The African Development Bank (AfDB) is taking the lead in facilitating the takeoff of one of Africa’s largest infrastructure projects − the $5-billion Nacala corridor rail and port project, supporting the project with $300-million from its private- sector window.
After years of financial structuring, a signing ceremony presided over by Mozambique Economy and Finance Minister Adriano Maleiane, Transport and Communications Minister Carlos Mesquita, and Energy and Natural Resources Minister Laeticia Klemens, in Maputo, marked the formal signing of the project deal.
The project will provide a 912 km rail line from Mozambique’s western Tete province to the Nacala port, on the eastern coast of the country, through Malawi. The project also includes the construction of a deep-sea port and associated terminal infrastructure at Nacala.
“This project supports two of the High 5s that guide the bank’s contribution to the sustainable development goals in Africa. “Providing a rail link across Mozambique and Malawi with a possible extension to Zambia will help to integrate Africa; and opening up markets for agricultural commodities will help the AfDB’s Feed Africa strategy. This dual use infrastructure development shows that Mozambique can put its natural resources at the service of its citizens,” said AfDB Mozambique country manager Pietro Toigo.
The AfDB played a key role as the co-lead arranger in the transaction, which includes the Japanese Bank for International Cooperation, Nippon Export & Investment Insurance and the Export Credit Insurance Corporation of South Africa, as well as a range of commercial banks providing finance for the project sponsored by Vale and Mitsui & Co.
When the rail line comes into full operation, coal exports will increase by 40% in 2018 and generate crucial foreign earnings for the Mozambique economy at a time when the country is witnessing a cyclical downturn. The project anticipates four-million tons of freight capacity a year for noncoal commodities, and opening up regional agricultural producers to world markets.
The AfDB is also investing $1-million in grants to assist small and medium-sized enterprises and developing agribusiness along the corridor in Malawi and Mozambique. This support aims to ensure that small businesses benefit from the potential of the port and the rail link.