting to Europe. Currently, the rare earth market is dominated by China – 98% of world supply comes from China, however, this project will create an alternative supply source other than China. Regarding the Kanyika Niobium Project, Globe Metals & Mining also intends to utilise the Nacala Rail to transport Niobium via Nacala Port. Currently, Brazil is dominating the Niobium market – about 90 to 92% of supply (equivalent to 55,000 tonnes per year) comes from Brazil, followed by Canada (4,000 tonnes per year). Once this project is realised, it will become third place in the world. To this end, upgrading the rail infrastructure and efficiency is highly critical.
26 Several candidate locations are under consideration: Lilongwe (with 350ha of land in the vicinity of airport), Blantyre (with 38ha of land), Liwonde, Shire Valley, North Karonga, Salima etc.
5-50 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chapter 6 Proposed Growth Scenarios of Zambia and Malawi Related to Nacala Corridor Development
6.1 Introduction This chapter describes the proposed growth scenarios of Zambia and Malawi related to Nacala Corridor Development. A growth scenario is proposed for Zambia and another growth scenario is proposed for Malawi. These growth scenarios are formulated by considering the following points:
How to promote development of economic sectors of Zambia and Malawi by utilising the Nacala Corridor, which is composed of a sea port, railways and trunk roads, connecting northern Mozambique, Malawi and Eastern Zambia
How to strengthen the Nacala Corridor so that economic sectors of Malawi and Zambia could efficiently and effectively utilise the Nacala Corridor
This way of consideration for formulating growth scenarios is based on the following basic understanding of the relationship between transport corridors and economic sector development:
Since the development and maintenance of corridor infrastructure and services for long-distant cargo transport are very costly, it is necessary to fully utilise existing and prospective corridor infrastructure and services for promoting the development of economic sectors.
It is necessary for transport corridor infrastructure and services to make a serious effort at attracting traffic demand for developing and maintaining the infrastructure and sustaining services. Otherwise, such infrastructure and services would not be further developed and sustainable, leading to the decline of economic sectors.
It is necessary for economic sectors to make an effort at utilising transport corridor infrastructure and services in order to sustain such infrastructure and services. Otherwise, such infrastructure and services would not be sustainable, resulting in a decline in the economic sectors.
6-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
6.2 Advantages of the Nacala Corridor over Other Transport Corridors of Zambia and Malawi
6.2.1 Emergence of Nacala Corridor as an Important Alternative Transport Route
(1) Upgraded Railway Between Nacala and Moatize Through Malawi with the Nacala Corridor Railway In the middle of 2016, a full-scale railway operation for coal transport started on the Nacala Corridor, whose railway tracks are well rehabilitated and railway operation is strengthened. On the other hand, since that time, general cargo, containers and other forms of cargo have been transported between Nacala Port and Malawi’s Blantyre (Limbe and Chirimba Industrial Park) and Lilongwe (Kanengo).
A railway line (not rehabilitated yet) connects between Nkaya and Mchinji by CEAR and another short rail section connects between Mchinji and Chipata by ZRL. The railway is able to operate cargo trains between Chipata and Nacala through Lilongwe, Nkaya and Liwonde. In actuality, cargo security is not so good. Even under this situation, a certain impact on the improvement is an advantage for the Nacala Corridor. This point is discussed in Section 6.2.2.
(2) Planned Upgrading of Railway Connection to Lilongwe and Chipata from Nacala A private group composed of Vale (Brazil) and Mitsui (Japan) announced an upgrade plan of the railway section between Nkaya and Mchinji of CEAR in order to connect this section with the upgraded Nacala Corridor Railway (Moatize-Nkaya-Liwonde-Cuamba-Nampula-Nacala). This planned upgrading of the railway section could bring a continually upgraded railway between Chipata and Nacala through Lilongwe, Nkaya, Liwonde, Cuamba, and Nampula. The planned upgrading could bring a significant improvement of rail transport up to Chipata in Eastern Province, Zambia. Section 6.2.2 analyses the advantage of the Nacala Corridor.
(3) Additional Needs for Improvement for Upgraded Nacala Corridor Railway Infrastructure and Services In order to improve the efficiency of cargo handling (to reduce monetary cost and time cost for transport) and cargo security during transport (to reduce risks of losing cargo), the following additional measures are required:
To establish multi-modal dry ports consisting of cargo railway stations, cargo handling machines, container yards, warehouses and truck parking lots, as well as customs offices and private forwarder offices To mechanise the handling of cargo at railway stations, especially by establishing multi-modal dry ports in inland countries and inland areas To equip weigh bridges for the loading and off-loading cargos, especially at multi-modal dry ports in inland countries and inland areas To establish and operate “cargo tracking systems” during rail transport
6-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Multi-modal dry ports should be operated in collaboration between railway operators and logistics companies managing warehouses and truck operation. This collaboration could improve the operation of cargo rail transport because more involvement of the private sectors would demand better services to railway operators.
Source: JICA Study Team Figure 6.1 Current Conditions of Development of Nacala Corridor
6.2.2 Advantages of Nacala Corridor over Other Transport Corridors for Zambia and Malawi In this section, the results of impact analysis of two cases are shown in order to clarify improved advantages of the two cases of upgrading of the transport functions of Nacala Corridor. The first case is based on the present situation created by the past upgrading (completed in the middle of 2016), and the other case is based on a planned upgrading (financially committed by private firms).
(1) Advantages of the Nacala Corridor Without Additional Interventions over Other Transport Corridors (Present Situation of the Nacala Corridor) The partially upgraded Nacala Corridor Railway between Nacala and Chipata through Malawian territory by combining the upgraded Nacala Corridor Railway and other existing rail lines mentioned in the earlier sections has a significantly good impact on the advantages of the transport corridor in terms of transport costs and time between Nacala and the following major cities.
6-3 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Corridor Comparison for Lusaka (Present Situation)
At present, no effective rail transport service together with truck transport services are available in Lusaka. The transport cost and time of the Lusaka-Nacala Road Corridor (1,810 km) account for the following (see Table 5.12 for detailed comparison data):
138% of the transport cost of the Lusaka-Beira Port Road Corridor (1,054km) 4 days slower than the Lusaka-Beira Port Road Corridor (1,054km)
86% of the transport cost of the Lusaka-Dar es Salaam Port Road Corridor (1,985km) As same days as the Lusaka- Dar es Salaam Port Road Corridor (1,985km)
118% of the transport cost of the Lusaka-Dar es Salaam Port Railway Corridor (2,039km) As same days as the Lusaka-Dar es Salaam Port Railway Corridor (2,039km)
86% of the transport cost of the Lusaka-Durban Port Road Corridor (2,381km) 6 days slower than the Lusaka-Durban Port Road Corridor (2,381km)
132% of the transport cost of the Lusaka-Durban Port Rail Corridor (2,638km) 5 days slower than the Lusaka-Durban Port Rail Corridor (2,638km)
In terms of transport cost, the Lusaka-Beira Road Corridor is very much advantageous over other transport corridors. The transport cost of the Lusaka-Beira Road Corridor accounts for 63% of that of the Lusaka-Durban Road Corridor and 86% of the Lusaka-Dar es Salaam Rail Corridor.
On the other hand, in terms of transport time, the Lusaka-Durban Road Corridor is very much advantageous over other transport corridors. The transport time of the Lusaka-Durban Road Corridor is two days faster than that of the Lusaka-Beira Road Corridor.
Corridor Comparison for Chipata (Present Situation)
The transport cost and time of the Chipata-Nacala Rail Corridor (1,133 km) account for the following (see Table 5.12 for detailed comparison data):
83% of the transport cost of the Chipata-Beira Port Road Corridor (930 km) 9 days slower than the Chipata-Beira Port Road Corridor (930 km)
51% of the transport cost of the Chipata-Dar es Salaam Port Road Corridor (1,811 km) 2 days slower than the Chipata- Dar es Salaam Port Road Corridor (1,811 km)
48% of the transport cost of the Chipata-Durban Port Road Corridor (2,381 km) 6 days slower than the Chipata-Durban Port Road Corridor (2,381 km)
The Nacala Corridor is the only international corridor going through Chipata among the four corridors. In terms of transport cost, the Chipata-Nacala Rail Corridor (the present situation) is significantly advantageous over other transport corridors. However, in terms of transport
6-4 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
time, the Chipata-Nacala Rail Corridor (the present situation) is very much disadvantageous over other transport corridors.
Corridor Comparison for Lilongwe (Present Situation)
The transport cost and time of the Lilongwe-Nacala Rail Corridor (989 km) account for the following (see Table 5.12 for detailed comparison data):
76% of the transport cost of the Lilongwe-Beira Port Road Corridor (1,096 km) 6 days slower than the Lilongwe-Beira Port Road Corridor (1,096 km)
50% of the transport cost of the Lilongwe-Dar es Salaam Port Road Corridor (1,667 km) 1 day slower than the Lilongwe-Dar es Salaam Port Road Corridor (1,667 km)
40% of the transport cost of the Lilongwe-Durban Port Road Corridor (2,650 km) 1 day slower than the Lilongwe-Durban Port Road Corridor (2,650 km)
In terms of transport cost, the Lilongwe-Nacala Rail Corridor is significantly advantageous over other transport corridors. However, in terms of transport time, the Lilongwe-Nacala Rail Corridor (the present situation) is disadvantageous over the Lilongwe-Beira Road Corridor.
Corridor Comparison for Blantyre (Present Situation)
The transport cost and time of the Blantyre-Nacala Rail Corridor (799 km) account for the following (see Table 5.12 for detailed comparison data):
79% of the transport cost of the Blantyre-Beira Port Road Corridor (812 km) 4 days slower than the Blantyre-Beira Port Road Corridor (812 km)
40% of the transport cost of the Blantyre-Dar es Salaam Port Road Corridor (1,978 km) 2 days faster than the Blantyre-Dar es Salaam Port Road Corridor (1,978 km)
39% of the transport cost of the Blantyre-Durban Port Road Corridor (2,340 km) 1 day slower than the Blantyre-Durban Port Road Corridor (2,340 km)
In terms of transport cost, the Blantyre-Nacala Rail Corridor is significantly advantageous over other transport corridors. However, in terms of transport time, the Blantyre-Nacala Rail Corridor (the present situation) is disadvantageous over the Blantyre-Beira Road Corridor.
(2) Advantages of the Nacala Corridor with Planned Interventions over Other Transport Corridors (to be Implemented by the Private Sector in Five to Seven Years) Different transport corridors between major cities and various sea ports are compared in terms of transport costs and time. In this section, the transport time and cost of the Nacala Corridor
6-5 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
after implementation of the planned interventions are compared with those of the other corridors1. As a result, general advantages of Nacala Corridor have been found.
Corridor Comparison for Lusaka (with Planned Interventions)
The transport cost and time of the Lusaka-Nacala Corridor (Combined Rail and Track Transport, 1,701 km) account for the following (see Table 5.13 for detailed comparison data):
93% of the transport cost of the Lusaka-Beira Port Road Corridor (1,054 km) 1 day faster than the Lusaka-Beira Port Road Corridor (1,054 km)
59% of the transport cost of the Lusaka-Dar es Salaam Port Road Corridor (1,985 km) 5 days faster than the Lusaka-Dar es Salaam Port Road Corridor (1,985 km)
80% of the transport cost of the Lusaka-Dar es Salaam Port Railway Corridor (2,039 km) 5 days faster than the Lusaka-Dar es Salaam Port Railway Corridor (2,039 km)
59% of the transport cost of the Lusaka-Durban Port Road Corridor (2,381 km) 1 day slower than the Lusaka-Durban Port Road Corridor (2,381 km)
89% of the transport cost of the Lusaka-Durban Port Rail Corridor (2,638 km) As same days as the Lusaka-Durban Port Rail Corridor (2,638 km)
Different transport corridors between Lusaka and various sea ports are compared, resulting in a significant advantage of the Nacala Corridor (Combined Rail and Truck Transport) over the Lusaka-Dar es Salaam Road Corridor, the Lusaka-Dar es Salaam Rail Corridor and the Lusaka-Durban Road Corridor. The Nacala Corridor (Combined Rail and Truck Transport) is advantageous over the Lusaka-Durban Port Rail Corridor in terms of cost. Regarding the required time for the transportation from Lusaka to each port, the Lusaka-Durban Port Road Corridor is more advantageous than the Lusaka-Nacala Port Railway-Road Corridor.
Corridor Comparison for Chipata (with Planned Interventions)
The transport cost and time of the Chipata-Nacala Corridor (Rail Transport, 1,133 km) account for the following (see Table 5.13 for detailed comparison data):
69% of the transport cost of the Chipata-Beira Port Road Corridor (930 km) 1 day faster than the Chipata-Beira Port Road Corridor (930 km)
43% of the transport cost of the Chipata-Dar es Salaam Port Road Corridor (1,811 km) 8 days faster than the Chipata-Dar es Salaam Port Road Corridor (1,811 km)
40% of the transport cost of the Chipata-Durban Port Road Corridor (2,431 km) 4 days faster than the Chipata-Durban Port Road Corridor (2,431 km)
1 Planned interventions are listed in 5.4.2 (2), which include: i) Upgrading (axle load and speed up) of the section between Salima and Nkaya; ii) Construction of dry ports (Chipata, Lilongwe, Blantyre) for establishment of adequate transport system; iii) Capacity building for operational, management and marketing of CEAR and the Railways Directorate of the Government of Malawi; and iv) Acquisition of new locomotives and wagons.
6-6 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
In terms of transport cost and time, the Chipata-Nacala Rail Corridor is advantageous over the Chipata-Beira Road Corridor. In terms of transport cost and time, the Chipata-Nacala Rail Corridor is significantly advantageous over the Chipata-Dar es Salaam Road Corridor and the Chipata-Durban Road Corridor.
Corridor Comparison for Lilongwe (with Planned Interventions)
The transport cost and time of the Lilongwe-Nacala Corridor (Rail Transport, 989 km) account for the following (see Table 5.13 for detailed comparison data):
64% of the transport cost of the Lilongwe-Beira Port Road Corridor (1,096 km) 2 days faster than the Lilongwe-Beira Port Road Corridor (1,096 km)
42% of the transport cost of the Lilongwe-Dar es Salaam Port Road Corridor (1,667 km) 7 days faster than the Lilongwe-Dar es Salaam Port Road Corridor (1,667 km)
34% of the transport cost of the Lilongwe-Durban Port Road Corridor (2,650 km) 7 days faster than the Chipata-Durban Port Road Corridor (2,650 km)
In terms of transport cost and time, the Lilongwe-Nacala Rail Corridor is significantly advantageous over the other transport corridors.
Corridor Comparison for Blantyre (with Planned Interventions)
The transport cost and time of the Blantyre-Nacala Corridor (Rail Transport, 799 km) account for the following (see Table 5.9 for detailed comparison data):
67% of the transport cost of the Blantyre-Beira Port Road Corridor (812 km) 2 days faster than the Blantyre-Beira Port Road Corridor (812 km)
35% of the transport cost of the Blantyre-Dar es Salaam Port Road Corridor (1,978 km) 8 days faster than the Blantyre-Dar es Salaam Port Road Corridor (1,978 km)
34% of the transport cost of the Blantyre-Durban Port Road Corridor (2,340 km) 5 days faster than the Blantyre-Durban Port Road Corridor (2,340 km)
In terms of transport cost and time, the Blantyre-Nacala Rail Corridor is significantly advantageous over the other transport corridors.
6-7 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: JICA Study Team based on the estimates shown in Table 5.8 Figure 6.2 Transport Cost: Comparison of Transport Corridors Related to Zambia and Malawi
6-8 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: JICA Study Team based on the estimates shown in Table 5.8. Figure 6.3 Transport Time: Comparison of Transport Corridors Related to Zambia and Malawi
6.2.3 Impact of Advantageous Nacala Corridor with Planned Interventions on Development of Economic Sectors
(1) Limited Emergence of New Exportable Products to Export Outside the Region due to Upgrading of the Nacala Corridor It is considered that the upgrading of an international transport corridor does not simply enable inland countries and inland areas to start producing new exportable products to overseas (outside the region) in the short term (several years or so). Even though those involved are taking advantage of the upgrading of the Nacala Corridor, it is not easy for economic sectors to create new exportable products (exportable to outside the region). It is partly because it is not so convenient yet for some economic sectors to utilise the upgraded railway of the Nacala Corridor.
6-9 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Emergence of the Users of the Railway of the Upgraded Nacala Corridor Although it is difficult for the upgraded international transport corridor to help economic sectors create new exportable products, the upgrading of such an international transport corridor would enable inland countries to shift their export routes to regional and overseas (outside the region) markets to the upgraded international transport corridor. In the case of Malawi, the export of sugar, tobacco and tea started to utilise the upgraded Nacala Corridor Railway from Blantyre to Nacala Port. It is partly because the export of sugar, tobacco and tea is more sensitive to transport costs for export than other economic sectors. Moreover, newly developing economic sectors, such as mineral exploitation of rare earth and rare metal in Malawi, are eager to utilise the upgraded railway, in order to reduce their transport costs for exporting extracted minerals and importing machinery and chemicals.
Additionally, in Malawi, importers of fertilisers and fuels have also responded to the upgrading of the railway of Nacala Corridor, considering the utilisation of the corridor.
6.3 Proposed Vision for Nacala Corridor Development
6.3.1 Proposed Vision on Nacala Corridor Development for Zambia, Malawi and Mozambique The Nacala Corridor runs through three countries namely, Mozambique, Malawi and Zambia, from Nacala Port to Lusaka. Not only for developing the Nacala Corridor for the three countries, but also for development of economic sectors related the Nacala Corridor, it is necessary for the three countries to share a common vision for promoting Nacala Corridor Development. The JICA Study Team proposes the following statement to express the common vision:
As members of a region sharing one international transport corridor, the Nacala Corridor, Zambia, Malawi and Mozambique are to mutually cooperate in development and maintenance of transport corridor infrastructure (railways and roads), their economic sectors are to compete each other targeting regional markets, and the three countries are to maintain peace and order and socio-economically thrive and prosper in the region.
6.3.2 Nacala Corridor Development Concept and Guiding Principles
(1) Nacala Corridor Development Concept In order to achieve the proposed vision of Nacala Corridor Development, a concept of corridor development is proposed as follows. Corridor development is composed of the development of corridor transport infrastructure/services and development of economic sectors along the transport corridor and in wider areas related to the corridor. The development of corridor transport infrastructure and services would support the development of economic sectors. On the other hand, the development of economic sectors would generate transport demand for the transport corridor so that the transport corridor infrastructure and services could be developed further and sustained. This kind of interactive relationship is critical to initiate and sustain
6-10 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
corridor development. Moreover, regional economic integration provides a foundation to support such interactive relationship between transport infrastructure development and economic development. By promoting regional integration, it is possible to establish efficient infrastructure development and services, to promote development of economic sectors, and to promote nurturing an economic bloc of the corridor region crossing borders. Thus, taking advantage of regional economic integration, corridor development aims to build a positive cycle of corridor infrastructure development and economic sector development as presented in Figure 6.4.
Figure 6.4 Concept of Corridor Development
(2) Guiding Principles for Nacala Corridor Development Based on the concept presented above, the following guiding principles are proposed for Nacala Corridor Development.
To promote sustainable development of the Nacala Corridor Region, by creating a positive cycle between corridor transport and economic sectors within the regional economy. To promote the development of economic sectors by utilising corridor infrastructure and services, while supporting the development of corridor infrastructure and services. To support dynamic development of economic sectors so that such economic sectors could generate traffic demand for corridor infrastructure and services. To support sustainable development of corridor infrastructure and services so that economic sectors could develop and be sustained by utilising those corridor infrastructure and services. To support inclusive development in the international corridor region by offering development opportunities to many people and businesses To support the participation of not only the government sector but also the private sector in corridor development, in order to achieve the vision proposed above.
6-11 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
To assist the transformation of the international corridor region to be a competitive, physically and economically integrated region in Africa.
In line with the vision, the concept and guiding principles for Nacala Corridor Development, the basic policies and strategies for development of the transport functions of Nacala Corridor and economic sectors are discussed in the subsequent sections.
6.4 Basic Policies on the Utilisation of Nacala Corridor and Development of Nacala Corridor Transport Infrastructure and Services
6.4.1 Basic Policies on the Utilisation of Nacala Corridor The Nacala Corridor is composed of railway and trunk roads, as well as a sea port. It depends on the cargo types whether trunk roads, railways or both are utilised in the Nacala Corridor.
(1) Roles of Railways and Trucks in Freight Transport In order to maximise efficiency in terms of transport costs and time, the principles described below are followed:
The railway is more advantageous for long-distance freight transport more than 500 km. The railway will be used as much as possible for long-distance freight transport more than 500 km.
In the short and medium term, a multi-modal dry port is developed at the node between road and railway, and a road is developed to access to the dry port. The operation of the existing railway is improved and infrastructure development is implemented in the medium term. A new railway line is developed to mutually connect the existing railway corridors in the long term.
For freight transport less than 500 km, trucks are used as much as possible. The environment of road transport crossing borders is improved, such as bypass roads to ease traffic going through urban areas, road widening to facilitate passing urban and settlement areas smoothly, and claiming lanes at the section of steep slopes, etc.
The Nacala Corridor can support importing of goods, in particular, the cost reduction of importing of fuels and fertiliser. The impact on fuel import is significant since it affects all sectors. The reduction on fertiliser price influences crop production, agro-processing and livestock, the main industry in Zambia and Malawi. Thus, efforts should be made to increase the import of fuels and fertiliser via the Nacala Corridor Railway. Malawi started the importing of fuels and fertiliser, utilising Nacala Corridor Railway. Currently they are transported to Blantyre. In the future, it is necessary to improve the railway operation of the Nkaya-Lilongwe section, and to develop rolling stock and infrastructure.
6-12 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Utilisation of Land Transport and Sea Transport to Have Access to Regional Markets The access to regional markets can be made from Zambia and Malawi through land transport and sea transport, since regional markets are to be expanded under the COMESA-EAC-SADC Tripartite FTA. For example, the access from Zambia and Malawi to Kenyan market is possible through the Nacala Corridor (by land) to the Nacala Port and then from Nacala Port to Mombasa Port.
Freight transport to Nacala Port from southern Malawi started through the Nacala Corridor Railway and has gradually increased. Transport from Malawi of bulky traditional export goods, such as sugar, tobacco and tea, started utilising the Nacala Corridor Railway. However, there are issues found on the railway, including limited demand for freight transport on the Nacala Corridor Railway, and poor handling facilities at railway stations for freight transport. At first, it is important to promote the utilisation of the Nacala Corridor Railway by transporting bulky goods.
Source: JICA Study Team, based on the data of urban population 2013 from “World Urbanization Prospect. The 2014 Revision” (UN) Figure 6.5 COMESA-EAC-SADC Tripartite FTA: Expanding Regional Market －Urban Population 2030 of Major Cities in the Region
6-13 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Figure 6.6 Access to Regional Market via Nacala Port
6.4.2 Selection of Development Scenario of Nacala Corridor Transport Infrastructure and Services When it comes to a wider network of railway corridors in Zambia and Malawi, the following three scenarios of railway corridor development are formulated:
[Scenario A] In addition to the current section from Nacala Port to Moatize in Tete Province for the coal transport, the transport infrastructure of the Nacala Corridor will be developed in the Nkaya - Limbea section (the section for upgrading the existing CEAR), the Nkaya - Lilongwe - Mchinji section (upgrading section of CEAR: there is a plan of development of railway by Vale and Mitsui Corporation), the Mchinji - Chipata section for upgrading the existent ZRL, and the Chipata - Petauke - Serenje section (new construction), to connect all of TAZARA Railway, ZRL, CEAR Malawi, and the Nacala Corridor Railway.
6-14 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: JICA Study Team Figure 6.7 Wide Railway Network in Zambia and Malawi: Scenario A
[Scenario B] Instead of the Chipata - Petauke - Serenje section (new construction) in [Scenario A], the Chipata-Lusaka section (new construction) will be developed to connect all of the TAZARA railway, ZRL, CEAR Malawi railway, and the Nacala Corridor Railway.
Chipata-Lusaka Railway
Source: JICA Study Team Figure 6.8 Wide Railway Network in Zambia and Malawi: Scenario B
6-15 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
[Scenario C] In [Scenario A], the Chipata - Petauke - Serenje section (new construction) is not implemented due to a very small amount of the expected revenue and too much construction cost, so that this section is connected by road.
Source: JICA Study Team Figure 6.9 Wide Railway Network in Zambia and Malawi: Scenario C (Selected)
The development of the Chipata-Lusaka section (new construction) is very expensive due to the long distance between them. Though the construction cost of the Chipata – Petauke - Serenje section is lower, the cost is still too expensive and the section is not easily materialised in the short and medium term. Therefore, [Scenario C] is selected. In this scenario, a dry port will be developed at Chipata to attract truck freight that comes from Lusaka to utilise the Nacala Corridor Railway.
In [Scenario C], different alternatives can be proposed, depending on the locations of multi-modal dry ports in Malawi to integrate truck transport and rail transport.
[Scenario C-1] Multi-Modal Dry Ports at Blantyre and Lilongwe [Scenario C-2] Multi-Modal Dry Ports at Blantyre, Lilongwe and Liwonde
Since the Limbe (Blantyre)-Nkaya section has been rehabilitated, it is possible to expand the capacity of the multi-modal dry port at Limbe Railway Station and/or in other industrial areas in Blantyre. Since the upgrading of the Nkaya-Mchinji section is committed by a private group, it is possible to establish a multi-modal dry port in Lilongwe in the short-term (probably in five to seven years) for increasing the efficiency of rail-truck combined transport. In these circumstances, a multi-modal dry port in Liwonde is not considered so necessary, because Lilongwe multi-modal dry port and Blantyre multi-modal dry port could widely cover the whole areas of Malawi. In consideration of these situations, [Scenario C-1] is selected.
6-16 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
6.5 Basic Policies on Priority Economic Sectors and Target Markets in Nacala Corridor Development
6.5.1 Increasing Importance of Regional Markets International transport corridor development for Africa has been considered mainly for the efficient transport of goods between inland countries and sea ports. That is, overseas export from inland countries and inland areas, as well as import to inland countries and inland areas from overseas countries have been the major targets of international transport corridor development. However, in the 2000s, African countries had experienced high economic growth by largely increased earnings from the export of primary commodities (minerals and agricultural products) and they increased purchasing power, resulting in the expansion of regional markets within Africa. At the same time, many African countries have formed regional economic communities, such as SADC, COMESA, EAC, UEMOA and ECOWAS, within which intra-regional trades of goods of regional origins are not subject to customs duties. Therefore, more attention should be paid to intra-regional trade and development of economic sectors targeting regional markets, in addition to outside regional markets.
In fact, the amount of value of non-traditional export from Zambia to Sub-Saharan Africa has increased at higher rates than that to high-income countries2. Zambia’s export to SADC and COMESA has grown at a very high pace in the years of 2003-20133. Meanwhile, Malawi’s second and third largest export destinations are Zimbabwe and Mozambique in recent years.
6.5.2 Basic Policies for Development of Economic Sectors in Relation to the Development of Nacala Corridor Transport Infrastructure As described as a basic understanding in Chapter 6.1, it is necessary to consider the points below for the development of economic sectors in relation to the development of the Nacala Corridor.
i) Promote economic sectors which can grow or strengthen its competitiveness through the utilisation of the benefits brought by the development of the transport infrastructure of the Nacala Corridor, such as decreasing of the transport cost, increasing of the assuredness of the transportation, decreasing of the price of fuel and fertilisers, etc.
ii) Prioritise the economic sectors which can make a positive circle like utilisation of the transport corridor will be increased by the development of the economic sectors and it makes further upgrading of the transport corridor.
iii) Promote the economic sectors which already have a certain amount of the production in the Nacala Corridor Region or sure potential to develop sufficient production capacity. The products need to target the regional markets, due to the fulfilment of domestic demands, or no market in the country but existing outside the country.
2 Page xv, Diagnostic Trade Integration Study (DTIS), Main Report (June 2014), The World Bank Group 3 Pages 36-37, Zambia: Harnessing the Potential for Trade and Sustainable Growth in Zambia, 2016, UNCTAD
6-17 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Therefore, at first, it is necessary to promote the development of not only economic sectors exporting to overseas markets (outside regional markets) but also economic sectors for regional markets as mentioned above, by making full use of the potential and strengths of each country. To that end, it is important to strengthen the implementation of regional economic integration. It is also necessary to coordinate policies for export promotion of agricultural products in each country. At the later stages, it might be possible to create exportable products to international markets out of the products targeted regional markets.
In Malawi and Zambia, expansion of the transport demand for the Nacala Corridor (rail and road) is indispensable for economic sector development. Therefore, measures considering the supply chain are needed to increase the production of these economic products as well as to construct collection and export systems of the products.
6.5.3 Priority Economic Sectors to be Promoted in Relation to Nacala Corridor Transport Infrastructure Development Priority economic sectors identified in Zambia and Malawi targeting regional markets include agriculture including livestock, and agricultural processing. In addition, Zambia has potential economic sub-sectors, such as the production of clinker/cement and synthetic detergent, while Malawi will be able to produce certain rare earth and rare metal. Coal from Mozambique and Zambia are directed for export to regional markets.
Therefore, the target sectors to be prioritised for Nacala Corridor Development in Zambia and Malawi from the analyses in previous Chapters are as follows:
Crop production, Livestock production, Agro-processing, Manufacturing (Clinker/cement and synthetic detergent), and Mining (Rare earth and rare metal).
The selected sectors are oriented toward export mainly to regional markets using the transport infrastructure and facilities of the Nacala Corridor. Interventions for the development of the priority sectors are required to improve the access to markets and finance, the availability of inputs, provision of information and business services, and capacity building.
Particularly, since the agricultural production in Zambia and Malawi is mainly carried out by small scale farmers, it is necessary to take proactive measures for the increase of transport demand, such as organising small scale farmers for aggregating their agricultural products and shipping collectively. Until now, a variety of efforts and projects for organising farmers’ associations and cooperatives have been attempted in the government programmes and assistance projects of development partners. However, it cannot be said that they are very successful. In this timing when the development of transport infrastructure (railway and road) of the Nacala Corridor has progressed, further efforts are to be made at export targeting regional markets of neighbouring countries.
6-18 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
1) Crop production
Crop production is the dominant economic sector in Zambia and Malawi, which provides employment for the majority. The sector interventions will be divided into two, targeting commercial farming and/or large scale farmers who are directed to the production of export oriented agricultural products and participate in the regional and international markets, and small scale farmers who are indirectly connected to the market through links with intermediaries and large traders. The export oriented clusters of selected agricultural products with high values should be organised, involving the two groups of farmers.
The characteristic indicators related to the agriculture production in Zambia and Malawi described in Chapter 3 and 4 are compared in the table below. The number of farmers in Zambia is only about 60% of those in Malawi. But their total cultivated area is about 2.4 times larger than that of Malawi and Zambia has potential to expand their cultivation areas in the future. With these facts, the potential agriculture to be aimed should be different between Zambia and Malawi.
Table 6.1 Comparison of Number of Farmers and Land in Zambia and Malawi Indicators Zambia Malawi National Area (ha) 75,261,400 ha 11,850,000 ha Number of Farmers’ Households 1,473,547 (Small scale) 2,5732,218 (Small scale, less than 5 ha) 56,000 (Middle scale) 28,676 (Middle and large scale) 2,000 - 3,000 (Large scale) Possible Agriculture Land (Potential) 42,000,000 ha 5,900,000 ha Cultivated Area 6,000,000 ha 2,500,000 ha Share of Agriculture sector among labour 67% 64.1% population Source: Zambia: 2nd national agriculture policy, Post Harvest survey 2014-2015 Malawi: National Agriculture Policy 2016, The Quiet Rise of Medium Scale Farms in Malawi, ward Anseeuw et al, Land 2016; doi: 10.3390/land 5030019 provided from World Bank 2013
In Zambia, there are still arable lands available to implement large scale agriculture and the GOZ has been promoting such large scale commercial agriculture and agribusiness. Thus, it is necessary to set up incentives for large scale farmers and private enterprises to participate in Farm Block Programme; to strengthen the collaboration mechanism and system by which such investors are encouraged to create a favourable relationship with small scale farmers without adversely affecting them; and to protect the rights of small scale farmers and rural communities. Moreover, in Zambia, the value chains of agriculture, agro-processing industry and livestock industry have been developed. In order to mitigate the demerit of land-lock countries, by utilising the Nacala Corridor, it is also important to develop value chains in the country and also across borders.
Meanwhile, small scale farmers produce almost all crops in Malawi. Hence, while considering policies such as the GBI promoting large scale commercial agriculture, it might be necessary to improve the productivity of small scale farmers and strengthen their agricultural production by improving market access. Also an approach should be developed for each crop, taking account of the benefits of Nacala Corridor Development.
6-19 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Considering the characteristics and development directions of the agriculture sectors in Zambia and Malawi described above, the criteria to select the potential economic sub sectors were presented as follows.
Table 6.2 Selection Criteria of Potential Economic Sub Sectors Zambia Malawi Suitable for being included in Agricultural Clusters Small scale farmers as beneficiaries (Distinguished (Value Chains) (Distinguished criteria for Zambia) criteria for in Malawi) Larger production in the Nacala Corridor Region Export crops. Or their production meets mostly domestic demands High demand in the regional market and/or in the world market Future market growth can be expected (or strong market demand in foreign market） Larger benefits of using Nacala Corridor Source: JICA Study Team
2) Livestock
Livestock production including poultry, beef cattle, sheep and goats, has the high potential to develop as export commodities with high added value. A livestock cluster needs to be formulated, with the promotion of stock feed production within the country. In particular, Zambian beef has hardly been exported, but traders from DRC come to buy beef raised, according to the interview with the Ministry of Livestock and Fisheries and Zambeef, the leading company of blended animal products as of July 2017. As described before, having seen the potentiality of livestock production, Saudi Arabia has the intention to import sheep and goats from Zambia. Following such attempts, the livestock sub-sector should be promoted and supported further to increase the export of livestock, by expanding the production through setting and managing pasture land, enhancing breeding, promoting veterinary service and animal disease control, and improving market access, etc. The livestock in Malawi is also has potential, but at this moment their products and supply system are not yet prepared to develop for exporting, due to the difficulty of setting up pasture land to raise certain quantity of animals.
3) Agro-processing
In addition to the expansion of agricultural production, the agro-processing industry is promoted to add values to the agricultural products and to promote manufacturing industries in the two countries. When the production volume of primary products increases, measures need to be taken not only for exporting raw agricultural products but also for exporting products with added value through domestic agricultural processing, etc. By increasing a profit per transportation cost, the domestic market is able to earn more from the export. In particular, in Zambia where commercial agriculture is promoted by the government, since a large quantity of quality agricultural products is produced, there is a good opportunity to promote agricultural processing industry using the products.
6-20 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
6.6 Strategies and Four Stages for Development of Nacala Corridor Transport Infrastructure and Services
6.6.1 1st Stage (Present Situation) and 2nd Stage of Development of Nacala Corridor Transport Infrastructure and Services The 1st Stage of development of the transport infrastructure of the Nacala Corridor is the present situation. The 2nd Stage of development of the transport infrastructure of the corridor is planned with a commitment of the private sector, Vale and Mitsui, which announced an upgrading plan of the railway line in August 2017.
1st Stage (Present Situation) Development of the Nacala Corridor: Upgraded Railway between Nacala and Moatize, together with Rehabilitated Railway Section between Limbe and Nkaya, and Not Rehabilitated Railway Section between Nkaya and Chipata through Mchinji
2nd Stage Development of the Nacala Corridor: Upgraded Railway between Nacala and Chipata, Combining of Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through Mchinji
Because of this upgrading of the rail infrastructure and locomotives, as well as improved operation, the Nacala Corridor would become significantly advantageous over the other transport corridors for Chipata, Lilongwe and Blantyre in terms of transport cost and time. In the case of Lusaka, the Nacala Corridor is not so advantageous over the Lusaka-Beira Road Corridor because a multi-modal dry port has not been established yet at this stage of development.
6.6.2 3rd Stage and 4th Stage of Development of Nacala Corridor Transport Infrastructure and Services 3rd Stage Development of the Nacala Corridor: Combined Rail Transport and Truck Transport between Nacala and Lusaka through Chipata, based on Upgraded Railway between Nacala and Chipata together with Establishment of Multi-Modal Dry Ports in Blantyre, Lilongwe and Chipata, Combining of Truck Transport between Lusaka and Chipata, Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through Mchinji
In order to achieve an efficient combined rail transport and truck transport between Lusaka and Nacala on the Nacala Corridor, it is necessary to establish a multi-modal dry port at Chipata Railway Station. The multi-modal dry port has the following facilities to integrate rail transport and truck transport:
Cargo railway station Machine to handle cargo for loading and off-loading to cargo trains Warehouses Truck parking lots Customs office Freight forwarders offices
6-21 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
By establishing and operating the multi-modal dry port, the combined rail and truck transport on the Nacala Corridor could reduce the transport costs so that the Nacala Corridor could compete with the Lusaka-Beira Road Corridor. It is estimated the transport cost for the Lusaka-Nacala Rail Corridor is 91% of that for the Lusaka-Beira Road Corridor. This competition between the Lusaka-Nacala Corridor combining rail and truck transport and the Lusaka-Beira Road Corridor could reduce the transport costs for importing fuel and chemical fertiliser.
For the purpose of securing the road connection between Lusaka and Chipata on the Nacala Corridor, it is necessary to replace the Luangwa Bridge with a new bridge.
In addition, the establishment of a multi-modal dry port in Lusaka is also very effective to improve the efficiency of integrating truck transport and rail transport.
4th Stage Development of the Nacala Corridor and Other Transport Corridors: Revitalized Railway Utilization of Other Corridors, due to Emerging Competition with Combined Railway Transport and Truck Transport between Nacala and Lusaka
It is considered that the use of the railway would be activated in other transport corridors related to Zambia as a result of the competition among the corridors including the Nacala Corridor (combined rail and truck transport). As a result, railways would be available in several transport corridors in the medium to long terms. Furthermore, corridor transport cost will be reduced for Zambia.
These activated rail corridors would bring benefits to the entire Zambian economy and agricultural sector in the form of the reduction in import prices of fuel and chemical fertiliser. Until now various products in Zambia are considered less competitive in export markets except copper. However, it seems possible that Zambian economic sectors would have a competitive edge in the export market (especially in the regional markets) due to the reduced prices of fuel and chemical fertiliser.
Regarding exports from Zambia to regional markets, it is not always necessary to use railway corridors since the truck transport is more efficient when the freight transport distance is less than 500 km. Therefore, the Nacala Corridor and other railway corridors do not directly boost the development of economic sectors. This impact is an indirect boost to the development of economic sectors. On the other hand, within the regional market, the Lusaka-Dar es Salaam Port Rail Corridor and the Lusaka-Durban Railway Corridor, which will be activated by the development of the Lusaka-Nacala Rail-Truck combined transport corridor, would also contribute to coastal countries and coastal areas that can be accessed via Nacala Port or Beira Port.
6-22 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
6.7 Zambia’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Development
6.7.1 Zambia’s Strategies for Promoting Development of Potential Economic Sectors by Taking Advantage of Upgraded Nacala Corridor In accordance with the different development stages of transport infrastructure of the Nacala Corridor, different strategies are proposed for promoting the development of potential economic sectors in Zambia as follows:
1st Stage (Present Situation) of the Development of Nacala Corridor: Upgraded Railway between Nacala and Moatize, together with Rehabilitated Railway Section between Limbe and Nkaya, and Not Rehabilitated Railway Section between Nkaya and Chipata through Mchinji.
At this stage, the Nacala Corridor (combined rail and truck transport) between Lusaka and Nacala is not advantageous at all in comparison with the Lusaka-Beira Road Corridor. The Lusaka-Durban Road Corridor is very advantageous over the Lusaka-Nacala Road-Rail Corridor in terms of transport time. Therefore, the present situation of the Nacala Corridor cannot provide any significant impact on the Lusaka Area.
On the other hand, at this stage, the Chipata-Nacala Rail Corridor is advantageous over the Chipata-Beira Road Corridor in terms of transport cost. However, in terms of transport time and cargo security, the Chipata-Nacala Rail Corridor is not advantageous over the Chipata-Beira Road Corridor at all. Therefore, it is not considered that the Chipata-Nacala Rail Corridor have a good impact on Eastern Province’s economy.
Although the advantages of Nacala Corridor could not be enjoyed in Lusaka and Chipata in this stage, it is important to initiate activities for economic sector development which will serve as a stepping stone to development in the next stage. Those initiatives could include the preparation of policies on trade and large scale commercial agricultural development with special consideration for small scale farmers as well as actions for trade facilitation.
2nd Stage of the Development of Nacala Corridor: Upgraded Railway between Nacala and Chipata, Combining Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through Mchinji.
Since a group of private firms (Vale and Mitsui) is to upgrade the Nkaya-Mchinji rail section, the train operation and security management of cargoes is expected to be largelyimproved. This upgrading of rail sections and improvement of cargo train on the Nacala Corridor between Chipata and Nacala could create advantages for the Nacala Corridor. As a result, it is possible for the economic sectors in Eastern Province to utilise the Nacala Rail Corridor between Chipata and Nacala for importing chemical fertiliser and fuel. At the same time, it is possible for economic sectors to utilise the Nacala Corridor Railway between Chipata and Nacala in order to export their products not only to neighbouring countries, but also to Kenya and Ethiopia through Nacala Port.
6-23 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
However, at the moment, Eastern Province’s agricultural production tends to be mostly conducted by small scale farmers and it is not so oriented to export to regional markets. Therefore, necessary support should be provided to small scale farmers who are oriented toward export for the expansion of their agricultural production.
3rd Stage of the Development of Nacala Corridor: Combined Rail Transport and Truck Transport between Nacala and Lusaka through Chipata, based on the Upgraded Railway between Nacala and Chipata together with Establishment of Multi-Modal Dry Ports in Blantyre, Lilongwe and Chipata, Integrating Truck Transport between Lusaka and Chipata, Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through Mchinji.
At this stage, a multi-modal dry port is established in Chipata in order to improve the efficiency of connecting rail transport and truck transport. The combined rail-truck transport between Lusaka and Nacala would create some advantages for the Nacala Corridor over the Lusaka-Beira Road Corridor. Because of this competitive relationship between the Nacala Corridor (rail-truck combined transport) and the Beira Road Corridor, corridor transport cost would be reduced for Lusaka and Chipata.
Because of the upgraded rail-truck combined transport, transport costs of importing of fuel and chemical fertiliser would be reduced. This could have a good impact on the economy of Eastern Province and Lusaka Area.
In Lusaka and its surrounding areas, and Eastern Province, it is important to strengthen export oriented agriculture production system mainly focusing on small scale farmers in the region and to attract more private investments, in order to expand the agriculture production for exporting to regional markets, while paying attention to the protection of the rights of small scale farmers and rural community.
On the other hand, at this stage, the Chipata-Nacala Rail Corridor is slightly advantageous over the Chipata-Beira Road Corridor and other corridors. This situation could create a positive impact on the development of economic sectors for exporting their products to neighbouring countries and other regional markets. Because of the reduced prices of imported fuel and chemical fertiliser and reduced cost for corridor rail transport, it is necessary to support the small scale farmers of Eastern Province in making an effort at expanding their production and their export to regional markets.
4th Stage of the Development of Nacala Corridor and Other Transport Corridors: Revitalised Railway Utilisation of Other Corridors due to the Emerging Competition between Combined Railway Transport and Truck Transport between Nacala and Lusaka and other corridors.
At this stage, it is expected to increase the utilisation of railways in transport corridors. As a result of this revitalised railway situation of transport corridors, corridor transport costs would be reduced not only for the Nacala Corridor Railway, but also for the other rail corridors. This
6-24 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
situation could create a positive impact on the whole economy of Zambia and the agriculture sector in particular.
Because of the positive impact on the Zambian economy and agricultural sector, it is possible and easier for the economic sectors to make an effort at expanding their production and export to regional markets. The potential products or economic sub-sectors identified in the latter sections should be targeted for export promotion to regional markets.
6.7.2 Zambia’s Potential Economic Sectors Related to Nacala Corridor Development Based on the expected improvement of the situation of transport corridors in the medium to long term, it is necessary to foster and promote the growth of economic sectors for the regional markets from now on. The potential economic sub-sectors mentioned in 6.5.3 were selected considering following points:
It has growth potential due to their targeting the growing regional markets.
The growth of those potential economic sub-sectors would be accelerated by prospective price reduction of fuels and chemical fertilisers due to the impact of Nacala Corridor Development.
They have already been produced in Zambia, the domestic market is almost satisfied, and the products of which production was expanded have competitiveness in regional markets.
The competitiveness of the products would be sustained in future by expansion of the production, because of the growth of regional markets and the "free trade areas or customs union within the region" towards implementation (difference tariff rate between outside region and within the region is about 20%).
As described in Section 6.5.3, the potential economic sectors are crop production, agro-processing, livestock and others in Zambia. Considering the characteristics of Zambia’s agriculture also written in the same section, the potential economic sub-sectors in Zambia were carefully selected from the aforementioned potential economic sectors in accordance with the following criteria.
Table 6.3 Selection Criteria of Potential Economic Sub Sectors in Zambia Suitable for being included in Agricultural Clusters (Value Chains) (Distinguished criterion for Zambia) Larger production in the Nacala Corridor Region Export crops. Or their production meets domestic demands High demand in the regional market Future market growth can be expected (or strong market demand in foreign market） Larger benefits of using the Nacala Corridor Source: JICA Study Team
6-25 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
With the criteria, the point of the each primary product is scored as shown in the table below. The products with eight points and over in total score are selected as priority products.
Table 6.4 Selection of Priority Products in Zambia Future market Larger growth can be Larger Suitable for Production High production expected (or benefits of being meets demand in Zambia Score in Nacala Export crop strong market using included in domestic the regional Corridor demand in Nacala Agricultural demand market Region foreign Corridor Clusters market） Cotton 9 ○（2） ○（2） ‐ ᇞ（1） ᇞ（1） ○（2） ᇞ（1） Tobacco 7 ○（2） ○（2） ‐ ᇞ（1） ×（0） ᇞ（1） ᇞ（1） Sugar Cane 10 ᇞ（1） ○（2） ‐ ○（2） ○（2） ○（2） ᇞ（1） （refining）
Maize 11 ◎（3） ‐ ᇞ（1） ᇞ（1） ○（2） ᇞ（1） ◎（3） Sorghum 3 ×（0） ‐ ○（2） ×（0） ×（0） ×（0） ᇞ（1） Rice 7 ×（0） ‐ ×（0） ◎（3） ○（2） ᇞ（1） ᇞ（1） Wheat 9 ᇞ（1） ‐ ×（0） ◎（3） ○（2） ᇞ（1） ○（2） Sunflower 12 ○（2） ‐ ○（2） ○（2） ○（2） ○（2） ○（2） Groundnuts 10 ○（2） ‐ ○（2） ○（2） ᇞ（1） ᇞ（1） ○（2） Soya Bean 10 ᇞ（1） ‐ ×（0） ○（2） ○（2） ○（2） ◎（3） Pulse 3 ×（0） ‐ ᇞ（1） ×（0） ᇞ（1） ×（0） ᇞ（1） Sweet Potato 4 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ×（0） Cassava 2 ×（0） ‐ ○（2） ×（0） ×（0） ×（0） ×（0）
Bovine Meat 8 ×（0） ‐ ᇞ（1） ○（2） ○（2） ᇞ（1） ○（2） Swine Meat 7 ○（2） ‐ ×（0） ○（2） ○（2） ×（0） ᇞ（1） Small Ruminant 9 ᇞ（1） ‐ ×（0） ○（2） ◎（3） ○（2） ᇞ（1） Poultry 9 ○（2） ‐ ×（0） ○（2） ○（2） ᇞ（1） ○（2） Fish 6 ×（0） ‐ ×（0） ○（2） ○（2） ᇞ（1） ○（2） ◎：3 points, ○：2 points, ᇞ：1 point, ×：0 point Source: JICA Study Team
As a result, Zambia’s potential economic sub sectors and products in relation to Nacala Corridor Development are identified as follows.
Table 6.5 Potential Economic Sub Sectors and Primary Products in Zambia Sub Sector Primary Products Maize Crop production Soya Bean Wheat Cotton Agro-processing Sugar Edible Oil（Soybean, Sunflower） Bovine Meat Livestock Small Ruminant（Goat, Sheep） Chicken Farming Others Soaps and synthetic preparations Source: JICA Study Team
6-26 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
6.7.3 Description of Potential Economic Sectors of Zambia and Key Points for Promoting Development of Potential Economic Sectors of Zambia
(1) Maize Zambia produces enough volume of maize to export after fulfilling domestic demands (annual production was about 2.5 to 3.4 million tonnes between 2011 and 2014), if it is not a drought year. Additionally it is expected that the production will expand and the export will be stabilised in the future. The market of the products exists within the region. South Africa and Zimbabwe, neighbouring countries of Zambia, and Libya import more than 500,000 tonnes of maize annually and the quantities is expanding year by year. There are also some countries who import several hundred thousand tonnes annually like Kenya, Botswana, Namibia, and Mauritius, and the quantities of the export to these countries are also increasing, so that large markets will exist in the region in the future.
The purchase price of maize might become lower than the current price, after an increase of the production. Then, it seems that large scale farmers will shift their production from maize to other highly profitable crops like soya beans or wheat more than ever. Therefore, the government needs to promote the improvement of the production by small scale farmers in order to expand the production of maize in the country.
In order to expand the production of small scale farmers, it is effective to improve the access to inputs such as seeds and fertilisers. For that, it requires the improvement and strengthening of the FISP’s system currently under review. It is also desirable to improve access to certified seeds in rural areas and to accelerate organising farmers for strengthening the sales at the same time.
Maize is the most informally traded crop in Southern African Region. It is exported informally from Zambia to DRC, and also to Tanzania and Mozambique. In this context, it is necessary to increase not only production but also formal sales channels of maize.
From the above, the government needs to take measures for simplification of the export procedures, improvement of input access including FISP, and optimisation and extension of the agriculture techniques and practices.
(2) Soya Bean In Zambia, soya bean production was 120,000 tonnes in 2011. Then it showed a remarkable growth to reach 260,000 tonnes and 210,000 tonnes in 2013 and 2014 respectively, which makes it possible to export tens of thousands of tonnes of soya beans. Meanwhile, its demands in the domestic market are still high as soya bean oil crude is still imported. Also, there are markets in the regions, as Egypt imports an incomparable volume of soya beans, about 1.0 to 1.9 million tonnes annually and the neighbouring countries of Zambia, such as South Africa and Zimbabwe, are expanding import. Moreover, Kenya, Botswana and Burundi also import it. Even now, Zambia is expanding the export as a major soya bean producer in the region, and increasing the production is expected in the future, targeting both domestic and regional markets.
6-27 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Both large scale and small scale farmers produce soya beans (in Zambia, 210,000 tonnes of soya beans was produced in 2010, of which 37,000 tonnes was produced by small scale farmers.) In order to expand the production of soya bean by large scale farmers, it would be effective to involve large scale producers in development of Farm Blocks which the government is currently promoting. To that end, the government should develop infrastructure in Farm Blocks to increase the participation of the operators in the programme. Meanwhile, at the existing Farm Blocks, the expansion of agricultural production by irrigation requires additional water resource development. In order to supply irrigation water to the Farm Blocks, it is necessary to develop a method for water resource development by the government and large scale farmers with a PPP-like arrangement.
For the increase of the production by small scale farmers, Out-Grower Scheme might be applicable. Therefore, more studies on the introduction of Out-Grower Schemes involving small scale farmers by private companies are necessary, in order to find the bottlenecks from the current status of the Farm Block being promoted in the country and Out-Grower Schemes, and to establish a win-win coordination framework and system including necessary measures such as capacity building of small scale farmers4.
From the above, the government needs to reform and strengthen the collaboration mechanism and the system between large scale commercial farms/private entities and small scale farmers, to promote the simplification of export procedures, to support water resource development in the existing Farm Blocks, to improve farming techniques to be more appropriate and suitable for the local environment, and to conduct the training of seed multiplication farmers.
(3) Wheat At present, wheat is the third most produced crop domestically after maize and soya beans (from 2011 to 2014, annual production volume was from 200,000 to 270,000 tonnes). However, the domestic demand has not been met yet so that the GOZ imported it in the low production years. In order to protect the domestic wheat producers, the GOZ has implemented measures to ban the import of wheat from 2015 during the domestic wheat harvesting season. At present, wheat is produced with irrigation by large scale farmers. Issues of wheat export from Zambia are price together with expansion of production volume. The expansion of production and price reduction are important toward the export by applying soya bean-wheat rotation mechanised agriculture by large scale farmers.
Demand for wheat in the regional markets is high and many countries import it. However, in order to ensure that Zambian wheat has price competitiveness against the imported wheat from outside the region, it is necessary to increase the number of middle and large scale commercial farmers producing wheat through the promotion of the Farm Block Programme, etc., the
4 In general, a large scale farmer produces agricultural products with hired labourers, and their relationship with the surrounding small scale farmers is weak. For example, large scale farmers producing soya beans by irrigation might have little advantage in managing the Out-Grower Schemes involving small scale farmers who produce soya bean in rain-fed production, from the perspectives of shipment time and quality. Therefore, it is considered difficult to expect that the existing large scale farmers will make efforts to develop the Out-Grower Schemes. The Scheme should be designed with the assumption on the implementation in cooperation between private enterprises and small scale farmers.
6-28 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
development of the agricultural cluster or value chain with consideration on the utilisation of wheat bran, etc., and also the improvement of variety. Moreover, development of transport infrastructure is also required to decrease both the production expenses and transportation cost.
(4) Cotton Cotton is produced by small scale farmers, and most of them cultivate under Out-Grower schemes in which farmers use seeds and loans provided by private companies. Thus, the amount of the cotton production is determined by the private enterprises. Cotton production in Zambia has been relatively stable in recent years, around 40,000 tonnes. It is exported to South Africa and Asian countries such as Singapore. The cotton markets in the region include South Africa and Egypt, though they are not so large. Hence, it may be possible to expand production toward the Asian market outside the region by using the Nacala Corridor. For that, it is necessary to expand production by private companies or to attract new private investors by the government.
(5) Edible Oil Production Soya bean oil is produced domestically (1,400 to 3,600 tonnes annually from 2011 to 2014). However, most of the oil is imported (10,000 to 26,000 tonnes annually from 2011 to 2014) and it is rarely exported. In the region, Egypt imports tens of thousands of tonnes, and there are other countries which have demands such as Angola, Zimbabwe, Mozambique, Mauritius and Madagascar. However, edible oil produced in Zambia shall meet domestic demands first.
Sunflower oil is produced domestically (1,300 to 7,000 tonnes annually from 2011 to 2014) and despite annual fluctuations of the production, a similar amount is exported every year (300 to 93,000 tonnes annually from 2011 to 2014). Meanwhile, its imports are steadily increasing (increased from 800 to 2,000 tonnes annually from 2011 to 2014). Currently, most of the export is to DRC, and there are other relatively large markets such as South Africa, Zimbabwe and Botswana in the region. Egypt, the largest importer in the region, and Namibia are potential markets for the export from Zambia. In addition, Mozambique, DRC and Tanzania import the sunflower oil, even though in a limited and unstable volume. However, as the demand for edible-oils expands with the growth of the economy in general, the demand will expand in the region according to development of the neighbouring countries.
In order to increase the edible oil production for both the domestic and the regional markets and to expand its export, it requires the promotion of investment in the manufacturing industry of soya bean oil and sunflower oil. also in soya bean production. Therefore, the government needs to promote investment in edible oil production and new Farm Block development.
(6) Sugar The production of sugar cane and raw sugar is increasing steadily (sugar cane: from 380,000 to 460,000 tonnes annually from 2011 to 2014 and raw sugar: from 210,000 to 260,000 tonnes annually). The raw sugar is exported mainly to the countries in the region such as Mauritius,
6-29 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
DRC, South Africa, Kenya, Burundi, Rwanda, etc. On the other hand, refined sugar was produced about 120,000 to 130,000 tonnes annually, and is exported mostly to DRC. Currently, foreign direct investment has been coming into this sector. Refined sugar has high demand in neighbouring countries such as South Africa, Tanzania and Zimbabwe and also Kenya and Uganda, where its market is expanding. Thus, there is a chance for Zambia to expand sugar production as well as its export to the markets.
The government also needs to attract investments to resolve the current oligopoly situation of raw sugar production and encourage sound competition. Bagasse generated by processing sugar cane can be used as a feed by mixing with oil cake that comes out after aforementioned edible oil extraction. Hence, sugar cane production and raw sugar production can also be promoted in combination with livestock production.
The government needs to promote investment to establish sugar cane plantations and sugar mills and also to support the improvement of basic infrastructure (water, electricity, etc.) for promoting investment in sugar factories.
(7) Bovine Meat Production The number of cattle heads is increasing year by year (from 2.5 million to 4.0 million heads annually from 2011 to 2014), and meat production is also increasing (from 150,000 to 230,000 tonnes annually from 2011 to 2014). Due to the large domestic demand for bovine meat, it is hardly exported except to DRC. However, there are large markets in the region such as South Africa or Angola, and then Egypt and Libya also import the large volumes. In addition, Mozambique and Mauritius are expanding the import of meat even in small quantities. Due to the demand for meats which expands with economic growth, the market will continue to expand in the region.
Value addition to agricultural products is indispensable in Zambia as a land locked country. The government has and should take an opportunity to promote agriculture-livestock industry clusters by increasing the production of maize and soya bean, processing them domestically, and utilising the residuals as feed for promoting domestic livestock production. Currently, meat companies purchase two or three years aged feeder calf from small scale farmers and sell the meat after fattening them. Reproduction and breeding of calves until being sold to the company is carried out by small scale farmers 5 . Because of the weak animal health management in the extensive breeding by small scale farmers, it is difficult to expand the meat production. Therefore, it is necessary to foster the large scale breeding farmers, to strengthen animal health management and to improve animal quarantine system.
Therefore, as government’s intervention, it is required to conduct setting and management of pasture land, to foster the large scale breeding farmers through capacity building, to establish an animal quarantine system, to expand the animal health management, and to increase the number of extension workers.
5 Calf breeding after reproduction requires labour costs due to labour-intensive and time-consuming work, so purchasing them from small scale farmers is more cost-effective.
6-30 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(8) Small Ruminants Production (Goat and Sheep) The population of goats is very large (from 2.3 million to 2.6 million heads annually from 2011 to 2014), but the number of sheep is limited in Zambia (from 230,000 to 240,000 heads annually from 2011 to 2014). The production is not enough to fulfil the domestic demand. Goats are imported alive and sheep are imported both as meat and as living livestock. Regarding the demands in the region markets, while imports are decreasing in South Africa, the largest importer, other countries like Mauritius and Egypt have a demand, and the import is growing in Angola, DRC and Tanzania, as same as other meats. Therefore, if Zambia has surplus production, there is an opportunity to sell it to the regional market6.
Since these small ruminants are bred mainly by small scale farmers, for increasing the production, it is necessary to strengthen the animal quarantine system and to expand sales channels through establishing public slaughterhouses. Moreover, adding premier on the sales price might be expected if a special slaughterhouse with Halal certification and cold chain can be established in future for export to the Islamic regions like the Middle East through the Nacala Corridor.
Therefore, as the government’s interventions, setting and management of pasture land, development of the large scale breeding farmers, establishing an animal quarantine system, dissemination of animal health management, and increase the number of extension workers are required.
(9) Poultry The number of poultry has increased year by year (from 36 million to 38 million heads annually from 2011 to 2014), and meat production too (from 43,000 to 48,470 tonnes annually from 2011 to 2014). A small volume of meat of poultry has been exported to DRC over the years, and also some of live poultry has been exported to Zimbabwe, Botswana, Malawi and Mozambique, etc. However, the domestic demand is not fulfilled and the imported volume exceeds the exported amount (with regards the total of meat and live of the poultry, 4,489 tonnes was imported and only 30 tonnes were exported in 2014). Due to this situation, the domestic market will be prioritised, and then it will be exported to the surrounding countries such as Tanzania, Mozambique and Zimbabwe where the import of chicken is increasing. The increase in meat demand accompanying economic growth begins with chicken meat. Therefore, the demand will increase continuously for a while in these countries even though they will also increase domestic production in the future.
In Zambia, the materials for poultry feed are relatively abundant such as wheat bran, maize husk and oil cakes, etc. Their amounts available in the country will be increased if the production of cereal crops with soya beans is increased and its value chain is developed. Therefore, there is an opportunity that the poultry industry is actively utilising these resources to increase the productivity as they expand their production, targeting the neighbouring
6 Indeed, it is expected to promote the production of goats since Saudi Arabia and Zambia have agreed on the export of goats in recent years.
6-31 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
countries’ markets. There are several poultry companies and chicken supply groups in the country. It is important to foster such companies as well as to establish a cold chain network and to improve the efficiency of customs clearance on land transportation for the transportation of the frozen meat.
Therefore, as necessary government interventions, it is required to extend techniques and facilities for feed production, to increase the number of extension workers and their capacity, to strengthen sanitation management in rural areas by establishing extension offices in the areas, and to spread vaccines and strengthen animal quarantine (Avian influenza can occur anywhere. It is impossible to export it for two years if affected).
(10) Soap and Detergents Soap and detergent exports from Zambia are expanding year by year to Zimbabwe, DRC, Malawi, Mozambique, etc. (from 13,000 to 28,000 tonnes annually from 2011 to 2014). Among the neighbouring countries, Tanzania, Ethiopia and Botswana are expanding their imports, and they should be considered as the markets in the future.
In order to support this trend, the government needs to strengthen the implementation of a regional customs union.
6.8 Malawi’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Transport Development
6.8.1 Malawi’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Transport Development In accordance with different development stages of the transport infrastructure of the Nacala Corridor, different strategies are proposed for promoting the development of potential economic sectors in Malawi as follows:
1st Stage of the Development of Nacala Corridor: Upgraded Railway between Nacala and Moatize, together with Rehabilitated Railway Section between Limbe and Nkaya, and Not Rehabilitated Railway Section between Nkaya and Chipata through Mchinji.
At this stage, the transport cost of the Lilongwe-Nacala Rail Corridor is 77% of that of the Lilongwe-Beira Road Corridor. The transport time of the Lilongwe-Nacala Rail Corridor is the same as that of the Lilongwe-Beira Road Corridor.
On the other hand, the transport cost of the Blantyre-Nacala Rail Corridor is 75% of that of the Blantyre-Beira Road. The transport time of the Blantyre-Nacala Rail Corridor is four days more than that of the Blantyre-Beira Road.
As seen in these comparisons between the Nacala Rail Corridor and the Beira Road Corridor, development of the Nacala Corridor has a substantial impact on the economy of Malawi as a whole, especially on southern Malawi and in terms of the transport cost. In fact, materials for chemical fertiliser are imported by using the Nacala Rail Corridor. Sugar, tobacco and tea are
6-32 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
exported by using the Nacala Rail Corridor. In this way, bulky cargo has started to use the Nacala Rail Corridor. Meanwhile, it is necessary to encourage small scale farmers to expand their production and export to neighbouring markets.
At the same time, since the cargo demand for the railway is still limited, it is necessary to promote the utilisation of the Nacala Rail Corridor, as well as Nacala Port by conducting sales activities to the private sector in Malawi.
2nd Stage of the Development of Nacala Corridor: Upgraded Railway between Nacala and Chipata, Combining Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through Mchinji.
With the upgraded railway between Nkaya and Mchinji, large areas of Malawi are to be covered by the cargo railway services of the Nacala Corridor. Such wide service areas of the railway become possible with the establishment of multi-modal dry ports in Lilongwe and Blantyre. This combined rail and truck transport systems could increase growth opportunities for potential economic sectors targeting regional markets, as well as outside regional markets. Thus, it is necessary to support small scale farmers in order to improve productivity, branding for marketing and gaining access to better prices in the domestic and regional markets.
3rd Stage of the Development of Nacala Corridor: Combined Rail Transport and Truck Transport between Nacala and Lusaka through Chipata, based on the Upgraded Railway between Nacala and Chipata together with the Establishment of Multi-Modal Dry Ports in Blantyre, Lilongwe and Chipata, Combining Truck Transport between Lusaka and Chipata, Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through Mchinji.
At this stage, the combined rail and truck transport of the Nacala Corridor between Lusaka and Nacala through Chipata could help Malawi open up its trade routes to Zambia and further to DRC. It is necessary for Malawi to promote the development of economic sectors targeting regional markets.
6.8.2 Malawi’s Potential Economic Sectors Related to Nacala Corridor Development As in Zambia, the potential economic sectors in Malawi are crop production, agro processing, livestock and others. Considering the characteristics of agriculture in Malawi written in Section 6.5.3, the potential economic sub sectors in Malawi were selected based on the following criteria.
6-33 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 6.6 Selection Criteria of Potential Economic Sub Sectors in Malawi Small scale farmers as beneficiaries (Distinguished criterion for Malawi) Larger production in the Nacala Corridor Region Export crops. Or its production meets mostly domestic demand High demand in the regional market and/or in the world market Future market growth can be expected (or strong demand in foreign market） Larger benefits of using the Nacala Corridor Source: JICA Study Team
With the criteria, the point of the each primary product is scored as shown in the table below. The products with eight points and over in total score are selected as priority products.
Table 6.7 Selection of Priority Products in Malawi Future market Larger Production High growth can be Larger production Small scale meets demand in expected (or benefits of Malawi Score in Nacala Export crop farmers as domestic the regional strong market using Nacala Corridor beneficiaries demand market demand in Corridor Region foreign market） Cotton 8 ᇞ（1） ᇞ（1） ‐ ᇞ（1） ᇞ（1） ○（2） ○（2） Sunflower 9 ᇞ（1） ‐ ×（0） ○（2） ○（2） ○（2） ○（2） Soya Bean 10 ○（2） ‐ ×（0） ○（2） ○（2） ○（2） ○（2） Groundnuts 12 ◎（3） ‐ ○（2） ○（2） ○（2） ᇞ（1） ○（2）
Tobacco 9 ᇞ（1） ○（2） ‐ ᇞ（1） ᇞ（1） ○（2） ○（2） Tea 8 ○（2） ○（2） ‐ ᇞ（1） ᇞ（1） ᇞ（1） ᇞ（1）
Maize 10 ◎（3） ‐ ᇞ（1） ᇞ（1） ○（2） ᇞ（1） ○（2） Sorghum 6 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ○（2） Rice 10 ᇞ（1） ‐ ᇞ（1） ◎（3） ○（2） ᇞ（1） ○（2） Wheat 6 ×（0） ‐ ×（0） ◎（3） ○（2） ᇞ（1） ×（0） Legumes 10 ○（2） ‐ ᇞ（1） ᇞ（1） ○（2） ○（2） ○（2） Sweet Potato 6 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ○（2） Cassava 6 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ○（2） Sugar Cane 11 ○（2） ○（2） ‐ ○（2） ○（2） ○（2） ᇞ（1） (refining)
Bovine Meat 7 ×（0） ‐ ×（0） ○（2） ○（2） ᇞ（1） ○（2） Swine Meat 7 ᇞ（1） ‐ ×（0） ○（2） ○（2） ×（0） ○（2） Small Ruminant 7 ᇞ（1） ‐ ×（0） ○（2） ○（2） ×（0） ○（2） Poultry 7 ×（0） ‐ ×（0） ○（2） ○（2） ᇞ（1） ○（2） Fish 7 ᇞ（1） ‐ ×（0） ○（2） ○（2） ×（0） ○（2） ◎：3 points, ○：2 points, ᇞ：1 point, ×：0 point Source: JICA Study Team
As a result, Malawi’s potential economic sub sectors in relation to Nacala Corridor Development are identified as follows.
6-34 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 6.8 Potential Economic Sub Sectors and Primary Products for Malawi Sub-Sector Primary Products Groundnut Rice Crop production Legumes Tea Tobacco Sugar Agro-processing Edible Oil（Soya bean, Sunflower） Livestock None Rare earth Others Niobium Source: JICA Study Team
6.8.3 Description of Potential Economic Sectors of Malawi and Key Points for Promoting Development of Potential Economic Sectors in Malawi
(1) Rice Currently, most of the rice produced in Malawi (from 110,000 to 120,000 tonnes per annum from 2011 to 2014) is consumed in the domestic market, with only a little exported, and the imported amount is also low. The GOM has already formulated a national irrigation master plan and selected 30 priority projects in it. Among them, 14 projects are already being funded and the total area of their schemes is 35,000 ha. After the completion of the 30 priority projects, additional 120,000 to 200,000 tonnes of rice can be produced annually within 78,000 ha to be gained from the irrigation schemes in total. As a result, the products will be able to be allocated for the exports.
If rice production is increased, there are markets to sell with high demand in neighbouring countries such as South Africa, Mozambique and Zimbabwe. In addition, Kenya, Angola, Madagascar, Ethiopia, Libya, Uganda, Djibouti, etc., also import hundreds of thousands of tonnes of rice annually in the region. It means that the demand on rice is very high in the region.
However, at present, many farmers producing rice leave its sales to vendors so that there are little benefits to farmers, and efforts to improve productivity and to secure its brand are stagnant. Therefore, it is necessary to improve cooperative shipping by small scale rice farmers, and in particular, their market access by utilising AHCX etc. developing in Malawi.
The government needs to make interventions to establish a rice seed (brand varieties) production system and its distribution route.
(2) Groundnuts Until 2013, the production of groundnuts in Malawi was expanded steadily (380,000 tonnes in 2013) and Malawi became one of the largest exporters in the region. However, because the EU and South Africa started strict tests on Aflatoxin, exports of groundnuts from Malawi were decreased to 47,000 tonnes in 2014 and 9,000 tonnes in 2015. This has happened to many
6-35 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
African groundnuts exporters. Nevertheless, there is a demand for groundnuts in the region, so that the groundnuts in Malawi are currently exported to countries where restrictions on Aflatoxin are not strict, such as Kenya, Tanzania, DRC, Zimbabwe and so on.
Since the export cost is reduced by the development of the Nacala Corridor, it is a large loss for Malawi if they cannot use the potential of the groundnuts export. Therefore, the government should take countermeasures against Aflatoxin through various donor supports、as described in 4.1.6, as soon as possible, such as the improvement of the production environment, development of post-harvest processing, technology development for conservatorship, improvement of extension service (capacity enhancement and increase in the number of extension workers), distribution facilities, market development, etc. These measures against Aflatoxin are urgently necessary because Aflatoxin can occur on maize and feeds, and influences animal husbandry and human health.
(3) Legumes Chickpea, pigeon pea and other legumes produced in Malawi (chickpea: 70,000 tonnes per annum from 2011 to 2014 and pigeon pea: 210,000 to 340,000 tonnes per annum from 2011 to 2014) are sold in the domestic market and also are exported to India and the UAE where 50,000 tonnes were exported in 2015. The demand for chickpeas is high in Egypt. Angola also had a high demand for that, but the demand has declined in recent years. Kenya and Zimbabwe import the pigeon pea but it is small quantity. Therefore, India and the Middle East will continue to be major export destinations in the future. In the region, Tanzania exports a lot of peas. Because pigeon peas are produced mainly by small scale farmers, it is necessary to strengthen the extension service for increasing the production. Moreover, the market for pigeon pea other than domestic consumption is India; therefore, the Government should strive to conclude an MOU with the Indian government urgently in order to eliminate 10% import duties (The Government of Tanzania has already concluded a MOU with the Government of India).
Moreover, the government needs to consider the measures for improvement and dissemination of the pigeon pea breed, cultivation technology improvement, etc. (There is a possibility of an increase in yield due to the current extensive cultivation practices).
(4) Cotton As in the same situation as Zambia, cotton is produced by small scale farmers under Out-Grower Scheme using seeds and loans provided by private companies. Hence, the increase of the production will depend on the private companies. The cotton production in Malawi had been steadily maintained below 20,000 tonnes per annum until 2009, but in recent years the production has doubled to nearly 50,000 tonnes per annum. On the other hand, exports have remained unchanged at around 10,000 tonnes per annum, and export destinations fluctuate from year to year. As for a cotton market, there are South Africa and Egypt in the region. However, it is possible to expand production toward the Asian market outside the region by taking advantage of the transportation cost reduction by the development of the
6-36 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Nacala Corridor. Thus, an export regime is required to be established in parallel with increase of the production.
(5) Tea The tea production in Malawi has been stable in recent years from 42,000 to 47,000 tonnes per annum from 2011 to 2014. The majority of the products are exported to South Africa and the UK. On average from 2011 to 2015, about 15,000 tonnes and 11,000 tonnes were exported to South Africa and UK respectively. In the region, the trend of import in each country is decreasing in general, but only Kenya, a large exporter in the region, is increasing. If the transportation cost to Kenya is reduced due to the development of the Nacala Corridor, Kenya might be considered as a market other than the current export destinations. Though the import is also on a downward trend, Egypt still import about 100,000 tonnes annually, three times larger than the import volume of South Africa. Other countries such as Libya, Angola, Botswana, Namibia, etc. also import a certain amount of tea. Therefore, these countries can be considered as the markets for Malawian tea in the future.
Because the reduction of transportation costs for export by utilising the Nacala Corridor is expected, the government should support improvement of the productivity through the “Malawi Tea 2020 program” currently being developed by an industry association (Tea Association of Malawi) and donors in combination with improvement of varieties of tea trees, introducing quality varieties, improving processing technology, and determining quality standards.
(6) Tobacco Because tobacco production in Malawi is on a downward trend, it is a bit difficult to say that tobacco is a growth industry. But it is an industry that can use the advantage of the cost reduction by the development of the Nacala Corridor.
Tobacco is an export product. The production in Malawi is gathered with a part of the products of Zambia and Mozambique, and exported mainly to Europe. Tobacco production in Malawi has declined from 200,000 tonnes at the peak in 2009 to 126,000 tonnes in 2014. But its export is expected to be maintained steadily (USD 571 million in 2011, USD 496 million in 2015). If the transport infrastructure (combined transportation of railway and truck) of the Nacala Corridor is further developed and then the transport cost for export is reduced, the export volume to Asia may increase in addition to the current destinations in Europe. In the region, Egypt is expanding imports of tobacco, and Kenya, Tanzania, Ethiopia and others import it stably even though in a small volume. Thus, there is a possibility to expand the exports to these countries.
(7) Sugar In Malawi, the production of sugar cane and raw sugar has been gradually increasing in recent years (from 2011 to 2014, the production of sugar cane and raw sugar increased from 2.5 million tonnes to 2.8 million tonnes and from 290,000 to 300,000 tonnes respectively). The
6-37 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
productivity of sugar cane in Malawi is high. The raw sugar is exported mainly to European countries. Since the EU’s quota was abolished in October 2017, its main markets in the future will be neighbouring countries including Zambia. Export of refined sugar is still very low, and the domestic market is the main target for a while. However, there is a high demand for sugar in Kenya and Uganda including neighbouring countries such as South Africa, Tanzania and Zimbabwe, etc. Therefore, the production for export to the regional markets will be able to be expanded.
(8) Edible Oil Although soya bean production has increased in recent years (from 76,000 tonnes to 120,000 tonnes from 2011 to 2014), soya bean is exported as agricultural products and domestic oil though crushing has not been produced. Although domestic production of sunflower oil has been growing in recent years (from 1,700 tonnes to 3,000 tonnes in 2011 to 2014), a similar amount of the oil is still imported. Therefore, even if the production of sunflower oil is increased, its main market will be the domestic one for a while. However, relatively large markets are also in the neighbouring countries such as South Africa, Zimbabwe and Botswana. Moreover, Egypt and Namibia, which are the largest edible oil importing countries in the region. Besides, Mozambique, DRC and Tanzania import it even though the volume is still small and not yet stable. Since the market for edible oil will expand with the GDP growth, the demand will grow in the future in line with the development of these neighbouring countries. Thus, it can be said that edible oil has a large market in the region.
Currently, sunflower is mainly produced by small scale producers; therefore, the government shall strengthen the extension service by using donor’s support, etc., and also promote investments through the GBI or others to organise vertical development of sunflower oil industry from production of sunflower to extraction of its essential oil.
(9) Rare Earth A rare earth project has been implemented by a Canadian mining firm, to outcrop rare earth elements mineralisation from the northern slope of Songwe Hill, Phalombe District, which is located about 2 km from the Mozambique border. The mine is expected to produce approximately 2,840 tonnes of REO by processing 500,000 tonnes per year of ore over eighteen years7. The total mine deposit is estimated 32 million tonnes8.
The rare earth ore will be refined in an integrated processing plant to be constructed on the project site, and the product is planned to be transported to Liwonde by truck and then to Nacala Port by the Nacala Corridor Railway for exporting to Europe. Inputs necessary for processing such as sulphur will be imported via the Nacala Corridor Railway.
The rare earth demand is assumed to grow with the expansion of demand for batteries for the world-wide trend to shift to electric vehicles. Currently, China dominates the rare earth market,
7 http://www.mkango.ca/s/songwe.asp 8 Mkang Resources. Raw Materials and Technology for the CleanTech Revolution. Rare Earth Future Innovation. July 2017.
6-38 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
supplying 98% of the production. Despite the small production amount, the project will offer an alternative source of supply other than China.
(10) Niobium A Niobium Project is undergoing to extract niobium ore from Kanyika mine located in Mzimba District, by an Australian mining development company. Niobium annual production is expected to be 3,000 tonnes for twenty years for the initial exploitation. In addition, 200 tonnes of tantalum will be produced per year and the mine also contains uranium.
Niobium is used for steel production such as special steel which is a material for electronics, rocket engine and parts, gas pipelines, nuclear industries, etc.9 Its market has been expanding and a long-term demand is expected to grow at 8-10 % per annum10. The estimated world reserves of niobium are 484 million tonnes. The annual production is 60,000 tonnes, of which 90 to 92% or 55,000 tonnes per year of supply comes from Brazil, followed by Canada with the production of 4,000 tonnes per year. The production from the Kanyika mine will become third place in the world.
It is planned to utilise the Nacala Rail to import production materials as well as to transport niobium via Nacala Port.
Source: Study Team Figure 6.10 Railway Network (Scenario C: Selected) with Areas of Potential Economic Sectors
9 Mining Review, Issue No. 31. November 2015. 10 http://www.globemm.com/Commodities/Niobium.aspx#.WcRWXtFx3b1
6-39 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Chapter 7 Priority Projects Proposed for Promoting Nacala Corridor Development
7.1 A Long List of Projects A variety of development projects are identified by the Study Team, in relation to the development of the Nacala Corridor (development of both transport infrastructure and economic sectors) by considering the following aspects:
Necessity: Projects which are essential for promoting development of the Nacala Corridor Region
Urgency: Projects which should be implemented urgently to solve existing/emerging problems in the region or to promote the development of Nacala Corridor
Contribution to regional development: Projects which are important for the development of the Nacala Corridor Region by utilising the opportunities created by development of the transport functions of the Nacala Corridor
Over 100 projects are identified and shown in Table 7.1. Some of these projects are selected from projects recommended by existing master plans of the governments, and some projects are newly proposed by the Study Team. These projects in the long list have a wider range of project features than those projects which are to be designed and implemented to directly promote the selected scenario.
Adequate timing of implementation of the projects is important to archive the selected scenario and to create synergies among the projects. For this purpose, preferable implementation periods of each of the projects are considered. The periods are set according to the stages of the scenario described in Chapter 6 as the figure below.
- 1st Period (2017-2019): The period from now till the 2nd stage means by the completion of the upgrading of the railway between Nkaya and Chipata through Mchinji.
- 2nd Period (2020-2022): The period between the 2nd stage to the 3rd stage means before the construction of multi-modal dry ports in Blantyre, Lilongwe and Chipata.
- 3rd Period (2023-2029): The period between the 3rd and 4th stages, which is in simple words, after the completion of transport infrastructure of the Nacala Corridor. The projects in the period are targeting to boost the utilisation of the corridor.
7-1 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source: JICA Study Team
Figure 7.1 Development Stages and Implementation Periods
7-2 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 7.1 Long List of Projects for Promoting Nacala Corridor Development
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Zambia Road Sub-Sector This project aims to replace Luangwa Bridge, which has a weight limit, with a new bridge. The Great East Road is the only trunk road (T4) that runs from Lusaka to Eastern Province and lies within the “Nacala Corridor”. Although T4 currently Replacement of possesses features of a major transportation trunk Proposed by Z1 Eastern RDA 1st Luangwa Bridge road in Zambia, due to the improvement of rail MTC functions in Malawi and hub functions in Chipata, the road functions are expected to shift accordingly with the rail into an international transportation trunk road. It is therefore important that this road can provide high-level mobility and safety. 70% of the project cost is This project is to construct Lusaka Flyover on T4. The to be financed Construction of project will lead to the reduction of congestion at by Export- Lusaka Flyover capacity bottlenecks and to improve road safety. Z2 Lusaka RDA 1st Import Bank of on the Great East Also, this project is vital for improvement of T4 as a India, and the Road (T4) transportation trunk road connecting Lusaka to rest is to be Eastern Province. financed by GOZ. Road Widening with Foot Path & Road widening and NMT facilities are installed in the Cycle Lane on areas of high demand. Dedicated walking and cycling Proposed by Lusaka/ Z3 Nacala Corridor infrastructure should be provided and related facilities RDA 2nd JICA Study Eastern (T4 between should be installed, to guide the mobility of users and Team Lusaka and improve safety. Chipata) Installation of Overtaking Lane at Proper Climbing lanes are introduced on steep inclines to Proposed by Sections on Z4 allow large vehicles to travel at a slower speed than Eastern RDA 2nd JICA Study Nacala Corridor the prevailing traffic without posing obstruction. Team (T4 between Lusaka and Chipata) Recommended This project is to construct Outer Ring Road as a by Lusaka MP completely new road to be part of development of the supported by Nacala Corridor, connecting the newly developed JICA. areas. In addition, this road demarcates urban growth However, areas between Urbanization Promotion Area and improvements Construction of Urban Growth Control Area. Although improvement of on the western Z5 Lusaka Outer Eastern RDA 3rd the western side bypassing the North-South Corridor section are set Ring Road has been proposed, the north eastern side to be connecting T2 (N-S corridor) and T4 (Nacala conducted Corridor) is passing by an international airport, and under a loan by requires improvement from the viewpoint of the flow the Export of commodities. Import Bank of India Chipata bypass will be built parallel to the expected New Construction Z6 Chipata-Serenje Railway. The function of the bypass Eastern RDA 2nd RDA of Chipata Bypass is to scatter freight traffic passing the residential
7-3 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects areas and the city centre. In addition, in Chipata, as there is a plan or Dry Port development near the Chipata station, connection to this dry port is also important. With the dry ports, Chipata can function as a logistics base integrating road and the rail. This project intends to rehabilitateT6, one of the Rehabilitation of access roads from Nacala Corridor to Mozambique. Proposed by Z7 Katete-Chanida Although the area along T6 has a great agricultural Eastern RDA 3rd JICA Study Road (T6) potential, the existing road is in poor condition and Team should therefore be rehabilitated. The access road to T4 in Petauke will be rehabilitated. Petauke has a high potential for Proposed by Rehabilitation of agriculture and mining. In addition, after completion of Z8 Eastern RDA 3rd JICA Study T4-Petauke Road the Chipata-Serenje Railway, Petauke will be a transport hub. However the existing road connecting Team T4 and Petauke is in poor condition. The project will upgrade8 tourism roads in Eastern Province whose improvement has been proposed in Upgrading of ZNTMP.(Nsefu- Lundazi via Mwanya, Mambwe – Provincial Recommended Z9 Petauke via Malama, Masumba – Katete Via Msoro, Eastern MTA 3rd Tourism Access by ZNTMP Mambwe – Chipata Via Nyokatoli, Nyimba – Mwape, Roads Nyimba – Mnyamadzi, Nyimba – Kazumba, Nyimba – Mbizi) Establishment of Truck overloading, by axle or combinations of axles, Z10 High-Tech Weigh is rampant. Installation of this system will lead to a Whole Country RDA 2nd RDA Bridge System decrease in road maintenance costs. Toll Gate Construction on Related laws, guidelines, etc. have already been Nacala Corridor established. The toll gate will contribute to securing Requested by Z11 Eastern ZNRF 2nd (T4 between gross revenue from road tolls for rural road ZNRF Lusaka and improvement. Chipata) Rail Sub-Sector Recommended by ZNTMP. Construction of This railway line links the Chipata–Mchinji line Finance is Serenje-Chipata through Petauke District to the Port of Nacala in Central/ under Z12 MOCTI 3rd Greenfield Mozambique. This project has also been identified as Eastern negotiation Railway key in Zambia’s NTMP. between MOCTI and China Greenfield Freight Kafue – Lion’s Den Extension Railway Extension of main line to border at Chirundu (104 km) Construction Chingola – Jimba Phase I: Chingola - Solwezi (178 Copperbelt Recommended Z13 ZRL 3rd (Expansion of km) /North-Western by ZNTMP Copper This project has been identified as essential in Transportation) Zambia’s NTMP. This project is to develop mainline safety systems Development of such as crossing gates and lights. ZRL’s on-going Z14 Mainline Phase I is currently underway although the time Whole Country ZRL 1st to 3rd project Signalling frame for improvement of the other 60 units is uncertain. Capacity Building: Because there are some skills gaps and significant Operational and areas where there is shortage of local expertise, ZRL Proposed by Z15 Management relies heavily on expert support from outside of Whole Country ZRL 1st JICA Study Training for ZRL Zambia. It is, therefore, recommended that senior Team and ZRA skills training programmes be instituted to enhance
7-4 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects the technical capacity of both organisations. To reduce costs and to increase cooperative working, it is recommended that this programme be instituted jointly. Also, strengthening of ZRA after the planned separation of the organization is necessary. Logistics Sector Dry ports can work as extensions of seaports or inland hubs to facilitate the movement of cargo between seaports and the hinterland. Chipata has the ZRL conducted potential to become a logistical hub on the Zambian a pre-FS. Construction of side after the rail functions have been improved on EU is Chipata the Malawian side. Therefore, the construction of a Z16 Eastern ZRA/ MOCTI 2nd considering Multi-Modal Dry Dry Port in Chipata is important for efficiency assisting the Port improvement of the transportation network on the implementation Zambian side. This importance will be even greater of this project. also, when the Chipata – Serenje Railway is realised. However, this is not included in the Intermodal Hubs proposed by ZNTMP. Construction of A dry port will be constructed in the Lusaka South Recommended Intermodal Hub in Multi-Facility Economic Zone (LS-MFEZ). It is MOCTI/ Z17 Lusaka 3rd by ZNTMP Lusaka included in the Intermodal Hubs proposed in the Private Ongoing (PPP) (Lusaka Dry Port) ZNTMP. AfDB’s support Improvement of is ongoing. The project will construct the OSBP facilities at Z18 OSBP (Mwami/ Eastern RDA/MOCTI 1st Construction Mwami/Mchinji Mchinji) project is under preparation. Capacity building The project includes components of installation of Proposed by of OSBP computer hardware and software etc. and various Z19 Eastern ZRA/MOCTI 1st JICA Study Operation at activities (supervision, technical assistance, training, Team Mwami/Mchinji financial and technical audit etc.) Improvement of Proposed by This project aims to construct an OSBP at Chanida Z20 OSBP (Chanida Eastern RDA/MOCTI 2nd JICA Study border Border) Team Capacity Building The project includes components of installation of Proposed by of OSBP computer hardware and software, etc. and Z21 Eastern ZRA/MOCTI 2nd JICA Study Operation at various activities (supervision, technical assistance, Team Chanida Border training, financial and technical audit etc.) Trade Policy This project is to conduct review of the Control of Requested by Z22 Reform and Goods Act and capacity building for the competition Whole Country ZRA/MOCTI 1st MOCTI Implementation and consumer protection tribunal. Requested by Improvement of This project aims to improve ICT connectivity for MOCTI ICT Connectivity enhancement of interface and to support Monitoring (Partially under Z23 Whole Country ZRA/MOCTI 2nd to Enhance and Evaluation Activities on the establishment of way with Interface at OSBP OSBP. support by the WB) Development of In order to promote regional trade facilitation, it is OSBPs of important to establish and operate OSBPs on various Transport road corridors related to Zambia. Corridors from It is necessary to promote both physical development Proposed by ZRA/RDA/ Z24 Zambia (ICT of OSBP facilities and capacity development of OSBP Zambia 1st JICA Study MOCTI (National Single personnel. While waiting for the completion of Team Window), physical facility development for OSBP, it is Physical necessary to start training of personnel directly Facilities, operating OSBPs.
7-5 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Capacity Those OSBPs not listed in this long list include those Development and on the following borders: Institutional Tunduma/Nakonde (Tanzania/ Zambia) of Dar es Building) Salaam Corridor (TradeMark East Africa are providing support). Kasumbalesa (Zambia/ DRC) (Negotiation with WB is on-going) Distance from Lusaka to Malawi border is approximately 600km. Drivers are forced to endure Installation of long-distance driving because of no stopovers. It is Luangwa therefore essential that rest spaces for drivers are Proposed by Stopover (Rest Z25 provided for road safety. Luangwa River crossing on Eastern RDA/Private 2nd JICA Study Area the Nacala Corridor is located at 250km from Lusaka. Team Development Although location has not yet been identified, Programme) installation of rest facilities has been proposed also in the ZNTMP from the viewpoint of safety. Study on Development of This is to conduct a study to develop Zambia as a Proposed by Zambia as a transport and logistics hub in Southern Africa by Z26 Whole Country MOCTI 2nd JICA Study Transport and clarifying functions and development strategies of the Team Logistics Hub in international transport corridors in Zambia Southern Africa Agriculture Sector Function This project aims to strengthen logistic infrastructures Strengthening on such as rural tracks, warehouses, facilities for MOAi and Logistics and loading, packing and processing in adequate Lusaka/ IFAD support MTC/MOA Z27 Management of locations to the Nacala Corridor, and to conduct. Eastern 2nd SME for value and private Agricultural capacity building for all parties, such as agricultural (Petauke) chain Commodities producers, cooperatives and farmers’ group, and development Value Chain rural traders and logistics operators. The project is to construct and operate feed processing factories and distribute the end products Development of to the livestock zone by utilising crops residues from Lusaka/ Proposed by Animal Feed farms and industrial factories as cotton oil cake, Nyimba/, MFL and Z28 3rd JICA Study Production and bagasse of sugar cane etc., in order to encourage Petauke/ private Team Distribution domestic animal production and export. Main market Chipata of the products can be Central, Southern and Eastern Provinces. Agricultural Productivity In the project, support will be provided to develop Proposed by Enhancement higher yielding seeds and production techniques JICA Study Z29 Whole Country MOA 1st Project through appropriate for the Zambian climate: Target: Maize Team based Technical Support Soybeans and Sunflower on NAP for R&D The project aims to promote large-medium scale agricultural cluster development by attracting the Promotion of private sector operators for export-oriented Large & Medium agriculture, collaborating with other projects; Target Proposed by Scale ZDA/MOA/ Z30 will be: Maize, Soybeans, Sunflower and Sugar cane, Whole Country 3rd JICA Study Agribusiness MOCTI Cooking oil and Sugar, Cattel, Goat and Sheep, Team Cluster Animal and Fish feed, etc. At the same time, it is Development necessary to pay attention to the protection of rights of small scale farmers and rural communities. Programme on The objective is to improve crop production by small Proposed by Export-Oriented scale farmers in Eastern Province for export, to Z31 Eastern MOA 2nd JICA Study Agriculture strengthen cooperation among those farmers, Team Promotion and markets, trade and agro-processing industry
7-6 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Livestock operators, and to promote the development of Development agribusiness in this region. The necessary capacity targeting Small building of the relevant public agencies shall be Scale Farmers in carried out. Eastern Province This aims to clarify measures to promote the Farm Study on Farm Block development through the study on current Block challenges to the Farm Block Program that is slow in Development implementation due to delayed infrastructure Proposed by Z32 Models with development, and impact on small scale farmers. At Whole Country ZDA/MOA 1st JICA Study Consideration for the same time, the development model will be Team Small Scale improved by paying attention to small scale farmers Farmers and developing a collaborative production method. A master plan on specific Farm Block will be prepared. Study on Nacala A study will be conducted on agricultural growth Central/ Proposed by Agricultural corridor development utilising the Nacala Corridor in Z33 Lusaka/ MOA 1st JICA Study Growth Corridor Zambia to export agricultural products to DRC and Eastern Team (Zambia) Zimbabwe Proposed by JICA Study Team Development of Animal production, such as cattle, goat and sheep will aligned with Market Oriented be promoted through introduction of disease control Whole Country, Z34 MFL 2nd Livestock Livestock and fattening for regional markets at the present and esp. Eastern Policy and Production for overseas in the futures. Eastern Province Dev. Plan This project is to promote collaboration between Out Grower small scale farmers and large-medium scale Whole Country, Eastern Z35 Scheme farmer/firms and necessary institutional measures to esp. Eastern MOA 3rd Province Dev. Improvement produce development synergy both for rural and (pilot site) Plan national economic growth. National Agricultural Capacity building of small scale farmers in agriculture Capacity Policy, production and farm management will be conducted, Whole Country, Development of Livestock Z36 which is required for them to become partners of esp. Eastern MOA 3rd Small-scale policy, and large and medium scale farmers or agribusiness (pilot site) Farmers Eastern entities Province Dev. Plan Investment Promotion Eastern/ District Industrial This project aims to provide technical and financial Central/ Proposed by CEEC/ Z37 Centre assistance for construction and enhancement Lusaka/ 2nd JICA Study MOCTI Development industrial yards in districts. Copperbelt/ Team Muchinga Financing access and training opportunities (including Entrepreneurship Proposed by preparation of business plans and financial Major cities in Z38 Development MOCTI 3rd JICA Study statements) will be provided to companies owned by the country Project Team entrepreneurs in major cities. Trade Sector Export Strategy Proposed by Country wide export strategies for promotion of Z39 Formulation Study Zambia MOCTI 1st JICA Study export will be formulated. for Zambia Team Development of This is to develop an inter-country trade centre Proposed by Z40 Eastern MOCTI 3rd Inter-Country as ’Michi-no-Eki ’at the Chipata-Mchinji border JICA Study
7-7 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Trade Centre Team (ICTC) Industry Sector Development of MFEZ will be constructed in Chipata to attract Multi- Facility domestic and foreign direct investment and to Planned by Z41 Economic Zone Eastern ZDA 3rd promote export-oriented and import-related industries ZDA (MFEZ) in and services. Chipata A study will be conducted to prepare a mining Promotion of Ministry of development plan in Eastern Province for investment Proposed by Mining Mines and Z42 promotion in the mining sector, especially in Eastern 1st JICA Study Development in Minerals non-traditional mining, increase value-addition and Team Eastern Province Development support small-scale mining development. Power and Energy Sector Development of F/S is on-going The project is to construct a thermal power plan at Z43 Thermal Power Eastern MOE/Private 2nd and completed Chipata using coal from Tete in Mozambique. plant by 2019 Rural This aims to develope off-grid power supply systems Proposed by Z44 Electrification (such as small hydropower or solar system) in rural Eastern MOE 3rd JICA Study Project areas. Team Human Resource Development Establishment of Proposed by This project aims to establish a university, which Eastern/ Ministry of Z45 a University in 3rd JICA Study provides agriculture courses in Chipata. Muchinga Labour Eastern Province Team Environmental and Social Management Study on Comprehensive Zambia Environmental Impact analysis will be undertaken on natural and Environment Proposed by and Social social environment to come up with possible Eastern/ Z46 al 1st JICA Study Management in mitigation measures on Nacala Corridor development Muchinga Management Team Eastern and (road, rail, development of Chipata, Petauke etc.) Agency Muchinga Provinces Urban and Regional Development This small scale urban MP should be developed with Chipata/Petauke the participation of both national and district level Ministry of Proposed by Small-scale officials. It should first prioritise improvement of Local Z47 Eastern 2nd JICA Study Urban infrastructure to ensure sustainable urban growth at Government Team Development MP new transport hub cities. & Housing/ Chipata industrial park should be also included. Preparation of The project is to prepare a regional development plan Eastern Province for Eastern Province, including development of Proposed by Z48 Reginal Chipata City and Petauke, agriculture and Eastern Eastern 1st JICA Study Development agri-business promotion, tourism, and mining Team Plan development. M/P Study to Formulate Ministry of Economic National Economic development strategies will be formulated, Proposed by Development Planning and Z49 focusing on not only the Nacala Corridor but also all Zambia 1st JICA Study Strategies by Development existing and planned transport corridors in Zambia. Team Using Transport / MOCTI/ all Corridors in stakeholders Zambia
7-8 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Malawi Road Sub-Sector Road Widening with Foot Paths & Cycle Lanes on Road widening and NMT facilities will be installed in Nacala Corridor areas of high demand. Dedicated walking and cycling Proposed by Central/ M1 between Mchinji infrastructure should be provided as well as related RA 1st JICA Study Southern and Chiponde instruments designed to guide the mobility of these Team Consisting of users and improve their safety. M12, M1, M8 and M3 Installation of Overtaking Lanes Climbing lanes are introduced on steep inclines to at Proper sections allow large vehicles to travel at a slower speed than on Nacala the prevailing traffic without posing obstruction. Proposed by Corridor between Especially, M3 (mountain road between Mangochi Central/ M2 RA 1st ICA Study Mchinji and and Chiponde), and M8 across the entire length are Southern Team Chiponde in poor condition from narrow road widths and Consisting of damaged pavements, which require urgent M12, M1, M8 and refurbishment. M3 This connects M12, a part of the undeveloped trunk road, to M1 in the northern part of Kanengo. Development of roads connecting the northern Expansion of section of Lilongwe’s Western bypass, the Kanengo Recommended M3 Lilongwe North Central RA 2nd area which is a base for the logistics of Lilongwe and by MNTMP Western Bypass other urban areas as well as the Kamuzu International Airport, will improve the smoothness of the road traffic on the corridor. Mthandizi-Mpingwe (Limbe By pass), linking the M2 and M3 (3.6 km). Ndirande-Nkolokoti linking Makata to Nkolokoti Road Blantyre City in Blantyre (3 km). Recommended M4 Road Misesa-Soche Hill–Manja in south Blantyre (4 km). Southern RA 1st by MNTMP Improvement Blantyre-Limbe Elevated Expressway: (8 km). This elevated road would run above the Chipembere Highway in Blantyre between Limbe at the M2/M3 junction and Mbayani on the M1. This project aims to construct a new 10 km 2-lane road from M1 along Chileka Road, Chirimba Construction of Industrial Area, north-east of Ndirande to M3 in Recommended M5 Blantyre Inner Limbe, in order to reduce through traffic in Blantyre Southern RA 2nd by MNTMP Bypass Road City, and to consequently reduce travel times and transport costs for public transport users and private vehicles. Liwonde-Cuamba Bypass is planned parallel to the New Road Nacala Railway and directly connects Liwonde Construction Proposed by (Malawi) and Cuamba (Mozambique). This bypass Malawi/ M6 between Liwonde RA/ ANE 2nd JICA Study will attract road users because it shortens the Mozambique and Cuamba Team distance from Malawi to Nacala Port and is in a (Bypass) relatively flat area, enhancing comfortable movement. Reinforcement of M5 is another important route on the Nacala Corridor, Roads & However, some bridges have only one traffic lane, Proposed by Widening Bridges and several sections of the road are vulnerable when Central/ M7 RA 2nd JICA Study on M5 between heavy rain hit the road. Reinforcement of the Northern Team Salima and vulnerable sections of the road by providing culverts Balakas and roadside drainages is therefore necessary.
7-9 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Establishment of Truck overloading by axle or combinations of axles, is Proposed by M8 High-tech Weigh rampant. Installation of this system will lead to Whole Country RA 2nd JICA Study Bridge System decrease in road maintenance costs. Team Toll Gate Construction on Nacala Corridor The study for related laws, guidelines, etc. is ongoing. Proposed by Central/ M9 between Mchinji Toll gates will contribute to securing gross revenue MNRF 2nd JICA Study Southern and Chiponde from road tolls to rural road improvement. Team consisting of M12, M1, M8 and M3 Rail Sub-Sector Rehabilitation and There is necessity for expansion and development of Acquisition of M10 locomotives, wagons and containers which presently Whole Country CEAR 1st CEAR Rolling Stock do not meet the demand. Assets In this project, it is intended to work with ZRL to understand and agree with what can be done to improve the railway service short of increasing the axle load. Additionally, they should agree on a list of Capacity Building: target customers to sell this new service; in particular, Recommended M11 Whole Country CEAR 1st Freight Marketing whether it is worth approaching any of the mining by MNTMP operations in Zambia. In addition, this project aims to establish a formal rail freight users group including both Malawi and international rail users will be necessary. There are skill gaps and shortage of local expertise in Recommended Capacity building: significant areas of the rail operation and as a Strategic Operational and management. It is essential to develop local skilled Option by Management resources that are capable of managing their own MNTMP. Training for CEAR asset. The institutional framework in the ministry is MOTPW/ (Investment by M12 Whole Country 1st and the Railways not strong, since it is supported by only two CEAR Vale/Mitsui is Directorate of the professional staff. Thus, it affects the resource and set to include Government of limits the capability of fulfilling the roll of the capacity Malawi institution, efficient data management and reinforcement maintaining working relationship with CEAR. for CEAR). Investment in Freight Facilities Insufficient capacity of the existing terminals, aging of Recommended (Sidings and the loading and unloading facilities and insufficient as a Strategic M13 Loading/ maintenance of the existing sidings are prominent. Southern CEAR 1st Option by Discharge Upgrading of the existing facilities and improvement MNTMP Equipment) at of the sidings is therefore necessary. Blantyre Southern Malawi does not have direct rail connection to Beira Port, because the Sena Line connecting Connecting of Limbe and Beira is not operational due to the loss of Nkaya-Moatize the bridge crossing Shire River. MOTPW/ M14 Southern 2nd MOTPW Line and The project is to connect the Nkaya-Moatize Line with CEAR Tete-Beira Line the Tete-Beira/ Macuse Line, by constructing a new section, for the purpose of connecting southern Malawi and Beira Port. Construction of Recommended New Railway Line Extension of a rail line to north from Kanengo or MOTPW/ as a Strategic M15 from Kanengo/ Salima is recommended, because the potential Northern 3rd CEAR Option by Salima to North of benefits can be enjoyed by more of Malawi. MNTMP Malawi Establishment of The project aims at establishment of a mechanism for Nacala Region MOTPW/ Proposed by M16 1st a Coordination coordination and promotion of the implementation of (Three MOITT/ JICA Study
7-10 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Mechanism for an integrated railway system for Nacala Corridor countries) CEAR Team Operating an Region Integrated Railway System Logistics Sector Insufficient capacity of the existing terminals, aging of the loading and unloading facilities and insufficient Construction of maintenance of the existing sidings are prominent in Multi-Modal Dry Proposed by Blantyre (Limbe and Chirimba Industrial Park) and Ports in Blantyre JICA Study Lilongwe (Kanengo). Upgrading of the existing CEAR/ M17 (Limbe and Central 1st Team facilities and improvement of the sidings are therefore MOITT Others) and Recommended necessary. Also, shifting the customs clearance Lilongwe by MNTMP functions currently at Mchinji to Kanengo and (Kanengo) developing a Dry Port at Kanengo improve the efficiency. Capacity Development of This is to provide training for government officers Proposed by M18 Government (customs, migration and health), related to OSBPs for Whole country MRA/ MOITT 1st JICA Study Officers for OSBP smooth operation of OSBPs in Malawi. Team Operation Installation of Ongoing MOTPW/ M19 OSBP (Mwami/ OSBP facilities at Mwami/Mchinji will be constructed Central 1st Supported by MOITT Mchinji) AfDB This project aims at capacity development for OSBP Capacity operation by installation of computer hardware and Ongoing Development for M20 software etc., with various supports (supervision, Central MRA/MOITT 1st Supported by OSBP Operation technical assistance, training, financial and technical AfDB at Mwami/Mchinji audit etc.) Installation of This project will construct the OSBP facilities at Proposed by MOTPW/ M21 OSBP (Chiponde Chiponde Border with consideration for introduction Southern 2nd JICA Study MOITT Border) of OSBP for railway freights. Team Capacity This project aims at capacity development for OSBP Development of operation by installation of computer hardware and Proposed by 2nd M22 OSBP Operation software etc., with various supports (supervision, Southern MRA/MOITT JICA Study
at Chiponde technical assistance, training, financial and technical Team Border audit etc.) Trade Policy This project is to conduct review of the Control of WB’s support M23 Reform and Goods Act and capacity building for the competition Whole Country MRA/MOITT 1st is going on. Implementation and consumer protection tribunal. Improvement of This project aims to improve ICT connectivity for ICT Connectivity Proposed by enhancement of interface and to support Monitoring M24 to Enhance Whole Country MRA/MOITT 2nd JICA Study and Evaluation Activities on the establishment of Interface at Team OSBP. OSBPs Waterway Sub-Sector To decrease the costs of transportation, it is Upgrading, necessary to develop a transportation system that Rehabilitation & utilises the waters of Lake Malawi. To that end, Recommended M25 Construction of Whole Country MOTPW 1st redevelopment of Nkhata Bay and Chipoka Port as by MNTMP Ports for well as development of River Port in Liwonde is Waterways necessary. Agriculture Sector Enhancing of This is to enhance capacity of farmers and board MOAIWD/ M26 Capacity of members of agricultural cooperatives and other Whole Country private 2nd NAP Managing farmers groups in terms of management and to trading
7-11 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Agricultural encourage small-scale farmers to do collective selling companies Cooperatives of their products by utilising existing trade platforms, such as commodity exchange. It also provides support to set up local warehouses. The project intends to promote control system of aflatoxin in groundnuts production and value chain in order to meet very strict food testing procedures for aflatoxin by developed countries. Malawi has Groundnuts developed MAPAC, Malawi Programme for Aflatoxin Production Control, and taken steps forwards reducing aflatoxin Revitalization with levels in groundnuts through the promotion of MOAIWD/M M27 Central 1st NAP Special Attention improved planting, handling and marketing OITT to Aflatoxin techniques1. However, the success of the initiative Control will rely on development of low-aflatoxin supply chain. Therefore, based on the review of improved methods developed by various supports, efficient integration of the stakeholders’ interests in this supply chain shall be studied. The project is to support the enhancement of rice production in irrigation schemes which is one of Malawi’s agricultural priorities in line with Malawi’s participation in CARD Initiative (Coalition for African Rice Development) and assist to introduce modern 14 areas have Rice Production rice mills. financial Central/ MOAIWD/ M28 Enhancement Most of surrounding countries of Malawi including 1st agreement out Southern Privates Project Zambia, Zimbabwe and Mozambique import rice. If of 30 schemes Malawi increases its rice production, there is a (MOAIWD) chance for export to regional markets. At the same time, Malawi’s irrigation schemes are to be developed in short and middle terms, according to Malawi’s National Irrigation Master Plan. The linkage between farmers’ groups of small-scale farmers or cooperatives and Commodity Exchange will be fostered in order to archive the improvement of market access and increase profits for small-scale farmers. Through the activity, a positive cycle on rice Improvement of production for farmers in the irrigation schemes is Proposed by Market Access for promoted. This project is necessary because the M29 Whole Country MOAIWD 2nd JICA Study Small-Scale Rice areas of irrigation schemes and rice production are Team Farmers expected to increase in the short and middle terms in Malawi, according to Malawi’s National Irrigation Master Plan. Therefore, the linkage between small-scale farmers and markets becomes more important for both increasing or securing farmers’ benefits and promoting rice export in the near future. Technical transfer will be conducted to improve tea MOAIWD/ Technical production capacity, to conduct technical transfer of Proposed by Thyolo/ Tea M30 Transfer of Tea green tea production, and to accelerate climate 1st JICA Study Mulanje Association Industry change adoption for the promotion of the tea industry Team of Malawi in Malawi. Malawi’s agricultural sector is dominated by Promotion of MOITT/ small-scale agriculture. However, due to the Proposed by Medium-scale MITC/ M31 presence of growing regional markets for agricultural Whole Country 3rd JICA Study Agribusiness MOAIWD/ and agro-processed products and improved Nacala Team Development GBI Corridor, development and export potentials of
1 IFPRI, MASSP POLICY Note 21, April 2015
7-12 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects agricultural and agro-processing sectors are expected to increase. Therefore, it is also possible to promote medium-scale agriculture and agro-processing by attracting private investment to Malawi. This project will be implemented for export of agricultural and agro-processed products and to enhance value addition (including rice, groundnuts, pigeon peas, soya beans, sugarcane, cooking oil) in cooperation with Green Belt Initiative (GBI). Local entrepreneurs and farmers organizations will be Local supported to access to market and to develop M32 Agribusiness Whole Country MITT 2nd NAP agribusiness with large and medium-scale farmers Promotion Project and investors though capacity development. Trade Sector Lack of quality control and standardization impedes the expansion of the distribution channels of products to chain stores and large scale retailers, and Capacity Building promotion of export. This project is to provide support Proposed by Project for Malawi M33 to enhance the capacity of MBS officers, to establish Lilongwe MBS 1st JICA Study Bureau of a monitoring and evaluation system and to install Team Standards (MBS) laboratories and equipment that contribute to the improvement of quality control and standardization of products for export of commodities Industrial Development Two large scale mining projects that will bring about significant impacts on regional development are currently under development. However, some social issues and conflicts have emerged in the local Infrastructure MOTPW/ community due to the anticipation of the negative Development for Water Proposed by impacts of the development. This project will develop Phalombe/ M34 Sustainable and Development 3rd JICA Study infrastructure in service towns for large scale mining Mzimba Pro-Poor Mining / Energy and Team projects to promote sustainable mining development Development Mines that contributes to the reduction of poverty in the regions, while mitigating negative impacts of the mining development on the community and environment. Investment Promotion Special economic zones (SEZs) will be developed for attracting investment to economic sectors for export Special Economic World Bank is with special emphasis on those targeting regional M35 Zones All Regions MOITT 3rd interested in markets. Development F/S. Possible locations include Blantyre, Lilongwe and Liwonde. Capacity Building This project will provides MITC with support to Project for Malawi provide quality services for investors and to enhance Proposed by M36 Investment and capacity of MITC for promoting FDI with special Lilongwe MITC 1st JICA Study Trade Centre emphasis on economic sectors targeting regional Team (MITC) markets Power and Energy Min. of Energy Sector Natural Ministry of Improvement The project is to develop a 330kV line connecting M37 Whole Country Resources, 2nd Energy and Zambia-Malawi Chipata in Zambia to Nkhoma in Malawi. Energy & Mines Interconnection Mines
7-13 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Min. of This project aims at providing support to increase the Natural Proposed by Electrification M38 reliability and quality of electricity supply in the major Whole Country Resources, 3rd JICA Study Project load centres and to promote rural electrification Energy & Team Mines Improvement of Electricity Supply The electricity supply to industrial areas in Malawi will Proposed by for Industrial be stabilised by rehabilitation and construction of Lilongwe/ M39 ESCOM 1st JICA Study Areas in Lilongwe substations which supply electricity to Kanengo and Blantyre Team and Blantyre Limbe/Chirimba area
Disaster Prevention Salima area is prone to flooding and a railway bridge of CEAR has experiences of being washed away by flooding. This project aims to mitigate floods in Salima District by installing flood control measures (including those for river bank protection, bridge pillar MOTPW/ Proposed by Flood Control protection or protecting bridge pillars from flooded M40 Salima MOAIWD 1st JICA Study Project rivers) for the railway. Team DoDMA is responsible for district disaster risk reduction management. Measures for protecting bridges are to be done by MOTPW. River bank protection is related to MOAIWD. Human Resource Development Quality of vocational training will be improved by Improvement of supporting construction of National Teachers Training Proposed by Min. of M41 Vocational College (NTTC), and training faculties of national All Regions 2nd JICA Study Labour Training teachers training college, national colleges and Team community colleges Zambia and Malawi Tourism Sector Ministry of Tourism and The project is to promote a tourism route from Eastern Zambia-Malawi Arts, Zambia Proposed by Eastern Province of Zambia to Malawi jointly, (Zambia)/ All ZM1 Tourism and 3rd JICA Study connecting South Luangwa National Park and other Regions Promotion Project Department Team national parks with the Lake Malawi (Malawi) of Tourism, Malawi Urban and Regional Development The Study for Nacala Corridor A study will be conducted to prepare the Nacala Economic Nacala Region Proposed by Corridor Integrated Masterplan in Zambia and Malawi To be ZM2 Development (Zambia/ 1st JICA Study aiming at diversified Economic Sectors Development Determined Strategies Malawi) Team based on a Region-Wide Corridor Network. (Integrated Master Plan) Malawi and Mozambique Road Sub-Sector Liwonde-Cuamba Bypass is planned parallel to the New Road Nacala Railway and directly connects Liwonde Construction Proposed by (Malawi) and Cuamba (Mozambique). This bypass Malawi/ MM1 between Liwonde RA/ANE 2nd JICA Study will attract road users because it shortens the Mozambique and Cuamba Team distance from Malawi to Nacala Port and is in a (Bypass) relatively flat area, enhancing comfortable movement.
7-14 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Mozambique Port Sector Conducted by JICA once. The operation capacity of Nacala Port will be Expansion and Further improved through the expansion of the Port’s MB1 Capacity Building Nacala CFM/ Private 1st implementation container terminal and improvement on the workers’ of Nacala Port is proposed by skills. JICA Study Team This project is to improve user convenience around Expansion of the Nacala Port through expansion of logistic facilities Proposed by APIEX/ MB2 Depository in such as harbour warehousing. In terms of Nacala 3rd JICA Study Private Nacala Port management, PPP or complete private management Team are expected. Port Access Road will be constructed, directly connecting National Road 12 and Nacala Port. The Feasibility New Construction road is 13.5 km in length, of which 700 m along on study MB3 of Nacala Port the coastline will be a bridge. The Port Access Road Nacala ANE 1st supported by Access Road will contribute to area improvement along the road JICA is and investment promotion through enhancement of ongoing. road network. Recommended Port Sales for by PEDEC- Trade using Nacala Port will be promoted by APIEX/ MB4 Promotion of Nacala 1st, 2nd Nacala conducting public relations activities. Private Nacala Port Development Strategies Zambia, Malawi and Mozambique Rail Sub- Sector Recommended by Establishment of PEDEC-Nacala Coordination in This project is for coordination and promotion of the Development A permanent the Provision of implementation of an integrated railway system for Nacala Region Strategies/ committee is ZMM1 Freight the Nacala Corridor Region. It aims to establish a (Three 1st Support by to be Forwarding Railway Regulatory body covering Zambia, Malawi countries) SADC and established Services for the and Mozambique. JICA is Rail Sub-sector proposed by JICA Study Team Logistics Sector Promotion of Nacala Corridor utilisation will be promoted by Proposed by Malawi, To be ZMM2 Utilisation of disseminating information on infrastructure conditions 1st JICA Study Zambia Determined Nacala Corridor and available services and organizing study tours. Team Tourism Sector MOITT Tourism The project aims to develop Tourism Infrastructure (Malawi)/ Development and Proposed by and to promote Tourism along the Nacala Corridor Malawi, Ministry of ZMM3 Promotion Project 2nd JICA Study (integration of Malawi Lake and National Parks in Zambia Tourism and along Nacala Team Malawi and Zambia) Arts Corridor (Zambia) Institution/Organization Establishment A coordination mechanism involving Zambia, Malawi Nacala Region Proposed by and and Mozambique will be established and All ZMM4 (Three 1st JICA Study Strengthening of strengthened for coordination and promotion of the stakeholders countries) Team a Coordination implementation of an integrated development for the
7-15 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Remarks on Proposal of Province/ Projects, Executing No Project Outline District/ Period Owner of Agency Region Projects and Funding for Projects Mechanism for Nacala Corridor Region. Nacala Corridor Development involving the Three Countries COMESA/ SADC Trade Sector Programme for Intra-Regional Trade Facilitation This programme aims to promote intra-regional trade Proposed by COMESA/ CS1 of Zambia, Malawi and to dispatch JICA experts to COMESA for Nacala Region 1st JICA Study SADC and Mozambique supporting regional economic integration Team through Nacala Corridor Originally the necessity for this project is Establishment recommended and Operation of Special by International An international railway coordinating committee will Committee PEDEC-Nacala Railway be established for the provision of safe, efficient, for Development CS2 Nacala Region 1st Coordinating effective integrated railway operation and capacity Implementati Strategies/ the Committee for development for the coordinating committee. on to be involvement of Nacala Corridor Established SADC and Railway JICA is proposed by JICA Study Team.
7.2 List of Priority Projects Recommended for Promoting Nacala Corridor Development In order to initiate and achieve the proposed growth scenario described in Chapter 6, the basic policy to select the priority projects is proposed below.
Table 7.2 Basic Policy on the Selection of the Priority Projects Development of Transport The projects to improve infrastructure in order to effectively utilise the Nacala Infrastructure of Nacala Railway being renovated by a private group and to efficiently demonstrate and Corridor maximise the transport functions of the Nacala Corridor in the short term. Promotion of Economic The projects that can contribute to promotion of the economic sectors of which Sectors along Nacala development potential is already recognised in the existing plans and/or actual Corridor performance in the past, or support the expansion of export to regional markets Source: JICA Study Team
As a result, the following fourteen projects are identified and recommended for implementation by the JICA Study Team.
7-16 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Table 7.3 shows a list of the priority projects recommended for promoting Nacala Corridor Development.
Table 7.3 Priority Projects Recommended for Promoting Nacala Corridor Development Project Sector Period Development of Transport Infrastructure of Nacala Corridor Zambia Z1 Replacement of Luangwa Bridge Road 1st Development of OSBP of Transport Corridors from Zambia (ICT (National Single Window), Z24 Road 1st Physical Facilities, Capacity Development and Institutional Building) Z6 New Construction of Chipata Bypass Road 2nd Z16 Construction of Chipata Multi-Modal Dry Port Logistics 2nd Malawi M3 Expansion of Lilongwe North Western Bypass Road 2nd M4 Blantyre City Road Improvement Road 1st M5 Construction of Blantyre Inner Relief Road Road 2nd M17 Construction of Multi-Modal Dry Ports in Blantyre (Limbe or Others) and Lilongwe (Kanengo) Logistics 1st M18 Capacity Development of Government Officers for OSBP Operation Logistics 1st M39 Improvement of Electricity Supply to Industrial Areas in Lilongwe and Blantyre Energy 1st Promotion of Economic Sectors along Nacala Corridor Zambia Promotion of Export-Oriented Agriculture and Livestock Development Targeting Small Scale Z31 Agriculture 2nd Farmers in Eastern Province Study on Farm Block Development Models with Special Consideration for Small Scale Z32 Agriculture 1st Farmers Z39 Export Strategy Formulation Study for Zambia Trade 1st Malawi M27 Groundnuts Production Revitalization with special attention to Aflatoxin Control Agriculture 2nd M29 Improvement of Market Access for Small-Scale Rice Farmers Agriculture 2nd Source: JICA Study Team
7.3 Brief Profiles of Priority Projects Recommended for Promoting Nacala Corridor Development This section provides brief profiles of the priority projects recommended for promoting Nacala Corridor Development.
7.3.1 Development of Transport Infrastructure of Nacala Corridor The proposed scenario has two major development strategies. The one is to strengthen transport infrastructure of the Nacala Corridor so that economic sectors could more actively utilise the upgraded rail and road functions and services of the Nacala Corridor. The other is related to development of economic sectors taking advantage of the enhanced transport infrastructure and services of the Nacala Corridor so that economic sectors could generate more traffic demand for the Nacala Corridor.
7-17 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
The priority projects explained in this section are those of the first categories mentioned above. Those priority projects are selected because they are effective for the following aspects:
Promoting regional trade facilitation by physical development and capacity development for OSBPs on road corridors Expanding the service areas of the combined rail and truck transport of the Nacala Corridor by physical development of multi-modal dry ports to combine rail transport and truck transport Improvement of the accessibility to multi-modal dry ports by road development
(1) Zambia
1) Z1: Replacement of Luangwa Bridge
(a) Background of the Project The Great East Road (T4) is the only trunk road that runs from Lusaka to Eastern Province and lies within the “Nacala Corridor”. Although T4 currently possesses the features of a major transportation trunk road in Zambia, due to the improvement of rail functions in Malawi and hub functions in Chipata, the road functions are expected to shift accordingly with the rail into an international transportation trunk road.
(b) Objectives of the Project For access to Chipata, it is important that T4 can provide high mobility and safety. However, the Luangwa Bridge located at 250 km from Lusaka towards Chipata has been in use for decades and is severely deteriorated. Limitation for vehicle weight is currently in place and passage is only allowed for one vehicle at a time. Therefore, during heavy traffic, long lines of vehicles awaiting passage are formed at both sides of this bridge, creating a bottleneck on the T4 Road.
Therefore, replacement with a new bridge is planned in order to secure high mobility and safety for the Nacala Corridor.
(c) Description of the Project In addition to the current bridge, a new bridge is to be built nearby and, from the viewpoint of safety, improvement of the road alignment in the surrounding mountain roads is to be conducted at the same time.
7-18 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Source : JICA Study Team Figure 7.2 Location of Luangwa Bridge
2) Z24: Development of OSBP of Transport Corridors from Zambia (ICT (National Single Window), Physical Facilities, Capacity Development and Institutional Building)
(a) Background and Rationale of the Project In Zambia, among two OSBPs on the North-South Corridor, the one at Chirundu of the Zambia-Zimbabwe border has been established and operational and the other one at Kazungula of the Botswana-Zambia border is under construction. The Zambian government has a plan to establish and operate more OSBPs at the other borders including the following borders:
Dar es Salaam Corridor: Tunduma-Nakonde (Tanzania-Zambia border) Lobito Corridor: Kasumbalesa (DRC-Zambia border) Beira Corridor: Chanida (Mozambique-Zambia border) Nacala Corridor: Mwami-Mchinji (Malawi-Zambia border) North-South Corridor: Beitbridge (South Africa-Zambia border)
Development partners have considered providing financial and technical support to some of these OSBPs. However, some OSBPs have not yet been considered by development partners.
Because the emergence of the upgraded rail infrastructure and services of the Nacala Corridor could raise the development potential of the economic sectors targeting regional markets, the function of OSBPs on international road corridors crossing national borders is considered to be important for facilitating regional trade.
The upgraded and combined rail and truck transport of the Nacala Corridor is expected to bring a significant positive impact to Chipata by 2020 and further to Lusaka hopefully by 2022, according to the proposed growth scenario. Thus, it is becoming increasingly important to develop a smooth transport function and border crossing of road corridors, in order to promote development of the economic sectors targeting regional markets.
(b) Objectives of the Project To promote trade facilitation, especially regional trade facilitation between neighbouring countries and Zambia
7-19 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
To promote establishment and operation of One Stop Border Posts (OSBPs) for the purpose of regional trade facilitation
(c) Description of the Project To promote development of physical facilities of OSBPs on various corridors related to Zambia To promote capacity development of personnel who manage and operate OSBPs on various corridors related to Zambia
Before the completion of physical facility development of OSBPs, which are to be assisted by development partners, it is necessary to start training of personnel directly operating OSBPs, as well as those who are to manage OSBPs.
3) Z6: New Construction of Chipata Bypass
(a) Background and Rationale of the Project Chipata is the capital city and economic centre of Eastern Province of Zambia. Recently Chipata officially obtained a city status. In addition, the section between Chipata and the Luangwa Bridge of T4 was upgraded so as to largely reduce travel time between Chipata and Lusaka.
In Chipata, the construction of a new industrial park is planned, and development of a coal-fired thermal power plant is also planned.
In addition, an upgraded railway will be realised between Chipata and Nacala Port since the rail section between Nkaya and Mchinji of CEAR is to be renovated by a private sector group within two years from 2018. In response to this improved railway connection between Chipata and Nacala Port, the development potential of economic sectors could emerge in Chipata and Eastern Province.
Furthermore, it is necessary to develop a multi-modal dry port in Chipata, near Chipata Railway Station, in order to extend the service areas of the combined rail and truck transport of the Nacala Corridor beyond Chipata to Lusaka.
Because of these initiatives for urban development and economic development, Chipata would require a bypass road not only to disperse concentrated traffic from the city centre and residential areas, but also to provide good accessibility to a newly planned Chipata Multi-Modal Dry Port.
(b) Objectives of the Project To construct a Chipata bypass for scattering freight traffic passing residential areas and the city centre of Chipata. To provide a good access road to Trunk Road T4 and Chipata Multi-Modal Dry Port, creating an effective logistics network.
7-20 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(c) Description of the Project The Project is to construct a Chipata Bypass (8-9 km), which is planned to run in parallel to the newly planned Chipata-Petauke-Serenje Railway and provide access to the Chipata Multi-Modal Dry Port.
Source：JICA Study Team Figure 7.3 Chipata Bypass
4) Z16: Construction of Chipata Multi-Modal Dry Port
(a) Background and Rationale of the Project Dry ports can work as extensions of seaports or inland hubs to facilitate the movement of cargos between seaports and the hinterland. Chipata has development potential to become a logistics centre in the Zambian side after the rail tracks and operation have been improved in the Malawian side. Therefore, the construction and operation of a multi-modal dry port in Chipata is important for the efficiency improvement of the transportation network in the Zambian side.
More directly, the multi-modal dry port at Chipata is intended to combine rail and truck transport of the Nacala Corridor in order to increase services areas of the Nacala rail transport.
The development of a multi-modal dry port is one of the key instruments to implement the proposed growth scenario for the Nacala Corridor.
(b) Objectives of the Project A multi-modal dry port will be established at Chipata Railway Station for the following three purposes:
To efficiently do on-loading and off-loading for the connected rail transport and truck transport To speed up customs clearance procedures To locate freight forwarder businesses for connecting economic sectors and transport businesses (rail transport and truck transport)
(c) Description of the Project At Chipata Railway Station, a multi-modal dry port will be established with the following functions:
Off-loading and on-loading functions for railway station Truck parking lots Warehouses for private companies Customs office Freight forwarders’ offices
7-21 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Malawi
1) M3 : Expansion of Lilongwe North Western Bypass (18 km)
(a) Background and Rationale of the Project Lilongwe trunk road has been developed between M1 to M12 in the southern part of the Lilongwe urban area. There are remaining sections to complete the outer ring road of Lilongwe City as a bypass road.
The completion of the western part of the outer ring road could provide convenient access to Kanengo Industrial Area and a future railway station or multi-modal dry port. The North Western Bypass enables shippers from outside Lilongwe to easily bring their cargos by truck to Kanengo’s multi-modal dry port for the purpose of utilising railway because the bypass can provide an alternative route without going through the city centre.
This road development project is essential for making the proposed Multi-Modal Dry Port in Kanengo efficiently operational. The multi-modal dry port is an important instrument for economic sectors to conveniently utilise the Nacala Corridor Railway. These priority projects are important for realising the proposed growth scenario for Nacala Corridor Development.
The cost of this project is estimated at USD 40 million in MNTMP.
(b) Objectives of the Project To improve the smoothness of the corridor’s road traffic by development of the roads connecting the northern part of Lilongwe’s Western Bypass, Kanengo area, a base for the logistics of Lilongwe, and other urban areas as well as Kamuzu International Airport.
(c) Description of the Project The Project of North Western Bypass of Lilongwe refers to the construction of a part of the undeveloped section of Lilongwe trunk roads, connecting from the existing M12 in the Western Bypass to M1 in the northern part of Kanengo(The figure below shows the North-West Bypass.) The length of this road is approximately 18 km and will connect Kanengo area, which is the most important logistics base for Lilongwe, National Road No.12 (M12), and Kamuzu International Airport. Kanengo located in northern Lilongwe is an industrial area with road and railway connections. This road may be tolled Source：JICA Study Team in order to provide a revenue stream to finance Figure 7.4 Lilongwe North-West Bypass maintenance and part of the capital cost.
7-22 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
2) M4: Blantyre City Road Improvement (3 sub-projects = 13.6 km)
(a) Background and Rationale of the Project Blantyre is Malawi’s centre of finance and commerce, and thes second largest city. Additional highway capacity in the city to remove through traffic from the main centres of activities is required. MNTMP recommends the construction and improvement of the road sections included in this project.
These sub-projects of road development are intended to reduce traffic congestion, leading to provision of better accessibility to multi-modal dry ports to be located within Blantyre (possible locations: Limbe and/or Chirimba Industrial Park). The multi-modal dry port is an essential instrument to achieve the implementation of growth scenario. The establishment of multi-modal dry ports makes economic sectors feel convenient in utilising the railway of the Nacala Corridor for the purpose of getting access to regional markets.
The costs of the projects were estimated in the MNTMP as follows;
Mthandizi-Mpingwe (Limbe Bypass, 3.6 km): USD 8 million Ndirande-Nkolokoti (3 km): USD 7 million Misesa-Soche Hill-Manja (4 km) : USD 9 million
(b) Objectives of the Project To diffuse traffic congestion around Limbe Station, a logistics centre for Blantyre City, as well as the surrounding roads, thus making logistics transportation faster and more punctual.
By implementing the three sub-projects for road improvement, this project can improve the accessibility to future locations of multi-modal dry ports (Limbe and Chirimba Industrial Area), leading to a more efficient logistics network.
(c) Description of the Project The Project will be conducted in the following road sections to ease traffic congestion around Limbe area and the trunk roads, as well as provide bypass functions for the crowded roads:
Mthandizi-Mpingwe (Limbe Bypass), linking the M2 and M3 (3.6 km). Ndirande-Nkolokoti linking Makata to Nkolokoti Road in Blantyre (3 km). Misesa-Soche Hill-Manja in south Source: JICA Study Team Blantyre (4 km). Figure 7.5 Location of Blantyre City Road Improvement Project
7-23 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3) M5: Construction of Blantyre Inner Relief Road (14 km)
(a) Background of the Project Blantyre is the centre of finance and commerce in Malawi, and its second largest city of about 1 million in 2015. MNTMP recommends implementation of this road project for reducing traffic congestion in Blantyre. The cost of this project is estimated at USD 100 million in MNTMP.
(b) Objectives of the Project To reduce through traffic in Blantyre City, and to consequently reduce travel times and transport costs for public transport users and private vehicles To provide better accessibility to Chirimba Industrial Area and a multi-modal dry port to be developed in Chirimba area from Limbe area
(c) Description of the Project The Project is to construct a new 10km two-lane road from M1 along Chileka Road, Chirimba Industrial Area, north-east of Ndirande to M3 in Limbe.
Source: JICA Study Team Figure 7.6 Blantyre Inner Relief Road
4) M17: Construction of Multi-Modal Dry Ports in Blantyre (Limbe or Others) and Lilongwe (Kanengo)
(a) Background and Rationale of the Project As part of the Nacala Corridor, the rail sections between Nacala and Nkaya and between Nkaya and Limbe have been improved. In addition, upgrading from Nkaya to Mchinji through Lilongwe is also committed by a private group.
The existing railway stations have insufficient capacity for loading and unloading of cargos. In Blantyre, there are some private facilities of railway cargo handling for private companies. In Lilongwe, Kanengo Industrial Area has extended rail lines connecting factories. However, there are no public facilities of railway cargo handling in Blantyre and Lilongwe.
In order to attract more cargos to the railway of the Nacala Corridor, it is necessary to integrate truck transport and rail transport. By doing so, it is possible to extend service areas of the railway of the Nacala Corridor. For achieving these purposes, it is necessary to establish public multi-modal dry ports in the areas where economic activities are concentrated, like
7-24 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Blantyre, the economic centre of Southern Region and Lilongwe, the national capital and economic centre of Central Region. Also in response to increasing traffic demand for the Nacala Corridor Railway, it is necessary for Blantyre and Lilongwe to establish multi-modal dry ports for combining rail transport and truck transport.
Establishment and operation of multi-modal dry ports are one of key elements for implementing the proposed growth scenario for promoting Nacala Corridor Development. It enables more economic sectors to conveniently utilise rail transport services in Malawi in relatively lower transport costs than road transport. As a result, Malawi’s economic sectors would generate more traffic demand for the combined rail and truck transport so as to sustain the operation of the long-distance rail transport of the Nacala Corridor.
(b) Objectives of the Project Multi-modal dry ports will be established and operated for the following three purposes:
To efficiently do on-loading and off-loading for connecting rail transport and truck transport To speed up customs clearance procedures To locate freight forwarder businesses for connecting economic sectors and transport businesses (rail transport and truck transport)
(c) Description of the Project In Blantyre and Lilongwe, the Project is to establish multi-modal dry ports with the following functions:
Off-loading and on-loading functions for railway stations Truck parking lots Warehouses for private companies Customs office Freight forwarders’ offices
5) M18: Capacity Development of Government Officers for OSBP Operation
(a) Background and Rationale of the Project At present, there are no OSBPs operating in Malawi, while Zambia has already experienced development and operation of OSBPs with Zimbabwe and Botswana. The establishment of OSBPs is planned at several national borders in Malawi in cooperation with development partners, such as WB and AfDB. These existing projects for establishment of OSBPs include physical development and preparation of regulatory and institutional frameworks in which OSBPs are operational.
To operate the OSBPs, coordination among authorities in two countries is required. It is also necessary to train custom officers for the smooth operation of OSBPs.
The establishment and operation of OSBPs on road corridors is required for trade facilitation, especially regional trade facilitation in the proposed growth scenario for promoting Nacala
7-25 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Corridor Development. Although rail transport of the Nacala Corridor is very effective in promoting the development of the economic sectors targeting regional markets, truck transport on road corridors is also very important to get access to regional markets less than 500 km away.
(b) Objectives of the Project To conduct capacity development for government officers (customs, immigration and quarantine) related to OSBPs for smooth establishment and operation of OSBPs in Malawi
(c) Description of the Project Capacity development will be conducted for related institutions (customs, immigration and health) to install the OSBPs as follows:
To enhance capacity of customs officers including the basic understanding of objectives of developing and operation of OSBPs, by emphasising the importance of the operation of a customs union To enhance capacity of immigration officers and health officers for the efficiency of the border crossing of goods and people
The Project is to train a wide range of government officers related to OSBPs, not only from operating officers but also managers and directors. The Project is to also emphasise the changes of mind set of government officers related to OSBPs by visiting operational OSBPs in Zambia.
6) M42: Improvement of Electricity Supply for Industrial Areas in Lilongwe and Blantyre
(a) Background and Rationale of the Project The upgraded railway and roads of the Nacala Corridor will create a better business environment not only to agricultural sector but also to agro-processing industries, due to reduced long-distance transport costs and time, as well as to reduced prices of fertiliser and fuel. According to the proposed growth scenario for promoting Nacala Corridor Development, this enhanced business environment would create development potential for the economic sectors targeting regional markets.
In order to take advantage of this enhanced business environment, it is necessary to improve other economic infrastructures rather than transport infrastructures. One of the priority economic infrastructures is electricity supply in urban areas, especially for industrial areas. This effort at economic sector development would, in turn, generate traffic demand to sustain the upgraded transport infrastructure of Nacala Corridor.
(b) Objectives of the Project To stabilise electricity supply to industrial areas in Malawi by rehabilitation and construction of substations
7-26 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(c) Description of the Project In order to improve the electricity supply in Lilongwe and Blantyre, construction of new substations and rehabilitation of existing substations in the industrial areas of Lilongwe and Blantyre are to be implemented.
To conduct rehabilitation and upgrading the existing substations which supply electricity to Kanengo in Lilongwe To construct new substations, and to rehabilitate and upgrade the existing substations which supply electricity to Limbe/Chirimba areas in Blantyre
7.3.2 Promotion of Economic Sectors Along Nacala Corridor
(1) Zambia
1) Z31 : Promotion of Export Oriented Agriculture and Livestock Development Targeting Small Scale Farmers in Eastern Province
(a) Background and Rationale of the Project By improvement of the Nacala Corridor (combined railway and road), the price of fertiliser is expected to be lower than now. There is also a possibility to reduce transportation costs to Malawi, Mozambique, and other countries in the regional markets such as Kenya and Ethiopia through Nacala Port.
Eastern Province holds the largest number of small-scale farmers in the country. This province is an agricultural production area. But its growth is stagnant due to the decrease of the tobacco industry, etc. Therefore, development of the Nacala Corridor is an opportunity to redevelop agriculture in this region.
(b) Objectives of the Project To improve the crop production for export by small scale farmers who are the majority in Eastern Province, to strengthen cooperation among those agricultural producers, markets, traders and processing industry operators, and to promote agribusiness development targeting small scale farmers in this region. The necessary capacity building of the relevant public agencies shall be carried out.
(c) Description of the Project In order to expand the production and marketing of maize and soya bean by small farmers, the following three measures are examined. ‐ Introduce the Zambia Commodity Exchange (ZAMACE) to small scale farmers’ cooperatives in order to strengthen the organisations through co-marketing with them. ‐ Collaborate with existing cotton and tobacco companies, in order to establish assembling systems of maize and soya bean produced by the out-growers. The products will be purchased by the companies, other market platforms such as ZAMACE and milling/processing plants.
7-27 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
‐ Cooperate with the support activities for small scale farmer by COMACO and CEEC for example. It aims to promote improvement of production by their activities and to make a co-shipment system of agricultural products through this network. It also promotes collaboration with market platforms such as ZAMACE or processing companies. To promote collaboration between agricultural producers/cooperatives and oil companies located in Eastern Province or Lusaka, poultry producers, and warehouse traders through interventions of the public institutions. To promote the raising of poultry or small ruminants as self-savings of farmers who find it difficult to access finances, and to formulate their market in Eastern Province through the introduction of qualified varieties and guidance of a breeding regime.
2) Z32: Study on Farm Block Development Models with Special Consideration for Small Scale Farmers
(a) Background and Rationale of Project The GOZ has a policy and programme for setting up Farm Blocks all over the country to archive economic diversification and growth, national food security and poverty reduction through promoting commercial agriculture production by the private sector. However, its implementation has not progressed as planned at this moment, as a result of delayed infrastructure development by the government. In particular, Farm Blocks in remote areas have not been developed because they are less attractive for private operators to invest and have no incentive to proceed infrastructure development.
The development of Farm Blocks should bring benefits not only to the core investors and migrants from outside who will work in the Farm Blocks, but also the small scale farmers who live in and around Farm Blocks. Moreover, it must prevent the occurrence of any negative impacts on the local communities and inhabitants by the investment and operation of the business. Necessary actions to maintain such principals for the investment should be included in the programme of Farm Block development.
The existing Farm Block plans have accommodated operators and large-scale farmers whose large-scale farming operations are expected to have a good impact on local economies and agriculture. However, in many cases, such large scale farmers have weak linkage with the surrounding small-scale farmers in commodity trading and procurement of chemical inputs, as well as in out-grower relationships. In addition, the out-grower model implemented by various kinds of agribusiness company with small scale farmers is currently still under development. Therefore, an appropriate working model for collaboration between operators and small scale farmers in the out-grower scheme or other relationships is required for sound development of Farm Blocks.
The proposed growth scenario for promoting Nacala Corridor Development emphasised the possibility and importance of exporting agricultural products to regional markets by taking advantage of the upgraded transport infrastructure of the Nacala Corridor and also by revitalising the railway utilisation of other corridors. In this sense, in Zambia, it needs to
7-28 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
expand the production for export targeting regional markets. The expansion of the production and export through the promotion of large-scale agriculture would depend on the progress of Farm Blocks. Therefore, it is important to improve the model of Farm Block development which pays attention to the small scale farmers in the region, and processes by involving them in the production activities.
(b) Objectives of the Project To improve the Farm Block development model by conducting a study covering various issues faced by the Farm Block Programme that is slow in implementation because of delayed infrastructure development, and by attracting private investment for promoting export to regional markets To improve the Farm Block development model by clarifying necessary considerations for small scale farmers and collaboration with them in production activities.
To prepare a Master Plan on a specific Farm Block, including the division of roles among the government, operators and other stakeholders related to the Farm Block
(c) Description of the Project To achieve the first objective mentioned above, the project will conduct a study on the improvement of Farm Block development covering the following points.
Clarification of role sharing between the government and private sector in infrastructure development, and review of the feasibility of the project Examination of the relationship between the private sectors’ burden and incentive to promote the investment Examination of implementation principles and guidelines including required environmental and social considerations and explanation to local small scale farmers for example, which are necessary during the implementation of the programme Consideration on a potential managing structure to implement the principles and guidelines above Study on a cooperation method between large scale farms and small scale farmers, which can be incorporated into Farm Block development Consideration of market access of the crops produced by large-scale farms located in the Farm Block and by surrounding small-scale farmers (survey on convenience of export procedures), Proposition of a new model (improved model) of Farm Block development from a comprehensive point of view Examination of methods for revitalising existing Farm Blocks
To achieve the second objective, based on the improved model of Farm Block development, a master plan for Farm Block development in a particular area will be formulated for a pilot project. However, if a core operator is not yet decided on the specific Farm Block, it is difficult to decide cultivated crops and the Master Plan would become at the outline design level.
7-29 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
3) Z39: Export Strategy Formulation Study for Zambia
(a) Background and Rationale of the Project The 7NDP emphasised the importance of export-oriented industries, such as export-oriented agriculture and mining. However, there is no clear strategy or direction to promote export. There are conflicting policies and practices that work as barriers to export promotion such as restrictive policies on the export of maize, wheat, sugar, cement, etc.
Zambia is a member of SADC, COMESA, and COMESA-EAC-SADC Tripartite Agreement which aim to promote regional trade for regional economic integration. The majority of non-traditional exports from Zambia, such as non-copper mining products, and maize and other agricultural products, are destined to the member states of SADC and COMESA. Promoting trade with the member states of SADC and COMESA will contribute to diversification of the economy by expanding non-traditional export. Thus, this project aims to formulate a country-wide export strategy for export promotion paying attention to both of regional markets and outside regional markets (overseas markets).
The proposed growth scenario for Zambia identified the following potential products and economic sectors which could target regional market:
Maize Soya bean Wheat Cotton Edible oil Sugar Bovine Meat Small Ruminants (Goat/ Sheep) Poultry Soaps and synthetic preparations The upgrading of combined rail and truck transport of the Nacala Corridor can encourage Zambia’s economic sectors to make an important shift to the expansion of production and export targeting regional markets (both inland neighbouring countries and coastal countries). The upgraded transport functions of the Nacala Corridor could reduce the prices of fertiliser and fuel in Zambia, so that Zambia’s economic sectors could receive benefits from the development of the Nacala Corridor for expanding the production and export.
(b) Objectives of the Project The objective of the Project is to formulate an export strategy for Zambia for the following purposes:
To identify export-oriented commodities and products, To develop country-wide export strategies, To remove various export barriers, and To establish consistent and integrated institutional frameworks for promotion of export.
7-30 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(c) Description of the Project The Project is to conduct a study covering the following four points:
To identify and develop export-oriented products and commodities ‐ To identify potential export-oriented products and commodities in agricultural, agri-business, mining, and manufacturing sectors with targeted markets of each of the commodities and products, by examining the competitiveness of those goods and advantages in proximity and transport cost, and other factors. The export-oriented products and commodities include both currently available and unavailable goods in Zambia, but with a potential to be produced in the country. The targeted markets of the goods could be different in the short-term and long-term. ‐ To review restrictive tariff and non-tariff barriers working against exports such as export bans and licensing requirements for export, measures to protect domestic markets that result in the distortion of prices, border management, customs procedure, etc., in Zambia and export targeted countries. Especially, several restrictive measures taken on export of agriculture and agri-processing products from the perspective of national food security are reviewed and an alternative mechanism will be examined.
To develop country-wide export strategies for promotion of export ‐ To develop export strategies for export promotion of the identified products in the short-term and long-term.
To develop an action plan to be taken to implement the export strategies, including projects and programmes ‐ To develop an action plan consisting of projects and programmes to be implemented. The projects and programmes may cover standardisation and quality control, improvement of business and investment environment, border management and export procedures, infrastructure development, capacity building, law and legal framework, etc.
To propose an integrated institutional framework for export promotion ‐ To propose a streamlined, integrated institutional framework for export promotion by modifying conflicting and restrictive rules and regulations for the implementation of the export strategies and action plan. This institutional framework should also work for regional economic integration.
(2) Malawi
1) M27: Groundnut Production Revitalisation with Special Attention to Aflatoxin Control
(a) Background and Rationale of the Project In 2012, the GOM conducted a study to understand the sanitary and phytosanitary (SPS) issues which become causes of limiting export opportunities for the country, with support of USAID. Improvement of aflatoxin mitigation, management and control for groundnuts was
7-31 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
identified as one of the top four issues that the country needed to address for the export growth2.
Malawi used to be one of the largest exporters of groundnuts in SADC and COMESA. However, due to the aflatoxin contamination, Malawi is not allowed to export to strictly regulated countries regarding aflatoxin, such as the EU and South Africa. At present, groundnuts produced in Malawi are exported to countries with lax regulation on aflatoxin. Due to the aflatoxin problems, low purchasing prices of groundnuts are prevalent, resulting in the decrease of groundnut production.
Moreover, in Malawi, it is said that the 60% of groundnuts sold in shops and supermarkets were found to have aflatoxin levels exceeding those considered safe for human consumption3. In the future, along with growing consciousness of food quality and people’s health, it may be highly probable that the strict regulation would be applied to both export and domestic markets.
Although Malawi does not have an exact policy for aflatoxin control, in 2013, the MAPAC was proposed for further consultations with relevant actors/stakeholders. The MAPAC suggested the road map as follows.
i) Immediate Steps
Component 1 – Mainstreaming (Integration) good practices and technologies into the key value chain
1.1 Assessment and Research 1.2 Strengthening supply-chain coordination for mainstreaming practices/ technologies
Component 2 – Testing, accreditation and policies Component 3 – Public awareness, advocacy and consumer education
Based on the MAPAC, the government and development partners in Malawi are actively engaging with groundnut farmers to reduce aflatoxin throughout the value chain. Interventions has been carried out, including farmers’ training on soil management, planting, applying of biological control4, post-harvest processing and consumer awareness campaigns to increase the demand for low-aflatoxin groundnuts5.
At this moment, since transport infrastructure of the Nacala Corridor has been upgraded and export opportunities are increasing, there would be a larger chance for the export expansion of the crops with advantages in their production in Malawi. Groundnuts have a large potential to be produced and exported if aflatoxin is properly controlled. Therefore, in order to establish
2 Malawi Programme for Aflatoxin Control (MAPAC), September 2013 3 IFPRI MASSP Policy Note 21, April 2015 4 https://www.times.mw/saving-malawis-maize-groundnuts-from-aflatoxins/ 5 IFPRI MASSP Policy Note 21, April 2015
7-32 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
the supply-chain of groundnuts for export, a strategy should be prepared based on the facts confirmed and technologies developed in the previous activities.
(b) Objectives of the Project The strengthening of a supply chain for the production and export of groundnuts with aflatoxin control is essential. The Project aims to propose a strategy to build the supply chain from production, storage, distribution of groundnuts, until export. In order to establish the supply chain and recover the production of groundnuts by small scale farmers, interests of all stakeholders in the chain should be considered and also aligned.
(c) Description of the Project The Project is to start with the formulation of a proper implementation structure as follows:
Conducting stakeholder analysis regards to the aflatoxin control and export promotion with related ministries, research institutes, development partners, NGOs, business entities and other stakeholders in accordance with its cross-cutting characteristics. ‐ Examine supply chain models for aflatoxin control for export of groundnuts ‐ Review improved practices for aflatoxin control in every stage of the supply chain, such as production, storage in the field, distribution, storage in warehouse, testing and shipping. ‐ Compare the practices from viewpoints of quality, confidence, cost-effective, risk etc. ‐ Prepare a draft model to establish the supply chain with aflatoxin control and to be tested in the next stage
Conducting trial shipping by applying the recommended practices ‐ Production of groundnuts Organise farmers’ groups or cooperatives to participate in the trial for production and collective shipping of groundnuts. Disseminate the improved cultivation methods of groundnuts for aflatoxin control. Discuss and negotiate with traders how to handle the low-aflatoxin products including negotiation about price premier.
‐ Distribution of groundnuts Conduct the trial for the improved methods of collection and storage of groundnuts with considering aflatoxin control and applying a traceable mechanism for export Discuss about the improved methods with the stakeholders in the trade and distribution sector for groundnuts, including verification of the export promotion incentives to expand the export to the countries with the strict regulations on groundnut import.
‐ Enhancement of testing/accreditation for groundnuts Compare the current testing and improved methods
7-33 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Diffuse the simple method developed in the Project
Preparing a guideline for export of groundnuts with consideration on aflatoxin control
Conducting awareness campaigns Implementation of campaigns for consumers, producers, trader and distributors
2) M30: Improvement of Market Access for Small-Scale Rice Farmers
(a) Background and Rationale of the Project As described in 6.8, rice has a high potential for Malawi as an export crop due to high demands in the surrounding counties. Moreover, according to the National Irrigation Master Plan in Malawi, new irrigation schemes are planned to develop about 40,000 - 70,000 ha, and financial commitments on the irrigation schemes are progressing well. As a result, the rice production in Malawi shall be increased.
At present, a license is required for rice export, which means the restriction on rice export by the government. However, if the domestic rice production will increase, rice export can be promoted, especially to regional markets by taking advantage of the upgraded transport infrastructure of the Nacala Corridor.
On the other hand, a rice value chain is not yet established in Malawi. Currently, rice is produced by small scale farmers, most of whom do not have access to potential viable markets. Therefore, they rely on seasonal vendors. The farmers neither have the price bargaining power nor storage capacity, and as a result, they have no choice but to sell it at a cheap price. Also, such small-scale sales result in high cost of distribution, which in turn leads to decline of price competitiveness of Malawi’s rice.
Therefore, it is extremely important as an activity towards export of rice in Malawi, to establish a rice value chain and an efficient rice distribution system together with increase in rice production in Malawi. In addition, it is also necessary to establish a production system of brand rice with high market demand. By distributing more profits to the farmers through such activities, incentives for improving productivity of small scale farmers should be created together with rice export promotion.
(b) Objectives of the Project Provide information to rice-producing farmers to improve market access in nationwide irrigation schemes for rice production. Through strengthening linkages between farmers and distribution systems, establishing a sustainable rice value chain will be encouraged.
Disseminate information and opportunities as fairly as possible to the groups participating in all the irrigation schemes operating in Malawi and support the growth of the potential organisations by using the private sector’s vitality.
(c) Description of the Project The Project is to cover the following tasks:
7-34 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
To improve access to markets for small-scale rice farmers (realise co-shipment) To introduce the use of Commodity Exchange such as ACE or AHCX (also introducing transportation services, production assistance and storage scheme provided by AHCX in cooperation with NASFAM) as a possible measure for co-shipment among cooperatives or small groups of farmers in existing or new irrigation schemes for rice production. As a pilot activity, under cooperation with private enterprises (principally a trading or processing company), to conduct several training sessions for producers’ organizations, such as corporate training (basic capacity development such as accounting, management, etc., especially for young people), lending and contract system. This outcome is compiled in a manual.
To do branding for promotion of rice exports from Malawi To strengthen the production system of brand seeds. To disseminate the method on cultivation and storage at the field level for establishing the brand. To support creation of a value chain of the brand varieties through consultation with vendors/distributors.
To improve the production of rice under the irrigation scheme as pilot activity To introduce the improved practices for rice production in the scheme. To rehabilitate irrigation scheme in order to increase the functionality of the scheme for effective water management (or may develop a new scheme). To prepare an extension kit for rice production and distribute it for irrigation scheme managers and extension workers.
7-35 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
Appendix for Chapter 7: Points to be Considered for Farming Plan
(1) Case 1- Export-Oriented Agriculture for Small Scale Farmers in Eastern Province, Zambia
1) Location of Markets and Production Capacity
Maize, soya beans and poultry farming are recommended in this project due to the possibility of expansion of regional markets. Thus, it is indispensable to estimate the capacity of production thoroughly and decide the quantity and season to be shipped for each product.
2) Identification of Production/Processing Sites
Those recommended products can be grown in Eastern Province due to ecological conditions, but it is necessary to check all natural conditions such as temperature, land form, water capacity etc., specifically, and to choose suitable land and location for cultivation
3) Technical Aspects
According to the requirements of targeted markets, varieties of inputs, appropriate time and techniques for production should be well examined and applied. Technical assistance regardless from public or private organisations must be checked and utilised to improve productivity, especially for small scale farmers.
4) Agricultural Support System on Agriculture Production and Agribusiness
It is possible to involve or collaborate with governmental support such as FISP, FARM BLOCK, etc. and other extension services by a farmers’ union, NGOs or other projects.
5) Social- Environmental Issues
It is indispensable to consider environmental friendly development both of agriculture production and agribusiness since Eastern Province has national parks, forest reserves and game management areas where wild species are living. The conservation agriculture should be practised near such reserves.
6) Protection of Rights of Small Scale Farmers and Rural Communities
In order to prevent the programme from adversely affecting small scale farmers, it is necessary to develop and appropriately enforce a measure to protect the rights of small scale farmers and rural communities, and to raise awareness of the farmers and enterprises on those rights.
7) Other Risks
Other risks such as climate change, bankruptcy of traders, processing companies and financial institutions, vacancy of public extension officers which small scale farmers rely on should also be considered.
7-36 Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report
(2) Case 2- Rice Production in Irrigated Land in Malawi
1) Location of Markets and Production Capacity
It is indispensable to estimate the market capacity for rice thoroughly and decide the quantity of the production and season to ship rice and other products which can be combined with rice. The production season should be adjusted to marketability if water control can be done.
2) Identification of Production/Processing Sites
Rice is probably grown in the irrigation schemes due to the ecological condition, but it is necessary to check all natural conditions such as temperature, land form, water capacity etc. specifically, and to choose suitable land and location for production for selected seed varieties, cropping season and techniques and technology to be applied (see below)
3) Technical Aspects
According to the requirements of targeted markets, varieties of inputs, appropriate time and techniques for production should be well examined and applied. Technical assistance regardless of public or private organisations must be checked and utilised to improve productivity especially for small scale farmers.
4) Agricultural Supporting Systems on Agriculture Production and Agribusiness
It is possible to involve or to collaborate with governmental support such as FISP, extension offices etc. and other extension services by FUN, NASFAM, NGOs or other projects.
5) Social-Environmental Issues
Social and environmental issues should be considered when irrigation schemes are developed. After starting rice production in the developed schemes, these issues need to be kept under consideration because new issues can emerge such as conflict between beneficiaries and non-beneficiaries, degradation soil and effect to environment nearby etc.
6) Other Risks
Other risks such as climate change, bankruptcy of traders, processing companies, financial institutions, vacancy of public extension officers which small scale farmers rely on should also be considered.
7-37
ANNEX : Records of the Seminars
1． Summary of the Seminars
（1） Seminar in Johannesburg Date and time : On 27 November 2017, PM 1 :00 to PM3:00 Place : Meeting room in JETRO Johannesburg Number of Participants : 37 in total (mainly from Japanese Entities in Johannesburg） Agenda: ① Opening remarks by JICA South Africa Office ② Presentation on Development Potential, Scenarios, and Necessary Actions for Development of Nacala Corridor and Region ③ Questions and Answers ④ Wrap up
（2） Seminar in Lusaka Date and time : 1st of December 2017, AM 9:00 to PM 4:00 Place : Southern Sun Ridgeway Hotel（Lusaka） Number of Participants : 63 in total（mainly from Governmental Officials of Zambia and Malawi, development partners） Agenda ; ① Opening remarks by MOTC of Zambia ② Presentation on Development Potential, Scenarios, and Necessary Actions for Development of Nacala Corridor and Region ③ Presentation of the APIEX of Mozambique ④ Questions and Answers ⑤ Group Discussion i. Is the proposed growth scenario appropriate? The advantage of the Nacala Corridor is the upgraded railway and its improved operation. In the results, the economic sectors could benefit from the reduced costs of the transport, and the reduced price of fertilizers and fuels. ii. How can economic sectors utilize advantages or good impacts of Nacala Transport Corridor? iii. Are the proposed priority projects for economic sectors and the same related to transport enough? iv. Are there any good ways to collaborate among three countries for the Nacala Corridor Development? ⑥ Closing Remarks by MOTC of Zambia ⑦ Closing Remarks by Representative of MOTPW of Malawi
A-1 2． Record of the Johannesburg Seminar
2.1 Participants of the Johannesburg Seminar
No. Company Name (English) Position Participant Name Japan Desk Head for Sub-Saharan Africa 1 Citibank N.A. South Africa Branch ISHII, Hideyo (SSA) 2 The Bank of Tokyo-Mitsubishi UFJ. Ltd. Managing Director CHIKAOKA, Yuichi 3 DBSA TICAD Advisor TOKUORI, Tomomi 4 DBSA Business Analysist WILLEMSE, Tobie 5 DBSA Water Engineer Manuel 6 DBSA Manager PAREKH, D 7 DBSA Program Manager TUNHUMA, Farai 8 FUJIFILM South Africa (Pty) Ltd. Managing Director HATA, Takeo 9 Hazama Ando Corporation Africa office Admin.&Finance Mgr GOPAUL, Julian 10 Hazama Ando Corporation Africa Office KOMORI, Yoshio 11 Marubeni Corporation UNZAI, Shin Executive Assistant to Deputy Regional CEO, Europe & Africa (Africa) 12 Mitsubishi Corporation YOSHIDA, Tetsuhiro General Manager- Regional Strategy & Business Development Johannesburg Branch Mitsubishi Electric Europe B.V. South Africa 13 Deputy General Manager AOKI, Daisuke Branch (African Representative Office) Mitsubishi Electric Europe B.V. South Africa 14 NISHIYAMA, Hidetoshi Branch (African Representative Office) 15 Mitsui & Co. Europe Plc, Johannesburg Branch MINAMI, Katsunori 16 Mitsui & Co. Europe Plc, Johannesburg Branch NARISAWA, Yuri 17 Mizuho Bank Chief Representative OIKAWA, Ryohei 18 Mizuho Bank Vergus 19 NEC Africa Pty Ltd KOIDE, Yosuke Infrastructure Advisor, Regional Integration & 20 NEPAD TACHIBANA, Eisuke Trade Division 21 NEPAD Business Foundation CEO CHEN, Lynette 22 Nippon Yusen Kabushiki Kaisha YAMAMOTO, Yuji 23 SMEC Business Development Manager BHAGA, Dinesh 24 SMEC Regional Manager, Gauteng South MCKUNE, Andrew General Manager Urban and Social 25 SMEC DUKE, Dave Development, Africa Division Sompo Japan Nipponkoa Insurance Inc. 26 Johannesburg Representative Office WASHIBE, Hidenori Europe & South America Regional Headquarters 27 Sumitomo Corporation Africa KAWABATA, Tatetoshi Risk Executive, Risk Management, Legal, 28 Sumitomo Corporation Africa Corporate Planning & Business Development SCHLOSSER, Anne-Marie Division Tokio Marine & Nichido Fire Insurance Co Ltd, 29 NOMURA, Yujin Johannesburg office 30 Toshiba Africa SHIMADA, Iwasuke JETRO (Japan External Trade Organization) 31 Director TAKAHASHI, Fumitoi Johannesburg JETRO (Japan External Trade Organization) 32 Executive Director NEMOTO Johannesburg 33 JICA South Africa Office Senior Representative OHIMA, Kensuke 34 Survey Team Team Leader SASAKI Hidekyuki 35 Survey Team member MUZUNO Satoshi 36 Survey Team member KOBAYASHI Hisako 37 Survey Team member HIROSHIGE Hideki
A-2 2.2 Records of the Questions and Answers in the Johannesburg Seminar
Questions Answers （1）Assumptions of the Utilization of Nacala Corridor ① Is it expected to use the Nacala Corridor for transportation The Nacala Corridor will be used for exporting the copper in of the copper, which is major export commodity of Zambia? future. However, unlike high-grade coal in Tete Province, the copper in Zambia does not have enough economic power to build a rail line by itself due to its limited production volume. ② Is the estimated transport cost for each corridor for inbound It is average transport cost for outbound. The transport costs of cargo or outbound? the corridors shown are average cost because the cost is varies in the seasons. It was estimated with considering the data in the National Transport Master Plans in Zambia and Malawi. ③ Are they matched that the future cargo demand forecasts They are not compared at this moment. It might be need to used for the Nacala Port development and the future cargo review in the future. demand assumed in this survey? (2) Priority Projects ① Did you decide order of priority among priority projects? The order of priority on the priority projects was not examined. It is expected that the corridor development will be initiated by the implementation of the priority projects as much as possible. ② Did you study about building value chain across countries The study of the value chain needs to be left to further study. for promotion of the economic sectors target to the regional The opportunity of the manufacturing industries is in Zambia, markets? and as a result of the development of the Nacala transportation corridor, it is conceivable that processing of raw materials transported from neighbouring countries shall be promoted in Zambia. (3) OSBP ① Why the priority projects regard the OSBP in Zambia and The OSBP is required for road corridors to improve the access same in Malawi is difference? to the regional markets. In Zambia, OSBP has been operating by support of the development partners. Therefore, the priority project aims to increase the number of OSBPs for operation. On the other hand, there is no OSBP actually working in Malawi, though the preparation of its installation is undertaken by the development partner. Therefore, the proposed project aims to train the government officials regarding mechanism, purpose and is operation of the OSBP in general. ② What is current status of support for the OSBP at We are told that AfDB and JICA do not commit development of Chiponde-Mandimba border by the development partners? the OSBP.
A-3 3． Record of the Lusaka Seminar 3.1 Participants List of the Lusaka Seminar
1. Zambia Partners Acc. No. Organization Position Name No. Ministry of Commerce, Trade and Acting Principal Planner Humfrey Kaunda 1 1 Industry 2 2 Ministry of Energy Energy Economist Jeff Chanda 3 3 Energy Officer Misheck M Mubuyaeta 4 4 Principal Economist Joseph Chanda 5 5 Ministry of Finance Senior Economist Oscar Shitima Ministry of Housing and Infrastructure Senior Planner Kambaila Munkoni 6 6 Development 7 7 Ministry of Mines (GSD) Geologist Chellah Muswilwa 8 8 Ministry of National Development Planner Alick Mulao Mushe 9 9 Ministry of Tourism Planner Lucas Zulu 10 10 Ministry of Transport and Senior Planner Sydney Tembo 11 11 Communications Chief Planner Irene B.M Tembo 12 12 Director Peter Simwanza 13 13 Deputy Director Barry R kaambwa 14 14 Human Resource Manager Mutswani Silombe 15 15 Director of Transport Nicholas Chikwenya 16 16 Secretary Mercy Tembo 17 17 Secretary Lenny M Shachele 18 18 Road Development Agency Technical Assistant Pangany Fredy 19 19 Assistant Manager - Planning Nonde Musawa 20 20 Road Transport and Safety Agency Legal Officer Prosecutions Peter Mulyata 21 21 (RTSA) Anthony Chewe 22 22 ICT Security Officer Lwindi Simunka 23 23 Zambia Railway Acting Regional Manager Kingfred Chanda 24 24 Zambia Revenue Authority Senior Collector Mukuka M Sichula Zambia Institute for Policy Analysis Research Fellow Nakubyana Mungomba 25 25 and Research (ZIPAR)
2. Malawi Partners No. No. Organization Position Name Ministry of Transport and Public Director of Railway Services MAGWEDE Geoffrey Francis 1 26 Works 2 27 Director of Road MPHONDA Kelvin Ngwali 3 28 Economist ZGAMBO Atusaye 4 29 Economist CHIMUNTHU-BANDA Takondwa Ministry of Agriculture, Irrigation and Director of DAPs NAMAONA Alex Austin Yasini 5 30 Water Development 6 31 Chief Irrigation Officer MWALABU Charles Gundani Ministry of Industry, Trade and Dept. of Trade MUSONZO Charity Priscilla 7 32 Tourism Deputy Director of Trade Dept. of Industry CHIMPOKOSERA GladysThamandani 8 33 Chief Industrial Development Officer Malawi Investment & Trade Center Planning and Research Manager NAMARIKA Bisa 9 34 (MITC) Malawi Confederation of Chambers of President (Chairperson) CHOKOTHO Kumbutso Karl 10 35 Commerce and Industry (MCCCI) 11 36 CEAR Managing Director CHIMWAZA Hendry Kurtz Andrew 12 37 Marketing & Commercial Manager Kennedy Kweran 13 38 Road Authority Director of Construction KADANGWE Samuel Clearing and Forwarding Agents Chairperson BANDAWE Everson Dee 14 39 Association of Malawi (CAFAAM) 15 40 Malawi Revenue Authority Station Manager in Mchinji Border PIKANI Steven
3. Mozambique Partners No. No. Organization Position Name 1 41 APIEX (Agency for Investment and Director General Lourenço Sebastião Sambo 2 42 Export Promotion) Dinis Caetano Lissave
A-4
4. Development Partners No. No. Organization Position Name 1 43 Africa Development Bank The Country Representative Richerd Malinga 2 44 World Bank The Country Director Justin Runji
5. Japanese Embassy and JICA No. No. Organization Position Name 1 45 Embassy of Japan First Secretary Masahide Suzuki 2 46 JICA Zambia Office Resident Representative Junichi HANAI 3 47 JICA Zambia Office Assistant Resident Representative Takashi HANSAKI 4 48 JICA Zambia Office Mwape Kapumpa 5 49 JICA Zambia Office Project Formulation Advisor Mami Katsuya 6 50 JICA Malawi Office Reiko MATSUI 7 51 JICA Malawi Office Godfrey KAPALAMULA 8 52 JICA Mozambique Office Yuichi MATSUSHITA 9 53 JICA Zambia Office Assistant Resident Representative Yoji MATUI 10 54 JICA Expert Advisor to Ministry of Agriculture Yusuke HANEISHI
6. Press No. No. Organization Position Name 1 55 Daily Nation (Press) Journalist Mailesi Banda
7. Survey Team No. No. Organization Position Name JICA Survey Team Team Leader / Integrated Regional MHideyuki SASAKI 1 56 Development Planning 1 JICA Survey Team Deputy Team Leader / Integrated Kyoko OGAWA Regional Development Planning 2 / 2 57 Agriculture and Agribusiness Planning 2 JICA Survey Team Regional Development (Industrial Hisako KOBAYASHI 3 58 Development) 4 59 JICA Survey Team Transport / Logistics Satoshi MIZUNO JICA Survey Team Regional Development (Rural Hideki HIROSHIGE 5 60 Development) 6 61 JICA Survey Team Assistant Engineer in Malawi N’Goma Dean 7 62 JICA Survey Team Secretary Natasha 8 63 JICA Survey Team Assistant Engineer in Zambia Janems Banda
A-5 3.2 Records of the Questions and Answers in the Lusaka Seminar
(1) Questions and Answers The summary of the questions and answers after the presentations regards Development Potential, Scenarios, and Necessary Actions for Development of Nacala Corridor and Region by the JICA Study Team and also the presentation of the APIEX of Mozambique in the Lusaka seminar on 1st December 2017 is as follows. The answers are given not only from the presenters but also the participants of the seminar mutually.
Questions Answers 1． Framework of the Nacala Corridor Development ① When considering cargo quantity and cargo transport, it is “The Nacala Corridor development agreement” has been signed necessary to consider seasonal fluctuation and peak of between Mozambique and Malawi in 2000, and Zambia joined in transport volume. When transporting agricultural crops, the 2003, then it became a trilateral agreement. Apart from this, “the transportation is concentrated after the post-harvest Nacala Corridor Railway Operation Agreement” also exists as a season, so it is necessary to arrange it well. Are there any sectoral agreement among three countries. agreements in the three countries regarding the operation of railways for the viewpoint? ② Regarding the development of this corridor, the economic Before implement the development of the Moatize / Tete railway development cannot be separated with political stabilities. by the private enterprises, the Government of both Malawi and How is the security on the region considered in the three Mozambique committed to ensure the safety of this corridor for countries? 50 years. 2． Development strategies and Trade Facilitation ① In addition to strategies on development of the It is agreed that Trade Facilitation is necessary as our strategy. infrastructure and economic sectors, a strategy of “Trade In order to proceed with the trade facilitation, it might be Facilitation” is necessary. The trade facilitation also affects necessary to strengthen the production first, so that that the other two strategies. It needs less cost than the development of the infrastructure and economic sectors will be infrastructure and is easy to cooperate involving other necessary first. It is necessary to think about balances among institutions. the strategies rather than just implement the trade facilitation. ② The “Non-tariff barrios” may be mitigated by promotion of It will be explained additionally in the report that the Nacala the Trade Facilitation. Since the laws and regulations differ Corridor development will contribute to regional economic in the three countries, it is necessary to organize them and integration such as COMESA - EAC - SADC 'Tripartite Free to unify them. This leads to the promotion of trade Trade Area' through the development of transportation facilitation, resulting in saving of time and cost. infrastructure. Normally, the corridor development and the regional economic integration are not discussed in same context, but it would be better that the regional institutions will consider to integrate both. 3． Transport Infrastructures ① What kinds of renovations are carried out in the Nacala Port With the JICA’s grant aid, renovation of pavement of containers’ now, and which scale facilities are eventually become? yards and loading facilities, etc. were conducted. After that, with an ODA yen-loan, it will be carried out within three years that 300m expansion of the berth, dredging, expansion of the containers’ yard, etc. ② If modern roads such as T4 (Great East Road from Lusaka Improvement of operation as well as upgrading of railways will to Chipata) were developed, even if Nacala railways were be conducted then the railway operation with intensive
A-6 renovated, road transport would be the main stream. Is not business-mind will be carried out at the Nacala Corridor Railway. it necessary to modernize the ageing railway system? If the road and the railway are used well together, customer service shall be improved. It will be a cause of the competition among the corridors. 4． OSBP ① Reduction of the transportation time is also very important The OSBP at the Mwami / Mchinji border is in the stage of the in addition to equalizing the cost from the viewpoint of the design preparation. Its bidding is expected in the first quarter of competitiveness of the corridor toward export. The OSBP is 2018, and construction of the OSBP is planned within 24 important for the reducing transportation time. So what are months. the current states of the OSBPs development? ② Is the OSBP - Chirundu model fully functioning now, No Answer because it is observed that the OSBP is not functioning well so much? Shall the model be applied to other places as well? ③ Although the discussion of OSBP is mainly related to the No Answer road transportations, there is also similar problem in railway that procedures are complicated and time-consuming for border crossing. What is the efficient operation of border facilities such as OSBP applicable to railways? 5． Economic Sectors ① Malawi is an agriculture based country and aiming for the There might be ideas to include other crops than rice and diversification of agriculture production. Therefore, it might groundnuts which are the subject of priority projects. Your need to target not only rice and groundnuts in the priority comments is highly appreciated in the group work or later. projects but also others. Firstly, it should consider the agricultural products, like cotton, livestock and others in general. ② In Malawi, aflatoxin control programme has been conducted Malawi is advancing aflatoxin countermeasures, and the priority under the AU and the Ministry of Industry, Trade and project will consistent with this. Tourism is its secretariat. The priority project should coordinate with this program.
（2）Comments and Information Sharing 1) Cooperation among three countries toward the success of the Nacala Corridor Development ① The competitiveness will be key for success of the Nacala corridors. In order to strengthen the competitiveness, it is necessary for the three countries to supplement and cooperate rather than compete. ② In considering the Nacala Corridor development, it is also necessary to study what other corridors are carrying out. The secretariat is necessary to actively carry out the Nacala Corridor Development Agreement. We need a governance mechanism for the development of legal systems and the trade facilitation, and we would like to ask for support in the sector from the development partners. 2) Transportation Corridor ① In economic terms, in order for commodity prices to be competitive in the global market, the both inbound and outbound costs should be reduced. ② It is necessary to increase the amount of cargo handled at the Nacala Corridor, including operation volume in
A-7 the Nacala Port. If there is sufficient economic activity and then enough cargoes will run towards Nacala Port, and the number of vessels calling at Nacala Port will also increase. ③ Upgrading the railway is planned as step-wise development, when the Nacala Corridor Region is developed and the railway transportation increased, the whole railway sections from Nacala Port to Chipata will be upgraded for 20.5 tonnes axils standard. The modernization of the railway operation is also carried out, the signalling system has been improved and the tracking system which identifies the position of the train is also introduced by the operators. ④ Various corridor developments are necessary as Zambia, and it is necessary to promote corridor development not only on the Nacala Corridor, but also others like the Walvis Bay corridor besides the North-South Corridor. fin.
A-8 3.3 Result of the Group Discussions in Lusaka Seminar
Questions Results of Discussions （1）Question １： The scenario is acceptable. • What are advantages Other advantages are also expected such as : of Nacala Transport 1．Reduced transit time Corridor? 2．Regional economic growth • Is the proposed growth -SADC, COMESA scenario appropriate? -Tri-partite (Malawi, Mozambique & Zambia) 3．Competitive advantage of exports 4．Socio-Cultural & Political integration 5. Improved access to the sea-port -local and international market access 6. promotion of value chains development along the corridor （2）Question 2： The group identified advantages or good impacts as follows; • How can economic • Wider market for the farmer due to improved transportation services. sectors utilize • Efficiency which will reduce the cost of doing business advantages or good • Reduced transport costs, which lowers the cost of doing business. impacts of Nacala • Job creation through wider market for the farmer. Transport Corridor? • The corridor will give support to the mining sector by providing efficient and improved transportation of minerals. • Industrialization • Fuel transportation cost will reduce due to improved transport. • Increased border trading • It will promote tourism along the corridor. • Improved affluence of the community and more disposable income for the settlers along the line of rail. • Mushrooming of the Financial Institutions. • Improved connectivity. （3） Question 3： 1. Economic Sector • Are the proposed 1) Zambia priority projects for • Promotion of export oriented minerals from Eastern Province and Copperbelt economic sectors 2) Malawi enough? • M30 (Improvement of market access for small-scale rice farmer) to be expanded for others • Are the priority projects like, add cotton, livestock etc. related to transport • Promotion of export oriented minerals from Central and Eastern Regions of Malawi enough? 3) For both countries • Promotion of tourism oriented transport and activities • Facilitation of the transportation of imported motor vehicles 2. Infrastructure Sector 1) Zambia • Prioritize Chipata - Serenje via Petauke railway project • Construction of Inter-Country Trading Centres at border crossings e.g. Mwami/Mchinji as pilot
A-9 • Construction of weigh bridges (incl. for rail) e.g. Chongwe (road), Chipata (road/rail), etc. 2) Malawi • Limbe-Marka railway rehabilitation • One Stop Border Post at Mwami How will rail be incorporated? Integration of ICT systems • Establishment of One Stop Border Post at Nayuchi and Entre-Lagos • Lusaka-Lilongwe broadband interconnector Zambia has already gotten connection to the border 3) Mozambique • Establishment of One Stop Border Posts at Nayuchi and Entre-Lagos • Chanida to the Indian Ocean broadband interconnector • Construction of Warehousing • Construction of Port access road • Marketing and promotion of Nacala Port （4） Question 4： 1．Trade facilitation • Are there any good Installation of OSBP facilities at borders. Clearing should be done in one place which has a ways to collaborate representative from each nation. among three countries Harmonized legal frame work and standard operating procedures. for the Nacala Corridor Standardization of technology. Development? One pay point principle, paying for services from one country should be legal in the other. 2.Coordination Mechanism Implementation of the Nacala Development Corridor Agreement by all the committees Revive the trilateral and improvise Nacala Corridor secretariat from the three countries.
A-10