MCLI Latest Presentation

MAPUTO CORRIDOR LOGISTICS INITIATIVE
The Regional Significance
of Developing Mozambique’s
Coal Infrastructure

This Presentation
• What’s s the big deal about Regional Integration?
• Is Regional Integration a big deal for Mozambique?
• The big deal for Mozambique’s s infrastructure
capacity

What’s s the big deal about Regional
Integration?
Look at the African Continent:
•Small national markets
•Limited opportunities to create economies of
scale
•High production costs
•Underdeveloped infrastructure
•These factors combine to hinder expansion of
trade within Africa and globally
TW Oshikoya 2010

What’s s the big deal about Regional
Integration?
Advantages of Regional Approach:
•Market enlargement is a stimulus for FDI –
largely as a result of the reduced trade barriers
and investment restrictions
•The resulting competitive environment widens
participation, limits monopolies, reduces
production costs, encourages private sector
investment
TW Oshikoya 2010

What’s s the big deal about Regional
Integration?
Advantages of Regional Approach:
•Regional integration contributes to political
stability and encourages good regional
governance initiatives
•Reduces the risk of conflict
•BUT! It requires strong commitment to the
implementation of agreements
TW Oshikoya 2010

Regional Integration
Regional integration remains the key strategy that will enable African A
governments to accelerate the transformation of their fragmented small
economies, expand their markets, widen the region’s s economic space, and
reap the benefits of economies of scale for production and trade, , thereby
maximizing the welfare of their nations. Regional integration increases
competition in global trade and improves access to foreign technology,
investment, and ideas. . African leaders thus consider it an important path to
broad‐based based development and a continental economic community, in
accordance with the Treaty Establishing the African Economic Community
munity
(1991) and the Constitutive Act of the African Union (2000).
IV
Assessing Regional Integration in Africa
UNECA October 2010

What’s s the big deal about Regional
Integration?
What has worked?
•Infrastructure development has played a
fundamental role in regional integration
successes
•Corridor approach
‐ Transport
‐ Energy
‐ ICT

What’s s the big deal about Regional
Integration?
CAN CORRIDORS MAKE SUPPLY CHAINS WORK?
•If efficient, they can have a significant impact on the
competitiveness of local business and regional
economies
•Can provide a measure of predictability, reliability and
efficiency crucial to trade and logistics supply chains,
•Key to providing access to markets.
•Able to address issues affecting trade in a transport
corridor approach gives confidence to users and
contributes to economies of scale

What’s s the big deal about Regional
Integration?
Maputo Corridor – Road, Rail, Border Post, Port and
Terminals
Corridors need
good infrastructure,
good systems and procedures,
good information
institutional mechanism to be the facilitator and interface
cooperation between the public and private sector are
essential to ensure sustainable success.
THE MAPUTO CORRIDOR TICKS ALL THESE BOXES

Regional Integration is a big deal!
Added impetus from AU, NEPAD and RECs
Tripartite Free Trade Area by 2014
Continental FTA by
2017

Continental FTA by 2017?

SADC
TRANSPORT
CORRIDORS

Is Regional Integration a big deal for
Mozambique?
YES!
Catalysts for economic growth in the region:
• significant investment in infrastructure
• trade facilitation improvements
• creating access to markets, been a catalyst for
economic growth in the region
•Buoyancy of the local economies and growth in real
estate values on the corridor are evidence of the
dynamic economic environment in which MCLI has
played a crucial role in facilitating corridor growth

ROAD
N4/EN4 HIGHWAY TOLL ROAD

RAIL – Rehabilitation of the Ressano
Garcia/Maputo Railway Line
92kms rehabilitation completed end 2008
Good cooperation between TFR, SR, CFM

Lebombo –Dec 2005
BEFORE THE FREIGHT
BYPASS

Lebombo/Ressano Garcia Border Post
FREIGHT BYPASS
OPENED JUNE 2010

• The big deal for Mozambique’s s infrastructure capacity
•Port Master plan envisages a further capital investment in the
port of USD $1,2 billion in the next 20 years ‐ $300m since 2003
•Concession extended to 2033 – confidence in the Port’s s growth
•Increased throughput from current 12 mt to 48 mt
•Channel dredging programme completed to 12m to
accommodate Panamax size vessels. On‐going to accommodate
post Panamax vessels

Is Regional Integration a big deal for
Mozambique?
• Ports are only as effective as their landside logistics
• Landside logistics on the Maputo Corridor are
increasingly competitive
• Growth in trade and volumes through the Port of
Maputo from 3 million tons in 2003 to 14/16 million
tons in 2012 is indicative

Is Regional Integration a big deal for
Mozambique?
• Transit trade potential into the SADC region is
enormous
(Population of 272 million growing at current 1.7% will reach 3503
million
by 2027)
• Legal environment is conducive to growing this area
of trade
• Potential cost reduction due to increased backhaul
cargo
• Maturing corridor management institution
• Deepening research capacity of the organisation

Is Regional Integration a big deal for
Mozambique?
Efficiencies and Improvements in Trade
Facilitation
• SARS Customs Modernisation – Increases Electronic
Interface and speed of document clearance
• Mozambique Customs Piloting SEW in Port of Maputo with
rollout to other ports of entry imminent
• Amendments to Transit Customs legislation in Mozambique
currently being finalised
KEY INTERVENTIONS FOR TRADE FACILITATION ON THE
MDC

The big deal for Mozambique’s
infrastructure capacity
CHALLENGES
•Demand has overtaken supply in rail and port services
•Rail is behind demand because of backlog in capital
investment and resource challenges
•Rail partners CFM, TFR improved the capacity from 15 trains
per week in 2007 to 46 trains per week in 2012
•TFR rail pricing strategy on the Maputo Corridor is
problematic
•Port Masterplan investment is on‐going and is addressing
infrastructure, human resources and equipment demands

The big deal for Mozambique’s
infrastructure capacity
CHALLENGES
•Since the Heads of State agreement on a One Stop Border
Post in 2007, the
MAPUTO CORRIDOR STILL DOES NOT
HAVE A
24 HOUR ONE STOP BORDER POST

Intra African Trade – What is needed?
MORE THAN ANYTHING A LONG TERM VISION AND
STRATEGY
A shift in the mind‐set of politicians who tend to favour
sovereign issues over regional priorities and who tend to plan
according to election cycles. This is out of alignment with the
long‐term view required to drive a slow process such as
regional integration and to develop crucial infrastructure that
often requires planning to be done on a 10‐ to 20‐year scale.
WEF Press Release

THANK YOU!
• barbara.mommen@mcli.co.za
• +27 13 755 6025
• +27 83 555 6025
• www.mcli.co.za