PROGRESS ON THE

MAPUTO DEVELOPMENT CORRIDOR

Background

Following initial discussions between South Africa and Mozambique early in 1995, and agreement between the two countries on the concept of the MDC, substantial progress has been made on this project.

The project is important for the Southern African region, in two main respects:

• It is a demonstration of how good inter-country cooperation is able to yield mutually beneficial results from an economic point of view
• It is a positive signal to the world's investors that Southern Africa has good economic potential, which, when facilitated and coordinated well by governments, can result in bankable projects which benefit both countries and investors.

Institutional Arrangements

Bilateral Structures

Investor's Conference

An Investor's Conference, to be jointly hosted by SA and Mozambique was planned in the latter half of 1995 and early 1996. It took place in Maputo in May 1996, just over a month after the period under review. Both national and international investors attended. The key infrastructure projects as well as more than 150 other projects were tabled at the conference for Investors to consider.

Key infrastructure projects

Single toll road: N4 from Witbank to Maputo:

The Build-Operate-Transfer contract was put out to tender in June 1996. The value of the project exceeds R1 b. and will be financed by the selected private sector consortium. The project is a first in the region both conceptually and financially. The road is located both in SA and Mozambique, but has been packaged as a single road by the two countries as a joint project. It will be financed by the private consortium and maintained by it for the period of the concession. This is in keeping with the objective of optimising the scope for private sector involvement in the development of infrastructure and the creation of economic opportunities, in order to limit the long term burden on the fiscus for public expenditure and to free up much needed state resources for other aspects of the growth and development strategy which can not be financed by the private sector.

Port of Maputo

The port of Maputo is a crucial infra-structural component of the new outward economic thrust of the region, and its upgrading will enable it to play a vital role in reducing transport-related export costs, thereby improving the global competitiveness of products produced in the region and contributing to the development of a sustainable economic base.

To date, the institutional framework for the port has been agreed to in principle, with the private sector taking up a 67% share in a joint venture with the government of Mozambique, through CFM. The purpose of the joint venture will be to attract private investment into the port in order to realise the rehabilitation which is necessary in order to improve the capacity and operations of the port.

Railway lines to Maputo

There are three railway lines to the port of Maputo which impact on the Maputo Development Corridor. The Goba line from Swaziland; the Limpopo line from Zimbabwe and the Ressano Garcia line from South Africa. In principle, a joint venture will be entered into between the four countries involved, with CFM taking up 33%, other countries' rail operators 16% and the private sector 51%.

Basic rehabilitation of the lines, signal equipment and rolling stock are required, and will be factored into the structuring of concessions for these lines.

CFM and Transnet (Spoornet) have entered into an agreement which will facilitate spot upgrading in the interim.

One-stop border facility

In order to facilitate easy access and the flow of goods and people between the two countries, a single border facility has been planned at Komatipoort/Ressano Garcia. It is envisaged that this facility will dramatically reduce cross-border bottlenecks by providing a one-stop border control procedure. Various departments in SA and Mozambique have been meeting to progress the financial approach and other technical details.

Provincial Programme

In order that the full benefits of the corridor are realised at provincial and local levels, the DoT has initiated a wide range of programmes with the Northern Province and Mpumalanga province, aimed at developing SMME opportunities in the tourism, manufacturing and agricultural sectors.

Sectoral Investments

There are a number of very large investments planned, pending the successful implementation of the key infrastructure projects. Notably, Alusaf is undertaking a feasibility study to establish an aluminium smelter in Maputo, worth several billion dollars. The extraction of gas from the Pande gas fields to the north east of Maputo will open up a number of opportunities for industries which are able to use gas for industrial purposes. It is envisaged that gas would be piped to Maputo and to South Africa for these purposes. Mining opportunities in the Northern Province are also being investigated for the export of minerals and beneficiated mineral products through the port of Maputo.