Nacala Road Corridor - TradeMark Southern Africa

1.3.2 Zambia’s strategic location at the heart of Southern Africa makes the country exceptionallyimportant in the establishment of a strong intra-regional market. The development of regional orsubregional infrastructure that adequately connects national markets - particularly robust transportand communication links - is essential for the movement of goods, services, capital, people andinformation across countries. There is significant potential benefits to greater connectivity in Africain terms of economies of scale, larger markets and greater cross-border economic transactions. Inaddition, “soft” issues like trade and transport regulatory frameworks, more efficient customsoperations and the establishment of one-stop border posts to allow more efficient border crossingcan significantly reduce trade transaction costs which results in increased volumes of trade andsocio-economic gains. In this regard, two one stop border posts are envisaged under NRCP, PhaseIII between Zambia/Malawi and Malawi/Mozambique.1.3.3 The implementation of NRCP and the Project will greatly contribute to improving transportinfrastructure and facilitating (i) regional trade among Zambia, Malawi and Mozambique thusoffering a diversification opportunity for the region to enhance subregional trade; and (ii) access toglobal markets for Zambia and Malawi. The creation of a strong subregional macro-economy basedon trade among the three participating countries would help shelter the economies from externalshocks resulting from volatility in global markets.1.4 Rationale for Bank’s involvement1.4.1 The rationale for AfDB’s involvement is threefold: (i) AfDB is already involved in thefinancing of NRCP Phase I and the project preparatory work for Phase III. The continued supportby AfDB to the implementation of Phase II is therefore logical. (ii) The objective of the Project isto address regional development constraints caused by poor infrastructure and is therefore in linewith AfDB’s Medium Term Strategy (2008-2012); and (iii) is also central to the strategic objectiveof providing investment and knowledge to facilitate delivery of priority regional infrastructure asper the Bank Group Regional Integration Strategy (2009-2012).1.5 Donor CoordinationSector or subsector*SizeGDP Exports Labor ForceTransport [%] [%] [%]Players - Public Annual Expenditure (average 2006-2009)*Government Donors EU 15.17%UA m 65.81 23.94 IDA 5.13%% 73.3% 26.6 DANIDA 2.93%NDF 2.4%OPEC 0.97%KFW 0.04%Level of Donor CoordinationExistence of Thematic Working Groups[Y]Existence of SWAPs or Integrated Sector Approaches[N]ADB's Involvement in donors coordination[M]* Years 2006 to 2009, inclusive for the road sub-sector3