Connecting SADC – Region needs billions for infrastructure master plan
SADC member states must raise an estimated US$65 billion for short-term financing of an infrastructure plan for the energy, transport, water, information and technology, meteorology and tourism sectors.
The regional bloc agreed on a five-year infrastructure master plan in 2012.
It was initially envisaged that the master plan would be rolled out over the next 15 years. Its aim is to improve commerce across the region, lock-in-step with continental trade and economic integration efforts.
Boosting investment in infrastructure is one way in which the regional bloc can boost integration and trade while creating economies of scale and product diversification that can be globally competitive.
While regional integration has been popularised as a concept, SADC is struggling to bring down barriers to trade, which experts agree is a major hindrance to cross-border commerce.
Inadequate infrastructure has become one of the major bottlenecks to intra-regional trade, and despite this realisation, the regional bloc is yet to come up with a plan on how to finance infrastructure.
At an infrastructure summit held in Maputo, Mozambique, about two weeks ago, SADC acknowledged the need to improve infrastructure but could not agree on how best to raise the US$65b needed in the short-term to alleviate the situation.
At the end of the summit, the regional bloc said its Secretariat will follow-up with potential financiers, investors and partners for the financing of the projects.
The Secretariat has also been tasked to continue to raise awareness on infrastructure projects and help member states package projects up to bankability stage.
SADC’s annual Summit of Heads of State, to be held in Malawi this August, is expected to deliberate on infrastructure financing as well.
SADC Executive Secretary, Dr Tomaz Salomao, said failure to invest in infrastructure would jeopardise trade capacity.
Graham Smith, programme manager for Trademark Southern Africa, said countries can finance some infrastructure projects through debt, as long as it is sustainable.
“Ports and power projects are the most likely to attract public-private partnership because you can ring-fence a long-term revenue stream. The rest can be public-sector financed,” Smith said.
A major infrastructure project that could boost commerce in the region is the proposed expansion of Walvis Bay Port in Namibia.
Speaking at a recent Namibian investment seminar in South Africa, Namibian Ports Authority (NamPort) executive for marketing and strategic business development, Christian Faure, said Walvis Bay was poised to be the gateway to SADC.
NamPort is finalising financing for the R3b expansion project, which would add 650 000 twenty-foot equivalent units (TEUs) a year capacity to the current 350 000 TEUs capacity.
Namibia has road, rail and air links with Angola, Zambia, Zimbabwe, Botswana and South Africa, and routes from Walvis Bay Port include the Trans-Kalahari and the Trans-Caprivi corridors.
Zambia, on its part, is investing in the rehabilitation of its rail network and hopes that the rest of SADC will engage in similar upgrades, as part of efforts to boost trade in SADC.
Zambia Railways Limited (ZRL) is raising more than US$1b for the facelift.
The CEO of ZRL, Muyenga Atanga, said they wanted to strengthen rail linkages with the rest of SADC.
“Currently, we have two major outlets; that is the Durban route ‑ which takes us into Zimbabwe and South Africa ‑ and the Dar es Salaam route,” he said.
On both corridors, ZRL depends on other railway systems to transport cargo.
“The idea is that because we are interdependent, we want to make sure that we have a common understanding in terms of how we can attain efficiency.
“As well, the utilisation of our trucks and wagons in the interest of the whole region and that entails that we come together and highlight what we call various bottlenecks that are preserved by each railway system so that this can be resolved,” Atanga said.
Over the next five years, Zambia plans to build rail links with Angola through the DRC.
Statistics show that African countries channel less investment to infrastructure development than other regions. Africa invests only four percent of its GDP to infrastructure, compared with China’s 14 percent.
The African Development Bank (AfDB) estimates that bridging the infrastructure gap could increase GDP growth by an estimated two percent a year.
AfDB also postulates that high transport costs add 75 percent to the price of African goods and about 30 countries on the continent have chronic power outages.
While trade between Africa and China and Western markets has boomed, the continent has remained disconnected and trading within Africa is still much more expensive than trading with other regions of the world.
Africa also faces tremendous challenges in trade in services and movement of people, a factor attributed to artificial boundaries put in place during colonialism.
There are plans to create a grand free trade area encompassing SADC, COMESA and the East African Community as part of efforts to increase trade within the continent.
• Reporting by Felix Njini in Windhoek and Jeff Kapembwa in Lusaka