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Delegation of the European Commission to Swaziland This project is funded by the European Union Delegation of the European Commission to Swaziland Framework Contract Beneficiaries EuropeAid/119860/C/SV/multi Lot N° 2: Transport and Infrastructures Specific Contract No 2007/133128 Identification Mission for an Infrastructure Improvement Programme in the Sugar Sector in Swaziland Draft Final Report October 2007 The contents of this report is the sole responsibility of Parsons Brinckerhoff Consortium and can in no ways be taken to reflect the views of the European Union. This report is prepared solely for the use and benefit of the Contracting Authority. It is the result of an independent review, and neither Parsons Brinckerhoff Consortium, nor the authors accept or assume any responsibility or duty of care to any third party. ECORYS Nederland BV P.O. Box 4175 3006 AD Rotterdam Watermanweg 44 3067 GG Rotterdam The Netherlands T +31 (0)10 453 88 00 F +31 (0)10 453 07 68 E [email protected] W www.ecorys.com Registration no. 24316726 ECORYS Macro & Sector Policies T +31 (0)31 (0)10 453 87 53 F +31 (0)10 452 36 60 DaK/FG95509rap01 Table of contents List of Abbreviations 7 Executive Summary 9 Background 9 Needs Assessment 10 Project costing 11 Prioritization 11 Budgeting 11 Conclusions and Recommendations 12 1 Background 17 1.1 Country Information 17 1.2 European Union and Swaziland 18 2 Transport Infrastructure 21 2.1 Air Transport 21 2.2 Rail Transport 21 2.3 Roads Transport 22 2.4 Roads Department - Ministry of Public Works and Transport 23 3 Review of Government Development Policies 25 3.1 Development of Transport Policy in General 25 3.2 Review of Individual Development Plans 26 3.2.1 The National Development Strategy (NDS) 26 4 Overview of the Sugar Industry 37 4.1 Summary of the Operations of the Sugar Industry 37 4.2 The Impact of EU Price Reforms on a National Level 39 4.3 The Significance of the Smallholder Sugarcane Growers in Swaziland 41 4.3.1 Komati Downstream Development Project (KDDP) and Lower Usuthu Smallholder Irrigation Project (LUSIP) 41 4.4 The Viability of Smallholder Sugarcane Farmers in Swaziland 43 5 Needs Assessment Process 47 5.1 Meeting with Stakeholders 47 5.2 Identification of Projects 48 5.3 Considerations for the Siphofaneni Bypass 49 5.4 Identified Projects 50 5.5 Risk Analysis 51 6 Costing and Prioritization of Projects 53 6.1 Project Costing 53 6.2 Importance of various projects 53 6.3 Ranking of Projects 54 7 Preliminary Economic Analysis 57 7.1 Introduction 57 7.2 Methodology 57 7.2.1 Estimation of Tonnage of Cane Transported 57 7.2.2 Savings in Transport Costs 58 7.3 Results 60 8 Implementation Sequence and Project Budgeting 63 8.1 Sequence of Project Implementation 63 8.2 Budgeting 66 8.3 Budgeting for the projects included in Phase I – 2008 - 2010 68 9 Conclusions and Recommendations 69 Annexes (separate document) Annex 1 project detail sheets Annex 2: Details of cost analysis Annex 3: cane growing data Annex 4: Worksheets for Preliminary Economic Analysis Annex 5: list of persons met Annex 6: list of farmer’s meeting Annex 7: list of documents collected Annex 8: specific terms of reference Annex 9: Additional updated information & action taken report Annex 10: Draft terms of references Annex 11: Project Identification Fiche Annex 12: Action Fiche Annex 13: Technical and Administrative Provisions for Implementation DaK/FG95509rap01 List of Abbreviations AAP Annual Action Programme ADT Average Daily Traffic AMSP Accompanying Measures for Sugar Protocol ARRB Australian Road Research Board CBR California Bearing Ratio CEO chief executive officer C.M.F. Contract Management Framework COPA Conditions of Particular Application CSIR Council for Scientific and Industrial Research, South Africa CSP Country Strategy Paper DBST Double Bituminous Surface Treatment DEC Delegation of the European Commission DPR Detailed Project Report(s) DR District Roads EU European Union EC European Commission ER Expected Results FA Farmers Association GDP Gross Domestic Product GoS Government of Swaziland Ha Hectares HDM Highway Design and Maintenance Model of World Bank IRR Internal Rate of Return IRI International Roughness Index KDDP Komati Downstream Development Project LSDI Lubombo Spatial Development Initiative LUSIP Lower Usuthu Smallholder Irrigation Project MEPD Ministry of Economic Planning and Development MIP Multi-Annual Indicative Programme MOAC Ministry of Agriculture and Cooperatives MoPW&T Ministry of Public Works and Transport MNREE Ministry of Natural Resources, Energy and Environment MOF Ministry of Finance MOHUD Ministry of Housing and Urban Development MPWT Ministry of Public Works and Transport MR Main Roads NAS National Adaptation Strategy NDS National Development Strategy NIP National Indicative Programme NPDP National Physical Development Plan Framework Contractor: Parsons Brinckerhoff Consortium 7 NSA Swaziland National Adaptation Strategy PRSAP Poverty Reduction Strategy and Action Plan RDMU Restructuring and Diversification Management Unit RCMU Road Construction Management Unit RMS Road Management System RSNAC National Airways Corporation RSSC Royal Swaziland Sugar Corporation RPDP Regional Physical Development Plan RTD Road Transportation Department SACU Southern African Customs Union SADC Southern African Development Community SATCC Southern African Transport and Communications Commission SDI Spatial Development Initiative SO Specific Objectives SEA Swaziland Environment Authority SNL Swazi Nation Land SP Sugar Protocol SPS Special Preferential Sugar SSA Swaziland Sugar Association SWADE Swaziland Water and Agriculture Development Enterprise TOR Terms of Reference TRL Transport Research Laboratory, UK TRQ Tariff Rate Quota UNDP United Nations Development Programme VHP Very High Purity Sugar 8 Framework Contractor: Parsons Brinckerhoff Consortium Executive Summary Background The European Union (EU) sugar regime has been reformed with effect from 1st July 2006, with the primary effects being on the reduction of EU guaranteed price (by a cumulative 36% over four years) and less guarantees on the market access volumes. This reform presents a significant adjustment requirement for Sugar Protocol (and Special Preferential Sugar) beneficiary industries and countries. The main effect is with respect to the price obtainable in Europe for sugar sales and the favourable market access preferences that were enjoyed by the beneficiary countries. Swaziland is one of the beneficiaries of the Sugar Protocol arrangement and would be hardest hit by the negative effects of the reform. The EU sugar reforms have far reaching impacts on the socio-economic scenario. In view of this, in April 2006, the Government of Swaziland submitted the National Adaptation Strategy (NAS) to EU Sugar Sector Reform through the EC Delegation in Mbabane. This strategy is a response to the declining performance of the sugar sector and, in particular, sets out mitigation measures against the developments in the sugar industry and in the wider economy. The measures were formulated on the basis of an analysis of the country’s economic and social conditions, and grouped according to their priority of implementation and most appropriate source of funding. The EC Multi-Annual Adaptation Strategy 2006-2013 for Swaziland, elaborated in 2006, on the basis of the Swaziland NAS, covers area such as institutional support, restructuring the provision of social services in the sugar belt, improvement of productivity and efficiency of smallholder sugarcane growers, infrastructure improvement, economic diversification, mainstreaming of cross cutting issues. Whilst the 2006 measures are concentrating only on the institutional requirements for implementing the NAS, through the establishment of a Restructuring and Diversification Management Unit (RDMU), the Multi-Annual Indicative Programme (MIP) 2007-2010, financed under the Development Cooperation Instrument of the European Union (EU) covers almost all the areas which will be funded by different Annual Action Programmes (AAPs). The total allocation will be € 69.895 millions; the phasing of the measures has been indicatively establishes combining NAS priorities and budget availabilities; nevertheless, it may change following the feasibility studies that will be performed at a further stage. One of the measures is the ‘Improvement of transport infrastructure relevant to the sugar industry (AAP 2008 and 2010)’. Framework Contractor: Parsons Brinckerhoff Consortium 9 The EC has specific objectives (SO) for the present MIP and they are: • SO 1 To help improve sugar production and its viability by providing assistance to small-scale sugarcane growers; • SO 2 To identify and make operational and alternative model for providing social services that were previously provided by the sugar industry; • SO 3 To improve transport infrastructures from the production areas to the mills; • SO 4 To support economic diversification in the sugarcane growing areas through crops diversification (research, trials and pilot projects) and the development of Economic Activities. As per the Specific Objective 3 of the MIP, the EC Delegation in Swaziland has engaged the Parsons Brinckerhoff Consortium as consultants to undertake the study ‘Identification Mission for an Infrastructure Improvement Programme in the Sugar Sector’. The Consultants commenced their mission on 11th June 2007. An Inception Report, Needs Assessment Report have already been submitted to the Delegation of the European Commission. This present Draft Final Report deals with the identification process,
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