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Nacala: Connecting Malawi to markets

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For a long time Malawian goods have remained uncompetitive on the international market because of high transport costs.

Similarly, the high transport costs have made imports extremely expensive as traders recoup the costs by passing them on to consumers.

Over the years, authorities have been looking for ways of bringing down the costs of transportation by providing corridors that would ensure cheap avenues for imports and exports.

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These windows include the Nacala Corridor, the Sena Corridor and the Shire Zambezi Waterway.

It is believed that bringing down the transport costs, which comprise about 50 percent of the product price, would help bring down the costs of exports and imports, thereby making them competitive.

Nacala Corridor

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The Nacala Corridor stretches from Chipata, Zambia passing through Liwonde in Malawi to the Indian Ocean port of Nacala.

The corridor is designed to provide easy access to the sea to land locked countries such as Malawi, Zambia and the Democratic Republic of Congo through which they could export and import their goods and services.

For Malawi, the Nacala Corridor provides short access to the sea as it presents only 789.6 km stretch from Liwonde to Nacala.

Improvements on rail

Around early 2008, Brazilian mining company, Vale discovered massive coal deposits in Moatize, Tete and had to look for avenues to take it to the ocean for exports.

Developing a new rail system from Tete to Nkaya in Malawi to connect to the Nacala Corridor provided a fertile and cheap option for the coal miner.

In addition, Vale had to refurbish the rail line from Nkaya to Nacala to give it the necessary reinforcements to transport huge tonnes of coal.

This has helped to improve the speed at which the trains travel from 10 km per hour on a stretch between Nayuchi in Malawi and Cuamba in Mozambique to 60 km per hour.

Improvements on Nacala Port

Nacala Port is currently ranked third among Mozambican ports in terms of cargo and container handling after Maputo and Beira. However, naturally blessed with a depth of 14 meters, Nacala Port is the best natural harbor in southeastern Africa and has a high potential. Currently, the port serves as a pivotal port for exports and imports in northern Mozambique.

The Japan International Cooperation Agency (Jica) has in recent years pumped in a total of US$300 million in loans to the Government of Mozambique towards the improvement of the port.

The project aims to increase cargo-handling productivity at the port which is pivotal for exports and imports in northern Mozambique, thereby contributing to economic development and poverty reduction in the Nacala Corridor which stretches from northern Mozambique to Malawi and Zambia.

Among others, the loan facility is designed to repair the North Wharf of the port, dredging, container yard paving, procurement of gantry cranes and other cargo handling equipment, and consulting services.

The rehabilitation works will help to increase the cargo volume from the 2.25 million tonnes handled in 2012 to 5.071 million tonnes per year by 2020.

Annual container volume is expected to increase from the 65,000 TEUs (twenty-foot equivalent units) handled in 2012 to 251,000 TEUs per year in 2020.

Stakeholder’s tour to Nacala

Last week, the Central East African Railways (Cear) organised a stakeholder’s trip to Nacala for the people to see for themselves how the improvements on the rail and port facilities have helped to improve the corridor.

The tour involved officials from the Ministry of Transport, Ministry of Energy, the Malawi Energy Regulatory Authority (Mera) Petroleum Importers Limited (PIL), National Oil Company Malawi (Nocma) as well as shipping lines such as Manica and Mediterranean Shipping Company.

The tour started from Liwonde on Saturday, spending nights at Cuamba and Nampula before reaching Nacala on Monday.

During the train ride to Nampula, the stakeholders were briefed on the improvements the rail has undergone, which will ensure quick transportation of cargo.

Cear Managing Director Hendry Chimwaza said in an interview that the company would like to encourage as many Malawian businessmen as possible to patronize the refurbished corridor.

“You know rail is cheap. With these refurbishments, it will ensure speedy transportation of cargo to and from Malawi,” said Chimwaza.

On Tuesday, the officials were taken on a tour of the port to appreciate the facilities as well as oil handling facilities at BP and Petromoc.

During the tour of the port, CDN Chief Commercial Officer Fabio Dewarte told the stakeholders that the port is being face lifted to handle cargo for Mozambique, Malawi and other countries with speed.

Dewarte said the improvements at the port coupled with the refurbished rail line will help reduce the number of days taken to ship cargo to Malawi.

He also told the delegation that the company has brought clearing agents closer to the port to ensure speedy clearance of goods.

Shortfalls

In as far as fuel handling is concerned; the tour revealed that Nacala has only two players or vendors of fuel namely BP and Petromoc.

During the tour, the stakeholders were told that BP stopped hauling cargo through the rail in 2005.

The development leaves Malawi with only Petromoc as the only vendor which could supply fuel on the Nacala side. One vendor means reduced to no competition in as far as pricing is concerned.

The other shortfall is too much stoppages on the way to pave way for the coal trains to pass. On many stretches, the rail is single lane which means that only one train could pass at any given time.

That is to say, trains have to wait at intersections for others to pass before proceeding and with the coal trains pulling 120 wagons each, the wait could be tiresome.

Worries cleared

During the tour stakeholders wanted to get clarification on what will be given priority between coal and general cargo given that Vale has invested billions of dollars to modernize the rail system.

Common sense, according to some stakeholders, would mean Vale’s coal trains being given priority over anything else on the rail road.

But Duwarte said priority on the rail road will only be given to passenger trains, adding that coal trains and passenger trains will be treated equally.

Delegates’ comments

Controller of Rail Services in the Ministry of Transport and Public Works Geoffrey Magwede believes the improved rail and port facilities provide a great opportunity for Malawian businesses.

“This is a golden opportunity to haul cargo over a short distance at reduced price. We believe the Malawian businessman will seize this opportunity,” said Magwede.

On his part, Mediterranean Shipping Company Branch Manager Fyner Bakali says the rail route to Nacala is ideal for Malawi as the time taken to import and export cargo has been reduced from five to two days.

“This means that businesses could have their imports within 48 hours and their exports at the port within the same time. This is great,” said Bakali.

Conclusion

In business three things are important. Time, costs and security. If indeed the corridor managers could give equal priority to coal and general cargo trains on the route, it could make window attractive.

Again if the authorities could act on strengthening security on the corridor to ensure that cargo is secure, then the corridor is second to none in efficiency.

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