African Development Bank (AfDB) Group on Tuesday announced it has approved $300 million (about K180 billion) long-term loan from its private sector development facilities to finance part of the cost of the Nacala Rail and Port Project of which Malawi is a beneficiary.
The resources will be allocated to four entities in Malawi and Mozambique and in Malawi, the Central East African Railways Company Limited (Cear) will get $83.6 million (about K50 billion) from the total chunk.
Other recipients’ entities include Corredor de Desenvolvimento do Norte SA (CDN) which will get $83.6 million, $111.5 million to Corredor Logistico Integrado De Nacala SA (CLN) and $86.7 million to Vale Logistic Limited (VLL), all from Mozambique.
The Nacala Rail and Port Project comprises two main components that include the construction and rehabilitation of parts of the 912 kilometre (km) railway through Mozambique and Malawi and the construction of a new coal terminal in Nacala-a-Velha and a 29.3km green field rail link connecting the existing railway to the new coal terminal.
The project also includes the construction of a deep sea port and associated terminal infrastructure at Nacala-a-Velha.
Currently, Malawi largely depends on her neighbours when accessing ports and international markets. Transport alone accounts for up to about 60 percent of the landed cost of the product.
AfDB resident representative for Malawi Andrew Mwaba said on Tuesday that the project is an important regional operation aimed at supporting economic growth and integration of Mozambique and Malawi and other countries in the region.
“It will facilitate value addition of mineral resources and agricultural commodities along the Nacala Corridor and also contribute to easing of transport infrastructure constraints,” he said.
Mwaba said overall, the project will ultimately contribute to private sector development in the two countries and provide the enabling environment to support inclusive growth along the Nacala Corridor.
To this effect, Mwaba said the AfDB will develop an SME business linkage programme along the Corridor to be funded by a technical assistance grant through the Fund for African Private Sector Assistance (Fapa).
“This will serve as a pilot show case for business linkage programmes and SME value addition for targeted crops and commodities in Mozambique and Malawi,” he added.
In April last year, Malawi, Mozambique and Zambia governments also launched the Nacala Road Corridor phase four project whose major scope involves the rehabilitation of a 75 kilometre road between Liwonde and Mangochi and also the construction of two one-stop border posts between Malawi and Mozambique at Chiponde and between Malawi and Zambia at Mchinji.
Last week, Cear assured Malawians that it is investing K3 billion in new locomotives to boost railway services in the country.
Cear managing director Hendry Chimwaza said the company has placed orders for six locomotives, which will boost Cear’s capacity to handle 600 000 metric tonnes (MT) of cargo annually from current 400 000 MT.
“We currently have 12 locomotives and 12 coaches, but we have plans to bring in additional six locomotives and nine coaches [this] year.
“I believe that we will increase our business performance with these new purchases, which will cost us about $5 million [about K3 billion],” Chimwaza said.