Investment in Africa’s economic corridors is vital to improving trade efficiency

Investment in Africa’s economic corridors is vital to improving trade efficiency

2021-05-11 08:03:00 PM

Investment in Africa’s economic corridors is vital to improving trade efficiency

High transport costs have been an impediment to Africa’s growth and development for far too long

The planning, design, construction and management of the infrastructure required for efficient and effective transport links falls within the ambit of road agencies across the continent — such as the SA National Roads Agency (Sanral) in SA, ANE in Mozambique or Kenya’s KeNHA. These corridors required building not simply the roads and bridges to carry the goods but also establishing the logistics — regulations and institutions — that would facilitate the movement of goods, people and services.

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More importantly, it requires collaboration, and the AfCFTA places this at the heart of the programme. This has also reignited and catalysed the drive behind establishing more one-stop border posts, which can substantially reduce congestion at border posts when properly planned and implemented. Excessive waiting times have a debilitating effect on trade, supply chains, opportunities for commercial ventures and the economy. 

The primary chain reactions from road agencies’ infrastructure programmes have a far-reaching effect on Africa’s economic recovery, revitalisation and transformation. The extent of job creation and transformation, particularly in providing greater equity for women and youth in the workforce, is substantial.

For example, Sanral has stakeholders as one of its business strategy pillars, concentrating on laying the foundations for economic participation of small businesses and rural actors in the construction and maintenance process. It also has developed strategic partnerships with leading private-sector companies at the apex of the supply chains in which it operates.

The partnerships serve to increase opportunities for funding, equipment and technical support for black-owned contractors. This model can, and is, applied by other agencies. In SA, the construction and engineering sectors’ transformation and BBBEE are paramount, and infrastructure development will enable it.

The development of economic corridors has an extensive history. For example, the Maputo Development Corridor — the first regional application of the concept, linking SA’s highly industrialised Gauteng province, Limpopo and Mpumalanga with Mozambique’s port of Maputo, has its beginnings in the spatial development initiative programme launched back in 1996.

Apart from the rail component, the 590km N4 highway plays a significant role in facilitating market access, building the integrative infrastructure and bringing countries together. SA high commissioner to Mozambique Mandisi Mpahlwa, speaking in 2020 at the trade and investment seminar themed, “Developing Afrocentric solutions and forging partnerships in Mozambique”, said mega industrial and infrastructure projects required collaborative approaches.

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He specifically mentioned the success of the public-private partnership (PPP) approach to “unlock the economic potential” such as found in the Maputo Development Corridor. Without these major projects to integrate the continent, the AfCFTA would “be dead in the water”.

The preferred bidder for the 30-year project was Trans Africa Concessions (Trac), comprising local companies Basil Read, Stocks & Stocks and French multinational Bouygues. In 1997, Trac signed the toll road concession with Sanral and Mozambique’s ANE to launch the first phase of the project, worth R3bn. Currently, Trac has plans to roll out construction projects on the N4 worth more than R1.5bn

.From Mozambique’s side, the Maputo Port Development Company’s 20-year plan aims to handle 48-million tonnes of freight by 2033. Mozambique exported roughly $900,000 worth of goods to SA in 2018 and imported about $1.8m from SA.At peak traffic times, the road sees between 1,500 and 1,900 vehicles passing through the Machadodorp and Middleburg Toll Plazas (both directions).

High transport costs have for too long acted as an impediment to the continent’s growth and development. Infrastructure investment in economic corridors will reduce costs, improve logistics and increase trade efficiency. Maputo — arguably the best-performing international corridor in Sub-Saharan Africa — has illustrated this. This holistic approach to regional planning that shifts from being transport-driven to development-driven requires mutually reinforcing processes and the collaboration of PPPs.

• Malahleha is head of strategy at Sanral.Would you like to comment on this article or view other readers' comments? Read more: Business Day »

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