The SDI projects, located in eight transport corridors, focus mainly on the development of the infrastructure, mining and mineral beneficiation, agriculture, agroprocessing, power generation and tourism industries.
The support programme, headquartered at the Development Bank of Southern Africa (DBSA) in Midrand, in Gauteng, is based on the South African government’s SDI methodology, which is premised on the principle that private sector investment provides the essential kickstart to a sustainable investment process. First implemented locally in 1996 with the start-up of the Maputo Development Corridor, government has demonstrated the ability of these initiatives to attract investment to areas of the country with unutilised potential.
Using the experience it gained in effecting SDIs locally, government, and the (DTI), in particular, has, in the last four years, been supporting other SADC governments and agencies to put similar initiatives in place. Department of Trade and Industry (DTI) regional SDI coordinator Paulo Zucula says that initiatives launched under this programme have reached various stages of implementation.
Besides the Maputo Development Corridor (MDC), in South Africa and Mozambique, which has achieved most of its original objectives, projects are advancing in seven other SDIs: Limpopo Valley SDI, in Mozambique; Zambezi Valley SDI, in Mozambique; the Beira Development Corridor, in Mozambique and Zimbabwe; the Nacala Development Corridor, in Mozambique, Malawi and Zambia; the Central Development Corridor, in Rwanda and Tanzania; the Mtwara Development Corridor, in Tanzania, Mozambique and Malawi; and the Walvis Bay SDI, in Namibia.
Zucula says the Zambezi Valley SDI is mooting a $4-billion project portfolio comprising mainly infrastructure, energy generation, mining and agriculture projects. Key to the success of this initiative is the rehabilitation of the 522 km Sena railway line, which links the coal deposit at Moatize, in Mozambique’s Tete province, with the Beira harbour on the country’s north coast.
Indian company Rites Ircom has been selected as the preferred bidder for the project, and is expected to start upgrading work before the end of the year.
The rehabilitation of the railway line will contribute towards making it economically viable to mine Moatize’s coal deposit, which has the potential to produce between three-million tons and five-million tons of coking coal a year for the export market.
The Industrial Development Corporation, steel producer Iscor, mining company Kumba Resources and Brazilian resources firm CVRD, are some of the companies involved in a bidding process to obtain the rights to exploit the deposit.
Zucula says that the financial feasibility of the project also depends on the construction of a 1 000-MW coal-fired power station in the vicinity of Moatize to enable the economic use of the nonexportable coal that the mine will produce.
In addition, it is required that a suitable export facility should be built at Beira harbour to allow for the exporting of coking coal.
In the SDI’s energy-generation sector, it is estimated that the Zambezi river and its tributaries have the potential to generate additional electricity of up to 9 000 MW. Zucula says that the existing generation capacity of 2 000 MW on the Zambezi river could be doubled should the second phase of the Cahora Bassa hydroelectric scheme and the planned Mpenda Uncua hydropower station further downstream, be built. A sufficient supply of electricity and the availability of rail infrastructure will also improve the case for other mining projects that are being considered for development in the area, including the Monte Muande magnetite mine and the exploitation of a nepheline cyanide deposit.
According to Zucula, once the Sena line is rehabilitated it will, in addition to minerals, be used to carry agricultural products to Beira.
The Zambezi river valley has 5,5-million hectares of arable land, of which about 2,5-million hectares can be farmed intensively.
New investments in the area’s agricultural sector include the planting of sugar, cotton, coconut and rice crops, as well as the establishment of agro-processing plants.
Zucula says that agriculture projects will also play an important part in the Limpopo Valley SDI.
The Chokwe irrigation scheme, which went into sharp decline during Mozambique’s civil war, has been rehabilitated and the area has the potential to produce rice, vegetables, sunflowers and cereals. Another growth node in the SDI is the promotion of tourism.
The area comprises the one-million-hectare Limpopo National Park, which, together with coastal resorts, are becoming prime tourist destinations. However, the single largest potential driver for economic development in the Limpopo Valley SDI is the proposed establishment of the Corridor Sands heavy-minerals mining project in Chibuto, which could entail an investment of up to $777-million. It is expected that the first phase of the mining venture will start early next year.
Elsewhere in Mozambique, in the Beira Development Corridor, efforts continue to attract major industries as anchors of an industrial development zone around the Beira port.
Meanwhile, several agricultural anchor projects with promising investment potential have been identified in the corridor area, including rice production and processing, beef-fattening and processing, chicken production and woodchip processing.
In the Nacala Development Corridor, Mozambique’s Nacala port and the rail line linking the northern part of the country with Malawi and eastern Zambia are poised for major upgrading.
The initiative aims to improve the limited access that Mozambique’s landlocked neighbours, Malawi and Zambia, have to ports for importing and exporting goods.
It is expected that several road and telecommunications infrastructure projects will also be undertaken in the corridor.
Other new ventures in the SDI could include heavy-minerals-, bauxite-, phosphate- and limestone- mining, as well as agriculture and tourism projects.
North of Nacala, the Mtwara Development Corridor and the Central Development Corridor aim to provide improved access to the port cities of Mtwara, south of Tanzania, and the Dar es Salaam port in Tanzania.
Zucula says that these two SDIs are at the inception stage, and adds that the regional support programme anticipates making much progress on scoping and project identification in these areas in the next year.
On the other side of Africa, the Walvis Bay SDI aims to enhance the utilisation of the port of Walvis Bay, in Namibia, an import and export facility for Southern Africa, and specifically for Botswana, and South Africa’s economic powerhouse, the Gauteng province.
The SDI is also promoting private investment in the area, and several projects have been identified in the agricultural, mining and tourism sectors.
According to Zucula, SDIs offer much potential for stimulating the economic development required to move countries in the SADC region out of the rut of poverty.
Nevertheless, he admits that the regional support programme faces some challenges, such as the current political climate in Zimbabwe, which is a constraint to development.
Further, project finance remains problematic.
Less than 3% of the world’s foreign direct investment in developing countries is invested in the SADC region.