Nairobi: Regional leaders are seeking to raise at least $3 billion for a planned infrastructure facelift to boost East and southern Africa as an investment destination. Leaders from four regional trading blocks - Southern African Development Community, East Africa Community, Common Market for Eastern, Southern Africa and InterGovernmental Authority on Development - are set to meet in Nairobi [this] week hoping to attract funding from donors and investors for projects. The projects include key corridors in East and southern Africa.
Under the direction of the Tripartite and IGAD, they will avail resources for the logistical and planning components for the conference that will provide resources to develop bankable infrastructure projects for investments in East Africa. Targeted sectors include roads, railways, inland waterways, ports, pipelines and power generation and transmission.
Amos Marawa, director of infrastructure at COMESA, said development of an efficient regional transport system will reduce the prohibitive transport costs and facilitate trade expansion and investment for economic growth in the Eastern and Southern region.
'In East Africa, the Northern and Central Corridors, anchored by the port of Mombasa in Kenya, and the port of Dar es Salaam in Tanzania, make up the principal transport routes for national, regional, and international trade', said Mr Marwa adding that the corridors’ extensional focus includes the DR Congo and links to Southern Sudan, Ethiopia and Zambia.
He however noted that due to inadequate physical infrastructure and inefficiency, these corridors are characterised by long transit times and high cost. It is estimated that freight costs per kilometre are more than 50 per cent higher than costs in the US and Europe; and for landlocked countries, transport costs can be as high as 75 per cent of the value of exports.
The Northern and Central Transport Corridors and their support infrastructure, notably ports of Mombasa and Dar es Salaam, are key transport pillars that have been neglected. 'As the gateways for the two corridors, the ports of Mombasa and Dar es Salaam must have adequate capacity and be able to perform efficiently in order for the overall corridor performance to improve,' Mr Marawa said.
The rehabilitation of Mombasa and Dar es Salaam ports, rail, road, lake transport and transit facilitation projects, are estimated to cost over approximately $4.2 billion.
The main significance of the corridor development programmes is to reduce the time and the costs of importing or exporting goods by surface transport in the Eastern and Southern region.
'If a One Stop Border Post is established along a route where the physical infrastructure of the road or rail has deteriorated to such an extent as to significantly reduce the speed of traffic, then any time savings gained by the One Stop Border Post will be lost because of the poor state of the physical infrastructure', said Mr Marwa.
Failure to implement the projects, he warns of a worst case scenario, where by increasing traffic would lead to congestion; increase transport costs and with deteriorating quality of service, would reduce competitiveness of the region’s exports and the increased cost of imports.
Related article: Investors to hold talks over funds for regional projects
Nairobi: Investors will know how the Sh1.5 trillion needed for the building of a port in Lamu and six other projects will be raised when they meet in Nairobi this week. The government plans to pitch for the project during the international forum starting on Wednesday, which financiers and political leaders from various countries in the region are expected to attend.
The two-day meeting aims to outline the financing and time frames for implementing key regional infrastructure projects in Kenya, Djibouti, Tanzania and Ethiopia.
'These priority projects will have a direct impact on transport efficiency, reducing the cost and time for moving goods and people across the region,' said Amos Marawa, the director of infrastructure development at the Comesa secretariat.
The projects, each costing billions of dollars, would be implemented in Lamu, Djibouti, northern, central (Tanzania) and Berbera (Ethiopia) transport corridors to expand regional markets and reduce cost of cargo transport.
President Kibaki is expected to open the regional conference on Wednesday. Apart from Comesa chairman King Mswati III of Swaziland, other top leaders expected in Nairobi include Burundi’s President Pierre Nkuruzinza (EAC chairman), Angola’s President Jose Eduardo dos Santos (SADC chairman) and Ethiopia’s Prime Minister (IGAD’s chairman) Meles Zenawi.
For close to 10 years now, Kenya has been toying with an idea of building a second port in Lamu, complete with a super highway to Addis Ababa and Juba, a standard gauge railway, and three international airports.
An efficient Lamu transport corridor is expected to cater for increased flow of cargo between Kenya and her two landlocked neighbours - Ethiopia and Southern Sudan - which have both expressed interest in joining the EAC trading bloc.
Last week, President Kibaki said he was ready to preside over ground breaking ceremony to mark the start the Lamu port’s construction following the recent feasibility study but offered no explanation on how he intends to raise the Sh1.5 trillion ($16 billion) required.
The conference organisers, however, expect the regional governments to make a strong case for use of models such as direct private sector investment, public-private partnerships and public expenditure in raising the heavy capital required for the project. 'The conference will advance the projects toward feasibility and bankability, allowing investors from the private sector, governments and donor community to finance them through institutional arrangements,' TradeMark East and Southern Africa, one of the conference organisers said in a statement.
The statement adds: 'Loans and grants from development partners and specialised institutions also play a key role in providing initial capital investment for infrastructure projects and together with government and private sector involvement can enable the region progress economically.'
Apart from the Lamu, the finer details for other projects of transport (road, railways and ports) and energy (transmission and pipelines) along the Djibouti, northern, central and berbera corridors will also be finalised.
The inefficiency along northern corridor, have for instance, raised by 40 per cent, the cost of transporting cargo from Mombasa to markets in Kenya, Uganda, Rwanda and Burundi as well as southern Sudan, DR Congo, Ethiopia and northern part of Tanzania.
This has reduced trade volumes with these destinations and raised prices for basic goods as inflated transport cost piles pressure along the value chain, says Mr Phillip Mwanthi, executive secretary at the Permanent Secretariat of Northern Corridor’s Transit Transport Co-ordination Authority.
For Kenya, the regional approach which pays attention to all aspects of infrastructure comes as a welcome relief as over reliance on road transport has been linked to higher maintenance cost and slow clearance at the port of Mombasa.
The Ministry of Road, which has for a long time resisted EAC’s move to raise axle weight limit beyond 48 tonnes saying Kenya’s roads were already burden due to under performing railway services.
* By GEORGE OMONDI
Source: Business Daily Africa: http://www.businessdailyafrica.com/Corporate+News/Investors+to+hold+talk...
