Making policies work

GREAT insights Magazine

The Maputo Corridor

Regional Integration that Works

December 2012

Mommen, B. 2012. The Maputo Corridor: Regional integration that works. GREAT Insights, Volume 1, Issue 10. December 2012. Maastricht: ECDPM

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In 1996, the governments of Mozambique and South Africa, in a renewal of cooperation and in order to re-establish trade and investment ties and to rebuild their flailing economies launched the Spatial Development Initiative programme. The key objectives were to rehabilitate the key elements of the Maputo Corridor, to maximise investment in the potential of the corridor, to maximise social development and employment opportunities, and to ensure policy and strategy frameworks for sustainable development.

The Maputo Corridor is a transport corridor linking the east coast port of Maputo in Mozambique with the highly industrialised and productive regions of the Gauteng province in South Africa. The key elements of this transport corridor are the N4 toll road, the rail corridor, the Lebombo/Ressano Garcia border post and the port and terminal facilities at the Port of Maputo. Short by African corridor standards, the Maputo corridor is only 590kms by road from Johannesburg, and 581km by rail, but is increasingly strategic in that is presents the shortest route to a port for South African exporters on the corridor and moves a variety of commodities including coal, timber, agricultural produce, granite, chrome, cement, containers, steel, magnetite, sugar, maize, gasoline, pulp, fertiliser and citrus. The Port of Maputo provides the shortest access to the Indian and Far Eastern markets and complements the South African regional port hubs in a multipurpose port of 15 terminals. It is an extremely busy trade corridor, despite its short distance. Trade between South Africa and Mozambique totalled R25,1 billion in 2011 (approximately US$2.96billion with 38% of that trading through the Lebombo/Ressano Garcia border post). Annually a total of 4.6 million people, 730 000 vehicles and 87 000 trucks cross the border into Mozambique at the Lebombo/Ressano Garcia border post. Trade is largely outward bound.

The need for an institutional setup: Maputo Corridor Logistics Initiative

In the absence of an institutional framework, the Maputo Corridor Logistics Initiative (MCLI) was established in 2004 by users, infrastructure investors, cargo owners and service providers looking for logistics solutions on the corridor. At the time, negative perceptions about the Port of Maputo and the corridor were multifarious: there were few shipping lines calling the Port, the economies of scale for cargo to attract shipping lines was very limited, the lack of rail capacity and delays in the rehabilitation of the rail line between Ressano Garcia and Maputo, the limited border post operating hours resulted in severe congestion and delays and increased costs to cargo owners, operational inefficiencies on the corridor and a lack of an institutional framework on the corridor. All of these factors mitigated against a successful and efficient transport and logistics corridor. MCLI was established to address these issues and to unlock these barriers to the movement of cargo and to provide ease of access for cargo moving on the corridor. MCLI is a non-profit membership organisation and currently has 170 members from the three corridor countries of Mozambique, Swaziland and South Africa.

Effective PPPs and railway development

The Maputo Corridor boasts some of the continent’s most effective public private partnerships (PPPs) in infrastructure delivery. The N4 Trans Africa Concession, one of the most successful bilateral road infrastructure PPPs on the continent, has invested R4billion in the first phase of a Build, Operate, and Transfer agreement and will invest another R3billion over the next 20 years. The privately concessioned Maputo Port Development Company has had its initial 15-year concession agreement extended after just 8 years, to 2033. This is indicative of the confidence in the port to bring the necessary returns on investment for investors. Its 20-year master plan will see US$1,7 billion invested in port growth and development to service the demands of the region and a throughput of 48million tons by 2033. To date, just under US$300million has been invested in infrastructure, equipment and training and throughputs in the port have increased from 3 million tons in 2003 to a projected 16 million tons at the end of 2012; 2 billion tons over the initial projections of 12 million tons for 2012.

The rehabilitation of the rail line from Ressano Garcia to Maputo was completed at the end of 2008 with significant investments in excess of US$80million in rail and rolling stock rehabilitation. As with most of Africa, the challenges of rail capacity and services remains a key challenge, but one which is being addressed jointly by the South African and Mozambican rail service providers, Transnet Freight Rail (TFR) and Portos e Caminhos de Ferro de Mozambique (CFM), in a programme which is geared towards ensuring that existing assets are maximised and investment prioritised to ensure that the rail services support port growth. Swaziland Railway has also entered into partnership with TFR to provide complementary services for commodities moving to the port of Maputo.

Lebombo/Ressano Garcia border post: remaining challenges

Commercial relations between the two governments are good at a number of levels. However, the disconnect between the excellent political will at executive level and the capacity for implementation at administrative level is no more evident than in the current status of the border post at Lebombo/Ressano Garcia. As early as 2007, the Heads of State of South Africa and Mozambique signed a bilateral agreement giving a directive for the implementation of a 24-hour One Stop Border Post at Lebombo/Ressano Garcia. This agreement was ratified by the Mozambican parliament in 2008 and only this year passed through the Standing Committee on Finance in the Parliament of South Africa. This process is a precursor to the signing of the bilateral agreement and further delays are inevitable as we draw to the end of the parliamentary programme for 2012.

This five-year delay remains unfathomable and points clearly to the lack of legitimate understanding of the challenges faced daily at the border post by truckers, cargo owners and business people and those in the corridors of decision-making. While the customs modernisation programmes implemented by the South African Revenue Service and the implementation of the Single Electronic Window by the Mozambican customs authority, Alfandegas, have been fundamental to speeding customs clearing processes at the border post, the congestion and delays due to the lack of a 24-hour operation is now at crisis levels. With the port operating 24/7, the backlog of traffic backed up between midnight and 06h00 has far reaching implications for all users of the border post and the cost implications of the delays run into millions of Rands on a daily basis.

This is both inconceivable and unconscionable in a region with significantly high unemployment rates and poverty levels; more especially since there is excellent transport infrastructure is in place. The current border facilities are drastically in need of upgrading and figures show that double (12000 people per day) the intended capacity (6000 people per day) are is crossing through the border post on a daily basis. Between 300 and 400 trucks cleared through the border post on a daily basis. A one stop operation will require innovative solutions to the infrastructure challenge required for the one stop operation and to the complexity of aligning the legislation of the myriad of government agencies operating at on both sides of the border.

Despite the bottlenecks which result from the 24h00 to 06h00 closure, certain commodities are moving by road on the corridor with very efficient turnaround times due to the completion of a truck bypass road in June 2011 which effectively allows a one stop operation for road cargo. This must be extended to passenger and business traffic.

Reviewing the MCLI’s institutional status

The Maputo Corridor is one of Africa’s key success stories in terms of regional integration between the regions of Swaziland, southern Mozambique and the Mpumalanga province. In this case, infrastructure investment has paid huge dividends in supporting the regional integration imperatives of the SADC region. The buoyancy of the regional economy throughout the onset of the economic crisis in 2008/9 is largely as a result of the ability of the corridor to provide access to trade and to the MCLI’s ability to successfully create the interface between the government and the private sector on issues affecting trade and trade efficiencies. A key element of this is the enormous network of readers, which MCLI has accumulated over the years in providing key information to stakeholders on corridor related issues. MCLI’s key functions of facilitation, coordination, integration and information have been crucial to providing users a platform for engagement with service providers and to ensuring that workable solutions are found to the challenges which affect this African logistics corridor.

The institutional structure of MCLI is, however, also currently under review. While the private sector nature of the organisation has been its greatest benefit until now, the lack of a formalised relationship with its government partners is problematic. The initial needs driven strategy must now be moved towards a more long-term approach, which is built around the development needs of the region. It is crucial that the organisation partners with the corridor governments in order to ensure the integration of long term planning and interventions on the corridor. A formalised PPP seems, at this stage, the most difficult option, but the option most likely to succeed in ensuring that the partners remain accountable at every level for the efficiencies on the corridor. The financial sustainability of the organisation has always been problematic, but a formalised PPP would provide a workable platform for introducing a user pay principle on the corridor, which would provide sustainable funding in balance with ensuring the least possible costs on this corridor.

Future prospects at national, regional and continental levels

A significant development in the region is the imminent implementation of amended transit customs regulations in Mozambique. During 2011, MCLI worked closely with the Port of Maputo to address the bottlenecks to transit trade on the corridor. This legislation will be published shortly and by reducing and in some cases, eliminating, the need for bonds and guarantees on transit cargo, will pave the way for increased bidirectional cargo flow on the corridor. Not only is the port of Maputo excellently situated to service transit trade into the SADC region, but the sound infrastructure, on the back of fairly advanced trade facilitation systems and processes make it an attractive option for corridor stakeholders. An increase in backhaul cargo will significantly reduce the costs of transport in the region and will bring economic benefits. This will require significant effort on the part of MCLI to promote this benefit, but the environment is increasingly more favourable for servicing transit trade.

The imminent implementation of the Tripartite Free Trade Area in 2014 and the intention of the Continental Free Trade Area to be operational by 2017, have huge implications for trade facilitation systems and facilities and legislative amendments which facilitate ease of trade and create the enabling environment for trade, are crucial for this corridor to maintain its strategic corridor role.

The Maputo Corridor has enormous opportunities for growth and continues to be a vital catalyst for regional integration and in so doing, continues to contribute to increased trade and investment in the region.

Barbara Mommen is the Chief Executive Officer of the Maputo Corridor Logistics Initiative

This article was published in Great Insights Volume 1, Issue 10 (December 2012)

 

Africa’s Change DynamicsEconomic Transformation and TradeRegional IntegrationMozambique

External authors

Barbara Mommen