Monday, April 27, 2009

Africa: New North-South Corridor to Tackle Trade Bottle-Necks

Kelvin Kachingwe, Inter Press Service, 8 April 2009

Africa's contribution to the global economy will continue to be low if there is no investment in infrastructure, delegates heard at the North-South Corridor Conference in Lusaka, where 1.2 billion dollars was raised.

Zambia's President Rupiah Banda told the conference, which ended yesterday, that there is a need to invest in infrastructure development and the energy sector to reverse the continent's low contribution to the global economy.

Donors pledged 1.2 billion dollars on the first day of the conference on Apr 6 for the North-South Corridor's infrastructure and trade facilitation programme. More than 1,000 officials, donors, businesspeople, ministers, diplomats and others from Africa and elsewhere attended the event in Lusaka, Zambia.

The North-South Corridor, which traverses eight countries in eastern and southern Africa, is a combination of two existing corridors (Durban Corridor and the Dar Es Salaam Corridor), linking the port of Durban and others in southern Africa to the east African port of Dar Es Salaam.

The Durban corridor also has direct links into the Beira, Maputo, Walvis Bay, Benguela and Lobito corridors.

From the port of Dar Es Salaam, the corridors link to central Africa. From the border post of Tunduma (Tanzania), the corridor links Moyale (Kenya) corridor and the northern corridor, linking the port of Mombasa to the Eastern DRC through Uganda and Rwanda. This provides physical interconnectivity between eastern and southern Africa.

The high-level investment conference was a tripartite meeting of the Common Market for Eastern and Southern Africa (COMESA), the Economic Community for East Africa (EAC) and the Southern African Development Community (SADC).

Kenya's President Mwai Kibaki, chairperson of COMESA, Uganda's Yoweri Museveni representing EAC and South Africa's President Kgalema Motlanthe representing SADC attended the meeting, in addition to the host, Banda.

The three regional economic communities (RECs) have pledged to work together towards the creation of a free trade area across their 26 member states. The corridor is the first major project under the newly formed Tripartite Task Force.

"The challenging economic environment, which was brought into sharper focus at last week's Group of 20 Summit, brings urgency to the efforts of COMESA, EAC and SADC to bring together our respective regional integration programmes.

"This is in order to further enlarge our markets, unlock our productive potential, increase levels of intra-African trade and enhance our regional prospects," Motlanthe told the conference.

During the proceedings, the World Bank committed 500 million dollars to projects along the North-South Corridor, with an additional 500 million dollars committed to investing in projects that are significantly complementary to the North-South Corridor.

The European Commission (EC) pledged 150 million dollars, the African Development Bank (ADB) 380 million dollars for projects on the North-South Corridor, in addition to its 160 million dollars in sections of the Ncala Corridor. The latter is complementary to the North-South Corridor and provides an alternative route to the sea.

The UK's Department for International Development committed to 100 million pounds over the next five years for projects on the North-South Corridor, aligned to the priorities of the RECs.

The RECs - COMESA, EAC and SADC - will implement an extensive aid-for-trade programme encompassing transport, power and trade facilitation projects along the North-South Corridor.

The three leaders representing the three RECs announced plans to implement critical reforms to facilitate cross-border trade, reduce transport delays and costs and promote public and private sector investment.

The North-South Corridor was selected for the aid-for-trade pilot programme because it is the busiest corridor in the region in terms of values and volumes of freight. Poor road and rail infrastructure and long waiting times at borders and ports create significant costs and hamper regional producers' ability to access regional and international markets.

"If we are to realise our vision of creating a vibrant and integrated free trade area, it is vital that we develop the region's physical infrastructure and capacity to trade. That is why the North-South Corridor pilot aid-for-trade programme is so important to our progress," Kibaki explained.

Another innovation is the holistic and regional approach the programme takes to transport system planning and maintenance, the aim of which is to give producers in the region access to a greater choice of road and rail networks.

The North-South Corridor programme includes the maintenance and upgrading of roads, establishing a system to more efficiently control axle loads, reduce border post delays and rehabilitate rail track along the corridor.

Faster border crossings and improved port facilities, railways and highways will enable producers and traders, especially in landlocked countries, to transport their goods quickly and access regional and international markets more easily, stimulating economic growth and inward investment.

In addition to upgrading infrastructure, the initiative will also simplify regulatory processes to speed up cross-border clearing procedures, harmonise transit and transport regulations and simplify administrative requirements.

World Trade Organisation (WTO) Director General Pascal Lamy said aid-for-trade is essential to support Africa's own economic growth agenda while the North-South Corridor is an example of a highly innovative regional aid-for-trade approach that can transform competitiveness and enhance regional trade flows.

"The corridor projects will promote development and poverty alleviation in the southern African region and promote deeper regional integration. Such initiatives have never been more urgent than in the current global economic climate," Lamy insisted.

Power supply and transmission in the region will also be improved to allow better management of peak loads and increased power trading, and will provide employment opportunities for large sections of the region's populations that live in areas with inadequate power.

The Chamber of Mines, representing mining companies operating in the DRC and Zambia that are reliant on the North-South Corridor for the export of minerals and concentrates, has welcomed the North-South Corridor Initiative.

"With the falling price of metals on the international markets it is essential that the costs of transport to and from international markets are reduced if we are to stay in business," the chamber pointed out in a statement.