RESOURCES CORRIDORS: EXPERIENCES, ECONOMICS AND ENGAGEMENT A TYPOLOGY OF SUB-SAHARAN AFRICAN CORRIDORS The School of Mining Engineering and Centre for Sustainability in Mining and Industry (CSMI), University of the Witwatersrand. Contributors: Hudson Mtegha Paseka Leeuw Sodhie Naicker Mapadi Molepo
Content Introduction SDI Methodology Development Corridor Concept Why Development Corridor? Examples of Development Corridors Conclusion
Introduction In 1995 RSA conceived Spatial Development Initiative (SDI) programme The SDI is aimed is at Enhancing investment attractiveness through identification of opportunities Providing infrastructure Removing a range of policy, legislative and institutional bottlenecks Ultimately SDI should result in creation of localised jobs In 2000 Regional Spatial Development Initiative Programme (RSDIP) was founded under DTI RSDIP was adopted by NEPAD
SDI Methodology The SDI methodology in Southern Africa provides the following: Opportunity of exploiting stranded natural resources Tool for identification, promotion and delivery of new infrastructure underpinned by the resource-based anchor/s Focusing and directing state infrastructure spending through the densification (collateral impact) Private Public Partnerships (PPP) cooperation in developing sustainable industrial zones of high latent investment potential. SDI methodology synergizes with Development Corridor concept
SDI Methodology Source: Jourdan, 2011
Development Corridor Concept DCs are generally trans-border economic activity (multilateral) The DC entails: Identifying anchor projects or source (generally resource-based) Linking the source with terminal point or sink (e.g. port) Concessioning out the link or the trunk (e.g. railway, road) Linking feeders cluster (e.g. agri-businesses) onto the truck Creating an environment for SMMEs participation at the source and sink and along the trunk
Development Corridor Concept Source: Jourdan, 2011
Development Corridor Concept Source: Jourdan, 2011
Development Corridor Concept The success of DC depends on: Appointment of a competent Project Manager Political commitment throughout the implementation process Installing an adequate technical in-country project management capacity Keeping stakeholders focused on the agreed conceptual business case Engaging in a targeted interaction with the private sector Effective institutional arrangements
Why Development Corridor? Africa has numerous mineral commodities Anchor projects and feeder clusters Over 90% of Africa is in the tropics Good for agriculture Agriculture is labour absorptive (feeder clusters) Africa has significant fossil, biomass and hydro resources Energy input or anchor projects (DRC) African aquaculture and mariculture are still nascent Could benefit from harbour-based sinks Africa has enormous tourism potential (cultures, flora, fauna and landscape) Trunks can facilitate tourists mobility
Why Development Corridor? Source: Inform Africa, 2012
Examples: Maputo DC Context Natural Resources Power & Gas Maputo Development Corridor Infrastructure Private Sector Business Case / Anchor Projects Rail, road & pipe link btw RSA & Mozambique; Maputo port, telecom & electricity upgraded Private sector investments ($5billion); Strong PPP SMME development (minimal); Strong industrial development (Duvha Power Station, Mozal Smelter, Sasol-Pande gas pipeline) Policy and Regulatory Environment PPP encouraged and facilitated by both governments Political Support Corridor Authority Stakeholder Participation Linkages Cross Border Arrangements Skills and Technical Capacity Supported by RSA & Mozambique (Heads of States & Transport Ministries) Competent Project Managers appointed on both sides Strong private sectors involvement; weak CBOs and NGOs input Strong industrial forward and side-stream linkages; Weak SMME support Unrestricted flow of people & goods across border; No visa requirements Capacitated SOEs (Power Utilities, Finance Institutions and Transport Institutions)
Examples: Maputo DC
Examples: Zambezi Valley DC Context Natural Resources Infrastructure Private Sector Business Case / Anchor Projects Coking & Thermal coal Zambezi Valley Development Corridor Limited rail infrastructure (under construction) Active involvement (e.g. Rio Tinto, Vale and host of Junior Australian and Indian exploration companies) Quality of resources (coal) and others (iron ore, nepheline syenite and heavy minerals) drives the business case Policy and Regulatory Environment Incentivised FDI; PPP experience gained in MDC Political Support Corridor Authority Stakeholder Participation Linkages Cross Border Arrangements Skills and Technical Capacity Currently corridor modality supports political and economic agenda Not yet established The programme not fully implemented No focus on the creation of local SMME products and services largely from South Africa Limited cross border activity Mozambique, Malawi and Zambia (mostly limited in Mozambique) The SDI unit is yet to be fully staffed
Examples: Zambezi Valley DC Source: Punugwe, 2005
Examples: Mtwara DC Context Natural Resources Infrastructure Private Sector Business Case / Anchor Projects Policy and Regulatory Environment Political Support Corridor Authority Stakeholder Participation Linkages Cross Border Arrangements Skills and Technical Capacity Coal, Iron ore, Gas & Fisheries Poor Mtwara Development Corridor Limited, with only recent agreement signed between NDC (Malawi) and China s Sichuan Hongda Group Poor; No attractive anchor project (Coal and iron ore projects have not move forward) Preparation of new Integrated Industrial strategy (IIDS 2025) which links SDIs to promoting growth in the country Political will appears to be weak between Tanzania, Malawi, Zambia and Mozambique Not active Limited Still at scoping stage Still to be developed Mozambique has the necessary experience and other countries seem to lacking behind
Examples: Mtwara DC
Examples: Central DC Context Natural Resources Infrastructure Private Sector Business Case / Anchor Projects Policy and Regulatory Environment Political Support Corridor Authority Stakeholder Participation Linkages Cross Border Arrangements Skills and Technical Capacity Gold Central Development Corridor Rail is dysfunctional (With gold being the main anchor road infrastructure can suffice) Limited mainly gold focused therefore no need for major rail infrastructure Limited anchor projects in all sectors Preparation of Integrated Industrial strategy (IIDS 2025); Mining did not benefit communities in the past; Recent calls for higher mining taxes Insufficient; Only Tanzania and Rwanda are signatories to the corridor; Burundi and DRC are not active Active authority under the NDC (insufficient though need active participation of all four countries) Good in Tanzania and Rwanda only Government and mining companies place lower emphasis on linkages Limited to two countries Donor support is critical in terms of skill and financial support to drive the programme
Examples: Central DC
Examples: Bas Congo DC Context Natural Resources Infrastructure Private Sector Business Case / Anchor Projects Policy and Regulatory Environment Poor Political Support Corridor Authority Stakeholder Participation Linkages Cross Border Arrangements Skills and Technical Capacity Inga hydropower complex Dilapidated. Bas Congo Development Corridor Poor; BHP Billiton has stopped its bauxite plant development. Poor / Hydropower No formal agreement between DRC, Republic of Congo and Angola (Corridor activities focused in DRC) Under Ministry of Industry. The ministry has set up a fledging SDI unit staffed by a project manager. Supported by RSDIP. Limited Poor Very limited Weak
Examples: Bas Congo DC
Lessons Learnt DCs should be initiated and pursued based on inherent economic and infrastructure potential The development of a corridor requires the participation of all economic and infrastructure ministries The success of a DC depends upon the effectiveness of the Project Manager(s) DC methodology requires careful scanning of sectoral potential along the corridor Investment projects need to be properly packaged
Lessons Learnt Promotion and marketing of the corridor depends upon the attractiveness of the packaged projects The DC anchor projects are large-scale, which would require deliberate action to create opportunities for SMMEs Cross-border DCs are initiated based on bilateral (or multilateral) agreements There has to be a long-term commitment to the success of a DC
Conclusion The Maputo DC has been the most successful initiative The role of government is seminal in facilitating Development Corridor The role of competent project manager (and subordinate managers) is pivotal Early involvement of SOEs, private sector, NGOs, CBOs in DC is crucial for its success Perpetual Political Will is paramount