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Resource-Based Sustainable Development in the Lower Zambezi Basin

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Resource-Based Sustainable Development in the Lower Zambezi Basin Resource-Based Sustainable Development in the Lower Zambezi Basin A draft for consultation Columbia University June 1, 2011 Vale Columbia Center on Sustainable International Investment A Joint Center of The Earth Institute at Columbia University and Columbia Law School The Vale Columbia Center on Sustainable International Investment seeks to be a leader on issues related to foreign direct investment (FDI) in the global economy, paying special attention to the sustainability dimension of this investment. Its objectives are to analyze important topical policy- oriented issues related to FDI, develop and disseminate practical approaches and solutions, and provide students with a challenging learning environment. Founded in 2006 as the Columbia Program on International Investment, the Center became the Vale Columbia Center on Sustainable International Investment (VCC) in 2008. The Center is a joint center of the Earth Institute and Columbia Law School. It operates with diversified funding from a number of sources, including an operational grant from Vale S.A. The idea for this report was conceived in discussions with Vale, and Vale provided the funding for travel, research and staff time for its production. The report is entirely the independent work of the VCC, based on public information, with no access to confidential documents from companies, the Government of Mozambique, or other any other parties. Draft for consultation- June 2011 2 Vale Columbia Center on Sustainable International Investment A Joint Center of The Earth Institute at Columbia University and Columbia Law School Table of Contents EXECUTIVE SUMMARY.................................................................................................................................... 9 SUMMARY OF RECOMMENDATIONS, BY CHAPTER....................................................................................... 12 INTRODUCTION TO THE LOWER ZAMBEZI BASIN AND THE VCC FIVE-PILLAR FRAMEWORK.......................... 17 AN AREA OF ENORMOUS OPPORTUNITY : THE LOWER ZAMBEZI BASIN ............................................................................. 17 VAST DEVELOPMENT NEEDS THAT CAN BE ADDRESSED BY A RESOURCE -BASED DEVELOPMENT STRATEGY ................................ 18 FIVE -PILLAR FRAMEWORK FOR RESOURCE -BASED SUSTAINABLE DEVELOPMENT ................................................................. 19 METHODOLOGY............................................................................................................................................ 20 A. SENIOR GUIDANCE ...................................................................................................................................... 20 B. CRITERIA FOR OBSERVATIONS AND RECOMMENDATIONS ..................................................................................... 21 C. SOURCES OF INFORMATION .......................................................................................................................... 21 D. WHY THIS REPORT ? WHY THE LOWER ZAMBEZI VALLEY ? .................................................................................. 22 E. NEXT STEPS ............................................................................................................................................... 23 CHAPTER ONE: INTEGRATED RURAL DEVELOPMENT IN THE ZAMBEZI VALLEY.............................................. 24 1. POVERTY ALONG THE BEIRA AND NACALA CORRIDORS ............................................................................................. 25 2. SMALLHOLDER AGRICULTURE : AN ENGINE OF GROWTH AND POVERTY REDUCTION ......................................................... 28 2.1 Scaling-up current and planned support to smallholder agriculture.................................................... 29 2.2 Coordinated investments to unlock small-holder agriculture .............................................................. 30 3. IMPROVING SMALLHOLDER PRODUCTIVITY ............................................................................................................. 31 3.1 Improving access to markets through feeder roads............................................................................. 31 3.2 Improving access to rural finance ........................................................................................................ 32 3.3 Establishment of a Zambezi Valley Agricultural Development Center ................................................. 33 3.3 Increasing access to agricultural inputs ............................................................................................... 34 3.4 Improved soil and land information for agricultural planning and decision-making........................... 35 3.5 Agri-business development along the corridors................................................................................... 36 4. INTEGRATING AGRICULTURAL INVESTMENTS WITH OTHER SECTORS TO REDUCE RURAL POVERTY ....................................... 38 4.1 Integrated approaches to rural development: Millennium Villages..................................................... 38 4.2 Design and implementation of IRDPs in Mozambique......................................................................... 40 4.3 Support for a national IRDP policy support secretariat in Mozambique.............................................. 40 5. PARTNERSHIPS WITH UNIVERSITIES TO DEVELOP CAPACITY IN SUSTAINABLE DEVELOPMENT PRACTICE ................................. 41 6. CONCLUSION AND SUMMARY OF RECOMMENDATIONS ............................................................................................. 42 CHAPTER TWO: LEVERAGING THE MINING INVESTMENTS FOR SUSTAINABLE DEVELOPMENT ..................... 43 1. LEVERAGING THE NATURAL RESOURCE SECTOR FOR INFRASTRUCTURE DEVELOPMENT ..................................................... 45 1.1 The Beira and Nacala corridors: a snapshot of their infrastructure..................................................... 45 1.2 Long-term planning of the corridor and coordination of players......................................................... 48 1.3 Beira corridor/Sena line: a new concessional arrangement and an opportunity for development ..... 50 1.3.1 The Sena line completion is stalled................................................................................................................ 50 1.3.2 Rail concessions and the risk of exclusive access........................................................................................... 51 1.3.3 A new concessional model: multi-user and promoting open access ............................................................. 51 1.3.4 A best practice regulatory framework: 5 principles....................................................................................... 53 1.3.5 Spillover benefits from the completion of the CESUL Energy Project............................................................ 55 1.4 Overcoming the cross-border challenge of the Nacala corridor........................................................... 56 1.4.1 Current regulatory and operational arrangements for the Nacala rail corridor ............................................ 57 1.4.2 Implementing a seamless cross-border framework....................................................................................... 59 1.4.3 Reviving the regional power interconnector along the Nacala corridor ........................................................ 61 1.4.4 Call for connecting the Nacala corridor to the SEACOM and EASSy submarine cables.................................. 63 2. LEVERAGING THE NATURAL RESOURCE SECTOR FOR ECONOMIC DIVERSIFICATION ........................................................... 64 Draft for consultation- June 2011 3 Vale Columbia Center on Sustainable International Investment A Joint Center of The Earth Institute at Columbia University and Columbia Law School 2.1 Necessary industrial policies to unlock the inhibitors of value addition, diversification, and inclusive growth........................................................................................................................................................ 65 2.1.1 Targeting the human resource constraints .................................................................................................... 65 2.1.2 Enabling the business environment ............................................................................................................... 67 2.1.3 Shifting toward a value-chain approach......................................................................................................... 67 2.2 Collaborative approach through a National Linkage Center................................................................ 68 2.2.1 Identifying the right value chains................................................................................................................... 68 2.2.2 Measuring the value addition ........................................................................................................................ 69 2.2.3 Setting up corporate procurement practices................................................................................................. 69 2.2.4 Promoting public-private-funded initiatives .................................................................................................. 70 2.3 Exploring downstream linkages ........................................................................................................... 71 2.3.1 Collaborative approach
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