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Southern Africa: funds will revive Nacala railway. (Countryfile).

Major funding is in place to develop the Nacala Corridor. Hobbs Gama reports from Malawi on an bold initiative to improve southern Africa's transport infrastructure.

Four countries of southern Africa are pooling together their resources to rehabilitate the Nacala railway line, a major link between central southern Africa and the Indian Ocean port. The Nacala Corridor was disrupted for almost two decades after being devastated by the Mozambican civil war that paralysed up to 77km of the line. The infrastructure was left in a shambles, and there were fears of unmarked landmines along the corridor.

The good news is that Nacala Corridor Development Project (NCDP), which seeks to improve links between land-locked Malawi and Zambia to Mozambique, has won financial pledges from Britain, the US and Japan. Britain and Canada are donating $5.6m for repairs to the railway--while the US is leading other donors in food supplies to the region and providing a $22m loan to Mozambique and Malawi through its Overseas Private Investment Corporation (OPIC).

OPIC's President, Peter Watson, described the initiative as "aiming to help the two countries reduce the cost of transporting petroleum and much-needed food, as well as exports, in a project that is expected to restore Mozambique's infrastructure destroyed during the two decades civil war.

Meanwhile, South Africa has joined the partner countries in support of the NCDP, describing it as a way to boost the region's economies by encouraging more economic integration and co-operation, cross-border trade, improved foreign direct investment and local participation in the economic development process.

Investments in sectors such as agro-industry, mining, tourism and other resource-based ventures are set to benefit from the project, and it meets all the objectives of the newly established New Partnership for African Development (NEPAD) agreement. Once completed, the initiative will provide employment to 75% of the people along the corridor.


However, the bad news is that a furious row arose over Malawi's formal decision, last October, to suspend the use of Nacala port and railway for its oil imports. According to Filipe Nhusse of the Mozambique Ports and Railway (CFM) company, the suspension of Malawi's oil imports has been costing CFM between $200,000 and $250,000 a month. The Malawians had not used the port and railway for their oil supplies since last April citing security reasons, although Malawi had continued to use the railway line to transport its primary export commodities, such as tea, tobacco and sugar.

The Malawian decision may be linked to a wave of acts of sabotage on the oil pipeline from Nacala port to bunkers of its state-owned oil company Petromoc. That problem has been resolved recently with the inauguration of a new pipeline, under 24-hour guard.

Meanwhile, some analysts are casting doubt on whether the NCDP project can meet its deadline. The most difficult problem is the removal of landmines which will eat up most of the donor funding. Cereals and other relief food grains are being delayed at the ports while up to 1 3m people in Malawi, Zambia, Mozambique, Angola, Lesotho and Swaziland are threatened with famine. The NDCP donors are mainly motivated by the pressing need to move this food-aid from Mozambican ports to the famine-stricken interior. Can partner countries set aside their squabbles to ensure the project's success?


An International Monetary Fund team was in Banjul in October for a 10 day visit, during which it held the first review of the Poverty Reduction and Growth Facility (PRGF), the institution's concessional facility for low-income countries.

Last July the executive board of the IMF approved a three-year finance arrangement of about $27m for The Gambia. Robin Kibuka, the IMF team leader, said "we are continuing to watch the situation as it develops. There have been a number of issues--inflation picking up moderately, a sharp depreciation in the exchange rate, as well as a lot of expenditure--which have resulted in a large budget deficit. Though there are problems in the economy, there are positive developments in the sense that growth continues to be high, despite the intermittent rains."

Giving some of the background information, the IMF official said the home-grown Poverty Reduction Strategy Paper (PRSP) and Strategy for Poverty Alleviation (SPAII) proposal were prepared and approved by the Gambian government in May, then submitted to the IMF and World Bank Board. The former was subsequently approved before the board discussed the PRSP.

In September, there was the donor round-table in Geneva and $15m was pledged to support the PRSP. "The Gambia has made tremendous strides in terms of preparing a strategy to reduce domestic poverty, formulating a PRGF program to sustain macroeconomic stability, and donors have pledged a lot of resources. So the economy is at a major crossroads", Kibuka asserted.

Ebrima Baldeh
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Author:Gama, Hobbs
Publication:African Business
Date:Dec 1, 2002
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