DATA COLLECTION SURVEY ON NACALA CORRIDOR ...

18-009CR (3)

6 R

DATA COLLECTION SURVEY ON

NACALA CORRIDOR INTEGRATED DEVELOPMENT

IN SOUTHERN AFRICA

FINAL REPORT

MARCH 2018

JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) ORIENTAL CONSULTANTS GLOBAL CO., LTD.

MITSUBISHI UFJ RESEARCH AND CONSULTING CO.LTD.

EIGHT-JAPAN ENGINEERING CONSULTANTS INC.

REPUBLIC OF ZAMBIA REPUBLIC OF MALAWI

DATA COLLECTION SURVEY ON

NACALA CORRIDOR INTEGRATED DEVELOPMENT

IN SOUTHERN AFRICA

FINAL REPORT

MARCH 2018

JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) ORIENTAL CONSULTANTS GLOBAL CO., LTD.

MITSUBISHI UFJ RESEARCH AND CONSULTING CO.LTD.

EIGHT-JAPAN ENGINEERING CONSULTANTS INC.

REPUBLIC OF ZAMBIA REPUBLIC OF MALAWI

Exchange Rate (March 2018)

US Dollar (USD) 1.00=Japanese Yen (JPY) 106.79

Zambian Kwacha (ZMW) 1.00= (JPY) 10.99

Malawian Kwacha (MWK) 1.00= (JPY) 0.15

Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa Final Report

i

TABLE OF CONTENTS

Page

List of Tables .......................................................................................................................................... vi

List of Figures ........................................................................................................................................ xi

List of Abbreviations .............................................................................................................................. xv

Executive Summary

Chapter 1 Introduction ................................................................................................................. 1-1

1.1 Background of the Study .................................................................................................... 1-1

1.2 Objectives of the Study ...................................................................................................... 1-1

1.3 Study Area .......................................................................................................................... 1-2

1.4 Counterpart Agencies for the Study ................................................................................... 1-3

1.5 Study Schedule ................................................................................................................... 1-3

Chapter 2 Corridor Development in Zambia and Malawi and Current Status

of Nacala Corridor Development ............................................................................... 2-1

2.1 Clusters of Transport Corridors .......................................................................................... 2-1

2.1.1 Propulsion Frameworks: Transport Corridors as Economic Corridors ......................... 2-1

2.1.2 Transport Corridors Relevant to Malawi and Zambia ................................................... 2-3

2.1.3 Current Status of Major Transport Corridors Excluding Nacala Corridor .................... 2-5

2.1.4 Institutions for Transport Corridors ............................................................................... 2-6

2.2 Current Conditions and Status of Nacala Corridor ............................................................. 2-8

2.2.1 Background of Nacala Corridor .................................................................................... 2-8

2.2.2 Status and Conditions of Nacala Corridor ..................................................................... 2-9

2.3 Current Usage of Nacala Corridor vis-a-vis Major Corridors .......................................... 2-15

2.3.1 Distance between Major Cities and Main Ports .......................................................... 2-15

2.3.2 Traffic Volume in Zambia and Malawi ....................................................................... 2-16

2.3.3 Freight Traffic at Border ............................................................................................. 2-17

2.3.4 Freight Share per Corridor .......................................................................................... 2-19

2.3.5 Freight Movement on Nacala Corridor ....................................................................... 2-22

2.3.6 Capacity of Major Ports .............................................................................................. 2-23

2.3.7 One Stop Border Posts (OSBPs) ................................................................................. 2-25

2.3.8 Transit Time and Cost ................................................................................................. 2-27

2.4 Comprehensive Evaluation of the Corridors .................................................................... 2-29

2.4.1 Hearing Survey Results on Nacala Corridor ............................................................... 2-29

2.4.2 Comprehensive Analysis on Transport Corridors Related to Zambia and Malawi ..... 2-31

Chapter 3 Present Condition of Zambia ..................................................................................... 3-1

3.1 Agriculture.......................................................................................................................... 3-2

3.1.1 Overview of the Agriculture .......................................................................................... 3-2

3.1.2 Agriculture Condition ................................................................................................... 3-2

3.1.3 Structure of Agriculture Producers ................................................................................ 3-5


ii

3.1.4 Current Situation on Agriculture Production and Distribution ...................................... 3-5

3.1.5 Agribusiness Clusters and Players ................................................................................ 3-9

3.1.6 Related Policies, Programmes and Projects ................................................................ 3-13

3.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector ........ 3-19

3.2 Industry ............................................................................................................................. 3-55

3.2.1 Overview of the Industry ............................................................................................. 3-55

3.2.2 Current Condition and Potential of Industrial Development Along Nacala

Corridor ....................................................................................................................... 3-56

3.3 Mining .............................................................................................................................. 3-58

3.3.1 Overview of the Mining .............................................................................................. 3-58

3.3.2 Mineral Production in Zambia .................................................................................... 3-58

3.3.3 Export of the Mineral Commodities ............................................................................ 3-60

3.3.4 Export Destinations of Mineral Commodities ............................................................. 3-60

3.3.5 Government Policy of Mining Sector ......................................................................... 3-63

3.3.6 Development Potential of the Mining Sector in the Nacala Corridor Region ............. 3-64

3.4 Trade ................................................................................................................................. 3-64

3.4.1 Overview of the International Trade ........................................................................... 3-64

3.4.2 Traded Commodities ................................................................................................... 3-65

3.4.3 Trade Along Nacala Corridor ...................................................................................... 3-68

3.4.4 Development Potential and Challenges of the Trade Sector

in the Nacala Corridor Region .................................................................................... 3-72

3.5 Tourism ............................................................................................................................. 3-73

3.5.1 Overview of the Tourism ............................................................................................. 3-73

3.5.2 Tourism Sector of the Nacala Corridor Region ........................................................... 3-76

3.5.3 Policy Direction and Challenges of Tourism Sector ................................................... 3-78

3.5.4 Development Potential and Challenges of the Tourism Sector in the Nacala

Corridor Region .......................................................................................................... 3-79

3.6 Energy .............................................................................................................................. 3-80

3.6.1 Current Situations of the Electricity Sub-Sector ......................................................... 3-80

3.6.2 Current Situations of the Petroleum Sub-Sector ......................................................... 3-83

3.6.3 Development Potential and Challenges of the Energy Sector ..................................... 3-85

3.7 Foreign and Domestic Investment .................................................................................... 3-87

3.7.1 Investment in Zambia .................................................................................................. 3-87

3.7.2 Investment in Eastern Province ................................................................................... 3-90

3.8 Transport Infrastructure and Logistics ............................................................................. 3-92

3.8.1 Current Transport Sector ............................................................................................. 3-92

3.8.2 Road Sub-Sector .......................................................................................................... 3-93

3.8.3 Rail Sub-Sector ........................................................................................................... 3-98

3.8.4 Aviation Sub-Sector .................................................................................................. 3-102

3.8.5 Waterway Sub-Sector ................................................................................................ 3-104

Chapter 4 Present Condition of Malawi ...................................................................................... 4-1

4.1 Agriculture.......................................................................................................................... 4-2

4.1.1 Overview of the Agriculture .......................................................................................... 4-2


iii

4.1.2 Agriculture Condition ................................................................................................... 4-2

4.1.3 Structure of Agriculture Producers ................................................................................ 4-5

4.1.4 Current Situation of Agriculture Production and Distribution ...................................... 4-6

4.1.5 Agribusiness Clusters and Players .............................................................................. 4-11

4.1.6 Related Policies, Programmes and Projects ................................................................ 4-13

4.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector ........ 4-20

4.2 Industry ............................................................................................................................. 4-43

4.2.1 Overview of the Industry ............................................................................................. 4-43

4.2.2 Current Condition and Potential of Industrial Development Along Nacala

Corridor ....................................................................................................................... 4-44

4.3 Mining .............................................................................................................................. 4-45

4.3.1 Overview of the Mining .............................................................................................. 4-45

4.3.2 Mineral Production in Malawi .................................................................................... 4-46

4.3.3 Export of Mineral Commodities ................................................................................. 4-46

4.3.4 Government Policy of Mining Sector ......................................................................... 4-47

4.3.5 Increased Mining Projects in Recent Years ................................................................. 4-48

4.4 Trade ................................................................................................................................. 4-49

4.4.1 Overview of the International Trade ........................................................................... 4-49

4.4.2 Traded Commodities ................................................................................................... 4-50

4.4.3 Development Potential and Challenges of the Trade Sector in the Nacala

Corridor Region .......................................................................................................... 4-53

4.5 Tourism ............................................................................................................................. 4-53

4.5.1 Overview of the Tourism ............................................................................................. 4-53

4.5.2 Policy Direction of Tourism Sector ............................................................................. 4-57

4.5.3 Development Potential and Challenges of the Tourism Sector in the Nacala

Corridor Region .......................................................................................................... 4-58

4.6 Energy .............................................................................................................................. 4-59

4.6.1 Current Situations of the Electricity Sub-Sector ......................................................... 4-59

4.6.2 Current Situations of the Liquid Fuel and Gas Sub-Sector ......................................... 4-61

4.6.3 Development Potential and Challenges of the Energy Sector ..................................... 4-63

4.7 Foreign and Domestic Investment .................................................................................... 4-66

4.8 Transport Infrastructure and Logistics ............................................................................. 4-68

4.8.1 Current Transport Sector ............................................................................................. 4-68

4.8.2 Road Sub-Sector .......................................................................................................... 4-71

4.8.3 Rail Sub-Sector ........................................................................................................... 4-77

4.8.4 Aviation Sub-Sector .................................................................................................... 4-83

4.8.5 Waterway Sub-Sector .................................................................................................. 4-84

Chapter 5 Overall Issues and Impact Analysis of Nacala Corridor Development .................. 5-1

5.1 Evaluation of Relevance of Nacala Corridor Development to Existing Policies

and Plans ............................................................................................................................ 5-1

5.1.1 Zambia’s National Development Plan and Nacala Corridor ......................................... 5-1

5.1.2 Zambia’s National Transport Policy (ZNTP) and Nacala Corridor ............................... 5-3

5.1.3 Zambia’s Budget Allocation Related Nacala Corridor Development ........................... 5-3


iv

5.1.4 Malawi Growth and Development Strategy (MGDS) III and Nacala Corridor ............ 5-6

5.1.5 Malawi’s National Transport Policy and Nacala Corridor ............................................ 5-7

5.1.6 Malawi’s National Transport Master Plan (MNTMP) and Nacala Corridor ................. 5-8

5.1.7 Malawi’s Budget Allocation Related Nacala Corridor Development ........................... 5-9

5.1.8 Regional Economic Integration Policy and Nacala Corridor ...................................... 5-12

5.2 Possible Driving Forces for Nacala Corridor Development ............................................. 5-14

5.2.1 Zambia ......................................................................................................................... 5-14

5.2.2 Malawi ......................................................................................................................... 5-20

5.3 Overall Issues on Nacala Corridor Development ............................................................. 5-24

5.3.1 Issues on Nacala Corridor Transport ........................................................................... 5-24

5.3.2 Issues on Economic Sectors ........................................................................................ 5-26

5.3.3 Issues on the Relationship Between Corridor Transport and Economic Sectors ........ 5-29

5.3.4 Issues on Regional Economic Integration ................................................................... 5-30

5.4 Impact Analysis ................................................................................................................ 5-31

5.4.1 Perspectives on Nacala Corridor Development ........................................................... 5-31

5.4.2 Impact of Railway Upgrading on Transport Cost ....................................................... 5-36

5.4.3 Impact of Nacala Corridor Development on Fuels and Fertiliser ............................... 5-40

5.4.4 Economic Impact on the Nacala Corridor Region ...................................................... 5-45

Chapter 6 Proposed Growth Scenarios of Zambia and Malawi Related

to Nacala Corridor Development .............................................................................. 6-1

6.1 Introduction ........................................................................................................................ 6-1

6.2 Advantages of Nacala Corridor over Other Transport Corridors of Zambia

and Malawi ......................................................................................................................... 6-2

6.2.1 Emergence of Nacala Corridor as an Important Alternative Transport

Route ............................................................................................................................. 6-2

6.2.2 Advantages of Nacala Corridor over Other Transport Corridors

for Zambia and Malawi ................................................................................................. 6-3

6.2.3 Impact of Advantageous Nacala Corridor with Planned Interventions

on Development of Economic Sectors .......................................................................... 6-9

6.3 Proposed Vision for Nacala Corridor Development ......................................................... 6-10

6.3.1 Proposed Vision on Nacala Corridor Development for Zambia, Malawi

and Mozambique ......................................................................................................... 6-10

6.3.2 Nacala Corridor Development Concept and Guiding Principles ................................ 6-10

6.4 Basic Policies on the Utilisation of Nacala Corridor and Development

of Nacala Corridor Transport Infrastructure and Services ................................................ 6-12

6.4.1 Basic Policies on the Utilisation of Nacala Corridor .................................................. 6-12

6.4.2 Selection of Development Scenario of Nacala Corridor Transport

Infrastructure and Services .......................................................................................... 6-14

6.5 Basic Policies on Priority Economic Sectors and Target Markets in Nacala

Corridor Development ...................................................................................................... 6-17

6.5.1 Increasing Importance of Regional Markets ............................................................... 6-17

6.5.2 Basic Policies for Development of Economic Sectors in Relation to the

Development of Nacala Corridor Transport Infrastructure ......................................... 6-17


v

6.5.3 Priority Economic Sectors to be Promoted in Relation to Nacala Corridor

Transport Infrastructure Development ........................................................................ 6-18

6.6 Strategies and Four Stages for Development of Nacala Corridor Transport

Infrastructure and Services ............................................................................................... 6-21

6.6.1 1st Stage (Present Situation) and 2nd Stage of Development of Nacala

Corridor Transport Infrastructure and Services ........................................................... 6-21

6.6.2 3rd Stage and 4th Stage of Development of Nacala Corridor Transport

Infrastructure and Services .......................................................................................... 6-21

6.7 Zambia’s Strategies for Promoting Development of Potential Economic Sectors

in Relation to Nacala Corridor Development ................................................................... 6-23

6.7.1 Zambia’s Strategies for Promoting Development of Potential Economic

Sectors by Taking Advantage of the Upgraded Nacala Corridor ................................ 6-23

6.7.2 Zambia’s Potential Economic Sectors Related to Nacala Corridor Development ...... 6-25

6.7.3 Description of Potential Economic Sectors of Zambia and Key Points

for Promoting Development of Potential Economic Sectors of Zambia ..................... 6-27

6.8 Malawi’s Strategies for Promoting Development of Potential Economic Sectors

in Relation to Nacala Corridor Transport Development ................................................... 6-32

6.8.1 Malawi’s Strategies for Promoting Development of Potential Economic

Sectors in Relation to Nacala Corridor Transport Development ................................. 6-32

6.8.2 Malawi’s Potential Economic Sectors Related to Nacala Corridor Development ...... 6-33

6.8.3 Description of Potential Economic Sectors of Malawi and Key Points

for Promoting Development of Potential Economic Sectors in Malawi ..................... 6-35

Chapter 7 Priority Projects Proposed for Promoting Nacala Corridor Development ............ 7-1

7.1 A Long List of Projects ...................................................................................................... 7-1

7.2 List of Recommended Priority Projects Promoting Nacala Corridor Development ........ 7-16

7.3 Brief Profiles of Priority Projects Recommended for Promoting Nacala

Corridor Development ...................................................................................................... 7-17

7.3.1 Development of Transport Infrastructure of Nacala Corridor ..................................... 7-17

7.3.2 Promotion of Economic Sectors Along Nacala Corridor ............................................ 7-27

Appendix for Chapter 7: Points to be Considered for Farming Plan .......................................... 7-36

ANNEX : Records of the Seminars


vi

LIST OF TABLES Page

Table 1.1 Study Area (Nacala Corridor Region in Zambia and Malawi) ............................................... 1-2

Table 1.2 List of Main Counterpart Agencies for the Study ................................................................... 1-3

Table 2.1 Distance between Major Cities and Main Ports .................................................................... 2-16

Table 2.2 Border Freight Traffic for Zambia and Malawi in 2015 ....................................................... 2-18

Table 2.3 Freight Share per Corridor for Zambia (Year 2016) ............................................................. 2-20

Table 2.4 Freight Share per Corridor for Malawi (Year 2016) ............................................................. 2-21

Table 2.5 Freight Movement on Nacala Corridor in Zambia ................................................................ 2-22

Table 2.6 Freight Movement by Railway in Malawi (2015) ................................................................ 2-23

Table 2.7 Outline of the Capacity of the Major Ports ........................................................................... 2-25

Table 2.8 Development Status of OSBPs at Various Border Towns .................................................... 2-26

Table 2.9 Transit Time and Costs for the Major Towns from Various Ports ....................................... 2-28

Table 3.1 Demographic Characteristics of the Study Area ..................................................................... 3-1

Table 3.2 Agriculture Products by Agro-ecological Region ................................................................... 3-3

Table 3.3 Farm Structure in Zambia (2016) ........................................................................................... 3-5

Table 3.4 Category of Producers inside of Farm Block ........................................................................ 3-15

Table 3.5 Roles of the three Committees for Screening the Investment Plans ..................................... 3-15

Table 3.6 Progress of the Farm Block Development ............................................................................ 3-16

Table 3.7 Export and Import of Maize by Zambia by Country (Unit: ton) ........................................... 3-24

Table 3.8 Import of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ................... 3-26

Table 3.9 Export of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ................... 3-26

Table 3.10 Export and Import of Soya Bean by Zambia by Country (Unit: 1,000 ton) ......................... 3-27

Table 3.11 Import of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ............ 3-29

Table 3.12 Export of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ............ 3-29

Table 3.13 Export and Import of Wheat by Zambia by Country (Unit: 1,000 ton) ................................ 3-30

Table 3.14 Import of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ................... 3-31

Table 3.15 Export of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ................... 3-32

Table 3.16 Export and Import of Cotton Lint by Zambia by Country (Unit: 1,000 ton) ........................ 3-33

Table 3.17 Import of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ........... 3-34

Table 3.18 Export of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ........... 3-34

Table 3.19 Export and Import of Bovine Meat by Zambia by Country (Unit: ton) ................................ 3-36

Table 3.20 Export and Import of Live Bovine Animal by Zambia by Country (Unit: ton) .................... 3-36

Table 3.21 Export and Import of Live Goats and Sheep and Sheep Meat by Zambia

by Country (Unit: ton) .......................................................................................................... 3-37

Table 3.22 Export and Import of Meat and Edible Offal of Poultry by Zambia

by Country (Unit: ton) .......................................................................................................... 3-38

Table 3.23 Export and Import of Live Poultry by Zambia by Country (Unit: ton) ................................ 3-38

Table 3.24 Import of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ......... 3-40

Table 3.25 Export of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ......... 3-40


vii

Table 3.26 Import of Meat of Sheep and Goat by Country in COMESA, SADC and EAC

(Unit: 1,000 ton) ................................................................................................................... 3-41

Table 3.27 Export of Meat of Sheep and Goat by Country in COMESA, SADC and EAC

(Unit: 1,000 ton) ................................................................................................................... 3-41

Table 3.28 Import of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ........ 3-42

Table 3.29 Export of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ........ 3-42

Table 3.30 Export and Import of Fish by Zambia by Country (Unit: ton) .............................................. 3-43

Table 3.31 Import of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...................... 3-45

Table 3.32 Export of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...................... 3-45

Table 3.33 Export and Import of Soya Bean Oil by Zambia by Country (Unit: 1,000 ton) ................... 3-46

Table 3.34 Export and Import of Sunflower Oil by Zambia by Country (Unit: 1,000 ton) .................... 3-46

Table 3.35 Import of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-47

Table 3.36 Export of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-48

Table 3.37 Import of Sunflower Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ....... 3-48

Table 3.38 Export and Import of Raw Sugar by Zambia by Country (Unit: 1,000 ton) ......................... 3-50

Table 3.39 Export and Import of Refined Sugars by Zambia by Country (Unit: 1,000 ton) .................. 3-51

Table 3.40 Import of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-53

Table 3.41 Export of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...... 3-53

Table 3.42 Import of Soap and Detergent by Country in COMESA, SADC and EAC

(Unit: 1,000 ton) ................................................................................................................... 3-55

Table 3.43 GDP and Employment by Industry ....................................................................................... 3-56

Table 3.44 Contribution of the Mining and Quarrying Sector to the National Economy

(Million ZMW at 2010 Constant Price) ................................................................................ 3-58

Table 3.45 Mineral Production in Zambia from 2009 to 2013 (Metric ton unless otherwise

specified) .............................................................................................................................. 3-59

Table 3.46 Export of Major Mineral Products from 2012 to 2016 (million USD) ................................. 3-60

Table 3.47 Export Value and Destinations of Copper from 2011 to 2015 (million USD) ..................... 3-61

Table 3.48 Export Value and Destinations of Precious Stones and Semi-Precious Stones in 2015 ....... 3-62

Table 3.49 Export Value and Destinations of Cement in 2015............................................................... 3-62

Table 3.50 Export Value and Destinations of Lime in 2015 .................................................................. 3-62

Table 3.51 Export Value and Destinations of Cobalt in 2015 ................................................................ 3-62

Table 3.52 Export Value and Destination of Sulphur in 2015 ................................................................ 3-62

Table 3.53 Export Value and Destination of Manganese in 2016 .......................................................... 3-62

Table 3.54 Top Ten Export and Import Commodities in 2015 ............................................................... 3-68

Table 3.55 Top Five Destinations of Export and Import at Mwami Border Post from 2013

to 2016 .................................................................................................................................. 3-70

Table 3.56 Top Five Exported and Imported Commodities at Mwami Border Post from 2013

to 2016 .................................................................................................................................. 3-71

Table 3.57 Tourist Arrivals and Annual Tourism Earnings .................................................................... 3-73

Table 3.58 Tourist Arrivals by Port of Entry in 2015 ............................................................................. 3-77

Table 3.59 Tourist Arrivals in Eastern Province from 2011 to 2015 ...................................................... 3-77

Table 3.60 Tourism Statistics by Province in 2015 ................................................................................ 3-78

Table 3.61 Guiding Principles and Measures for Tourism Sector Development .................................... 3-79

Table 3.62 Electricity Access ................................................................................................................. 3-80


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Table 3.63 Power Generations in Zambia ............................................................................................... 3-81

Table 3.64 Consumption of Power by Sector in 2015 ............................................................................ 3-82

Table 3.65 National Fuel Consumption from 2010 to 2015 (metric ton) ............................................... 3-85

Table 3.66 Major Projects in the Energy Sector ..................................................................................... 3-86

Table 3.67 Investment in Eastern Province in Comparison with the Whole Country

(Pledged base, 2010-2016) ................................................................................................... 3-91

Table 3.68 Yearly Finding Requirement (USD) for the Transport Sector 2013-2016 ............................ 3-93

Table 3.69 Road Conditions by Road Type for 2014 (RDA 2014) ........................................................ 3-95

Table 3.70 Funding Sources for Road Works in 2016 ............................................................................ 3-95

Table 3.71 Budget Allocation by Programme in 2016 ........................................................................... 3-96

Table 3.72 Areas of Congestion and their Causes .................................................................................. 3-96

Table 3.73 ZRL Market Share in 2013 ................................................................................................. 3-100

Table 3.74 Proposed New Transport Quota System by ZRL ............................................................... 3-102

Table 3.75 Dry Port and ICD Facilities and Select Information ........................................................... 3-105

Table 4.1 Demographic Characteristics .................................................................................................. 4-1

Table 4.2 Distribution of Landholdings and Cultivated Area by Farm Size ........................................... 4-6

Table 4.3 Top 30 Ranked Irrigation Schemes and Current States of their Financing ........................... 4-14

Table 4.4 Recent Implemented Projects Related to Aflatoxins Control ............................................... 4-19

Table 4.5 Export and Import of Groundnuts by Malawi by Country (Unit: 1,000 ton) ........................ 4-24

Table 4.6 Import of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton) .......... 4-25

Table 4.7 Export of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton) .......... 4-26

Table 4.8 Export and Import of Rice by Malawi by Country (Unit: 1,000 ton) ................................... 4-27

Table 4.9 Import of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...................... 4-29

Table 4.10 Export of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ...................... 4-29

Table 4.11 Export and Import of Legumes by Malawi by County (Unit: 1,000 ton) ............................. 4-30

Table 4.12 Import of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ............. 4-31

Table 4.13 Export of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ............. 4-32

Table 4.14 Export of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ........... 4-32

Table 4.15 Import of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ........... 4-32

Table 4.16 Export of Cotton Lint by Malawi by Country (Unit: 1,000 tons) ......................................... 4-33

Table 4.17 Export and Import of Tobacco by Malawi by Country (Unit: 1000 tons) ............................ 4-35

Table 4.18 Import of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ................ 4-36

Table 4.19 Export of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ................ 4-36

Table 4.20 Export and Import of Raw Sugar by Malawi by Country (Unit: 1,000 ton) ......................... 4-37

Table 4.21 Export and Import of Refined Sugars by Malawi by Country (Unit: 1,000 ton) .................. 4-38

Table 4.22 Export and Import of Tea by Malawi by Country (Unit: 1,000 ton) ..................................... 4-39

Table 4.23 Import of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ....................... 4-40

Table 4.24 Export of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton) ....................... 4-41

Table 4.25 Export and Import of Soya Beans by Malawi by Country (Unit: 1,000 ton) ........................ 4-42

Table 4.26 Import of Soya Bean Oil by Malawi by Country (Unit: 1,000 ton) ...................................... 4-42

Table 4.27 GDP 2016 at 2010 Constant Price ........................................................................................ 4-44

Table 4.28 Employment by Industry 2013 ............................................................................................. 4-44


ix

Table 4.29 Contribution of Mining and Quarrying Sector to the National Economy

(Million MWK at 2010 Constant Price) ............................................................................... 4-45

Table 4.30 Mineral Production in 2015 and 2016 .................................................................................. 4-46

Table 4.31 Mineral Export in 2015 and 2016 ......................................................................................... 4-47

Table 4.32 Top Ten Export and Import Commodities in 2015 ............................................................... 4-52

Table 4.33 Top Five Importers and Exporters of Top Five Traded Commodities in 2015 ..................... 4-52

Table 4.34 Tourist Arrivals ..................................................................................................................... 4-54

Table 4.35 Expenditures by Purpose of Visit and Average Number of Nights in 2015 ......................... 4-56

Table 4.36 Annual Average Room and Bed Occupancy Rates in 2015 ................................................. 4-56

Table 4.37 Tourist Arrivals by Port of Entry Along Nacala Corridor in 2015 ....................................... 4-56

Table 4.38 Visions and Objectives in Malawi 2020 Tourism Development Strategy ............................ 4-57

Table 4.39 Challenges to the Tourism Sector ......................................................................................... 4-58

Table 4.40 Access to Electricity ............................................................................................................. 4-59

Table 4.41 Installed Capacity and Peak Demand from 2007 to 2016 ..................................................... 4-59

Table 4.42 Existing Power Stations ........................................................................................................ 4-59

Table 4.43 Peak Demand Forecast.......................................................................................................... 4-60

Table 4.44 Stand-by Power Supply Installation, Electricity Generation and Demand by Industry

in 2012 .................................................................................................................................. 4-61

Table 4.45 Fuel Import from 2000 to 2016 ............................................................................................. 4-62

Table 4.46 Fuel Import by Corridor from 2000 to 2016 (Thousand Litres) ........................................... 4-63

Table 4.47 Major On-Going and Planned Projects and Investments Proposed in IRP ........................... 4-65

Table 4.48 Major Large Scale Investment Projects in 2016 ................................................................... 4-67

Table 4.49 Freight Demand by Mode in 2015 (1,000 ton) ..................................................................... 4-70

Table 4.50 2016/17 Transport Sector Budget (billion MWK) ................................................................ 4-70

Table 4.51 Malawi's Road Network at the Time of 2009 ....................................................................... 4-74

Table 4.52 Condition of Malawi’s Classified Road Network as of June 2010 ....................................... 4-74

Table 4.53 Actual Roads Fund Income and Road Works Expenditures (million MWK) ....................... 4-74

Table 4.54 Ongoing Reconstruction Projects ......................................................................................... 4-76

Table 4.55 Potential Reconstruction Projects ......................................................................................... 4-76

Table 4.56 MNTMP Capital Road Projects ............................................................................................ 4-76

Table 4.57 2015 Annual Accumulative (ton) ......................................................................................... 4-83

Table 4.58 Current Demand at Kamuzu Airport..................................................................................... 4-84

Table 5.1 Macroeconomic Targets ......................................................................................................... 5-2

Table 5.2 Ten Critical Development Outcomes for Diversification and Inclusive Economic

Growth .................................................................................................................................... 5-3

Table 5.3 Expenditure by Function in 2017 and 2018 ............................................................................ 5-4

Table 5.4 Revenue in 2017 and 2018 ...................................................................................................... 5-5

Table 5.5 Improvement of Nacala Corridor (Rail) as Indicators in MGDS III ....................................... 5-6

Table 5.6 Expenditure from 2016/17 to 2018/19 .................................................................................. 5-10

Table 5.7 Revenue, Grants and Financing from 2016/17 to 2018/19 ................................................... 5-12

Table 5.8 Food and Cash Crop Production in Eastern Province, 2005/06–2014/15 ............................. 5-15

Table 5.9 Top Three Industries of Each Province Passing through Major Corridors ........................... 5-35

Table 5.10 Freight Demand by Mode in 2015 (1,000 ton) ..................................................................... 5-36


x

Table 5.11 Pure Transport Cost by Commodity in 2016 ........................................................................ 5-36

Table 5.12 Transit Time and Costs for the Major Towns from Various Ports ....................................... 5-37

Table 5.13 Transit Time and Costs for the Major Towns from Various Ports at Present and Future ..... 5-39

Table 5.14 Impacts of Nacala Corridor Development on Transport Time and Cost .............................. 5-40

Table 5.15 Regional Prices of Petrol and Diesel in US Dollars (USD/litre, as of 31st

December 2016) .................................................................................................................... 5-41

Table 5.16 Fuel Price at Port and Transport Cost to Malawi by Corridor .............................................. 5-41

Table 5.17 Impact on Transport Cost in Malawi (Fuel) ......................................................................... 5-42

Table 5.18 Average Annual Fertiliser Price (Urea) (USD/ton) .............................................................. 5-43

Table 5.19 Transport Cost of Fertiliser in Zambia .................................................................................. 5-44

Table 5.20 Pure Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton) ............... 5-44

Table 5.21 Transport Cost of Fertiliser in Malawi .................................................................................. 5-44

Table 5.22 Impact on Transport Cost of Fertiliser Import in Zambia ..................................................... 5-45

Table 5.23 Impact on Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton) ...... 5-45

Table 6.1 Comparison of Number of Farmers and Land in Zambia and Malawi ................................. 6-19

Table 6.2 Selection Criteria of Potential Economic Sub Sectors .......................................................... 6-20

Table 6.3 Selection Criteria of Potential Economic Sub Sectors in Zambia ......................................... 6-25

Table 6.4 Selection of Priority Products in Zambia .............................................................................. 6-26

Table 6.5 Potential Economic Sub Sectors and Primary Products in Zambia ...................................... 6-26

Table 6.6 Selection Criteria of Potential Economic Sub Sectors in Malawi ......................................... 6-34

Table 6.7 Selection of Priority Products in Malawi .............................................................................. 6-34

Table 6.8 Potential Economic Sub Sectors and Primary Products for Malawi ..................................... 6-35

Table 7.1 Long List of Projects for Promoting Nacala Corridor Development ...................................... 7-3

Table 7.2 Basic Policy on the Selection of the Priority Projects .......................................................... 7-16

Table 7.3 Priority Projects Recommended for Promoting Nacala Corridor Development ................... 7-17


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LIST OF FIGURES Page

Figure 1.1 Study Area: Nacala Corridor Region ...................................................................................... 1-2

Figure 1.2 Workflow ................................................................................................................................ 1-4

Figure 2.1 Corridors Supplying Zambia and Malawi ............................................................................... 2-4

Figure 2.2 National Transport Corridor Coordination Secretariat ........................................................... 2-8

Figure 2.3 Current Conditions of Development of Nacala Corridor ........................................................ 2-8

Figure 2.4 Traffic Volume on Main Roads in Zambia and Malawi (2015) ........................................... 2-17

Figure 2.5 Major Border Posts Related to Zambia and Malawi ............................................................. 2-17

Figure 2.6 Proportions of Observed Truck Movements in Malawi (2016) ............................................ 2-19

Figure 2.7 Imports and Exports by Seaport (ton) ................................................................................... 2-21

Figure 3.1 Nacala Corridor Region in Zambia ......................................................................................... 3-1

Figure 3.2 Agro-ecological Region and Vegetation Type ....................................................................... 3-3

Figure 3.3 Water Catchment in Zambia ................................................................................................... 3-4

Figure 3.4 Main Crop Zones of Zambia ................................................................................................... 3-6

Figure 3.5 Production of Maize (right) and Other Cereals (left) .............................................................. 3-6

Figure 3.6 Production of Oil Crops .......................................................................................................... 3-7

Figure 3.7 Production of Tobacco, Cotton and Coffee ............................................................................ 3-7

Figure 3.8 Number of Livestock – Cattle, Goats, Pigs, Sheep (right) and Chicken (left) ........................ 3-8

Figure 3.9 Concentration of Food Manufacturing Firms in Zambia, and the Spatial Analysis

of New Entrants .................................................................................................................... 3-10

Figure 3.10 COMACO Value Chain Model ............................................................................................ 3-19

Figure 3.11 Net Agricultural Export Value in Zambia ............................................................................ 3-20

Figure 3.12 Production of Maize by Zambia and its Export by Country ................................................. 3-24

Figure 3.13 Import of Maize by Country in the Integrated Region .......................................................... 3-25

Figure 3.14 Production and Trade of Soya Bean by Zambia ................................................................... 3-27

Figure 3.15 Import of Soya Bean by Country in the Integrated Region .................................................. 3-28

Figure 3.16 Production and Trade of Wheat by Zambia .......................................................................... 3-30

Figure 3.17 Import of Wheat by Country in the Integrated Region ......................................................... 3-31

Figure 3.18 Production and Trade of Cotton Lint by Zambia .................................................................. 3-32

Figure 3.19 Import of Cotton Lint by County in the Integrated Region .................................................. 3-34

Figure 3.20 Number of Livestock by Zambia .......................................................................................... 3-35

Figure 3.21 Number of Small Livestock by Zambia ................................................................................ 3-35

Figure 3.22 Import of Bovine Meat by Country in the Integrated Region ............................................... 3-39

Figure 3.23 Import of Meat of Sheep and Goat by Country in the Integrated Region ............................. 3-41

Figure 3.24 Fish Production 2011-2014 by Zambia ................................................................................. 3-43

Figure 3.25 Import of Fish by Country in the Integrated Region ............................................................. 3-44

Figure 3.26 Production and Trade of Edible Oil by Zambia .................................................................... 3-46

Figure 3.27 Import of Soya Bean Oil by Country in the Integrated Region ............................................ 3-47

Figure 3.28 Import of Sunflower Oil by Country in the Integrated Region ............................................. 3-48

Figure 3.29 Production of Sugar Cane and Trade of Sugar by Zambia ................................................... 3-49


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Figure 3.30 Production and Trade of Refined Sugar ................................................................................ 3-50

Figure 3.31 Trade of Sugar Confectionery by Zambia ............................................................................ 3-51

Figure 3.32 Import of Refined Sugar by Country in the Integrated Region ............................................. 3-52

Figure 3.33 Import of Sugar Confectionery by Country in the Integrated Region .................................. 3-54

Figure 3.34 Trade of Soap and Detergent by Zambia .............................................................................. 3-54

Figure 3.35 Import of Soap and Detergent by Country in the Integrated Region .................................... 3-55

Figure 3.36 Copper Production and Copper Price ................................................................................... 3-59

Figure 3.37 Export and Import Values from 2006 to 2015 ...................................................................... 3-64

Figure 3.38 Top 10 Export Partners in 2015 ............................................................................................ 3-65

Figure 3.39 Top 10 Import Partners in 2015 ............................................................................................ 3-65

Figure 3.40 Traditional and Non-Traditional Export from 2007 to 2017 ................................................ 3-66

Figure 3.41 Export by Product Category from 2006 to 2015 ................................................................... 3-67

Figure 3.42 Import by Product Category from 2006 to 2015 ................................................................... 3-67

Figure 3.43 Export and Import Values at Mwami Border Post ................................................................ 3-69

Figure 3.44 Tourist Arrivals by Continent ............................................................................................... 3-73

Figure 3.45 Tourist Arrivals by Purpose of Visit ..................................................................................... 3-74

Figure 3.46 Tourist Arrivals by Top Ten Overseas Markets in 2015 ...................................................... 3-74

Figure 3.47 Tourist Arrivals by Top Ten Africa Markets in 2015 ........................................................... 3-75

Figure 3.48 Tourists Visited Major National Parks ................................................................................. 3-75

Figure 3.49 Installed Capacity by Type of Generation ............................................................................ 3-81

Figure 3.50 Power Generation by Power Plant ........................................................................................ 3-82

Figure 3.51 Power Import and Export ...................................................................................................... 3-83

Figure 3.52 Government Import of Petroleum Feedstock and Finished Products from 2011 to 2016 ..... 3-84

Figure 3.53 Refinery Production of Petroleum Products in 2016 ............................................................ 3-84

Figure 3.54 Investment in Zambia (Pledged base, 2010-2016) ................................................................ 3-88

Figure 3.55 Investment in Zambia (Pledged base, 2010-2016) by Sector ............................................... 3-88

Figure 3.56 Investment in Zambia (Pledged base, 2016) by Area ........................................................... 3-89

Figure 3.57 FDI Liabilities Stocks by Source Country, 2014-2015 ......................................................... 3-89

Figure 3.58 FDI Liabilities Stocks by Industry, 2014-2015 ..................................................................... 3-90

Figure 3.59 Investment in Eastern Province (Pledged base, 2010-2016) ................................................. 3-91

Figure 3.60 Core Road Network in Zambia ............................................................................................. 3-94

Figure 3.61 Feeder Road Density ............................................................................................................. 3-97

Figure 3.62 Road Network and Per Capita Agricultural Production for 2015 ......................................... 3-97

Figure 3.63 Railway Network in Zambia ................................................................................................. 3-99

Figure 4.1 The Nacala Corridor Region in Malawi .................................................................................. 4-1

Figure 4.2 Agricultural Development Domains for Malawi .................................................................... 4-4

Figure 4.3 Distribution of Water .............................................................................................................. 4-5

Figure 4.4 Production of Maize (left) and Other Cereals (right) .............................................................. 4-7

Figure 4.5 Production (left), Import and Export (right) of Legumes ....................................................... 4-8

Figure 4.6 Production of Cash Crops ....................................................................................................... 4-9

Figure 4.7 Volume of Export Crops ......................................................................................................... 4-9

Figure 4.8 Number of Livestock - Cattle, Goats, Pigs and Sheep (left), Chickens (right) ....................... 4-9

Figure 4.9 Potential Irrigation Area ....................................................................................................... 4-13


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Figure 4.10 Production and Trade of Groundnuts by Malawi.................................................................. 4-23

Figure 4.11 Import of Groundnuts by Country in the Integrated Region ................................................. 4-25

Figure 4.12 Export of Groundnuts by Country in the Integrated Region ................................................. 4-26

Figure 4.13 Production, Area Harvested, Yield and Export of Rice by Malawi ...................................... 4-27

Figure 4.14 Import of Rice by Country in the Integrated Region ............................................................ 4-28

Figure 4.15 Production and Export of Legumes by Malawi .................................................................... 4-30

Figure 4.16 Import of Chickpeas by Country in the Integrated Region ................................................... 4-31

Figure 4.17 Export of Pigeon Pea by Country in the Integrated Region .................................................. 4-32

Figure 4.18 Production and Export of Cotton Lint by Malawi ................................................................ 4-33

Figure 4.19 Production and Trade of Tobacco by Malawi ....................................................................... 4-34

Figure 4.20 Import of Tobacco by Country in the Integrated Region ...................................................... 4-36

Figure 4.21 Production and Trade of Raw Sugar by Malawi ................................................................... 4-37

Figure 4.22 Production, and Trade of Refined Sugar by Malawi ............................................................ 4-38

Figure 4.23 Production and Export of Tea by Malawi ............................................................................. 4-39

Figure 4.24 Import of Tea by Country in the Integrated Region .............................................................. 4-40

Figure 4.25 Production and Export of Oil Seeds in Malawi .................................................................... 4-41

Figure 4.26 Production and Trade of Edible Oil by Malawi .................................................................... 4-42

Figure 4.27 Export and Import Values from 2006 to 2015 ...................................................................... 4-49

Figure 4.28 Top 10 Export Partners in 2015 ............................................................................................ 4-50

Figure 4.29 Top 10 Import Partners in 2015 ............................................................................................ 4-50

Figure 4.30 Export by Product Category from 2006 to 2015 ................................................................... 4-51

Figure 4.31 Import by Product Category from 2006 to 2015 ................................................................... 4-51

Figure 4.32 Tourist Arrivals in 2005 by Continent .................................................................................. 4-54

Figure 4.33 Tourist Arrivals by Purpose of Visit ..................................................................................... 4-54

Figure 4.34 Tourist Arrivals by Top Ten African Markets ...................................................................... 4-55

Figure 4.35 Tourist Arrivals by Top Ten International Markets in 2015 ................................................. 4-55

Figure 4.36 Tourist Arrivals by Port of Entry in 2015 ............................................................................. 4-56

Figure 4.37 Power Generation and Consumption from 2007 to 2016 ..................................................... 4-60

Figure 4.38 Consumption by Customer Category of ESCOM in 2016 .................................................... 4-60

Figure 4.39 Fuel Import from 1999 to 2016 ............................................................................................. 4-62

Figure 4.40 Fuel Import by Corridor in 2016 ........................................................................................... 4-63

Figure 4.41 FDI Inflow to Malawi (2011-2014) ...................................................................................... 4-66

Figure 4.42 FDI Inflow to Malawi by Sector (2014) ............................................................................... 4-66

Figure 4.43 Authorized Investment in Malawi (2016) by Sector ............................................................. 4-67

Figure 4.44 Organization Structure of MOTPW ...................................................................................... 4-70

Figure 4.45 Institutions Relating to Road Traffic .................................................................................... 4-71

Figure 4.46 Road Network in Malawi ...................................................................................................... 4-73

Figure 4.47 Historic Development of the Railway Network in Malawi .................................................. 4-79

Figure 4.48 Freight Volume at Nayuchi from 2012 to 2016 .................................................................... 4-82

Figure 5.1 Expenditure for Selected Functions in 2018 (Economic Affairs, Environmental

Protection and Housing and Community Amenities) ............................................................. 5-5

Figure 5.2 Proposed Integrated National Transport Network .................................................................. 5-9

Figure 5.3 Expenditure of Major Programmes ....................................................................................... 5-11


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Figure 5.4 Location of Chipata- Petauke-Serenje Rail Line .................................................................. 5-16

Figure 5.5 Location of Possible Driving Force Projects and Plans ........................................................ 5-23

Figure 5.6 Industry Share to the Total GDP at Current Prices, 2015: Nacala Corridor ......................... 5-32

Figure 5.7 Industry Share to the Total GDP at Current Prices, 2015: North-South Corridor ................ 5-32

Figure 5.8 Industry Share to the Total GDP at Current Prices, 2015: Dar es Salaam Corridor ............. 5-33

Figure 5.9 Industry Share to the Total GDP at Current Prices, 2015: Lobito Corridor.......................... 5-34

Figure 6.1 Current Conditions of Development of Nacala Corridor ........................................................ 6-3

Figure 6.2 Transport Cost: Comparison of Transport Corridors Related to Zambia and Malawi ............ 6-8

Figure 6.3 Transport Time: Comparison of Transport Corridors Related to Zambia and Malawi ........... 6-9

Figure 6.4 Concept of Corridor Development ....................................................................................... 6-11

Figure 6.5 COMESA-EAC-SADC Tripartite FTA: Expanding Regional Market

－Urban Population 2030 of Major Cities in the Region ..................................................... 6-13

Figure 6.6 Access to Regional Market via Nacala Port ......................................................................... 6-14

Figure 6.7 Wide Railway Network in Zambia and Malawi: Scenario A ............................................... 6-15

Figure 6.8 Wide Railway Network in Zambia and Malawi: Scenario B ................................................ 6-15

Figure 6.9 Wide Railway Network in Zambia and Malawi: Scenario C (Selected) .............................. 6-16

Figure 6.10 Railway Network (Scenario C: Selected) with Areas of Potential Economic Sectors .......... 6-39

Figure 7.1 Development Stages and Implementation Periods .................................................................. 7-2

Figure 7.2 Location of Luangwa Bridge ................................................................................................ 7-19

Figure 7.3 Chipata Bypass ..................................................................................................................... 7-21

Figure 7.4 Lilongwe North-West Bypass ............................................................................................... 7-23

Figure 7.5 Location of Blantyre City Road Improvement Project ......................................................... 7-24

Figure 7.6 Blantyre Inner Relief Road ................................................................................................... 7-24


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LIST OF ABBREVIATION

7NDP Seventh National Development Plan ACE Agricultural Commodity Exchange (Malawi) ADMARC Agricultural Development and Marketing Corporation AfDB African Development Bank AGCOM Agricultural Commercialization Project for Malawi AHCX Auction Holdings Limited Commodity Exchange (Malawi) ANE National Road Agency（Mozambique）

AP-SEZ Agro-Processing Special Economic Zone ASF African Swine Fever ASWAp Agriculture Sector Wide Approach CAA Civil Aviation Authority CAADP Comprehensive Africa Agriculture Development Programme CAZ Cotton Association of Zambia CBPP Contagious Bovine Pleuropneumonia CCPC Competition and Consumer Protection Commission CDN Corredor de Desenvolvimento do Norte CEAR Central East African Railways CEEC Citizens Economic Empowerment Commission CFM Caminhos de Ferro de Moçambique CCGC China’s Gezhouba Group Corporation CLN Corredor Logístico Integrado do Norte COMACO Community Markets for Conservation COMESA Common Market for Eastern and Southern Africa C-SAAP Country-led Situation Analysis and Action Planning DCA Department of Civil Aviation DCC Dar es Salaam Corridor Coordinating Committee DRC Democratic Republic of the Congo DRI Direct Reduced Iron DRTSS Directorate of Road Traffic and Safety Services (Malawi) EAC East African Community EAPP East Africa Power Pool ECF East Coast Fever ECOWAS Economic Community of West African States EDF Export Development Fund EIA Environmental Impact Assessment EIB European Investment Bank EIF Enhanced Integrated Framework ESCOM Electricity Supply Corporation of Malawi Limited E-SLIP Enhanced Smallholder Livestock Investment Project EU European Union F/S Feasibility Study FAO Food and Agriculture Organisation FAOSTAT Food and Agriculture Organisation Statistics FDI Foreign Direct Investment FISP Farmer Input Support Programme (Zambia) FISP Farm Inputs Subsidy Programme (Malawi) FMCG Fast Moving Consumer Goods


xvi

FRA Food Reserve Agency FSP Fertilizer Support Program FTA Free Trade Area FTC Farmer Training Centre FUM Farmers Union of Malawi GBI Green Belt Initiative GDP Gross Development Product GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GMA Game Management Areas GOM Government of Malawi GOZ Government of Zambia GW Giga Watt (109 watt) HFO Heavy Fuel Oil ICD Inland Container Depot ICT Information Communications Technology ICTC Inter-Country Trade Centre IDA International Development Association IDC Industrial Development Cooperation IFAD International Fund for Agricultural Development IPPs Independent Power Producers IRP Integrated Resource Plan (Malawi) JICA Japan International Cooperation Agency KIA Kamuzu International Airport KPAs Key Priority Areas MAPAC Malawi Programme for Aflatoxin Control MBS Malawi Bureau of Standards MERA Malawi Energy Regulatory Authority MFEZ Multi Facility Economical Zone MFL Ministry of Fisheries and Livestock (Zambia) MGDS Malawi Growth and Development Strategy MHID Ministry of Housing and Infrastructure Development (Zambia) MIDP Medium Scale Irrigation Development Project MITC Malawi Investment and Trade Centre MNLP Malawi National Land Policy MNTMP Malawi National Transport Master Plan MNTP Malawi National Transport Policy MOA Ministry of Agriculture (Zambia) MOAIWD Ministry of Agriculture, Irrigation and Water Development (Malawi) MOCTI Ministry of Commerce, Trade and Industry (Zambia) MOE Ministry of Energy MOITT Ministry of Industry, Trade and Tourism (Malawi) MOTPW Ministry of Transport and Public Works (Malawi) MOU Memorandum of Understanding MRA Malawi Revenue Authority MT Metric Ton MTC Ministry of Transport & Communications (Zambia) MW Mega Watt MWK Malawian Kwacha


xvii

MWS Ministry of Works & Supply (Zambia) NAIP National Agricultural Investment Plan NAP National Agriculture Policy NAS National Agriculture Strategy NASFAM National Smallholder Farmers’ Association of Malawi NCIC National Construction Industry Council NEPAD New Partnership for Africa's Development NEPAD-IPPF NEPAD Infrastructure Project Preparation Facility NES National Export Strategy NGO Non-Governmental Organization NMT Non-Motorised Transport NRFA National Road Fund Agency (Zambia) NTE Non Traditional Exports NWRA National Water Resources Authority O&M Operation and Maintenance OFID OPEC (Organization of the Petroleum Exporting Countries) Fund for International

Development OPRC Output and Performance Based Road Contracting System OSBP One Stop Border Post PACA Partnership for Aflatoxin Control in Africa Petromoc Petróleos de Moçambique PPP Private Public Partnership PSO Public Service Obligation PTA Preferential Trade Area RA Roads Authority (Malawi) RDA Road Development Agency (Zambia) RDC Railroad Development Corporation REO Rare Earth Oxides RFA Road Fund Administration (Malawi) RGCs Rural Growth Centres RISDP Regional Indicative Strategic Development Plan RSS Road Sector Strategy RSZ Railway Systems of Zambia RTSA Road Transportation & Safety Agency

RUTF Ready to Use Therapeutic Foods SA South Africa SADC Southern African Development Community SAPP Smallholder Agribusiness Promotion Programme SAPP Southern African Power Pool SDI Spatial Development Initiative SEZ Special Economic Zone SLIP Smallholder Livestock Investment Project SMEs Small and Medium Enterprises SNAP Second National Agriculture Policy SPS Sanitary and Phytosanitary SVIP Shire Valley Irrigation Project SWB Small Water Bodies T4 Great East Road


xviii

TAZAMA Tanzania-Zambia Mafuta TAZARA Tanzania-Zambia Railway Authority TEU Twenty Feet Equivalent Unit TFCAs Transfrontier Conservation Areas TIP SWAp Trade Industry and Private Sector Development Sector Wide Approach TWG Technical Working Group UAE United Arab Emirates UEMOA West African Economic and Money Union USAID United States Agency for International Development UNDP United Nations Development Programme UNSD United Nations Statistics Division WB World Bank WBCG Walvis Bay Corridor Group WITS World Integrated Trade Solution WTO World Trade Organization ZAMACE Zambian Commodity Exchange ZDA Zambia Development Agency ZMW Zambian Kwacha ZNFU Zambia National Farmers Union ZNTMP Zambia National Transport Master Plan ZNTP Zambia National Transport Policy ZRA Zambia Revenue Authority ZRA Zambia Railways Authority ZRL Zambia Railways Limited


S-1

Executive Summary

Data Collection Survey on Nacala Corridor Integrated Development in Southern Africa

1. Objectives of the Study

The Nacala Corridor is an important economic corridor in Southern Africa, extending from

Nacala Port in the northern region of Mozambique, through Lilongwe, the capital city of Malawi,

to Lusaka, the capital city of Zambia. The study has three objectives. The first objective is to

identify issues, needs, and development potentials of the Nacala Corridor Region. Second, the

study is to propose priority projects including those suitable for assistance by considering

integrated development strategies for the Nacala Corridor Region. Third, it aims to clarify roles of

regional organisations, such as COMESA, SADC, and NEPAD, in Nacala Corridor Development

and identify possible cooperation between those organisations and JICA. This study focuses on

Zambia and Malawi, since a master plan was already prepared for the Nacala Corridor Region in

Mozambique.

2. Study Area

The target area of the Study is the Nacala Corridor Region in Zambia and Malawi shown in the

table and figure below.

Table 1 Study Area (Nacala Corridor Region in Zambia and Malawi)

Country Route of Nacala Corridor Provinces/Regions

Zambia Lusaka-Chipata and Extended Routes Lusaka, Eastern, Muchinga, Central, and

Copperbelt Provinces Malawi Mchinji-Lilongwe-Chiponde / Nayuchi Nationwide

Figure 1 Study Area: Nacala Corridor Region

Tete Lusaka

Chipata

Lilongwe

Blantyre

Nacala Port


S-2

3. Corridor Development in Zambia and Malawi and Current Status of Nacala Corridor Development

Zambia and Malawi are landlocked countries and their access routes to seaports are limited to

crossing-border land transport. Therefore, they use several transport corridors as follows:

Corridor to Durban Port: North-South Corridor in Zambia and Durban Corridor in Malawi

Corridor to Dar es Salaam Port: North-South Corridor in Zambia and Dar es Salaam

Corridor in Malawi

Corridor to Beira Port: Beira Corridor in Zambia and Malawi

Corridor to Ports in west coast of Africa: Lobito Corridor and Walvis Bay Corridor only in

Zambia

Figure 2 Corridors in Zambia and Malawi


S-3

At present, cargo transport does not use the Nacala Corridor very much in comparison with other

corridors. It is because the railway and Nacala Port of the Nacala Corridor have not yet been well

known by potential users, although the railway in the Nacala Corridor has been upgraded by a

private mining group for transporting coal from Moatize up to Nacala Port. The upgraded railway

is available up to Blantyre, the southern commercial centre of Malawi, through Nkaya and

Liwonde. However, due to the inefficiency of the transportation network as a result of the lack of

connectivity between road and railway transportation (Multi Modal Dry Ports for example), the

advantages of railway transportation have not yet been enjoyed in Lilongwe, the capital of

Malawi, or Chipata, in Zambia.

As for development of economic sectors, Zambia’s agricultural sector has a high export potential;

however, it needs to address challenges of low-productivity of small scale farmers and stagnant

production of Farm Blocks (large scale farms). Malawian economic sectors, especially

commercial agriculture and agro-processing sectors started responding to the upgraded Nacala

Corridor Railway for exporting their products. Now it is time for Malawi to encourage small scale

farmers to organise themselves and to export their products to regional markets, as well as outside

regional markets, by utilizing the railway and roads of the Nacala Corridor. For promoting

corridor development, it is essential to promote development of both corridor infrastructure and

economic sectors.

4. Advantages of Nacala Corridor

With planned interventions to maximise the transport functions of the Nacala Multi-Modal

Corridor, its advantages in terms of transport cost and time are identified in comparison with

other corridors. Those interventions include upgrading of railway and construction of dry ports.

Zambia: In Lusaka, Nacala Corridor (Rail and Road) has an advantage over other corridors in

terms of transport cost, while in terms of time, the Lusaka-Durban Corridor has an advantage over

the other corridors in terms of time. In Chipata, the Nacala Corridor (Rail and Road) has an

advantage over the other corridors in terms of transport cost and time.


S-4

Figure 3 Transport Cost and Time: Comparison of Transport Corridors Related to Zambia

Malawi: In Lilongwe, the Nacala Rail and Road Corridor after the interventions has an advantage

over the other corridors in terms of transport cost and time. The Nacala Rail Corridor has an

advantage over the other corridors in terms of cost, while, the Nacala Road Corridor has an

advantage over the other corridors in terms of time. In Blantyre, the Nacala Rail Corridor after the

interventions will have an advantage over the other corridors in terms of transport cost and time.

The Nacala Rail Corridor has an advantage over other corridors in terms of cost.


S-5

Figure 4 Transport Cost and Time: Comparison of Transport Corridors Related to Malawi

5. Impacts of Transport Corridor Improvement on Economic Sectors

The Study reveals that the Nacala Corridor (combined rail and truck transport) is advantageous

over the other transport corridors in terms of transport cost and time after the completion of

upgrading the railway in the

Nacala Corridor.

As a result, it is expected that

prices of fuel and fertilizer would

decline, access to neighbouring

countries and regional markets

would be improved, and the

potential for economic sector

development in the Nacala

Corridor areas would increase.

Therefore, the following two kinds Figure 5 Concept of Corridor Development


S-6

of development strategies for the Nacala Corridor and its surrounding areas are recommended: (1)

to develop transport corridor infrastructures so that economic sectors could utilize them more

easily and efficiently, and (2) to support to make full use of development potential of economic

sectors taking advantage of upgraded the Nacala Corridor.

6. Proposed Growth Scenarios of Zambia and Malawi Related to Nacala Corridor Development

(1) Staged Development of Transport Infrastructure and Services of Nacala Corridor

Considering transport cost and time necessary for utilising the Nacala Corridor, the following

four stages of development of corridor transport infrastructures are set for the proposed growth

scenario:

1st Stage (Present Situation at 2018): Upgraded Railway between Nacala and Moatize, together

with the Rehabilitated Railway section between Limbe and Nkaya.

2nd Stage (2020): Upgraded Railway between Nacala and Chipata passing through Lilongwe by a

private group. According to the private group, the required period for this upgrading is two years.

Therefore, the 1st period that transfers from the 1st stage to the 2nd stage is expected as two years

from now, and then the 2nd stage is expected to run in 2020. The advantage of the Nacala Corridor

will be expanded to the whole of Malawi and Eastern Province in Zambia.

3rd Stage (2023): Upgraded Railway and Roads with Establishment of Multi-Modal Dry Ports in

Blantyre, Lilongwe and Chipata. Due to these, truck transport and upgraded railway transport can

be combined smoothly, and then the transport time from Lusaka to the Nacala port will become

the second shortest among the transport corridors and also the cost will become the lowest. In

order to develop the dry ports, it may need two years from design stage to start operation without

fund arrangement. Therefore, the 2nd period which is from the 2nd stage to the 3rd stage, is

expected to take at least three years and the 3rd stage is expected to start in 2023 at the earliest.

Figure 6 Four Stages of Nacala Corridor Development


S-7

Figure 7 Development of Nacala Corridor and Impact on Economic Sectors in 3rd Stage

4th Stage (2030): In the long term, it is expected that transport times and costs of the other

corridors will be reduced in Zambia and Malawi due to emerging competition with the Nacala

Corridor, which has advantages in transport times and costs. Though it may difficult to estimate

the period that is necessary for competitions among the corridors occur, at least several years may

be needed to perform the full functions of the Nacala Corridor after the installation of the dry

ports. It may take several years before continuous competitions occur. Therefore, the 4th stage is

assumed to begin in 2030.

For Zambia, the Nacala Corridor will be considered as one of the several transport corridors that

have merit in Zambia, which will have an advantage of transport cost and time through (1) the

implementation of projects such as construction of the dry port and its access roads in Chipata, to

accelerate the use of the Nacala Corridor for transporters, traders and other private entities in

Zambia, and (2) the promotion of economic sectors which utilise the Nacala Corridor.

For Malawi, the Nacala Corridor will be (1) the only railway transportation available in Malawi

that enables to transport commodities at a lower price than road transport and (2) a multimodal

corridor connecting Malawi to regional markets through Zambia to increase the amount of selling

goods and enter new markets.

(2) Potential Products to be Targeted for Expansion of Production and Export to

Regional Markets

As described in the concept of corridor development, it is necessary to consider the points below

to make a positive cycle between the development of economic sectors and the development of

the Nacala Corridor.

① Promote the growth of economic sectors which will strengthen its competitiveness

through the utilisation of the benefits brought by the development of the Nacala Corridor,


S-8

such as decreasing the transport cost, increasing the assuredness of the transportation,

decreasing of the price of fuel and fertilisers, etc.

② Prioritise the economic sectors which can create a positive circle of the utilisation of the

transport corridor and the development of the economic sectors, by which the continuous

maintenance and further upgrade of the transport corridor will be promoted.

Based on the characteristics of agriculture production in Zambia and Malawi, it is clarified that

considerable agricultural potential in Zambia and that in Malawi are different. In Zambia, there

are still enough land to develop commercial farming and an opportunity to develop value chain

based on the agricultural products from the farms due to their certain volume and uniformed

quality of production. On the other hand, land use in Malawi has already been developed to a

certain level; therefore, it might be necessary to improve the productivity of agriculture and

market access of small scale farmers.

Based on the understanding above, analysing regional market potential for Zambia and Malawi as

well as their present productive sectors’ potential, the potential economic sub sectors are selected

with the criteria below:

Table 2 Selection Criteria of Potential Economic Sub Sectors

Zambia Malawi

Suitable to combine in Agricultural Cluster Small scale farmers as beneficiaries

Large production in Nacala Corridor Region Export crop. Or its production meets domestic demand High demand in the regional market Future market growth can be expected (or strong market demand in foreign market）

Great benefit of using the Nacala Corridor

Table 3 Potential Economic Sub Sectors and Primary Products

Sub Sector Zambia Malawi

Crop Production Maize Soya Bean Wheat Cotton

Groundnuts Rice Pulse crops Cotton Tea Tobacco

Agro-processing Sugar Edible Oil（Soya Bean, Sunflower）

Sugar Edible Oil（Soya Bean, Sunflower）

Livestock Bovine Meat Small Ruminant（Goat, Sheep） Chicken Farming

-

Others Soaps and synthetic preparations Rare earth Niobium


S-9

(3) Staged Development of Economic Sectors by Utilising Transport Infrastructure

and Services of Nacala Corridor

In accordance with the stages of development of corridor transport infrastructures, the following

staged development of economic sectors is set for the proposed growth scenario. The transition

periods of the stages are assumed as follows;

1st Period (2017-2019): The period from now till the 2nd stage means by completion of

the upgrading of the railway between Nkaya and Chipata through Mchinji.

2nd Period (2020-2022): The period between the 2nd stage to the 3rd stage means before

the construction of multi-modal dry ports in Blantyre, Lilongwe and Chipata.

3rd Period (2023-2029): The period between the 3rd and 4th stages means after the

completion of the Nacala Corridor from viewpoint of infrastructure.

Table 4 Growth Strategies of Economic Sectors by Development Stage

Stage Nacala Corridor

Infrastructure and Service Development

Period Country (Zambia/ Malawi)

Expected Positive Impacts at the Stage

Strategies for Economic Sector Development

1st

Stage

(1) Upgraded Railway between Nacala and Moatize

(2) Rehabilitated Railway Section between Limbe and Nkaya

1st Period (Present situation :

2017 – 2019)

Zambia

No advantage of the Nacala Corridor over other corridors except the advantage of Chipata-Nacala Rail Corridor in transport cost

No impact on Lusaka and Eastern Province economy

-

Malawi

Substantial impact on the economy of Malawi, especially on the southern Malawi in terms of the transport cost.

Advantage of import of fertiliser and fuel

Advantage of export of sugar, tobacco and tea, etc.

Need to encourage small scale farmers to expand their production and export to neighbouring markets.

Needs to promote the utilisation of the Nacala Rail Corridor and Nacala Port by conducting sales activities.

2nd Stage

Upgraded Railway between Nacala and Chipata (1) Upgraded Railway

between Nacala and Moatize


(3) Upgraded Railway Section between Nkaya and Chipata through Mchinji

2nd Period (2020 – 2022)

Zambia

Advantage (reduced transport costs and time) of the Nacala Corridor between Chipata and Nacala over other corridors

Advantages for Eastern Province to utilise the Nacala Rail Corridor for fertiliser and fuel import (reduced prices of fertiliser and fuel)

Opportunity for Eastern Province to export products to regional markets (inland neighbouring countries and coastal countries through Nacala Port).

Need to support small scale farmers in Eastern Province for export oriented production by taking advantage of impacts of upgraded Nacala Rail Corridor (reduced prices of fertiliser and fuels, as well as reduced transport costs and time)

Malawi

Large areas of Malawi covered by the cargo railway services of the Nacala Corridor.

Opportunity for development of

Need to support small scale farmers for improvement of productivity, branding


S-10

Stage Nacala Corridor

Infrastructure and Service Development

Period Country (Zambia/ Malawi)

Expected Positive Impacts at the Stage

Strategies for Economic Sector Development

economic sectors targeting regional markets, as well as outside regional markets.

for marketing and access to domestic and regional markets.

3rd Stage

Combined Rail Transport and Truck Transport between Nacala and Lusaka through Chipata Upgraded Railway between Nacala and Chipata (1) Upgraded Railway

between Nacala and Moatize


(3) Upgraded Railway Section between Nkaya and Chipata through Mchinji

Establishment of Multi-Modal Dry Ports Blantyre Lilongwe Chipata

Establishment of OSBP Mwami-Mchinji Border

3rd Period (2023 – 2029)

Zambia

Advantage of the Nacala Corridor between Lusaka and Nacala over other corridors

Good impact on the economy of Lusaka and Chipata

Advantage for Lusaka and Chipata to utilise the Nacala Corridor for fuel and fertiliser import with reduced prices.

Opportunity to export products to neighbouring countries and other regional markets.

Needs to attract private investments for the development of Farm Blocks in Lusaka and its surrounding areas, as well as in Eastern Province for expanding agricultural production oriented to regional markets.

Need to continue to support small scale farmers of Eastern Province for expanding agricultural production oriented to regional markets.

Malawi

Opportunity to export products to Zambia, DRC, and other regional markets by utilising rail and truck transport of the Nacala Corridor and other corridors such as North-South Corridor and Dar es Salaam Corridor

Need to continue to promote the development of economic sectors for export to regional markets

4th Stage

Revitalised Railway Utilisation of Other Corridors due to Emerging Competition with Combined Railway Transport and Truck Transport between Nacala and Lusaka

And then (2030 ~)

Zambia

Reduction of transport costs of not only the Nacala Corridor, but also other rail corridors due to the competition among the corridors

Positive impact on the Zambian economy and agricultural sector due to reduced transport costs and time, and reduced prices of fertiliser and fuels

Opportunity to expand production and export for regional markets and outside regional markets

Need to promote to expand production and export of potential products or economic sectors targeting regional markets and international markets by widely using revitalized rail transport corridors (not only the Nacala Corridor but also other corridors)

Malawi

Opportunity to export products to Zambia, DRC, and other regional markets via rail and truck transport of the Nacala Corridor and other corridors such as North-South Corridor and Dar es Salaam Corridor

Need to promote economic sectors widely targeting regional and outside regional markets


S-11

7. Priority Projects for Promoting Nacala Corridor Development

In order to initiate and sustain the implementation of the selected growth scenario, the following

fifteen projects are identified as priority projects which are recommended for implementation.

The priority projects are categorized broadly into two groups. A group of projects is those for

development of corridor transport infrastructure and the other is a group of the projects for

promoting economic sectors such as agriculture and livestock.

Table 5 Priority Projects Recommended for Promoting Nacala Corridor Development

Project Sector Period

Development of Transport Infrastructure of Nacala Corridor

Zambia

Z1 Replacement of Luangwa Bridge Road 1st

Z24 Development of One Stop Border Post (OSBP) of Transport Corridors from Zambia (ICT (National Single Window), Physical Facilities, Capacity Development and Institutional Building)

Road 1st

Z6 Construction of New Chipata Bypass Road 2nd

Z16 Construction of Chipata Multi-Modal Dry Port Logistics 2nd

Malawi

M3 Expansion of Lilongwe North Western Bypass Road 2nd

M4 Blantyre City Road Improvement Road 1st

M5 Construction of Blantyre Inner Relief Road Road 2nd

M17 Construction of Multi-modal Dry Ports in Blantyre (Limbe and Others) and Lilongwe (Kanengo) Logistics 1st

M18 Capacity Development of Government Officers for OSBP Operation Logistics 1st

M39 Improvement of Electricity Supply to Industrial Areas in Lilongwe and Blantyre Energy 1st

Promotion of Economic Sectors Along Nacala Corridor

Zambia

Z31 Promotion of Export-Oriented Agriculture and Livestock Development Targeting Small Scale Farmers in Eastern Province Agriculture 2nd

Z32 Study on Farm Block Development Models with Special Considerations for Small Scale Farmers

Agriculture 1st

Z39 Export Strategy Formulation Study for Zambia Trade 1st

Malawi

M27 Groundnuts Production Revitalisation with Special Attention to Aflatoxin Control Agriculture 2nd

M29 Improvement of Market Access for Small Scale Rice Farmers Agriculture 2nd


1-1

Chapter 1 Introduction

1.1 Background of the Study

The Nacala Corridor, extending from Nacala Port in the northern region of Mozambique,

through Malawi, to Lusaka, the capital city of Zambia, is an important economic corridor in

Southern Africa. JICA has been assisting the development of the Nacala Corridor and its

surrounding areas through various projects. However, most of the projects have targeted the

northern region of Mozambique. At present, traffic volume along the Nacala Corridor in

Zambia and Malawi is not much, and the potential of the corridor development is not utilised

effectively. For landlocked countries such as Zambia and Malawi, development and utilisation

of international corridors, which would improve access to international markets and vitalise

the regional economy, is an important issue for the development of the national economy.

The Government of Zambia identified diversification of the economy and infrastructure

development for economic diversification as the most important issue in the Sixth National

Development Plan (2013-2016). A cross-ministerial working group was established for Nacala

Corridor Development.

The Government of Malawi identified development of transport infrastructure as one of the

most important issues in the Malawi Growth and Development Strategy II (2011-2016), and

infrastructure development and management of international corridors as one of the priority

areas in the National Transport Policy formulated in 2015.

However, except for some information about infrastructure development, there had been no

adequate information of the existing conditions and development potential of the Nacala

Corridor from a perspective of regional development incorporating both hard and soft aspects

of economic sectors. Therefore, the JICA Study was conducted to collect information on

Nacala Corridor Development in Zambia and Malawi, placing a special focus on identification

of development potentials and formation of projects.

1.2 Objectives of the Study

The objectives of the Study were to identify issues, needs, and development potentials of the

Nacala Corridor Region, and to identify priority projects by considering integrated

development strategies for the Nacala Corridor Region.

The following information were collected and analysed to achieve the objectives:

Existing projects related to the development of the Nacala Corridor Region

Current socio-economic conditions of the Nacala Corridor Region

Economic sector development in the Nacala Corridor Region

Logistics networks for economic sector development in the Nacala Corridor Region


1-2

The Study also clarified roles of regional organisations, such as Common Market for Eastern

and Southern Africa (COMESA), Southern African Development Community (SADC), and

New Partnership for Africa’s Development (NEPAD), in Nacala Corridor Development, and

identified possible cooperation between those organisations.

1.3 Study Area

The target area of the Study is the Nacala Corridor Region in Zambia and Malawi shown in

Figure 1.1. The Nacala Corridor is a transport corridor consisting of railway and road. It runs

from Nacala Port in the northern region of Mozambique through Malawi, to Lusaka of Zambia.

The Nacala Corridor Region is defined as shown below according to expected influence and

impacts given by the Corridor.

Table 1.1 Study Area (Nacala Corridor Region in Zambia and Malawi)

Country Route of Nacala Corridor Provinces/Regions

Zambia Lusaka-Mwami and Extended Routes Lusaka, Eastern, Muchinga, Central, and Copperbelt Provinces

Malawi Mchinji-Lilongwe-Chiponde/Nayuchi Nationwide

Source: JICA Study Team


Figure 1.1 Study Area: Nacala Corridor Region

Tete Lusaka

Chipata

Lilongwe

Blantyre

Nacala Port


1-3

1.4 Counterpart Agencies for the Study

The main counterpart agencies for the Study are shown in Table 1.2.

Table 1.2 List of Main Counterpart Agencies for the Study

Zambia Malawi Regional Organisation Ministry of Transport and

Communications Ministry of Works and Supply Ministry of Housing and Infrastructure

Development Ministry of Agriculture Ministry of Fisheries and Livestock Ministry of Commerce, Trade and

Industry Ministry of Mines Ministry of National Planning and

Development

Ministry of Transport and Public Works

Ministry of Agriculture, Irrigation and Water Development

Ministry of Industry, Trade and Tourism

Ministry of Finance, Economic Planning and Development

Ministry of Natural Resources, Energy and Mining

COMESA SADC NEPAD

1.5 Study Schedule

The general workflow chart for the implementation of the Study is shown in Figure 1.2.


1-4

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2-1

Chapter 2 Corridor Development in Zambia and Malawi and Current Status of Nacala Corridor Development

2.1 Clusters of Transport Corridors

2.1.1 Propulsion Frameworks: Transport Corridors as Economic Corridors

The Nacala Corridor is one of international transport corridors in Africa, which are cutting

across different countries, in many cases connecting international ports with inland countries.

These transport corridors are considered as “economic corridors”, which aim at not only

providing the countries along the corridors with transport services, but also initiating

economic development by promoting development of industries and social services in the

regions along the corridors.

(1) Spatial Development Initiative (SDI)

The economic corridor development is rooted in the “Spatial Development Initiative (SDI)”

started by South Africa for reconstruction in the 1990s after the end of the apartheid. The

programme, which intended to promote investment and improve transport efficiency, made

remarkable success for the determination and leadership of politicians, government officers

and development experts. Due to this success, the SDI approach was adopted by regional

organisations such as SADC, African Development Bank (AfDB), and COMESA1. These

regional organisations acknowledged that the SDI enables a region to achieve economic

growth by attracting investment to cultivate abundant natural resources and eventually by

nurturing manufacturing industry in an integrated manner2.

The Maputo Development Corridor in southern Mozambique is known as the most successful

inter-regional initiative in sub-Saharan Africa among others. The SDI advocates the other

corridors as follows3:

Limpopo Valley SDI (SA and Mozambique) Beira Development Corridor (SA, Mozambique and Zimbabwe) Zambezi Valley SDI (SA and Mozambique) Nacala Development Corridor (SA, Mozambique, Malawi and Zambia) Walvis Bay Development Corridor (SA and Namibia) Gariep SDI (SA’s Northern Cape Province and Namibia) Mtwara Development Corridor (SA, Tanzania, Mozambique and Malawi) Central Development Corridor (SA, Tanzania and Rwanda) Lebombo Investment Initiative (SA, Swaziland and Mozambique)

1 Gadzeni Mulenga. Developing Economic Corridors in Africa Rationale for the Participation of the African Development Bank. AfDB Regional Integration Brief. NEPAD, Regional Integration and Trade Department - No. 1. April, 2013 2 http://www.mcli.co.za/mcli-web/mdc/sdi.htm 3 http://sadcindustries.net/SDIs.html


2-2

(2) SADC

Despite the importance of the infrastructure of transport corridors, such as roads, railways, and

marine waterways, only 25% of transport delays are attributed to the issues of hard

infrastructure. Rather, the operation issues of the existing infrastructure cause 75% of delays.

In particular, the main disturbances to the transport are bureaucratic border procedures and

inefficient customs regulations, which could result in interruptions of up to 24 hours and

adversely affect trade in the region4.

Therefore, SADC targets the removal of non-tariff barriers to trade, especially inconsistent and

unpredictable border procedures. SADC stated in the Protocol on Trade that coherent custom

procedures should be established in the entire region for the reduction of transport time and

vibrant trade activities5.

At the same time, SADC launched the SDI programme on 18 corridors as an integrated

planning tool for regional development with significant growth potential. In the programme,

the public sector takes a role to craft a business friendly environment in order to attract

investment from the private sector and/or to promote public-private partnerships. The

Regional Infrastructure Development Master Plan in 2012 identified the North-South Corridor

and the Dar es Salaam Corridor as high priority corridors, and the Beira Corridor and Nacala

Multimodal Corridor with the medium priority for the greatest potential for growth6. The 18

corridors contain:

Eastern Corridors: Limpopo, Beira, Nacala, Mtwara, Dar es Salaam

Southern Corridors: Durban-Manzini, Durban-Maseru, Durban-Phalaborwa, Maputo

Western Corridors: Trans Orange, Trans Kalahari, Walvis Bay-Ndola-Lubumbashi

(Trans Caprivi), Trans Cunene, Namibe, Lobito (Benguela),

Mulanje, Bas Congo

North South Corridor: Durban -Lubumbashi

(3) AfDB

The objectives of the AfDB’s support for the development of regional transport corridors in

Africa are to activate inter-regional and international trade and initiate market integration. In

particular, the corridors provide inland countries with new access to international markets.

Guided by the principles of the Bank’s Regional Integration Strategy, both the hard and soft

infrastructure components are included in the AfDB’s approach for development of the

corridors, such as construction, maintenance and rehabilitation of infrastructure, trade

promotion tools and capacity-building programmes. It also includes the components for

sustainability of economy, society, and environment7.

4 http://www.sadc.int/themes/infrastructure/transport/transport-corridors-spatial-development-initiatives/ 5 Ditto 6 Ditto 7 Gadzeni Mulenga. Developing Economic Corridors in Africa Rationale for the Participation of the African Development Bank. AfDB Regional Integration Brief. NEPAD, Regional Integration and Trade Department - No. 1. April, 2013


2-3

For the Nacala Road Corridor Development Project, the Bank is supporting from Phase 1 to 4

in Mozambique, Malawi and Zambia as the main donor. Phase 1 involves rehabilitation of 348

km of road from Nampula to Cuamba in Mozambique and construction of a 13 km bypass

road west of Lilongwe City in Malawi; Phase 2 involves rehabilitation of 360 km of road from

Luangwa Bridge to Mwami in Zambia; and Phase 3 involves rehabilitation of 175 km Cuamba

-Mandimba-Lichinga road in Mozambique. Phase 4 involves rehabilitation of a 75 km road

between Liwonde and Mangochi (75 km) along the Nacala Road Corridor in Malawi as well

as construction and establishment of an One Stop Border Post (OSBP) between Malawi and

Zambia at Mchinji/ Mwami border post.

(4) COMESA

The goal of COMESA is to bring about economic benefits to the member states. By

organizing themselves, the member states take actions for the common objectives, such as

negotiation with non-member states or other organisations, investment attraction, and

development expansion. Regional integration is a tool to achieve prosperity and poverty

reduction by stimulating economic growth. Nevertheless, effective and reliable economic

infrastructure is indispensable to make the regional integration successful. In fact, the member

states suffer from excessively high transaction costs and weak competitiveness in markets

because of lack of transport, energy, and communication infrastructure. Thus, COMESA

includes development of economic infrastructure for the transaction cost reduction and

improvement of competitiveness in the priority areas among others. As a strategic objective, it

identified elimination of bottlenecks in infrastructure development and service improvement

by enhancing infrastructure connectivity and infrastructure integration in the region8.

The components of infrastructure development in COMESA cover transport, energy and

Information Communications Technology (ICT) sectors. A corridor approach adopted by

COMESA focuses on consistent and coherent policy and legal framework building, and

coordination and development of strategic physical infrastructure in the three sectors.

Transport sector development is concerned with air transport, road and rail transport and

maritime and inland water transport. The energy sector covers electricity, non-renewable

(fossil fuels) and renewable energy. The ICT sector includes telecommunications,

broadcasting and postal services9.

2.1.2 Transport Corridors Relevant to Malawi and Zambia

Malawi is a landlocked country bordering Tanzania on the north, Zambia on the west and

Mozambique on the south, east and partially on the west. Being an inland state, Malawi’s

access to seaports necessary for international trade is only available via land transport. Major

corridors that provide the country with access to sea include Nacala, Beira, Durban and Dar es

Salaam. The first three corridors pass through Mozambique; the Durban Corridor via

Zimbabwe; and the Dar es Salaam Corridor goes through Tanzania.

8 COMESA. 2013. COMESA Region Key Economic Infrastructure Development Project 9 Ditto


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Zambia, like Malawi is a landlocked country, neighboured by Malawi to the east,

Mozambique to the southeast, Tanzania to the northeast, the Democratic Republic of Congo

(DRC) to the north, Angola to the west, Namibia and Botswana to the southwest and

Zimbabwe to the south. Like Malawi, Zambia’s economy is highly dependent on the export of

natural minerals especially copper, and agricultural products which are transported primarily

by road through the neighbouring countries to the main ports. Imported goods are also

transported to the country by the same methods. The chief transportation routes used by

Zambia include the Nacala Corridor connecting to Nacala Port through Malawi and

Mozambique, the Dar es Salam Corridor to Dar es Salaam Port through Tanzania, the Mtwara

Corridor through Malawi and Tanzania to Mtwara Port, the Walvis Bay Corridor to Walvis

Bay Port through Namibia, the Lobito Corridor to Lobito Port through DRC and Angola, and

the North-South Corridor connecting to the southern ports of Durban and Beira. The corridors

going through Malawi and Zambia are shown in the figure below:


Figure 2.1 Corridors Supplying Zambia and Malawi


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2.1.3 Current Status of Major Transport Corridors Excluding Nacala Corridor

(1) Beira Corridor

The Beira Corridor connects the Port Town of Beira to major towns in central Mozambique,

Zimbabwe and Zambia. Some of the major towns within this corridor include Chimoio,

Mutare and Harare. The route from southern Zambia through Harare to Beira is a major trade

route for the transportation of Zambian and Zimbabwean goods between the major towns and

Beira Port. Since 1980 at the height of the Mozambican Civil War, transportation through the

Beira Corridor was constantly interrupted by insurgent forces, causing major setback to trade

in the surrounding economies. The rehabilitation after the Civil war by the local government

as well as international funding has seen Beira retake its place as Mozambique’s second city

and a vital port for regional transportation.

Also from Malawi, the route through Tete in Mozambique to Beira Port is called the Beira

Corridor. Beira Port handles the largest portion of Malawi’s exports and imports.

(2) North-South Corridor

The North-South Corridor is a combination of two traditional corridors (the Durban Corridor

and Dar es Salaam Corridor) linking the Port of Durban and major cities in Southern Africa to

the Eastern Port of Dar es Salaam. The Durban Corridor also has direct links into the Beira,

Maputo, Walvis Bay, Benguela and Lobito Corridors. From the Port of Dar es Salaam, the

corridors link to the central region of Africa and from the border post of Tunduma in Tanzania

via the Tunduma (Tanzania) – Moyale (Kenya) Corridor and Northern Corridor linking the

Port of Mombasa to eastern DRC through Uganda and Rwanda thereby giving physical

interconnectivity between Eastern and Southern Africa. The North-South is the busiest

corridor in the region in terms of values and volumes of freight. There have been efforts by

regional trade blocs to improve the road and rail infrastructure and reduce waiting times at

borders and ports and thus facilitate regional and international trade.

(3) Dar es Salaam Corridor

The Dar es Salaam Corridor links the Port of Dar es Salaam to the major cities of Lusaka in

Zambia and Lilongwe in Malawi. Key infrastructure along the corridor includes the port, the

TAZARA (Tanzania-Zambia Railway Authority) railway line and the TANZAM

(Tanzania-Zambia) highway. In the 1960’s, a transport coordinating committee was founded

focusing essentially on the handling of metal exports from Zambia for providers and users of

the transport services. In 2003, the Dar es Salaam Corridor Coordinating Committee (DCC)

was established on behalf of the transport committee, under the auspices of SADC, as a public

private entity to coordinate the issues of transport services in general.

(4) Mtwara Corridor

The Mtwara Corridor connects Mtwara Port on the Indian Ocean to major towns in southern

Tanzania, and across Malawi to Zambia. Some of the major towns alongside this corridor

include Masasi, Songea, Mbamba Bay in Tanzania, Nkhata Bay, Mzuzu in Malawi and


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Chipata in Zambia, where it links with the Nacala Corridor. A section of the corridor runs

southwards from Mangaka to the border with Mozambique to Mueda and links with the

Pemba-Montepuez-Lichinga Corridor in northern Mozambique. The zone of influence of

Mtwara Port therefore covers large areas of southern Tanzania, northern Mozambique,

northern Malawi and eastern Zambia. This region, highly rich in natural minerals, is vital for

trade among the respective countries.

However, according to discussions with counterparts in Malawi, the Mtwara Corridor may not

become an important import-export port in future due to its limited effects for cost reduction

or modal-shift. Therefore, they gave a low priority for improvement of Nkhata Bay necessary

to complete the function of Mtwara Corridor.

(5) Walvis Bay Corridor

The Walvis Bay Corridor consists of three trade routes linking the Port of Walvis Bay to the

neighbouring countries. The three routes are namely, the Trans-Kalahari Corridor,

Trans-Caprivi Corridor and Trans-Cunene Corridor. The Trans-Kalahari Corridor is a highway

connecting Walvis Bay to Johannesburg and Pretoria through Botswana. The Trans-Caprivi

Corridor branches off from the Trans-Kalahari Highway at Karibib, proceeding northeast

wards to the Angolan border at Rundu, and further eastwards through to Katima Mulilo at the

border with Zambia. The Trans-Cunene Corridor consists of the northern part of the Namibian

national highway from Otavi to Oshikango, and shares the same route as the Trans-Caprivi

Highway from Walvis Bay to Otavi. From Oshikango, the road continues to Lubango in

Angola. The Walvis Bay Corridor suffered setbacks due to the civil war, but in its aftermath

has seen growth into a leading route for the transportation of goods inland from the West

African Coast. It is a key trading route connecting the landlocked countries of Botswana,

Zambia and Zimbabwe to the Western Port of Walvis Bay.

(6) Lobito Corridor

The Corridor of Lobito is an important route through central Angola, connecting several major

towns including Lubumbashi in southern DRC and Lusaka in Zambia. Its strategic location

provides the shortest connection of the West African Coast to the inland countries, playing a

key role as a platform in the regional and international network system of transports in

Southern Africa.

2.1.4 Institutions for Transport Corridors

The following entities are boosting demand of each corridor by means of a lot of supports.

(1) Walvis Bay Corridor Group

The Walvis Bay Corridor Group (WBCG) is a public-private partnership established in 2000

to promote the utilisation of the Walvis Bay Corridor and improve infrastructure. The Walvis

Bay Corridor is a network of transport corridors principally comprising the Port of Walvis Bay,

the Trans-Kalahari Corridor, the Walvis Bay-Ndola-Lubumbashi Development Corridor

(previously known as the Trans-Caprivi Corridor), the Trans-Cunene Corridor, and the


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Trans-Oranje Corridor. The Trans-Kalahari Corridor links the Port of Walvis Bay to

Botswana’s Gaborone and Gauteng in South Africa. From Gauteng, this Corridor links with

the Maputo Corridor to the east coast of Southern Africa.

The Walvis Bay-Ndola-Lubumbashi Development Corridor connects Walvis Bay to DRC as

well as the land locked countries of Zambia and Zimbabwe. The Trans-Cunene Corridor

extends through northern Namibia into southern Angola and the Trans-Oranje Corridor links

the Port of Luderitz with Northern Cape Province of South Africa.

The Walvis Bay Corridor Group’s public-private partnership set-up allows for the pooling of

resources from both the regulators and operators of transport. The public sector provides

guidance on the issues of regulations such as customs, transport regulation and infrastructure

development whereas the private sector is responsible for business development issues and the

making of operational proposals and logistical solutions. The ports and corridors are

strategically positioned to give Namibia the positioning of a transport hub for regional and

international trade among the SADC countries, and the rest of the world10.

(2) Beira Corridor Group

The Beira Corridor Group (BCG) – this was a successful private and public sector sponsored

company, which had the prime objective of trade facilitation on the Beira Corridor. The BCG

operated between 1984 and 2000, but closed due to the declining economy in Zimbabwe, and

has not been replaced since.

(3) Dar es Salaam Corridor Committee (DCC)

The DCC is a forum for regional cooperation on cross border transport policy formulation,

regulation and operation. The Committee was established in the year of 2003, under the

auspices of SADC, and it is composed of public and private institutions from the member

countries. Its current membership comprises the United Republic of Tanzania, the Republic of

Malawi, the Republic of Zambia and DRC. The DCC headquarters are located in Tanzania,

under the Secretariat established to support the implementation of interventions and measures

agreed by the DCC members. The DCC serves to facilitate and promote trade in and among

the member states using the corridor by promoting reduction of total transit time on the

corridor and total transport costs for corridor traffic11.

(4) National Transport Corridor Coordination Secretariat of Zambia

Zambia, in a step to promote economic development has established the “National Transport

Corridor Coordination Secretariat” to coordinate with other institutions including DCC and

Walvis Bay-Ndola-Lubumbashi Development Corridor to promote regional trade. The

Secretariat operates under the Ministry of Transport and Communications (MTC),

coordinating and promoting various corridors relevant to Zambia. It serves also as an advisory

10 http://www.wbcg.com.na/ 11 http://darcorridor.org/index.php/about-us


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body to Zambia’s exporters and importers of goods and services. The proposed structure of the

National Corridor Coordination Secretariat is presented below:

Source: Concept Note on the Establishment of a National Transport Corridor Coordination Secretariat (October 2016)

Figure 2.2 National Transport Corridor Coordination Secretariat

2.2 Current Conditions and Status of Nacala Corridor

2.2.1 Background of Nacala Corridor

The Nacala Corridor connects Nacala Port to several major towns in the regions of northern

Mozambique, Malawi and Zambia. Some of the major towns connected by this corridor

include Nacala, Nampula, Blantyre, Lilongwe, Chipata and Lusaka. The Nacala Corridor has

been a very important route for the transportation of Malawian exports and imports. The

prolonged civil war in Mozambique caused setbacks to international transport through the

Nacala Corridor but rehabilitation works have been underway since the end of the war in 1992.

The Nacala Corridor has been identified as one of the six international corridors by

Mozambique in their third Road Sector Strategy (RSS) (2007-2014) for road development to

enhance regional development and international transportation.


Figure 2.3 Current Conditions of Development of Nacala Corridor

Nacala Port REHABILITATED

by JICA

Luangwa Bridge-Mwami Border Road Section:

UPGRADED by EU & AfDB

Nkaya-Moatize Railway: NEWLY BUILT by Vale/

Mitsui

Limbe-Nkaya-Nacala Railway: UPGRADED

by Vale/Mitsui

Chipata-Lilongwe-Salima-Nkaya Railway: NEED

REHABILITATION Chiponde-Cuamba &

Cuamba-Malema Road Sections:

UNPAVED

Lilongwe

Lusaka

Mchinji/ Mwami

Luangwa Bridge

Nacala

Chiponde/ Mandimba

Nayuchi/ Entre Lagos

Nkaya

Balaka

Maraka

Kachaso

Mtengulani Mangochi

Liwonde

Blantyre

Limbe

Chipata


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2.2.2 Status and Conditions of Nacala Corridor

(1) Road Conditions and Status

Road No. and Section

Conditions Status Photo

T4: Lusaka - Luangwa bridge 230 km

Carriageways have been kept in sound condition by management of the Zambian government although pavement damage can be seen in some mountain sections of the road. Shoulders are mostly fractured and narrow making it difficult for large vehicles to overpass. Walkways in the village sections are undeveloped.

-

T4: Luangwa Bridge

Decades after construction, the soundness of the bridge has declined. Due to this, passage restrictions have been introduced. It has been referred to as the bottleneck of the Nacala Corridor.

-

T4: Luangwa bridge - Mtenguleni 310 Km

One section currently under construction was scheduled to be completed in September 2017. The road is a high standard road paved with asphalt and concrete along its entire length. On some sections, walkways and lights have been installed, taking into consideration of the factor of safety.

Under construction Financed by EU/EIB and AfDB

T4: Mutenguleni - Chipata - Mwami Border 50.4 km

In Chipata, walkways and bicycle pathways have been installed, catering for the movement needs of the vulnerable road users.

Completed in 2016 Financed by EU/EIB and AFD


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Mwami/Mchinji Border

The border itself has been referred to as chaotic, with the presence of many informal traders. The border crossing is operated 24 hours, however, the border for commercial truck traffic closes earlier (around 18:00).

OSBP works are scheduled to commence with AfDB’s “Nacala Road Corridor Development Project Phase IV” On April 13th, representatives of both countries met and signed for the commencement of the works.

M12: Mwami - Lilongwe

Although the carriageway has been kept in sound condition under maintenance by the Government of Malawi (GOM), some damaged areas can be seen on the shoulders. Also, a large portion of protective fences on the bridge are damaged. Safety facilities such as walkways, etc., in the villages are undeveloped. A weighing station for vehicle loads has been installed near the border.

-

M1: Lilongwe Western Bypass

It was completed in 2015 with funding from the AfDB. Although the road is in excellent condition, the number of large vehicles diverting to this route is less than what was expected (the function of reduction of congestion has not been fully realised).

Completed in 2015 Financed by AfDB

M1: Lilongwe - Balaka

After works by EU completed in 2011, the road is in excellent condition. Safety facilities such as walkways, etc, in the villages are undeveloped. Also, the bridges have not been improved; they are in comparatively sound condition.

Completed in 2011 Financed by EU


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M8: Balaka - Liwonde

Pavement of the existing road is in very poor condition and the shoulders are completely shattered.

-

M3: Liwonde - Mangochi

Pavement of the existing road is in very poor condition and the shoulders are completely shattered. Refurbishment works funded by AFDB have just been started.

Under Construction Financed by AfDB


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M3: Mangochi Bridge

This bridge was completed in works under a Japanese Grant Fund in 2002. As the bridge passes through Mangochi Town and the eastern side is mountainous, there is very little use by large vehicles.

Completed in 2002 Financed by Japan

S131: Liwonde - Chiponde

Route M3 between the Mangochi Bridge and Chiponde is in a mountainous area, making it difficult to travel for large vehicles and prone to accidents. Large vehicles generally avoid this mountainous route and use S131 (improvement works finished in 2004) instead. Compared to M3, S131 is relatively in good condition.


Generally, during heavy traffic, congestion occurs due to the delay of large vehicles in the

steep uphill sections, forming bottlenecks.

Consequently, the need for climbing lanes on steep grades can be seen and the need for a

bypass and Non-Motorised Transport (NMT) facilities in populated areas have been expressed

in many sections.


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(2) Rail Conditions and Status

Section Conditions Status Photo

Chipata - Petauke - Serenje

- Detailed feasibility study is ongoing by China.

-

Chipata Station It is operated and maintained by ZRL. Terminal facilities are absent. On and off-loading of commodities is conducted by trailers at the railroad crossing sections.

Negotiation with the EU is underway on the construction of a terminal.

Chipata - Mchinji and Nkaya

The north branch between Nkaya and Mchinji and the Zambia border near Chipata is also part of the CEAR concession and is the longest of the four routes. Its length is 12 km from Chipata to Mchinji and 110 km from Mchinji to Kanengo, 105.5 km from Kanengo to Salima and 172 km from Salima to Nkaya. In total that is around 400 km. The maximum axle load is 18 tonnes between Chipata and Salima (via Kanengo and Mchinji) and 15 tonnes per axle between Salima and Nkaya.

The concession from the Malawi/Mozambique border to Chipata at Cwaba is operated by CEAR. Plans are under way for upgrading the Nkaya-Mchinji section in 2018 under private funding by Vale/Mitsui, which will allow for the accommodation of the18t axle load over the whole section.


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Nkaya - Limbe This section is 96 km long. The section between Nkaya and Limbe is currently in operation for freight and passenger traffic.

Upgrading works were conducted on the Nkaya - Limbe route from 15t axle to 18t axle load, completed in August 2017.

Limbe- Makhanga-Marka-Mutarara

This route section is part of the CEAR concession and forms the historically most important branch line of the Malawi railway network. The section between Limbe and Mutarara (around 200 km) is currently non-operational. This section includes the bridge at Chiromo near Bangula over the Shire River which was washed away in 1997.

From 2019, it is expected that CEAR will operate a passenger service between Limbe and Makhanga.

Nacala Railway Nkaya-Kachaso

This railway branch line is 130.5 km long and is newly built. The line has been built to handle 20.5 tonnes axle loads.

Preliminary operation of the rail was started in July 2015 and full scale transportation of coal was started in January 2016.


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Nacala Railway Nkaya-Nayuchi

This railway line is around 99 km long to the Mozambique border and is newly rebuilt. It is around 612 km from the border to Nacala. The branch line has been rebuilt to handle 20.5 tonnes axle loads.

This line falls under the CEAR concession.


2.3 Current Usage of Nacala Corridor vis-a-vis Major Corridors

2.3.1 Distance between Major Cities and Main Ports

The distances of road and rail connection from the main cities of Zambia and Malawi to the

Ports of Durban, Dar es Salaam, Nacala and Beira are as shown in the table below. As can be

seen from the table, Beira Port occupies the most conducive location from Zambia in terms of

distance. In regard to Malawi, when the rail is used, Nacala Port is the closest and can be said

to be conducive. The comparison of port distances is expanded with consideration of

transportation costs and time afterwards in this discussion.


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Table 2.1 Distance between Major Cities and Main Ports

Major City Main Port Mode km No. of Border

Lusaka

Beira Road 1,054 2 Nacala Road 1,810 2

Dar es Salaam Road 1,985 1 Rail 2,039 1

Durban Road 2,381 2 Rail 2,638 2

Ndola

Beira Road 1,400 2 Nacala Road 2,126 2

Dar es Salaam Road 1,811 1 Rail 1,992 1

Durban Road 3,000 2 Rail 2,958 2

Chipata

Beira Road 930 2

Nacala Road 1,224 2 Rail 1,133 2

Dar es Salaam Road 1,811 2 Durban Road 2,431 2

Lilongwe

Beira Road 1,096 1

Nacala Road 1,080 1 Rail 989 1


Blantyre

Beira Road 812 1

Nacala Road 930 1 Rail 799 1



2.3.2 Traffic Volume in Zambia and Malawi

According to the data of road traffic from both Zambia’s and Malawi’s respective road

authorities in 2015, the capitals of both countries as well as Kitwe in Zambia had the heaviest

traffic volume. By corridor, the North-South Corridor and Lobito Corridor to DRC had the

heaviest traffic volume. High traffic volume is also seen with the corridors of Nacala and Dar

es Salaam near the cities as well as within Zambia, but the traffic volume is low near the

borders.

In Malawi, the traffic volume is high for Routes M1 and M5 connecting the capital, Lilongwe

and the country’s second largest city of Blantyre. Regarding connection to the Chiponde

border on the Nacala Corridor, the area eastwards of the Mangochi Bridge by Route M3 is not

suitable for the travel of large vehicles and S131 is generally used.


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Source: Zambia Roads Development Authority and Malawi Roads Authority

Figure 2.4 Traffic Volume on Main Roads in Zambia and Malawi (2015)

2.3.3 Freight Traffic at Border

The freight traffic volume conditions of the major border towns are indicated in the figure

below.


Figure 2.5 Major Border Posts related to Zambia and Malawi


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The most border freight traffic can be seen at Livingstone and Chirundu on the North-South

Corridor. The next is Nakonde on the Dar es Salaam Corridor. On the Nacala Corridor, even

though traffic on the Mwami/Mchinji border between Zambia and Malawi is 300 vehicles per

day - the highest in Malawi, at the Chiponde border with Mozambique, the volume is a mere

10 vehicles per day.

Table 2.2 Border Freight Traffic for Zambia and Malawi in 2015

Country Border Crossing Road No. Direction ADT

(Freight Traffic)

Zambia

Chanida/Cassacatiza T6 Zambia

101 Mozambique

Nakonde/Tunduma T2 Zambia

497 Tanzania

Mbala M1 Zambia

N/A Tanzania

Livingstone T1 Zambia

779 Zimbabwe

Chirundu T2 Zambia

556 Zimbabwe

Kazungula M10 Zambia

N/A Botswana

Malawi

Songwe M1 Malawi 74 Tanzania 55

Mchinji/Mwami M12 Malawi 168 Zambia 138

Dedza M1 Malawi 113 Mozambique 55

Mwanza M6 Malawi 126 Mozambique 100

Muloza M2 Malawi 60 Mozambique 72

Chiponde M3 Malawi 6 Mozambique 6

Source: Zambia Roads Development Authority and MNTMP

The following figure shows the proportions of road freight (light goods and heavy goods)

vehicles observed in the traffic surveys in Malawi. 17% of all truck movements have an

international origin or destination. Aside from these, the proportion of trucks travelling

between the regions is relatively small at 8%, whilst most movements are intra-regional.


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Source: MNTMP

Figure 2.6 Proportions of Observed Truck Movements in Malawi (2016)

2.3.4 Freight Share per Corridor

The freight volume conditions of the major border are indicated in the table below.


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Table 2.3 Freight Share per Corridor for Zambia (Year 2016)

Corridor Border Freight Volume (Export 2016)

Mode (ton/year) Total (tons/year) %

Road Rail Air Other

Nacala Chanida 36,351 0.0 0.0 0.0 36,351

337,694 12.9 Mwani 293,472 7,871.4 0.0 0.0 301,343

Dar es Salaam Nakonde 224,432 3.5 0.0 0.0 224,436 224,436 8.6

North-South/Beira

Chirundu 743,349 0.0 0.0 0.0 743,349

1,157,437 44.2 Kariba 1,762 0.0 0.0 0.0 1,762 Livingstone 124,099 1,170.7 1.8 0.0 125.272 Victoria Falls 23,871 0.0 0.0 0.0 23,871 Kazungula 263,184 0.0 0.0 0.0 263,184

Lobito Kasumbalesa 744,115 0.0 0.0 0.0 744,115 744,115 28.4 Walvis Bay Katima Mulilo 156,546 0.0 0.0 0.0 156,546 156,546 6.0

Total 2,611,180 9,045.6 1.8 0.0 2,620,228 100.0

Corridor Border Freight Volume (Import 2016)


Road Rail Air Road

Nacala Chanida 91,394 0.0 0.0 0.0 91,394

105,418 2.5 Mwani 14,025 0.0 0.0 0.0 14,025

Dar es Salaam Nakonde 1,923,570 106.5 0.3 0.0 1,923,676 1,923,676 45.7

North-South/Beira

Chirundu 1,378,571 0.0 0.0 0.0 1,378,571

1,830,240 43.5 Kariba 3,985 0.0 0.0 0.0 3,985 Livingstone 6,046 0.0 453.8 0.0 6,500 Victoria Falls 75,144 0.0 0.0 0.0 75,144 Kazungula 366,038 0.0 3.2 0.0 366,041

Lobito Kasumbalesa 134,112 0.0 0.0 0.0 134,112 134,112 3.2 Walvis Bay Katima Mulilo 215,349 0.0 0.0 6.3 215.355 215,355 5.1

Total 106.5 457.4 6.3 4.208,802 100.0

Corridor Border Freight Volume (Transit 2016)


Road Rail Air Road

Nacala Chanida 6,114 0.0 0.0 0.0 6,114

11,797 0.4 Mwani 5,683 0.0 0.0 0.0 5,683

Dar es Salaam Nakonde 890,119 255.7 0.0 0.0 890,374 890,374 26.8

North-South/Beira

Chirundu 921,273 0.0 0.0 0.0 921,273

1,093,073 32.9 Kariba 2 0.0 0.0 0.0 2 Livingstone 2 0.0 0.0 0.3 2 Victoria Falls 7,038 3,080.3 0.0 0.0 10,118 Kazungula 161,677 0.0 0.0 0.0 161,677

Lobito Kasumbalesa 1,260,594 0.0 0.0 0.0 1,260,594 1,260,594 37.9 Walvis Bay Katima Mulilo 69,570 0.0 0.0 0.0 69,570 69,570 2.1

Total 3,336.0 0.0 0.3 3,325,409 100.0

Corridor Border Freight Volume (Transit 2016)


Road Rail Air Road

Nacala Chanida 133,859 0.0 0.0 0.0 133,859

454,909 4.5 Mwani 313,179 7,871.4 0.0 0.0 321,051

Dar es Salaam Nakonde 3,038,121 365.7 0.3 0.0 3,038,487 3,038,487 30.0

North-South/Beira

Chirundu 3,043,193 0.0 0.0 0.0 3,043,193

4,080,750 40.2 Kariba 5,748 0.0 0.0 0.0 5,748 Livingstone 130,147 1,170.7 455.7 0.3 131,774 Victoria Falls 106,053 3,080.3 0.0 0.0 109,133 Kazungula 790,898 0.0 3.2 0.0 790,902

Lobito Kasumbalesa 2,138,821 0.0 0.0 0.0 2,138,821 2,138,821 21.1 Walvis Bay Katima Mulilo 441,465 0.0 0.0 6.3 441,472 441,472 4.4

Total 12,488.1 459.2 6.6 10,141,485 100.0

Notes: As access to Chanida border obviously goes through T4 (the Nacala Corridor), Chanida border is categorized into the Nacala Corridor.

Source: Zambia Revenue Authority


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Altogether, the North-South Corridor covers the highest percentage of Zambia’s freight with

Dar es Salaam and Lobito also covering a significant portion. Although Dar es Salaam covers

the highest percentage of imports (45.7%) and freight in transit to the surrounding nations,

exports through this corridor are comparatively low (8%). Transport via the Nacala and

Walvis Bay Corridors is meagre, both covering just over 4%.

Table 2.4 Freight Share per Corridor for Malawi (Year 2016)

Corridor Border Freight Volume

Export Import ton % ton %

Nacala Chiponde 1,513

82,773 14.9%

53,411

849,383 16.0% Nayuchi (Rail) 42,269 150,264 Mchinji 20,143 524,254 Muloza 18,848 121,454

North/South/Beira Mwanza 153,984 408,523 73.7%

2,497,614 3,144,090 59.2%

Dedza 254,539 646,476 Dar es Salaam Songwa 63,299 63,299 11.4% 1,320,314 1320,314 24.8%

Total 554,594 100.0% 5,313,787 100.0%

Note: Regarding Muloza, from a questionnaire conducted with transport companies, it was confirmed that it is used for access to the Nacala corridor. The corresponding freight share was therefore counted for the Nacala corridor.

Source: Malawi Revenue Authority

In Malawi, the Nacala Corridor covers approximately 15% of both of exports and imports.

Also, in the National Transport Master Plan (MNTMP) conducted by Malawi, the share per

port is classified as shown in the figure below. Beira Port covers the largest share at 56%,

followed by Durban at 26%, Nacala at 10% and Dar es Salaam at 5%.

Source: MNTMP

Figure 2.7 Imports and Exports by Seaport (ton)


2-22

2.3.5 Freight Movement on Nacala Corridor

Observation of the freight condition on the Nacala Corridor from the Zambian border of

Mwami shows that for Zambia trade with Malawi is the highest in terms of both of exports

and imports, accounting for over 70%. South Africa is the second largest for exports whereas

Japan is in second place in terms of imports. Cotton is the leading export to Malawi with

cement in second place. Cotton is also the chief export to South Africa. In regard to imports

from Malawi to Zambia, timber is the chief import followed by foods including drinking water.

From Japan as the second country with the most goods imported, the chief imported

commodity is vehicles.

Table 2.5 Freight Movement on Nacala Corridor in Zambia

Border Post Origin or Destination Goods

Mwami (Zambia/Malawi)

Import

Export

Source: Monthly Nacala Corridor 2012 - 2016 (Zambia Revenue Authority)

From the condition of freight by rail in Malawi (imports and exports only), wheat grain and

agricultural chemicals are most prominent. In regard to exports, apart from construction

materials, sugar, tobacco and pigeon pea are dominant.

MALAWI78%

JAPAN13%

UAE3%

INDIA2%

CHINA2%

OTHER2%

MWAMI BORDER POST / IMPORT RATIO

MAIN PARTNER COMMODITY

MALAWI・Wood・Food/Beverages・Parts of vehicles

JAPAN ・Vehicles

UAE・Parts of machinery・Parts of vehicles

MALAWI70%

SOUTH AFRICA22%

SWITZERLAND5%

OTHER3%

MWAMI BORDER POST/ EXPORT RATIO MAIN PARTNER COMMODITY

MALAWI・Cotton/Cotton seed・Cement

SOUTH AFRICA ・Cotton/Cotton seed

SWITZERLAND ・Cotton/Cotton seed


2-23

Table 2.6 Freight Movement by Railway in Malawi (2015)

CLIENT TRAFFIC Total CLIENT TRAFFIC Total

MALAWI IMPORTS 104,565 MALAWI EXPORTS 86,248 Bakhresa Wheat grain 20,460 Local trader Eggs 500 Bakhresa Wheat grain 14,379 Local trader Potatoes 1,252 PIL (Sturrock) Diesel 4,984 Local trader Timber 1,480 VALE project Malawi Shouders / p/ clips 1,614 Zalco Lime 40 MANICA/ MOZ fertilizer Fertilizer 13,343 Local trader Sand 660 MANICA/ MOZ fertilizer Fertilizer 4,337 ILLOVO Sugar 924 MANICA/ MOZ fertilizer Fertilizer 1,490 ILLOVO Sugar 27,342 Transitex Maquinas VP 102 IFA Toordall 500 CORI Edible oilss 44 Export trading Pegion peas 2,120 Bridge Shipping Bagged Wheat grain 496 ALLIANCE ONE Tobacco 400 Others Various 43,316 IFA Pegion peas 215 SDV Groundnuts 125 CMA-CGM/ DELMAS Tea 8 CMA-CGM/ DELMAS Steel bars 100 Allience freight Cotton 24 Allience freight Pegion peas 270 MOTA engil - Project VALE Concrete Sleepers 38,976 Allience freight Cotton 200 Allience freight Ground nuts 792 Icon carriers Coffee 21 Agrimal Steel bars 260 Mota Engil Cotton 373 IFA Tea 100 Master Freight Ground nut 2,222 TMT Tea 50 Agro Industries Pegion peas 1,204 Glens Cotton 775 AFRISIAN Sesame 22 TMT Pegion peas 3,655 ZALCO Lime 156 IFA Macadamia Nuts 396 IFA Pegion peas 645 Others Varous 442

Source: MNTMP Team

2.3.6 Capacity of Major Ports

Durban Port

The Port of Durban is South Africa’s premier multi-cargo port and is counted among the

busiest ports in Africa, handling about 80 million tons of cargo per annum. The Port of Durban

is the leading port in the SADC region and the premier trade gateway for Southern Africa with

East and West Africa, the Far East, Europe and North America. It is the international

commercial gateway to South Africa and is strategically positioned on the world shipping

routes. It is one of the few ports in the world located in close proximity to the central business

district. The Port of Durban occupies a focal point in the transport and logistics chain with

60% of all imports and exports passing through the port; thus, it assumes a leading role in

facilitating economic growth in Southern Africa.


2-24

Beira Port

The Port of Beira lies on the northern shores of the Mozambique Channel off the Indian Ocean

at the mouth of the Pungoe River in Sofala Province. Centrally located on Mozambique’s

eastern shores, the Port of Beira is an important trade and transportation centre for Central

African products and coastal goods. Railways from Zimbabwe, DRC, Zambia, and Malawi

end in the Port of Beira, and it serves as the main port for those inland nations.

Nacala Port

The Port of Nacala was granted to Corridor de Desenvolvimento de Norte (CDN) and recently

Vale, a Brazilian mining company. Nacala is one of the deepest natural ports in Africa. It is

certainly one of the best natural harbours in Eastern Africa. Nacala serves the Province of

Nampula and would be the main gateway to Malawi. However, due to underdeveloped

infrastructure in track, rolling stock and equipment, the Port is underutilised in providing

transport services of high international standard.

Mtwara Port

Mtwara Port is located at about 580 km southward from Dar es Salaam, and was initially

developed as the base for the export of groundnuts in the 1950s. In terms of the scale of cargo

handling volume, Mtwara Port is currently third after Dar es Salaam and Tanga Ports.

However, its location inside the Mikindani Bay is advantageous and provides potential over

the other two ports as it lies in a naturally protected harbour by the overhanging peninsular.

Dar es Salaam Port

The Port of Dar es Salaam is Tanzania’s major port in Dar es Salaam, which is the centre for

industry, the largest city, and the seat of government. Located on the shores of eastern Africa

off the Indian Ocean, the Port of Dar es Salaam is about 41 nautical miles south-southeast of

the Port of Zanzibar and some 170 nautical miles south of Kenya’s Port of Mombasa.


2-25

Table 2.7 Outline of the Capacity of the Major Ports

Port

General Cargo

Terminal Capacity

Container Terminal Capacity Berth

Number

Berth Total

Length Number

of Employ-

ees

Total Area

Maximum Draft

Number of Calls

Total Cargo (2015)

General Cargo (2015)

Con- tainers (2015)

Operation Development

Plan (1,000 ton/

Year) (1,000 ton/

Year) (m) (ha) (m)

(Calls per

Week)

(1,000 ton/

Year)

(1,000 ton/

Year)

(1,000 TEU/ Year)

Durban - 3,600 59 10,933 6,000 960 12.5 80 81,219 45,255 2,664 TRANSNET FREIGHT RAIL

Plans underway for improvement of berths

Beira 3,000 300 12 1,987 502 39 12 - 5,195 2,400 207 JJ Africa Dredging plans

underway for the sea route

Nacala 2,000 180 6 995 223 8 14 8 2,210 900 97

Corredor Logistico de Nacala (CLN)

Plans underway for refurbishing of the existing terminal and building of a new terminal. Also, a terminal designated exclusively to coal is under construction.

Mtwara 400 - 5 385 - - 9.5 10 563 360 15

Plans for port extension are underway. The F/S has already been completed.

Dar es Salaam

694 11 2,018 2,684 50 10 30 13,305 5,016 614

Tanzania International Container Terminal Service (TICTS)

Plans underway to increase container berths by two


From the handling records of 2015, the capacity of Durban Port was by far the highest,

followed by Dar es Salaam, Beira, Nacala and Mtwara. The capacity handled at Nacala is

approximately 1/6 of Dar es Salaam and 2/5 of Beira.

According to the responses to a questionnaire survey administered to cargo agents, Durban

Port is the hub whereas Beira and Dar es Salaam Ports which are unsuitable for large ships are

typically used for transportation by medium and small sized ships.

2.3.7 One Stop Border Posts (OSBPs)

Currently, there is only one functioning OSBP at Chirundu, Zambia. Development of OSBPs

at the main borders is vital for the reduction of transit time and cost, thus promoting trade. The

table below shows the status for the development of OSBP at various border towns. Also, the

World Bank is in the process of providing technical assistance for the development of a Single

Window System to improve trade in the region.


2-26

Table 2.8 Development Status of OSBPs at Various Border Towns

Corridor Location Remark

Dar es Salaam Tunduma/Nakonde (Tanzania/Zambia) The Governments of Tanzania and Zambia agreed between 2010 ~ 2011 to establish an OSBP at this border. According to EU/COMESA, development of an OSBP on the Tunduma Side commenced in December 2016 with the support and funding from TradeMark East Africa. Also, USAID have conducted a series of studies, training and sensitisation of border agencies and stakeholders between 2012 and 2015 with the intention of further support to the development of an OSBP at Nakonde.

Kasumulo/Songwe (Tanzania/Malawi) The GOM has received financing from WB, and in April 2017 invited bids for consultancy services in regard to feasibility study, detailed design, preparation of tender documents and construction supervision for improvement of this border post to an OSBP12.

Kasumbalesa (Zambia/DRC) Both governments are now considering development. Nacala Mwami/Mchinji (Zambia/Malawi) OSBP works are scheduled to commence with AfDB’s “Nacala Road

Corridor Development Project Phase IV.” On April 13th, 2017, the representatives of both countries met and signed for the commencement of the works.

Chiponde/Mandimba (Malawi/Mozambique)

OSBP works for Chiponde/Mandimba were dropped from the same project (Phase IV). The current state is unknown.

North-South Chirundu (Zambia/Zimbabwe) It was redeveloped as OSBP in 2009 to respond to the problem of chronic traffic delay at the border. Initially, as Africa’s only OSBP, Chirundu enjoyed success, being looked at as the model example of border post operation13 14. However, lately there have been reports of deterioration of the OSBP functions due to malfunctioning ICT systems, insufficient staff training, operation space, etc15.

Beitbridge (SA/Zimbabwe） The Governments of Zimbabwe and South Africa agreed in 2009 to redevelop this border post as OSBP. At the second session of the Bi-National Commission (BNC) between the two nations held in October 2017, South African President Jacob Zuma reiterated the need for the 2009 agreement to be implemented and the two governments agreed to set up a joint technical committee to formulate the implementation plan16.

Kazungula (Botswana/Zambia) The Governments of Botswana and Zambia agreed in 2011 to construct a road-rail bridge at the Kazungula Border, linking the two countries by crossing the Zambezi River. Funded by the two governments and AfDB, this Project was divided into three major phases: Phase 1 involving construction of the bridge, Phase 2 is the construction of OSBP facilities on the Botswanan side whereas Phase 3 involves construction of OSBP facilities on the Zambian side. There are reports that Phase 1 is almost complete, and Phase 2 is under way having been commenced in 2016. In January 2017, there were reports that the two countries had signed an agreement with a Chinese contractor for works on the OSBP on the Zambian side under Phase 317 18.


12 http://www.ra.org.mw/wp-content/uploads/2014/12/Songwe-Kasumulu-One-Stop-Border-Post-Expression-of-Interest.pdf 13 https://www.tralac.org/discussions/article/5338-challenges-at-chirundu-one-stop-border-post.html 14 http://unctad.org/meetings/es/Presentation/DinganiBanda_Zambia_NTFCForum_Jan2017.pdf 15 https://www.tralac.org/discussions/article/5338-challenges-at-chirundu-one-stop-border-post.html 16 https://www.enca.com/africa/south-africa-zimbabwe-push-for-one-stop-beitbridge-border-post 17 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-Social-Assessments/Botswana%20and%20Zambia-Kazungula%20Bridge-ESIA%20Summary.pdf 18 http://www.sundaystandard.info/botswana-zambia-sign-kazungula-project-contract


2-27

2.3.8 Transit Time and Cost

The table below shows the times and costs of transit to the major towns in Zambia and Malawi

from the major ports of Durban, Beira, Nacala, Mtwara and Dar es Salaam.

In regard to transit time, although Zambia’s Lusaka and Ndola lie in Durban Port’s sphere of

influence, Chipata and Malawi’s Blantyre lie in Beira Port’s whereas Lilongwe lies in both

Beira and Nacala Port’s sphere of influence. Comparison of the costs of transportation shows

that, although Chipata, Lilongwe and Blantyre lie in Nacala Port’s sphere of influence,

currently there is little reliability on railway transportation and the rate of use is low. In order

to reduce the transportation cost, which is a challenge faced by both countries, it is important

that the reliability of railways is improved and the transportation mode is shifted from road to

railway.


2-28

Way

Por

tT

otal

Way

Bor

der

Cha

rge

Por

t Han

dlin

gT

otal

Bei

raR

oad

1,05

46

410

1,61

347

096

03,

043

Roa

d1,

810

113

142,

769

470

945

4,18

4R

oad

1,98

57

714

3,03

720

71,

598

4,84

2R

ail

2,03

97

714

1,95

71,

598

3,55

5R

oad

2,38

17

18

3,64

340

080

04,

843

Rai

l2,

638

81

92,

374

800

3,17

4

Bei

raR

oad

1,40

08

412

2,14

247

096

03,

572

Nac

ala

Roa

d2,

126

133

163,

253

470

945

4,66

8

Roa

d1,

811

67

132,

771

207

1,59

84,

576

Rai

l1,

992

77

141,

912

1,59

83,

510

Roa

d3,

000

91

104,

590

400

800

5,79

0

Rai

l2,

958

91

102,

662

800

3,46

2

Bei

raR

oad

930

54

91,

423

470

960

2,85

3

Roa

d1,

224

73

101,

873

470

945

3,28

8

Rai

l1,

133

153

181,

411

945

2,35

6

Dar

es

Sal

aam

Roa

d1,

811

97

162,

771

207

1,59

84,

576

Dur

ban

Roa

d2,

431

111

123,

719

400

800

4,91

9

Bei

raR

oad

1,09

65

49

1,66

025

796

02,

877

Roa

d1,

080

63

91,

636

255

945

2,83

6

Rai

l98

912

315

1,23

194

52,

176

Dar

es

Sal

aam

Roa

d1,

667

77

142,

526

206

1,59

84,

329

Dur

ban

Roa

d2,

650

131

144,

015

600

800

5,41

5

Bei

raR

oad

812

54

91,

250

257

960

2,46

7

Roa

d93

07

310

1,40

925

594

52,

608

Rai

l79

910

313

995

945

1,94

0

Dar

es

Sal

aam

Roa

d1,

978

87

152,

997

206

1,59

84,

801

Dur

ban

Roa

d2,

340

111

123,

545

600

800

4,94

5

Ave

rage

Tra

nspo

rt C

ost (

US

D)

(20'

Dry

)

Lilo

ngw

eN

acal

a

Tra

nsit

Tim

e (d

ays)

Lusa

kaD

ar e

s S

alaa

m

Dur

ban

Maj

or C

ityM

ain

Por

tM

ode

km

Ndo

laD

ar e

s S

alaa

m

Dur

ban

Nac

ala

Bla

ntyr

eN

acal

a

Chi

pata

Nac

ala

Tab

le 2

.9

Tra

nsi

t T

ime

and

Co

sts

fo

r th

e M

ajo

r T

ow

ns

fro

m V

ario

us

Po

rts

Sou

rce:

JIC

A S

tudy

Tea

m


2-29

2.4 Comprehensive Evaluation of the Corridors

In this chapter, the current status of major transport corridors and ports were analysed, and the

comparison of the corridors from the viewpoints of time and transport cost from major cities

and its port are studied. In the following section, the results of hearing survey are summarised

aiming to understand the advantages and disadvantages of the corridors recognised by users.

Then, comprehensive evaluation of corridors is described.

2.4.1 Hearing Survey Results on Nacala Corridor

As can be seen from the above data, the rate of use of the Nacala Corridor for the flow of

goods to/from outside the African region is low. To understand the cause for this, a survey was

conducted with local transportation and trade companies in Zambia and Malawi. The main

views that arose are summarised below:

Views Obtained from Zambia

Top 4 most used harbours: 1. Dar es Salaam, 2. Durban, 3. Beira, 4. Walvis Bay

Market condition: Transportation routes are decided from observing the situations of the

transportation costs and routes.

Reason why the Nacala Corridor is currently not used: Unknown to cargo owners/ (Other

companies use the Ports of Dar es Salaam and Durban mainly. Nacala is unknown, or the

logistics firms have no offices there).

The scale of Nacala Port is small.

Challenges: 1) the railway system is inefficient and therefore unreliable, 2) the need for

cargo equipment infrastructure such as dry ports and containers was raised. Currently

Nacala Port is not being sufficiently used and these challenges will have to be overcome in

order to enable full operation of the Port.

For the utilisation of Nacala Port, improvement of railway inefficiency is necessary.

Improvement of efficiency includes shortening of transportation time, punctuality, and

smooth customs procedures.

Introduction of OSBP is not a serious problem. Large transportation companies beforehand

send documents to the border and only physical scanning is conducted at the border, which

does not take much time. More than OSBP, ICT is necessary.

In regard to the transportation of copper, South African transporters’ system is already

strongly established and it is difficult to alter that system.

Views Obtained from Malawi

Never used the Nacala Corridor at all. There has been no request by the owners of goods.

The road condition in Mozambique is poor. (There are unpaved sections)

Steep sections at the border sections are difficult for passage with large vehicles. Therefore,

even though it’s farther, the relatively flatter Beira Corridor is preferred. (The mountain

road between the border and the Mangochi Bridge is difficult for the passage of large

vehicles, and dangerous. Also, the road slope over the Mangochi Bridge often presents a

barrier for the large freight vehicles.)


2-30

Compared to the Beira Corridor, management at the Nacala Corridor is poor. (Poor

performance)

The capacity and facilities of the main container terminals (Blantyre for example) are

insufficient.

The warehousing capacity around the Nacala Corridor is small. (They are not container

terminals).

Operation is impossible owing to the company’s not having an office at Nacala Port. If the

Nacala Corridor were to be used, installation of an office would be necessary.

The main port used is the Port of Beira (about 80% of all freight). The road condition for

the Beira Corridor is good, furnished even with facilities for bulk vessels. On the other

hand, Nacala Port is around 10% (the main form of transport to the port is the rail). The

Nacala Corridor has not been sufficiently utilised so far due to the shortage of locomotives

and freight vehicles as well as the underdeveloped railway operation system. The number

of waiting days is about one week for Nacala Port (and maximum three days for Beira).

Access to Nacala Port by road is through M2 and NR7 on the Mozambican side. NR7 is

unpaved for a stretch of about 60km from the border.

Challenges with Railway Transportation

The capacity of Nacala Railway is small.

The capacity and facilities of main container terminals (Blantyre, for example) are

insufficient.

It’s inefficient and unreliable (locomotives are broken and unusable, it’s slow. ※Bolloré

has own hundreds of trucks).

Although the railway should be cheaper than transportation by road, the cost per tonne is

approximately 5 to 10 dollars, similar to the road. From the cost point of view, there is

nothing to attract cargo owners from using roads to the railway.

Primarily, if it can be operated efficiently, rail should be substantially cheaper than road

transportation. For example, whereas about 30 tonnes can be transported per vehicle with

transportation by truck, by rail a 40 ft container can carry 40 wagons of 26 to 28 tonnes

each; making it possible to transport over 1,000 tonnes.

(In response to the inquiry on whether ordinary freight vehicles can use the Nacala Corridor

rail line developed by Vale), the business community has not been duly informed about this

development and information on the conditions of use and other details has not been

sufficiently shared. CEAR (Central East African. Railways Company) need to conduct

public relations activities.

Reinforcement of the organisational structure and the improvement of efficiency are urgent

challenges for CEAR. There are a shortage of locomotives and freight vehicles as well as

the low service level from the deterioration of the tracks. Rebuilding work is necessary.

Malawi continues to be in need of road improvement and must utilise the railway

infrastructure already in place. Malawi has not fully utilised the railway to Lake Malawi,

which is a resource they already possess, which is wasteful. Primarily the railway is a

cheaper transport mean than roads and methods of utilisation should be examined.


2-31

Expectations for the Nacala Corridor

Due to the problems of poor security around Beira Port, traffic congestion, expensive

warehousing, etc., increased use of Nacala Port is desired.

From the geographical conditions, dredging is continuously required at Beira Port. It is

used as a feeder port (with Durban as the main port).

Nacala Port, as a deep East African port can be an alternative to Dar es Salaam and Durban

Ports.

The merits include, 1) compared to other ports, access to Nacala Port involves the shortest

distance, and 2) Nacala is a deep port and use of large vessels is possible. Also, there is a lot

of trade between Zambia and China, and Nacala enjoys a geographically conducive

location to connection to East Asia.

Although currently it is not being used, development of dry ports can be a milestone

towards the use of the Port. If dry ports are developed, offices can be opening up for the

preparations for the use of the Nacala Corridor. Other transportation companies have also

shown interest in development of dry ports.

If the Nacala Corridor can operate fully, a spin off effect in the eastern parts of Zambia can

be expected.

Nacala Port is largely regarded as the “port for coal exportation”. Being a deep port,

shifting from other ports may be expected. Illovo, a sugar company in Malawi, has recently

started using Nacala Port.

2.4.2 Comprehensive Analysis on Transport Corridors Related to Zambia and Malawi

(1) Nacala Railway Corridor and Nacala Port

1) Transit Time and Cost

Under the present conditions, the Nacala Corridor has an advantage over other transport

corridors in terms of transport cost when transporting goods from Chipata, Lilongwe and

Blantyre to Nacala Port. However, there are no advantages when transporting goods from

Lusaka and Ndola in Zambia. After upgrading the railway from Nkaya to Mchinji, as well as

improvement of the operation capacity of CEAR and construction of a multi-modal dry port in

Chipata, the transport cost from Lusaka to Nacala Port through the Nacala Corridor will

become the cheapest among the other corridors.

On the other hand, the current challenge of the Nacala Corridor is transport time. At present,

the time required for the transport of goods from Chipata and Lilongwe to Nacala Port by

Nacala Railway is the longest among all the corridors. After the upgrading of the railway and

installation of a dry port in Chipata, the transport time from Chipata, Lilongwe and Blantyre to

the Port will become the shortest. However, despite the longest distance to its port, the

North-South Corridor will maintain the shortest transport time when transporting goods from

Lusaka. This is due to the improved roads which allow high speed transport by truck and the

excellent efficiency of the port operation.


2-32

2) Conditions and Potentials of the Port

Being one of the deepest natural ports in Africa, Nacala Port has an advantage of being able to

accept large scale vessels. In addition, the Port currently has a relatively short transit time

because it is less crowded than others.

On the other hand, the Port has big challenges in terms of its facilities. The infrastructure

related to the railway is not developed well, and warehouses and handling facilities are also

not sufficient. Because of these reasons, only a few freight service companies are located in

the port, which further leads to the limited number of vessels arriving in the port.

3) Security, Safety and Other Related Conditions

With difficulties in securing financial sources for maintenance of their roads, the modal shift

to railway has become an urgent challenge in Zambia and Malawi. The Nacala Railway

Corridor, with the upgraded railway from the port to Nkaya in Malawi and with the expected

upgrading for the remaining section connecting to Chipata in Zambia which has already been

committed by a private group, would provide a solution to this challenge. Moreover, a new

line connecting Chipata and Serenje is also expected to be developed in the long term.

On the other hand, there are still many challenges as follows;

Nacala Port is not well known among carriers, but it is recognised as a port mainly for coal.

Security in railway transport is weak due to the lack of a tracking system.

Road transport with large trucks is difficult because there are unpaved roads in and around

the borders of Malawi and Mozambique.

(2) Beira Corridor and Beira Port


The Beira Road Corridor has an advantage in terms of transport time when transporting goods

from Chipata, Lilongwe and Blantyre to Nacala Port. The transport time of the Beira Road

Corridor comes in second place when transporting goods from Lusaka and also Ndola to the

port, following the time required travelling to Durban Port through the North-South Corridor.

The transport cost of the Beira Corridor is also relatively low compared to the other transport

corridors except for that of the Nacala Railway Corridor.


The Beira Corridor connects to Zimbabwe, Zambia, Malawi and DRC with Beira Port

functioning as their trading port. Zimbabwe and DRC are large countries that import many

commodities, thus the access to these countries is an advantage of Beira Port.

The challenge of the port is its shallow depth and accretion of sand which requires periodical

dredging. Due to its characteristics, Beira Port can only be used by small and medium scale

vessels and the port is positioned as a feeder port to Durban Port. If transport time to Durban is

counted in the total transport time, it will require an additional ten days.


2-33


The roads in the Beira Corridor are comparatively flat and large trucks can pass easily.

However, safety is a large challenge in this corridor; the corridor is reported to have poor

safety and terrible traffic jams in and around Beira Port. High storage cost is also a

disadvantage of Beira Port. The safety of the corridor in Zimbabwe is also reported to be quite

inadequate.

Furthermore, the Beira Corridor Group, which was the coordinating institution facilitating

trade on the corridor, closed its operation in 2000.

(3) North – South Corridor and Durban Port


Thanks to the good road conditions and highly efficient operation of Durban Port, the

transport time from Lusaka to Durban Port through the North-South Road Corridor is the

shortest among all the transport corridors. The railway transport of the North-South Corridor

takes an additional day compared to the road transport, but the cost is cheaper; it is the same as

the lowest cost of the Beira Corridor.

The challenge of the North–South Corridor is its high cost for road transport. The cost from

Chipata, Lilongwe and Blantyre to Durban Port becomes higher than other corridors,

corresponding to its distance.


The advantage of Durban Port is its already established position as a primary hub-port in the

Southern African region. The port has a very large capacity as a container terminal with a long

berth length with a scale that is totally different from the other ports. Even yet, their handling

charge is relatively low.

The challenge of Durban Port is that they still need to expand its capacity. Therefore, the

improvement of the berths is under preparation.


The North-South Corridor has many advantages. One is that the transport system has already

been developed and established for the transportation of copper in Zambia. Many foreign

companies currently operating in Zambia have established various supply systems utilising

Durban Port.

Even though the North–South Corridor is an established route, the distance is long and the

transport cost by truck is relatively high. Furthermore, due to high traffic on the corridor, the

road conditions are getting worse in scattered sections.

Currently, many trucks from Durban Port pass through a small part of Zimbabwe and enter

into Zambia through the Livingstone border post or Chirundu border post. However, it is

reported that the drivers are charged with many taxes or penalties (including bribes) to pass


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through Zimbabwe. This situation of the corridor is expected to be improved by shifting the

route via Botswana after the construction of Kazungula Bridge in 2019.

(4) Dar es Salaam Corridor and Dar es Salaam Port


The Dar es Salaam Corridor has competitiveness in terms of cost when transporting goods

from Lusaka to Dar es Salaam Port by railway transport. However, the transport cost of the

corridor for both of rail and road is basically expensive because of its long distance and

transport time. Furthermore, handling charge in the port is also very high.


Dar es Salaam Port is relatively shallow and is used by small and medium class vessels, thus,

it is recognised as a feeder port. However, Dar es Salaam Port is located near some of the

greatest ports such as the Port of Mombasa in Kenya and the Port of Zanzibar. Therefore, it is

highly convenient for feeder transport.

The Port is already busy and its handling charge is high.


There is an advantage that the DCC, a coordination institution to organise the corridor

development, has been established with the support of the WB and is playing its designated

role.

(5) Viewpoints from Zambia and Malawi

1) Zambia

Since Zambia is a land-locked country, development of transport corridors and their effective

use in accordance with their purposes are essential for development of economic sectors.

At present, the North-South Corridor with Durban Port and the Dar es Salaam Corridor with

Dar es Salaam Port are Zambia’s primary corridors from the viewpoints of reliability, safety,

capacity and development of supply chains.

On the other hand, the Nacala Corridor is not yet recognised as an important corridor for

Zambia. This may be partly because the advantages of the Nacala Corridor are not felt in

Lusaka and the central areas of Zambia. It is also partly because the transport system

consisting of railways and trunk roads has not yet been improved enough. Moreover, Nacala

Port has not been functioning very well, resulting that the number of vessels arriving at Nacala

Port is not as high as the other major ports. However, it is expected that the volume of cargos

moving through the Nacala Corridor would significantly increase when it improves its

competitiveness in terms of transport cost and time between Lusaka and Nacala Port after the

completion of upgrading of the railway up to Chipata and the installation of a multi-modal dry

port there.


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2) Malawi

Similar to the case of Zambia, efficient and effective utilisation of transport corridors is

important for the development of Malawi’s economic sectors.

At present, they use the Beira Corridor mainly because it is easy to get access by truck and the

distance is shorter than other corridors to sea ports. The Nacala Corridor has not been used

because its road conditions are poor in Mozambique, the rail section between Mchinji and

Nkaya is not good in terms of infrastructure and operation, and related cargo facilities, such as

warehouses, have not well developed. However, thanks to the improvement of the railway up

to Nkaya from Nacala Port, Malawian cargoes have started utilising the Nacala Corridor

recently. After the completion of the expected upgrading up to Mchinji from Nkaya, more

cargos would use the Nacala Corridor.


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Chapter 3 Present Condition of Zambia

This chapter analyses the current condition of the study area in Zambia by sector in order to explore

development issues and potentials of the Nacala Corridor Region. The analysis of the study area

discusses the sector wide issues, which are influential to the development of each sector in the region,

as well as the regional specific issues and development potential of the sectors. The results of the

analysis become important inputs for the impact analysis discussed in Chapter 5.

The Nacala Corridor Region or the study area in Zambia discussed here incudes: Eastern, Muchinga,

Lusaka, Central, and Copperbelt Provinces as shown in Figure 3.1. The demographic characteristics

are presented in Table 3.1.


Figure 3.1 Nacala Corridor Region in Zambia

Table 3.1 Demographic Characteristics of the Study Area

Province Population (1,000 persons) Annual Average Growth Rate Urban Population

(2010) Poverty Rate

(2015) 2000 2010 2015 00-10 10-15 Central 1012 1307 1,515 2.59% 3.00% 25.1% 56.2%

Copperbelt 1581 1972 2,362 2.23% 3.67% 80.9% 30.8% Eastern 1306 1593 1,813 2.01% 2.63% 12.6% 70.0% Lusaka 1391 2191 2,777 4.65% 4.86% 84.7% 20.2%

Muchinga 524 712 895 3.11% 4.69% 17.0% 69.3%

Zambia 9,886 13,093 15,474 2.85% 3.40% 39.5% 54.4%

Source: Census, Central Statistics Office, Zambia, 2015 Living Conditions Monitoring Survey (LCMS)


3-2

3.1 Agriculture

3.1.1 Overview of the Agriculture

Agriculture in Zambia is characterised by dual structures consisting of subsistence small scale

agriculture and large/medium scale agribusiness (commercial farming under favourable

natural condition). The sector generates approximately 10% of GDP of Zambia and provides

livelihoods for more than 70% of the population. The sector absorbs about 67% of the labour

force and remains the main source of income and employment for both females and males.

Agriculture has led to an increase in rural incomes and contributed to poverty reduction and

food and nutrition security1.

Zambia's total land area is 75 million ha (752,614 km2), of which 58% (44 million ha) is

classified as medium to high potential for agricultural production in terms of natural

conditions. Depending on the agro-ecological condition, various agriculture products are

grown such as maize, soya beans, groundnuts, wheat, cotton, tobacco, sugar cane, coffee and

horticulture crops. Livestock rearing and fisheries were complementary livelihoods next to

crop production for small scale farmers, but large scale firms stared dealing as agribusiness.

In order to enhance agriculture development to contribute to economic growth, the Second

National Agriculture Policy (SNAP) 2016-2020, a renewed policy of the National Agriculture

Policy (NAP) 2004-2015, provides a framework that will promote sustainable agricultural

diversification, agricultural commercialization, private sector participation and inclusive

agricultural growth.

The SNAP is consistent with the National Agricultural Investment Plan (NAIP) 2014-2018

under the Comprehensive Africa Agriculture Development Programme (CAADP)2 framework

and also in line with the Vision 2030, long term policy of Zambia.

3.1.2 Agriculture Condition

(1) Land Use and Availability

Land is not fully utilised for agriculture at the present, even though Zambia still has a large

expanse of vacant land. Medium-high agricultural potential land is estimated at approximately

44 million ha, 58% of Zambia land area, of which 14%, about 6 million ha, is under

cultivation. Additionally, the land with potential for irrigation is estimated at around 2.75

million ha, of which no more than 156,000 ha is developed, mostly on commercial farms for

sugar, wheat and plantation crops.

There are two types of land category and tenure system in the country; state land and

customary land, while the tenure systems are leasehold tenure and customary tenure. The

majority of state land is owned by large scale commercial farmers that cultivate over 20 ha of

1 Government of Zambia, “Second National Agricultural Policy 2016” 2 CAADP is a framework for agricultural transformation, wealth creation, food security and nutrition, economic growth and prosperity for all; Zambia CAADP focuses on six implementation areas of which agricultural marketing development and investment promotion.


3-3

land. Only 8.4% of the small scale households in Zambia own title to their land in state land3

and over 90% of them live in and use customary land without right to use under one’s own

name, but just under the tradition leader’s permission.

(2) Agro-Ecological Condition and Suitable Production

Most parts of the territory of Zambia belong to a humid subtropical climate (Cwa) and are

located on the great central African plateau with the elevation of 1,000 to 1,200 m. Thus the

temperature and rainfall are relatively suitable for many kinds of crops and animals. In

particular, grassland covers respectively 65.4% of the total land. According to those conditions,

land can be divided into three agro-ecological regions/zones which allow raising a broad range

of crops, fish, and livestock.

Source: 2015 GAP Report Building Sustainable Breadbaskets, Global Harvest Initiative

Figure 3.2 Agro-ecological Region and Vegetation Type

Table 3.2 Agriculture Products by Agro-ecological Region

Classification AER 1 AER 2 (A & B) AER 3

Aras 17.3 million ha 27.4 million ha 30.6 million ha Precipitation Less than 800 mm rainfall per

year 800 mm to 1,000 mm rainfall per year More than 1,000 mm rainfall per year

Days of rainy season

80–120 growing days 100–140 growing days More than 160 growing days

Suitable Products Suitable for millet, sorghum, lentils, bananas, paprika, baby corn, small ruminants, cattle, dairy, aquaculture and poultry.

Suitable for maize, sorghum, cassava, millet, rice, groundnuts, cow peas, tobacco, sunflowers, irrigated wheat, soya beans, horticulture, aquaculture, cattle, dairy and poultry.

Suitable for cassava, maize, millet, sorghum, beans, groundnuts, rice, coffee, tea, pineapples, cattle, dairy, poultry, small ruminants and aquaculture.

Source: 2015 GAP Report Building Sustainable Breadbaskets, Global Harvest Initiative

3 Commercial Farms in Zambia and the Relationship with Smallholder Farms Sipangule, Kerstin Nolte, Paper prepared for presentation at the “2016 World Bank Conference on Land and Poverty” 2016, Kacana.

AER1 AER2B AER2A

AER3

AER3


3-4

(3) Water Resources

In addition Zambia has four lakes, four big rivers, many perennial rivers, dambo (marsh) dams

and underground water sources. Among the Southern African countries Zambia is the most

endowed country with surface and underground water supplies, with about 45% of the total

water supplies in the area. However the water resources are not used efficiently for crop

production, livestock rearing and fisheries except large scale agribusiness firms. Estimates

from FAO (Food and Agriculture Organisation of the United Nations) suggest that of the 2.75

million ha of land with potential for irrigation development, only 155,912 ha, 5% of potential

land is currently under some form of irrigation4. Due to water resources and favourable

climate conditions, grazing land is abundant for livestock rearing. For fisheries, three major

basins, the Zambezi, Luapula and Congo have still capacity to raise fish. By managing water

resources, the crop, animal and fish production can be developed significantly.

Source: Water Resources Management Authority; http://permits.zam-water-info.com/

Figure 3.3 Water Catchment in Zambia

4 NAIP 2014-2018, Ministry of Agriculture and Livestock, 2013


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3.1.3 Structure of Agriculture Producers

Zambian farmers are classified into three broad categories of the national agricultural statistics,

namely 1) small-scale farmers who have farmland less than 20 ha, 2) medium-scale farmers

with the land of 20-100 ha, and 3) large-scale farmers who own the farmland of more than 100

ha. According to the research results of Indaba Agriculture Policy Research Institute (IAPRI),

it can be said that almost 96% of farmers are small scale farmers in Zambia; 1.47 million

households are small scale farmers, while only 2,000-3,000 farmers or firms are in the middle

scale and large scale categories5. The small scale farmers are categorised by the holding size

of farmland into three categories, more than 70% of them are Smallholder A, who have a

farmland less than 2 ha as shown in the following table.

Table 3.3 Farm Structure in Zambia (2016)

Landholding Size Category The numbers of farmers

0–2 ha Smallholder A 1,051,000 2–5 ha Smallholder B 350,000

5–20 ha Smallholder C 70,000 20–100 ha Medium-scale

2,000-3,000 >100 ha Large-scale

Source: JICA Study Team based on the Zambia Agriculture Status Report 2016, IAPRI 2016

The small scale farmers are generally subsistence producers of staple foods and sell into local

markets with occasional marketable surplus. They often trade their products with informal

wholesalers or vendors in regional markets such as DRC, Zimbabwe and Malawi.

Medium-scale farmers produce maize and a few other cash crops for the domestic market.

Large-scale farmers produce various crops mostly for the export markets.

3.1.4 Current Situation on Agriculture Production and Distribution

The main agriculture products in Zambia are maize, soya beans, groundnuts, wheat, cotton,

tobacco, sugar cane, coffee, tea, horticulture crops, fish and livestock. A portion of tobacco,

cotton and wheat are exported to neighbouring countries, and most of tobacco, sugar,

horticulture and coffee are exported mainly to the European market. The fish and livestock are

most consumed in the country. The summary of production and distribution for each

commodity is described below.

(1) Crops

1) Cereals and Tubers

Zambia is well-known as a ‘Grain Basket in southern Africa’ due to the production and

exportation of maize. As a staple food, wheat, millet, rice and sorghum are also grown, the

quantities are much lower than maize as shown in the figure below on the left. While maize

production was 3.35 million tonnes in 2014, wheat, produced in second place among cereals

was approximately 200,000 tonnes of production. As shown the figure on the right, the maize

5 Zambia Agriculture Status Report 2016, IAPRI


3-6

can be grown in more than half of the country, but the wheat can only be grown in specific

areas due to climate condition.

The maize, wheat and rice are increasing those productions and productivities. By contrary,

production of millet and sorghum are decreasing because farmers prefer maize for food and

also cash. Cassava can also be grown largely and is easy to produce but its production is

decreasing recently.

Source: FAOSTAT

Figure 3.5 Production of Maize (right) and Other Cereals (left)

Source: Zambia Agriculture Dataset: Department for international Development (DFID) 2002

Figure 3.4 Main Crop Zones of Zambia

Provinces

Millet

Maize

Sorghum

Rice

Cassava

Wheat


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Zambia is exporting the maize to neighbouring countries such as Zimbabwe, South Africa and

Malawi when food security issue is scarce in those countries. In contrast, wheat and rice are

imported from Europe, South Africa and Asian counties.

2) Legumes and Oil crops

Many kinds of legumes are grown in

Zambia. Groundnuts used to be produced

the most in the country among legumes.

However the groundnuts production has

declined greatly these past five years

because aflatoxin is observed and cannot

be sold in European market. Next to it,

mixed beans are wildly grown mostly for

self-consumption. Thus the production has

been relatively stable for these past five

years.

Soya beans are also traditionally grown both for self-consumption and as cash crop. . It is also

traded for export and import, even though it’s not on a large scale. It is exported mainly to

Zimbabwe and South Africa, and imported from Malawi. Due to the surge of its demand, the

production and area planted is increased. One of the reasons is development of oil processing

manufacture inside the county. With the trend, the demand of sunflower is also gradually

increasing, but the production is not well raised for the time being.

3) Export Oriented Crops

Sugarcane, cotton, tobacco and coffee

are produced mainly for export. Some of

these products are processed in the

country, but most of them are exported as

a raw material except sugar.

Sugar is the most produced and exported

inside Zambia. Sugar cane produced

about 4 million tonnes in 2014. All sugar

cane is processed to sugar in the country

and this sugar is exported, mainly for

Mauritius, DRC, South Africa, Kenya

and other neighbouring countries.

Regarding tobacco, virginia and burley tobacco are produced mainly by medium and small

scale farmers. The Eastern Province has largest share for both types of tobacco; especially

97% of the burley tobacco in Zambia was produced in Eastern Province in 2014. Large

quantities are exported to Malawi, and other portion is China and Zimbabwe. Malawi had been

Source: FAOSTAT

Figure 3.6 Production of Oil Crops

Source: FAOSTAT, UN Com Trade Database Figure 3.7 Production of Tobacco, Cotton

and Coffee


3-8

historically known for producing burley tobacco, but currently Zambia became the one of the

largest tobacco producing countries in the world.

Cotton is among Zambia`s main crops ranking second to the staple food crop maize in terms

of generated value by exporting and in terms of the number of farmers who grow it. The

export amount of “cotton”, which may include both lint and seeds, was 45,000 tonnes in total,

35% of total production. Of which, more than half are exported to South Africa, and about

25% are exported to China and Singapore.

Coffee production is mainly in the Northern districts of the Muchinga Mountains

encompassing the Nakonde, Kasama and Isoka regions because Zambian farmers generally

produce Arabica coffee which requires cool, shady and slightly humid weather conditions.

Destination countries of coffee beans export are changeable by year. While USA, Germany

and UK imported coffee from Zambia in 2014, in 2015, Finland and South Africa were the

main customers.

(2) Livestock Husbandry and Animal Products

Most of the farmers raise a few animals, but just for animal traction or as stock as its name

‘livestock’ suggests.

In 2014, 4 million heads of cattle, 1.1 million heads of pigs and 38 million of chickens are in

the country. Among them, 3.3 million of cattle and 1 million of pigs have been held by small

scale farmers. The Southern Province accounted for the highest percentage of cattle population

in Zambia with 31.2% and Eastern Province follows with 30.7%. Regarding the pig population

in Zambia, Eastern Province accounted for the highest percentage with 51.5%.

The goat population in Zambia was estimated at about 2.6 million and the sheep population

was only about 130,000. The meats produced by the live animals are mainly consumed in the

domestic market, but some quantities have been exported to DRC and Angola. Traditionally

pastoralist is rare in Zambia, thus the animal production is not very developed there. The

quantity of animal products to export including meats and eggs is very low at the present.

Most dairy products consumed in the country have been mainly imported from South Africa.

Source: FAOSTAT

Figure 3.8 Number of Livestock – Cattle, Goats, Pigs, Sheep (right) and Chicken (left)


3-9

(3) Fishery

Zambia has 15 million ha of water in the form of rivers, lakes and swamps in the major basins

of the Zambezi, Luapula and Congo Rivers, which provide the basis for extensive freshwater

fisheries. Fish contributes more than 53.4 percent of animal protein in the diet of Zambians.

The fishery sub sector contributes to 2.95% of the Agriculture sector’s GDP. However,

demand for domestic fish for consumption still outstrips production. The national demand for

fish is conservatively estimated at 160,000 tonnes per year, and this gap between supply and

demand is foreseen to increase further with population growth. Generally, annual fish

production is to 60,000 ~ 80,000 tonnes from capture fishing and 10,000 ~ 20,000 tonnes from

aquaculture. It means that around only 50-60% of annual demand (160,000 tonnes) can be

covered by domestic production, but the rest is covered by the import; from South Africa,

Zimbabwe and Tanzania. Eastern Province has 1,703 fish farmers operating 2,333 fish ponds,

and the current annual fish production is 500 tonnes, which is around 0.7% to 0.8% of the

annual national production.

(4) Forestry

Forestry products are another growth area for business opportunity in Eastern Province with

timber, wood, honey and bees wax being the major products. Eastern Province has a total of

65 protected forest areas, including eight National and 57 Local Forests covering a total of

460,216 ha. The province has also seen an increasing demand for timber particularly

Pterocarpus chrysothrix (Mukula) which is exported to Asian countries mainly China and

Thailand. This poses a great potential for the establishment of timber industries in the

province. Eastern Province has also great potential for beekeeping, a practice that has been

in local communities for some time now. The province has an estimated honey production

capacity of 300 tonnes per year. The major honey producing districts in the province are

Mambwe, Chipata, Lundazi and Petauke. The other districts however, have huge potential

for beekeeping that only requires scaling up. COMACO (Community Markets for

Conservation, see;3.1.6(2) 6)) is the only company promoting beekeeping among small

scale farmers. The company has 3,927 trained beekeepers that produce and supply honey.

3.1.5 Agribusiness Clusters and Players

Agribusiness in Zambia is mostly run by medium-large scale commercial farmers and private

firms, but there is also collaboration with small scale farmers who also run agribusinesses. In

fact, more than 400,000 households grow primary products or raw material as an in-grower or

out-grower6 of agribusiness farms or private firms7. Some organisations or companies support

the small scale farmers to develop agriculture clusters or links to investors or markets. In fact,

6 Out-grower Schemes, also known as contract farming, are broadly defined as binding arrangements through which a firm ensures its supply of agricultural products by individual or groups of farmers. (source：OECD）Such farmer who conduct a contract farming are called as 'out-grower. 7 Zambia Agriculture Status Report 2016, IAPRI 2016 and Commercial Farms in Zambia and the Relationship with Smallholder Farms Sipangule, Kerstin Nolte, Paper prepared for presentation at the “2016 World Bank Conference on Land and Poverty” 2016, Kacana


3-10

there are over 6,500 small and medium enterprises (SMEs)8 in agribusiness that not only

produce crops or animals but also run agribusiness processing. Most of the SMEs are located

in greater Lusaka, the Copperbelt and the Great East Road.

Brief situations of agribusiness cluster (or supply chain players) are described below.

(1) Agricultural Input and Machinery Suppliers

Numerous suppliers of agricultural input (seed, fertiliser and chemicals, etc.) and/or machinery

run their business based on Lusaka corporations with foreign mother companies in regional or

overseas countries such as South America, India and Zimbabwe. Most of the inputs itself or its

raw material are brought from other countries. For example, Zambia Fertiliser Ltd., one of

biggest fertiliser suppliers in Zambia, which produces compound fertiliser by blending

imported raw materials from Durban, Beira or Dal es Salaam. Agro-dealers and suppliers’

branches such as NWK Agri-Service, which are located at the main towns in rural areas, are

also selling imported inputs from South Africa. However, the import share from Asian and

8 Zambia Agribusiness and Trade Project, World Bank, 2016

Source: Project appraisal document of ZAMBIA AGRIBUSINESS AND TRADE PROJECT

Figure 3.9 Concentration of Food Manufacturing Firms in Zambia, and the Spatial Analysis of New Entrants

Chipata

Kabwe

Lusaka Mongu

Livingstone

Choma

Mazabuka Kafue

Ndola

Solwezi

Chingola

Mansa

Kasama

Primary (Trunk)

Secondary (Main)

Roads

Cities above 50,000

Total manu food & bev firm 0 - 5

6 -10

11 - 16

17 - 27

28 -198


3-11

Middle East countries has increased in recent years9. The feed and medicines for livestock and

fish farming are available at the agro-dealers’ store in the rural area.

As stated, most of the agricultural inputs including feed and medicines for animal and fish

husbandry rely on imports or are produced in Lusaka using imported raw materials. These are,

therefore, very expensive and not affordable for small scale farmers because transportation

cost is added to the input price. Particularly, it is said that feed accounts for about 60% to 70%

of the production costs of animals and fish so farmers cannot raise the production and

productivity optimally10.

Needless to say, all equipment and machinery are also imported mainly from South Africa, EU

and Asia, such as India and China, recently.

(2) Primary Producers

The primary agriculture producers in Zambian provide the raw materials for agro-related

industries which accounts for 84% of the manufacturing value addition in the country11.

Medium/large scale commercial farmers and firms produce mostly cash crops such as tobacco,

cotton, horticulture products, soya beans, wheat and a small quantity of coffee for domestic

and international markets. Among farmers, there are those who process secondary products

such as raw sugar and maize mills. By contrary, the latter produces mainly primary products

or raw material for agribusiness firms unless they consume processed products locally.

Small scale farmers also grow the tobacco, cotton, horticulture crops, soya bean and wheat as

well as maize and raise animals and fish mainly for self-consumption. However their maize is

often exported to neighbouring countries such as DRC, Malawi, Zimbabwe and African Great

Lake region. The fish and animals are mostly consumed in domestic markets rather than trade

with neighbouring countries because domestic demand has been increasing in the recent

years12.

Except for the commodities produced on companies own farms, the primary products are

purchased and transported by agro-processing industry companies, general commercial firms

or transporters, or sometimes farmers’ cooperatives or associations. Tobacco and cotton used

to be transported to South Africa but a share destined for Asian countries has also increased

recently.

(3) Agro-Processing Industry Firms

The agro-processing industry has been developing in the country in recent years due to an

increase of food demand in and around the country.

Due to the import restrictions of edible oil from 2015, the oil processing industry has also been

developed tremendously. Sugar and edible oil are the main export commodities to regional 9 Comtrade 2010-2015 10 Draft of Livestock Policy. Ministry of Fisheries and Livestock, 2015 11 Country report to the 71st Plenary Meeting of the International Cotton Advisory Committee to be held from 7-12 October 2012 at Interlaken, Switzerland, Cotton Board of Zambia 12 According to Interview with Zambian Development Agency and Ministry of Livestock and Fishery


3-12

markets such as DRC, Zimbabwe and South Africa at present. However, most of the

agro-industrial companies are facing a shortage of primary products as raw materials.

According to Mount Meru Millers Zambia Limited, although the demand of sunflower oil has

been increased in Zambia and also in Malawi, the domestic demand cannot be fulfilled due to

shortage of sunflower seeds as raw material. This company has started to promote sunflower

production in Central Province in order to ensure to obtain raw material. To fulfil the raw

material stably, Tradekings is contracting with 830 farmers to procure Irish potatoes as raw

material and processed confectioneries such as cookies and snacks.

As for animal products, Zambeef Products PLC, one of the largest agro-industry companies,

also has a problem with the shortage of feeder calves for the meat products. The company

purchases certain aged feeder calves from small scale farmers because the rearing calves

requires a lot of time and effort. However, the company has a difficulty to purchase a large

number of calves regularly because the number of calves which can be reared by one small

scale farmer is limited and most of rearing places are scatted and located in remote areas; thus,

it is difficult to access to a number of feeder calves at one time. Therefore, this company has

not yet exported meat, the main product, while exports several products such as cereal crops

and feed to Zimbabwe, Rwanda, Angola and Mozambique.

The fishery, aquaculture in particular, has not been well developed even though there is a large

water body suitable to fishery in the country. One of the reasons is the difficulty of fish feed

procurement which are not affordable or available. The trade of fish products is mostly by the

informal sector except Yelelo, a leading company of aquaculture business exporting formally

in Kasumbalesa in DRC. On the other hands, Skretting, the largest fish feed production

company has opened feed plant at Siavonga near Lake Kariba in April 2017. The investment is

expected to serve as a catalyst for fishery development in Zambia.

(4) Retailers

The major grocery retailers in Zambia are supermarkets with South Africa’s capital such as

Shoprite, Game, Spar and Pick’n Pay. Such kinds of supermarkets have procured merchandise

through its own distribution line from original countries. However, other than commodities

which are produced in certain quantities, those supermarkets purchase local products at the

present such as perishable commodities; vegetables, fruits, meat and fish and as grocery food

such as maize mealie, wheat flour and cooking oil. Shoprite and Game buy the commodities

from local wholesalers and Spar contracts with farmers and buys products directly. At present,

supermarkets owned by Indian, Chinese or Thai companies have increased.

Those supermarkets are oriented toward foreigners and wealthy people, while most of the

Zambians use local markets and vendors who sell local products.

(5) Trading Companies

Thousands of companies are trading primary products and processed food in Zambia to sell

domestic or international markets. Same as the above mentioned agro-industry processing

firms or retailers, some trading companies contract with farmers or local traders, while some


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just buy products according to their own demands without contract. But the ones who need

certain quantities of products regularly tend to make a contract with farmers through the

cooperatives, associations or individually. In that case, the companies provide agriculture

inputs and techniques for the production in many cases. For example, Cargill, one of biggest

grain majors in the world, provides such services for small scale farmers as well as conducting

organisation training sessions and launching a maize mill in Chipata and a soya bean crush

and oil refinery factory in Lusaka to enable them to join commodity value chains. NWK

Agri-Services13, handling staple food and pulse crops and cotton, provides pre-financing to

small holders to allow them to access input and grow products.

Out of contract or linked with agribusiness firms, the primary products, especially maize, soya

beans, and wheat produced by small scale farmers, are distributed inside and outside the

country through private transport and/or logistics organisations such as AFGRI and Zambian

Commodity Exchange (ZAMACE)14.

3.1.6 Related Policies, Programmes and Projects

In order to achieve food security, and develop the agriculture sector driven by large scale

commercial farmers or agribusiness companies, the GOZ has been preparing and reforming

regulation, institutions and laws for accelerating agribusiness. In addition the GOZ also

facilitates small scale farmers to obtain farming inputs and techniques with the assistance of

donors and to work with the agribusiness players. Related current development policies and

movement with international donors and investors are described briefly below.

(1) Development Policies, Strategies and Plans

The GOZ has participated in the CAADP since 2011 through the facilitation by the COMESA.

Aligned with CAADP, the GOZ has launched the revised National Agricultural Policy (NAP)

and National Agricultural Investment Plan (NAIP) in 2013. The policy and the plan focus on

the development of sustainable, dynamic, diversified and competitive agricultural sector,

which assures food security15.

In accordance with NAIP, the main goal of agriculture programmes and projects is always

food security but is shifting to market oriented agriculture including enhancement of

agribusiness for export. Regarding fisheries and livestock, since the Ministry of Fisheries and

Livestock (MFL) has established in 2015, the ministry has prepared its own new policies

fisheries and livestock respectively. The fisheries are focusing on export the same as

self-sufficiency, while the livestock sub-sector is targeting national socio-economic

13 NWK Agri-Services stated operation under the Dunavant name since May 2000 and changed its corporate name as NWK Limited, a major South African based agribusinness that acquired a majority shareholding in October 2013. NWK Limited in South Africa holds has 60% of interest of the NWK Agri-Services in Zambia and Louis Dreyfus Commodities (Middle-East and Africa) Trading (LDC) that is based in Dubai shares 40%. 14 a private limited liability company incorporated under the Companies Act in 2007 with assistance from USAIS to improve agriculture trade through the the implementation of the Warehouse Receipt System (WRS). 15 National Agricultural Policy (NAP) and National Agricultural Investment Plan (NAIP)2014-2018, MOA,2013


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development and food and nutrition security16. In any case, diversification of production is a

key issue in the agriculture policies. On that occasion, the diversification and export-oriented

agriculture is the 1st outcome in the strategy of economic diversification and job creation in the

new national development plan17.

In order to developer competitive agriculture sector including livestock and fisheries, the

irrigation development is necessary. As above-mentioned, Zambia’s irrigation potential is

estimated at 2.75 million ha of which 523,000 ha can be economically developed, this

variance on figure is different by source though. If irrigation scheme is developed, yield of

major crops can be increased 1.5 to 3 times more than the one with conventional production.

Therefore the government has intended to develop more irrigation scheme for small scale

farmers. However, most of schemes developed by the government or NGOs in the past are

ruined due to poor management of facilities. It is related to instructional aspects of farmers in

rural areas, most of farmers water management groups are not well functioned. Thus to

promote more irrigation agriculture, it is important to identify the suitable sites and choose

types of crops, as well as to organise and train thoroughly beneficially farmers considering

traditional socio-economic situation of the site.

(2) Development Programmes and Projects

The following points are presenting related programmes and projects at the small scale farmer

level.

1) Farm Block Development Programme18

For promoting commercial agriculture for economic development by utilising the land

resources, the GOZ has undertaken a number of measures to encourage domestic and

international investors like reinforcement of fiscal and institutional incentives. As one of the

measures, ‘Farm Block Development Programme’ was determined in 2002 aiming at poverty

reduction through regional development conducted by the investment promotion. The

programmes has been carried out by the Zambia Development Agency (ZDA) and many

related institutions.

The programme aims to achieve economic diversification and growth, national food security

and poverty reduction by developing rural areas through the commercialization of agricultural

land. In the initial plan, the government is to identify a Farm Block on the scale of 100,000 ha

in each province, and to provide and install basic infrastructure and facilities such as trunk

roads, bridges, electricity, dams, schools and health facilities in the block. The core investor

being a lead investor for each block is expected to develop the infrastructure for their business

within the allocated plots in the Farm Block and to manage the appropriate agribusiness

activities. They are also expected to contribute to agricultural development in the area, for

16 Based on interview with Animal Production Department in the Ministry of Fisheries and Livestock and ‘Draft Livestock Policy’ 2015 17 National Agriculture Investment Plan 2014–2018, MOA and Livestock,2013 18 Agriculture Sector Leaflet, Zambia Development Agency, 2014


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example by supporting the small, medium and large-scale farms in and around the blocks

through an Out-grower Scheme in marketing of their products. Producers who are inside of the

blocks are categorized into five categories as shown below.

Table 3.4 Category of Producers inside of Farm Block

Category 1 2 3 4 5 Area（ha） 5～10 11～100 101～1,000 1,001～5,000 5,001～10,000

Source: MOA

The core investors in the category 4 and 5, who are leading producters, had been expected to

maintain infrastructure in the area of Farm Block, manage agribusiness and support buying

and selling crops produced by large, medium and small scale local farmers categorized from 1

to 3, under the Out-grower Scheme. According to ZDA, farmers who live in the area that will

be developed as a Farm Block have three options; i) to participate in projects of core investor

as out-grower, ii)to continue farming as individual farmer inside of the Farm Block, or iii) to

accept land acquisition and receive compensation for resettlement from an investment firm.

In the implementation of the Farm Block Programme, ZDA is in charge of planning of the

programme, attracting the private investment, and public relations. In addition, a committee

consisting of multiple ministries and agencies, centred in the Ministry of Agriculture (MOA),

reviews and approves the business plans of the investors. The committee has three levels of

the structure as shown in the table below and screen the investors’ plan with results of

Environment Impact Assessment (EIA). After the ratification of the plan in the Council

Minister Committee, the investors will be able to apply and acquire the land tenure.

The operators who plan to start activities in the Farm Block need to conduct an environmental

and social impact assessment (EIA) in order not to negatively affect local communities and

individuals by their planned activity, and the operator who might have negative impacts would

not be selected. The government has the responsibility of supervising the investor’s business

plans including environmental and social consideration and actual implementation in order to

protect social and cultural values of community and people’s life.

Table 3.5 Roles of the three Committees for Screening the Investment Plans

Committee Chair person Roles

Technical Committee Director of Dept. of Agriculture in MOA

Analysis of Business plan: Analysis and Evaluation of the business plan for the Farm block

Steering Committee Permanent Secretary of MOA Approbation: Approval of the Business plan based on examination content

Council Minister Committee The Minister of Agriculture Ratification: Business licensing based on the examination content

Source: Interview with the MOA

In the Farm Block Development Plan prepared in 200519, three Farm Blocks named Nasanga,

Kalumwanga and Luena were selected as targets of the first phase to develop the infrastructure

19 Farm Block Development Plan 2005-2007, Ministry of Finance and National Planning 2005


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because of further limitation of the government budget. However, the programme has not been

progressed as planned due to the limited financial resources of the government for

infrastructure development. The current progress of the Farm Blocks development is

summarized in the table below.

Table 3.6 Progress of the Farm Block Development

Location Province District Current Status

Nassanga Central Serenje Major infrastructures have been developed. Activities of the core investors An entity to utilize 6,000 ha is not determined yet. Under selection Zambia Jail utilizes 3,700 ha. Leaseholds of 352 small and middle plots (5~1000 ha) have been set. 20 percent of the applicants have been migrated.

Kalumwange Western Kaoma N/A Luena Luapula Kawambwa Activities of the core investors

Sunbird Bioenegy Litd. utilizes 10,000 ha for production of Biofuel made with Cassava. Kawambwa Sugar Lid utilizes 10,000 ha for sugarcane production. The small plots are under setting. Start recruiting settlers after cadastre is ready.

Lusuwishi Copperbelt Lufwanyama Activities of the core investors Global Plantation (Holding an oil milling factory in Ndola) uses 10,000 ha. They

produce soya bean, etc. Other entities have been allocated 4 plots with 5,000 ha/ plot (total 20,000ha)

respectively. Tahal Group (Israel) plans to construct irrigation scheme and technical training

centre for horticulture. AfDB is conducting a feasibility study for infrastructure development in the area for small scale farmers by grant (on scale USD 50 million).

Manshya Muchinga Mpika Activities of the core investors Green 2000 Ltd. and Netafile (Israel) plan to establish the machinery training

centre for agriculture value chain development Other four or five investors are already determined.

Kalungwishi Northen Mporokoso Activities of the core investors China Railway Seventh Group (China) conducted agricultural development of

200,000 ha aiming to export for DRC or Asia.

Source：JICA Study Team（Interviews with MOA, ZDA, IDC）

The ZDA is reviewing the plan and trying to reactivate focusing on some blocks, such as

Mwanza (Southern Province) and Lufwanyama (Copperbelt Province) where Kenya and

Malaysian investors are interested in agriculture investment. The AfDB supports development

of the Farm Block by providing technical assistance to conduct a feasibility study on the Farm

Block20 and loan for basic infrastructure development21.

Apart from the review of ZDA, other several queries are also observed for the Farm Block

development. The GOZ do not have clear idea of required basic infrastructure for the Farm

Block development including budget and role and responsibility of each stakeholder.

Moreover, it has not been prepared yet that appropriate guidelines about required

environmental and social considerations for existing small scale farmers and cooperation

20 https://www.afdb.org/en/projects-and-operations/project-portfolio/p-zm-aa0-025/ 21 https://www.afdb.org/en/projects-and-operations/project-portfolio/p-zm-aac-005/


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methods applied between medium-large scale farmers and small scale farmers in their

production and access to market from the Farm Block, etc.

2) Zambia Agribusiness and Trade Project

Under the financial support of World Bank, Zambia Agribusiness and Trade Project was

lunched 2016 and will be implemented until 2022. It aims to improve and develop market

linkage in agribusiness for ‘emerging and poor farmers’ especially small and small-medium

enterprises. The project consists of three components namely: i) Market Linkages in

Agribusiness; ii) Strengthening the Regulatory and Institutional Framework for Agribusiness

and Trade; and iii) Project Management and Monitoring and Evaluation. Leading by the

Ministry of Commerce, Trade and Industry (Ministry of Commerce, Trade and Industry:

MOCTI), MOA and MFL are implementation the project with other partners. Since the project

has just started, the result has not been reported yet.

3) FISP (Farmer Input Support Programme) Electric Voucher

The GOZ introduced input subsidies in 2002/03 through the creation of the Fertilizer Support

Programme (FSP), and the Farmer Input Support Programme (FISP) is its successor which

began in 2009/10. The Program started aiming to increase maize production through the

provision of fertilizer and improved maize seed, while at the same time creating an

environment for private sector input supply chains to develop. The target crop is increased to

cover others such as groundnuts, soya bean, other beans, rice, cotton, etc., and the scale of its

fertilizer distribution was expanded from 48,000 tonnes in 2002/03 to 214,000 tonnes in

2015/1622.

In the 2015/2016, MOA introduced the FISP Electronic Voucher initiative. The 'E-voucher'

system enables farmers to receive the subsidy from the government to purchase inputs by

pre-paid VISA bank card. In 2015/16, 0.24 million farmers in Southern, Lusaka, Central and

Copperbelt districts received subsidy of the FISP through E-voucher not physical inputs

purchased by the government. The ‘E-voucher’ system promotes private sector’s participation

in agricultural inputs, enables small scale farmers to obtain inputs timely and purchase a wide

range of recommended inputs such as veterinary drugs, agricultural equipment, livestock and

juvenile fish. Therefore, the 'E-voucher' system can be said to have the potential to accelerate

diversification of the small scale farmers. Now, the GOZ has extended the program to 39

additional districts covering 602,521 farmers during the 2016/2017 season23. Provided that,

due to the review of the concept of the FISP program to help farmers with the potential to

grow, farmers have to raise the ZMW400 deposit fees to access inputs.

22 Statement by Minister of Agriculture and Livestock on “The Preparedness of the Farmer Input Support Program (FISP) for the 2015/16 Agricultural Season." 23 http://www.musika.org.zm/article/84-fisp-electronic-voucher-program-to-promote-diversification


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4) Smallholder Agribusiness Promotion Programme (SAPP)24

The Smallholder Agribusiness Promotion Programme (SAPP) is a seven years programme

from 2011 to 2017 costing approximately USD 25 million under the support of IFAD. The

goal of SAPP is to “increase the income levels of poor rural households involved in

production, value adding and trade of agricultural commodities including animal products”.

The purpose is to “increase the volume and value of agribusiness based on the output of

small-scale producers”. The programme has two main components as i) More Efficient Value

Chains and ii) Enabling Environment for Agribusiness Development, which have two

sub-components respectively.

5) Enhanced Smallholder Livestock Investment Project (E-SLIP)25

The Enhanced-Smallholder Livestock Investment Project (E-SLIP) is a seven years

programme from May 2015 to April 2022 approved by MOZ in September 2014. It is a

follow-on project to the Smallholder Livestock Investment Project (SLIP) which closed on

31st March 2015. The goal is to sustainably improve the production and productivity of small

scale producers' livestock systems. The programme has two components namely, i)

Sustainable animal disease control and ii) Sustainable livestock production. This is a

nation-wide programme but the target areas are districts prone to outbreaks of Contagious

Bovine Pleuropneumonia (CBPP) or East Coast Fever (ECF) and districts to which these

diseases may spread.

The MFL led the implementation. However a lack of extension offers under MFL and their

weak capacities were key challenges. Additionally seamless transition between SLIP and

E-SLIP were not done, so it did not result in quick-wins for sustained beneficiaries trust and

belief in the E-SLIP Programme.

6) Community Markets for Conservation (COMACO)26

COMACO began in 2003 in Zambia’s Luangwa Valley as an NGO activity for secure food

sources and income of small scale farmers by conserving the environment and properly

utilising natural resources. This activity is developed as a COMACO as a limited-by-guarantee

company in collaboration with the Government of Norway, German International Cooperation

Corporation (GIZ), United States Agency for International Development (USAID) and several

NGOs. The COMACO extends its services to over 140,000 small scale farmers, manufactures

twelve value-added products, and supports economic incentives for achieving conservation

and improved livelihood results.

24Based on interviews, and the website of IFAD and Supervision Report of SAAP and Final Programme Designe Report of E-SAPP 25 Based on interviews, and the website of IFAD and Supervision Report of SAAP and Final Programme Design Report of E-SAPP 26 Based on interview results and presentation sheet provided by COMACO


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Source: Presentation Power Point by COMACO

Figure 3.10 COMACO Value Chain Model

These are in order to manage both hunger and poverty reduction and ecosystem and wildlife

protection, and the objectives are:

to get small-scale farming families out of poverty with the right skills and markets that help

them become better stewards of their land;

to provide consumers a range of nutritious, pesticide-free, tasty food products under the

brand ‘It’s Wild! ‘and sourced from COMACO farmers

COMACO has already established and operated the exclusive value chain shown in the figure

on the right as honey, Chama rice, peanut butter, yummy soy (soy milk powder), ground nuts

with trademark ‘It’s Wild!’. According to the manager of COMACO, those products have

been on sale in Zambia and have begun receiving trade inquiries in Malawi (Chipiku).

3.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector

As described above, Zambia has a favourable agro-ecological condition for agricultural

production and also big markets which need agricultural commodities in the surrounding and

overseas countries. Additionally, the demands for the Zambian commodities are increasing at

present in these markets. Therefore, it will be a great opportunity to reinforce the exporting of

Zambian agriculture commodities and goods, if both the roads and railway along with the

Nacala Corridor are well upgraded to enable overseas export and more if the railway is

extended to Serenje which connects to DRC and others as mentioned later. The development

potentials and challenges of agriculture and agribusiness, which can capture this opportunity

without any delay and utilise it efficiently are described below.

(1) Overall Potential and Challenges of Development

1) Marketability of Agriculture Products in Zambia

As a so-called a Regional Food Basket, Zambia has been supplying food to neighbouring

counties and even to the Africa Great Lake region where the population and food demand are

increasing. This is a great opportunity to earn foreign currency in the country.

A) Farmers learn better practices to produce surplus w/help of lead/senior lead farmers

B) Surplus sold to COMACO at bulking points C) Surplus consolidated at commodity depots and

later shipped to processing plants D) Value-added processing of raw materials into It’s

Wild! food products E) Products sold at premium value F) Farmers receive premium value for crops when

compliant with conservation targets


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The export commodity is mostly one

crop, maize, which is a major staple

food in the country (see details in the

(2)-1)). In other words, the foreign

currency income from agriculture relies

on maize production. As shown in

Figure 3.11, the net agricultural export

value from 2011 to 2015 trended

downward because maize production

decreased due to erratic and poor

rainfall. Additionally, in 2016, the

GOZ announced a temporary export

ban of maize grain and its products

with a fear of food shortage even though Zambia was an only country in the southern African

region stocking surplus maize and though its price was very high. The export ban was lifted in

May 2017 but foreign currency income from maize was not as good as the previous year due

to a good harvest in neighbouring countries.

In Zambia, most of the maize is produced by the small scale farmers. The Food Reserve

Agency (FRA) has mandates to purchase maize from the farmers and also to to provide market

access to small scale farmers27. For that purpose, the FRA sets 1,000 to 1,200 satellite buying

depots in local rural areas where the private traders do not come and purchase. The purchased

maize is stored in FRA’s main depots exist in 76 locations along the railway in whole country.

Some of stored maize are distributed to the local area for food security aspects, and remaining

is supplied to the markets and domestic milling companies with considering market demands

and price28. In addition to this, private venters buy maize in market price and sell it to the

milling company, feed company or drink company. The government regulates the export and

import of maize. Export volumes are determined once domestic maize production has been

measured for the year. Only licenced companies are allowed to export maize.

In order to utilize the marketability of Zambian commodities for the promotion of export

oriented agriculture, there are two challenges to be tackled, namely; i) to establish a food trade

mechanism and system in particular for maize to manage maize production and distribution

balancing domestic food security and ii) to promote the diversification of agricultural

commodities for export at the field level. Recently, the food security and promotion of

exported orientated agriculture are certainly emphasized in the NAIP and even in the 7th

National Development Plan (7NDP). Therefore, a concrete regime and action plan regards

food security and diversification of the production towards export oriented agriculture are

needed to carry out on the ground. Additionally the considerations for small scale farmers and

rural community are also needed.

27 Agriculture, Livestock and Fisheries Sector Profile 2011, ZDA 28 Interview with FRA, 2017

Source: Agriculture Status Report 2016, Indaba Agriculture Policy Research Institute, 2016

Figure 3.11 Net Agricultural Export Value in Zambia


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2) Possibility of Diversification of Agriculture and Agribusiness

Although, various agricultural products can produced under preferable natural condition in

Zambia, most of the farmers, regardless their farming scale, produce only limited varieties of

crops and livestock.

Under the agricultural situation, the NAIP put the crop diversification as a top priority in order

to meet national needs and to promote exports, focusing on maize, legumes, oil seed crops,

other cereal crops, root and tuber crops and horticultural crops. Among these crops, the

legumes and oil seeds are demanded highly in both formal and informal markets. According to

the Mount Meru Millers Zambian Limited and an agricultural cooperative in Petauke, the

demands for the processed products like vegetable oils and flours are also increasing in

domestic and international markets.

Besides, the NAIP has mentioned the importance of the livestock and aquaculture sector for

agriculture and economic development. The livestock sector, in particular, has a development

potential in the light of rising meat demand in and outside the country. In fact, the GOZ was

concluded MOU with the government of Saudi Arabia to raise and export one million goats

and sheep in 2016, and made up the Goats and Sheep Task Force in MFL, MOA and MOCTI

in 201729. Since large quantities of crop residues can be expected for animal feed production

in the country, by utilising the existing resources, livestock development is to be done as an

agricultural diversification.

3) Rural Development Opportunities utilize Emerging of Agribusiness by Private Investment

As mentioned before, the ‘Farm Block Development Programme’ to promote agribusiness by

private sectors has been conducted to achieve economic diversification and growth, national

food security and poverty reduction in rural areas. If the programme can promote to increase

primary production and to develop agribusiness by the private entities, it is a great opportunity

to develop the agricultural sector, especially to develop the value chains of the crops and

integrated regional agricultural clusters.

The investors should include some activities to contribute to rural development in

collaboration with local small scale farmers in their business plans in the framework of the

programme. According to ZDA and MOA who are main implementation body of the

programme, the core investors have no mandatory obligations to apply Out-grower Scheme, to

take similar actions or to employ the farmers who request in the their business plans. However,

the investors are required to involve such support activities for small scale farmers in their

plan, which is one of condition to be ratified by the GOZ. Therefore, it is expected that

through this program, the small scale farmers living in and around the Farm Block will be

out-growers or employees of the farms or factories developed by the investments if they wish

so with their own will..

29 Lusaka Time on 8th August 2017


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At the present, the programme has not been progressed as planned due to the delay of

infrastructure development caused by several reasons, but seven Farm Blocks have achieved

some progress more and less particularly as mentioned in 3.1.6(2). It might need to review and

reform the programme including the necessary considerations of small scale farmers to

implement the programme smoothly and bring early benefits to the investor and the local

communities.

The intervention of commercial farms led by private investors has the possibility to create

negative impacts in rural areas, such as ‘land issue’ or ‘social discord’, although bringing

positive impacts such as improved market access or job creation in rural areas. Therefore,

including the progressed seven Farm Blocks, it should be considered to secure the rights of

small scale farmers and communities in the implementation of the programme in order to

achieve sound contribute of the investments to rural development in collaboration with local

small scale farmers which supress the any negative impacts.

4) Empowerment of Small Scale Farmers and Extension System

The empowerment of small scale farmers can be a key to promote export oriented agriculture

and agribusiness through the collaboration between small scale farmers and private investors

as described earlier. If the small scale farmers have capacity in terms of production and

stability of the products, they will have bargaining power and be able to negotiate with traders,

commercial farmers or private investors for trade or contract as an out-grower. Once the

empowerment of small scale farmers enables the creation of a healthy and transparently

relationship with traders and/or commercial farmers or firms are established, the relationship

and the agribusiness may be sustainable.

In order to realise this, a problem is raised: weak extension services30 and lack of numbers

and capacities of governmental officers. In fact, one extension worker should cover about

1,000 farmers who are living scattered place in rural area.

New Extension Strategy31 also raised poor extension planning, under performing livestock

extension services and Farmer Training Centres (FTCs), as well as low capacity of officers,

especially market oriented production systems. According to a press, MOA is going to hire

additional extension workers32 to support small scale farmers and also commercial farmers. In

this occasion, by reviewing capacity building programme, the government should reconstruct

existent extension system; capacity of officers especially in market oriented agriculture and

agribusiness, and location of FTC, etc. in collaboration with the Zambia National Farmers

Union (ZNFU) dispatches its full-time staff providing various forms of extension services and

also private sectors.

30 Interview with MFL 31 The National Agricultural Extension & Advisory Services Strategy, 2016-2020, MOA, 2016 32 https://www.daily-mail.co.zm/extension-officers-recruited/ , https://www.africanfarming.com/field-extension-officers/


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5) Potential of Eastern Province in Development of Agriculture-Agribusiness

The Nacala Corridor itself cannot develop without distribution goods and commodities or a

certain number of people to use it. The indisputable option to increase the distribution goods

and people using the Corridor is the agricultural development in Eastern Province at the initial

stage, where the Nacala Corridor passes through directly.

This province has a great potential of agriculture production and agribusiness due to its

favourable agro-ecological condition. Moreover a large number of firms related agriculture

(see Figure 3.9) are located along the Corridor. In fact, the province has been the country's top

producer and exporter of tobacco33 and cotton lint. Many small scale farmers have produced

those crops under contract with agribusiness firms. However, the tobacco market tends decline

due to the decrease of smokers in the world, and the cotton industry has shrunk since the

1990s due to stiff global competition and policies that fail to protect domestic industries,

according to UNDP34.

The farmers in the Eastern Province have been producing crops other than cotton such as

maize, soya beans, ground nuts and sunflowers. Additionally, livestock rearing is relatively

prosperous and the development potential of aquaculture is high in the province due to

abundant water resources. Even though most of the farmers are in small scale and their

agricultural production is less productive, they can increase the production utilising the natural

conditions, and if the farming input and machinery can be provided at a cheap price. In

addition, many firms which can buy primary agricultural products from small scale farmers

are running business producing food along with the Nacala Corridor. Although the SMEs have

a capacity problem, several projects by donors and banks are enhancing their capacities and

functionalities at present. With such occasions, agribusiness will be developed, and then the

distribution of goods and movement of people will also be increased.

(2) Potential and Challenges of Development on Primary Products

1) Maize

(a) Production and Current Trade

During the farming season of 2013/2014, a total of 1,299,158 households, representing 88.2%

of all agricultural households grew maize in Zambia. The annual production of maize in 2014

was 3.35 million tonnes and it was far higher than other cereals such as wheat, millet, sorghum

and rice. The Eastern Province recorded the largest area among provinces with 23.7% of the

total cultivated areas in Zambia.

33 Most small scale farmers' tobacco is Burley tobacco, grown in the Eastern Province under contract with four companies: Alliance One (Stancom/Dimon), Zambia Leaf Tobacco Company (ZLTC), Africa Leaf (Zambia), and Tombwe Processing Limited. Tombwe is the only tobacco processor operating in Zambia. The other firms only purchase tobacco and either ship the unprocessed leaf to Malawi or Zimbabwe or process small amounts through the Tombwe facility for a fixed charge (currently USD0.30 per kilogram of green leaf). 34 Zambia Human Development Report 2016, UNDO, 2016


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As shown in the table below, a small amount of maize was imported but it is less than 1% of

total production. Currently the export quantities of maize vary by years. Destinations are also

varies by year, but more than half of the total export quantity is for Zimbabwe. South Africa,

Malawi and surrounding countries are higher ranked on average for five years.

Table 3.7 Export and Import of Maize by Zambia by Country (Unit: ton)

Countries 2011 2012 2013 2014 2015 Average

(2011-2015)

Export 1 Zimbabwe 304,531 376,744 98,811 49,502 567,432 279,404 2 South Africa 79,167 143,883 3,538 2,664 18,622 49,575 3 Malawi 163 2,224 28,300 18,381 103,073 30,428 4 Kenya 69,340 60,410 5,444 5,106 3,216 28,703 5 Namibia 14,261 32,848 2,191 335 8,313 11,590 6 Mozambique 7,114 31,094 4,082 6,465 8,169 11,385 7 United Rep. of Tanzania 6,312 13,131 14,636 5,859 8,159 9,619 8 Botswana 3,330 31,788 1,002 1,560 1,639 7,864 9 Burundi 2,292 17,697 2,340 0 1,201 4,706

10 Rwanda 1,435 12,532 1,364 1,351 0 3,336 11 DRC 325 221 10,386 3,161 2,333 3,285 12 Others 8,057 3,015 1,479 1,060 617 2,846

Total 496,326 725,588 173,572 95,443 722,775 442,741

Import 1 South Africa 0.71 0.83 2.78 2.05 0.96 1.46 2 Malawi 0.00 0.10 0.54 0.12 0.00 0.15 3 Zimbabwe 0.01 0.00 0.46 0.00 0.03 0.10 4 Others 0.02 0.02 0.24 0.03 0.03 0.07

Total 0.73 0.95 4.03 2.21 1.03 1.79

Source: UN Comtrade

(b) Production Potential

In Zambia, Eastern Province is the largest maize producer. The province has the potential to

produce about 2 million tonnes of maize to meet the annual national demand and surplus for

export. Currently the province is only producing 600,000 tonnes of maize and there is a huge

gap of 1.4 million tonnes. If production in Eastern Province would be increased to reach its

potential by utilizing cheaper fertilizer imported through the Nacala Corridor, the province

Figure 3.12 Production of Maize by Zambia and its Export by Country

Source: Central Statistical Office of Zambia, FAOSTAT and UN Com Trade Database


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would be capable of feeding the whole nation. Moreover, the import of cheaper fertiliser and

promotion of appropriate fertiliser application might be a necessary condition to produce

surplus for export.

(c) Potential Market in the Integrated Region (COMESA, SADC and EAC)

As of September 2017, COMESA has nineteen member states, SADC has fourteen and EAC

has six. If area of COMESA, SADC and EAC is assumed as one integrated regional market, it

consists of 27 countries. The scale of the commodities’ market in the integrated region is

estimated based on current trade volumes.

The integrated region with relatively large markets of imported maize such as Libya, South

Africa and Zimbabwe have increased import, and other countries like Kenya, Botswana,

Namibia, Mauritius and Swaziland have also been increasing import, although the amounts are

still smaller. Therefore, Zambia can expect to increase the export of maize to these

neighbouring countries.

Currently Zambia is one of the second largest exporters of maize in the region. The

competitors of maize exporters are South Africa, champion of the region, and Uganda,

Tanzania and others which changes year by year.


Figure 3.13 Import of Maize by Country in the Integrated Region


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Table 3.8 Import of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015 1 South Africa 109.96 308.82 4.04 86.57 697.32 2 Libya, State of 333.77 626.74 660.69 877.42 638.66 3 Zimbabwe 457.79 433.06 303.45 287.43 571.78 4 Kenya 353.31 324.62 93.47 458.94 250.35 5 Botswana 64.12 74.31 190.06 196.99 209.98 6 Namibia 58.71 66.81 166.94 104.31 140.65 7 Mauritius 92.78 89.64 99.74 90.23 109.76 8 Swaziland 0.00 80.15 75.32 84.92 95.78 9 Mozambique 87.37 6.54 38.06 151.50 119.12 10 Rwanda 66.56 101.15 62.94 89.60 0.00 11 Others 103.83 148.16 231.08 127.09 286.39

Total 1,728.21 2,260.00 1,925.78 2,555.00 3,119.78

Source; UN Comtrade, ITC35

Table 3.9 Export of Maize by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015 1 South Africa 2,975.95 1,578.87 2,603.10 2,147.84 762.24 2 Zambia 492.52 687.79 173.57 95.44 722.78 3 Uganda 95.44 177.95 103.95 112.93 281.09 4 United Rep. of Tanzania 2.94 175.30 40.45 274.43 57.76 5 Malawi 357.25 0.83 1.86 3.85 1.51 6 Ethiopia 60.15 0.00 0.00 0.00 0.43 7 Mozambique 14.38 7.00 1.45 38.83 0.10 8 Egypt 2.26 4.40 2.46 4.10 5.86 9 Kenya 12.02 4.23 1.26 1.98 0.00 10 Rwanda 2.74 7.25 7.49 1.80 1.86 11 others 11.62 7.54 5.20 4.12 5.41

Total 4,027.27 2,651.14 2,940.78 2,685.30 1,839.04

Source; UN Comtrade, ITC

2) Soya Bean


In 2014, the total amount of soya bean production was 214,179 tonnes in Zambia36 and only

36,824 tonnes was produced by small and medium scale farmers37. So, soya beans are

produced mainly by medium-large scale farmers or commercial farms in Zambia. The current

trade of soya beans by Zambia is not large. It is exported mainly to Zimbabwe, South Africa

and Botswana, and imported from Malawi and others.

35 Data of Egypt is not included due to its uncertainness 36 FAO stat data (dated on Sep 7, 2017) 37 Post Harvest Survey 2013 – 2014 Agriculture Season (Small and Medium Scale Farms), Central Statistical office of Zambia


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Figure 3.14 Production and Trade of Soya Bean by Zambia

Table 3.10 Export and Import of Soya Bean by Zambia by Country (Unit: 1,000 ton)


(2011-2015) Export Zimbabwe 0.50 0.00 0.55 12.82 7.55 4.3 South Africa 0.00 0.00 0.79 9.64 2.21 2.5 Botswana 0.66 1.58 0.30 2.72 1.97 1.4 Others 0.08 0.87 0.80 0.70 0.10 0.5

Total 1.24 2.45 2.43 25.88 11.82 8.76

Import Malawi 2.37 0.33 1.45 0.66 1.45 1.25 South Africa 0.04 0.17 0.00 0.14 0.10 0.09 Others 0.02 0.00 0.00 0.10 0.00 0.03

Total 2.43 0.50 1.45 0.90 1.55 1.37

Source: UN Comtrade


Soya beans are cultivated widely in Zambia, and Eastern Province leads the country in small

scale farmers’ soya production in almost every harvest season. From 2001 to 2010, 42% of

soya beans produced by small scale farmers was produced in Eastern Province. Other

provinces with sizeable production include Central and Northern Provinces. The total soya

bean production in Eastern Province ranges from about 2,000 tonnes to about 9,000 tonnes

depending on the year. If urea, which is imported and sold directly to the market, can be

provided with cheaper price in Eastern Province by using Nacala railway, the production of

soya beans might be increased.

Moreover, it is recommended to combine the soya beans into the crop rotation, because of its

high demand in domestic and international markets, its soil improvement effect, and also its

suitability for mechanized production with centre-pivot or sprinkler irrigation systems.

Additionally, if the Farm Block production is vitalized as the GOZ is promoting, soya bean

production might be increased.


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Soya bean production in Zambia is not met with local demand due to various challenges

associated with access to inputs, production techniques, and marketing, therefore the demands

are currently satisfied with imports of soya bean oil.

The demands for soya bean are mostly in domestic companies and large scale wholesalers for

processing soya beans to produce soya bena oil, animal feed, and soya flour. The other

demands may exist for exporting it informally to Malawi, Tanzania, or even Zimbabwe or

Botswana. Therefore, there is sufficient room for public and private investment to fill the

above mentioned gap. In addition, interlinked production mechanism is playing prominent role

in soya markets in Eastern Province. In this production mechanism, the entities related to

credit, input supply, and output sale are ‘interlinked’ in the production, and major corporates

such as Cargill, NKW Agri-Services, and COMACO (main processor of soya beans at a large

scale) are already involved in the activities.


Demands for soya bean is increasing in world-wide for oil production, feed for livestock, etc.,

according to the increasing life standard of the people. In the integrated region, which means

countries belonging to COMESA, SADC and EAC, about 1.5 million tonnes of soya beans

was imported. Most of the amount was imported by Egypt constantly (mainly importing from

USA, Argentina, Ukraine, Canada, Uruguay, etc.). Following Egypt are South Africa (from

Zambia and Paraguay), Libya (from Argentina), Kenya (from Uganda), Zimbabwe (from

Malawi and Zambia), Burundi, Mozambique (from South Africa) and Tanzania and Botswana.

Regarding the export, the total amount in the region was less than 10% of the total import in

every year. South Africa, Ethiopia, Zambia and Malawi are currently exporting even in small

quantities.


Figure 3.15 Import of Soya Bean by Country in the Integrated Region


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Table 3.11 Import of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Egypt 1,115.80 1,922.85 1,079.71 1,331.44 1,206.49 2 South Africa 1.54 0.98 4.46 103.64 182.15 3 Libya, State of 0.00 0.13 0.03 0.20 3.30 4 Kenya 12.57 27.25 6.35 4.23 10.23 5 Zimbabwe 3.26 0.46 5.17 17.38 14.24 6 Sudan (before 2012) 6.99 0.00 0.00 0.00 0.00 7 Botswana 3.18 3.53 2.33 0.36 1.95 8 Burundi 8.80 3.77 0.00 0.01 0.00 9 Mozambique 1.61 3.22 0.84 0.72 3.49 10 United Rep. of Tanzania 0.31 0.92 0.72 3.06 0.75 11 Others 7.16 6.31 3.52 3.95 4.13

Total 1,161.21 1,969.41 1,103.12 1,464.98 1,426.73


Table 3.12 Export of Soya Bean by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 South Africa 44.73 160.20 17.65 1.92 5.68 2 Ethiopia 1.00 4.22 36.56 35.53 32.70 3 Malawi 5.04 4.56 14.33 23.24 9.56 4 Zambia 1.24 2.45 2.43 25.88 11.82 5 Uganda 1.80 2.75 2.06 1.36 7.79 6 Egypt 0.08 1.10 0.07 1.18 0.65 7 United Rep. of Tanzania 0.55 0.22 1.93 0.53 0.00 8 Mozambique 0.03 0.00 1.06 1.50 0.09 9 Kenya 0.34 1.40 0.15 0.00 0.25 10 Djibouti 0.00 0.00 0.22 0.92 0.66 11 others 0.63 0.49 0.72 1.26 0.33

Total 56.06 177.87 77.88 94.58 69.86


3) Wheat


Wheat is one of the important crops in Zambia. Its recent annual domestic production is

between 200,000 to 270,000 tonnes. In Zambia, the production of the maize is the largest,

followed by soya bean and wheat in turn. Usually, commercial farmers in large- or

middle-scale prefer to produce soya beans in the rainy season and wheat (with irrigation) in

the dry season.


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Figure 3.16 Production and Trade of Wheat by Zambia

Table 3.13 Export and Import of Wheat by Zambia by Country (Unit: 1,000 ton)


(2011-2015) Export Zimbabwe 0.00 0.00 1.76 8.70 0.00 2.09 South Africa 0.00 0.00 0.00 0.20 0.00 0.04 Others 0.00 0.09 0.02 0.03 0.02 0.03

Total 0.00 0.09 1.78 8.92 0.02 2.16

Import South Africa 12.00 0.03 0.00 0.00 29.76 8.36 Ukraine 0.00 0.00 0.00 0.00 8.28 1.66 Russian Federation 0.00 0.00 0.00 0.00 1.84 0.37 Mozambique 0.00 0.00 0.00 0.00 1.14 0.23 Zimbabwe 0.00 0.00 0.00 0.00 0.64 0.13 Brazil 2.41 0.00 0.00 0.00 0.00 0.48 others 0.21 0.00 0.00 0.00 0.22 0.09

Total 14.62 0.03 0.00 0.00 41.87 11.30

Source: UN Comtrade


In general, wheat is produced by commercial farmers because it is produced with irrigation

using moving sprinklers or centre-pivot system. According to the agro-ecological

classification in Zambia, production of the irrigated wheat is suitable to grown in Area IIa (See

Table 3.2), which covers Central, Lusaka and parts of Southern and Eastern provinces38.

The GOZ launched a ban on wheat import in order to protect the producers from cheaper

import. Even though, it may difficult for small-scale farmers to produce wheat with their own

irrigation method, due to the competitiveness with large scale farmers or the cheap imported

wheat. In 2006, there was only less than 100,000 tonnes of wheat production in Zambia but it

became about double within five years as 171,274 tonnes in 2010. If the Farm Block

programme will progress well, and rather than core investors but other larger scale farmers

38 2nd National Agriculture Policy of Zambia

0

50

100

150

200

250

300

2011 2012 2013 2014

(1,000 tons)Production (Zambia) Export (Zambia)Import


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cultivating around several hundred hectares can be active, the wheat production will be

increased.


In the integrated region, demand for wheat is very high. Even the countries exporting wheat in

the region, import larger volume than its own export. Egypt, South Africa, Libya, Kenya,

Ethiopia and Tanzania are importing large volume of wheat in every year.


Figure 3.17 Import of Wheat by Country in the Integrated Region

Table 3.14 Import of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Egypt 9,800.06 8,246.87 122.54 1,251.53 N/A 2 South Africa 1,824.30 1,698.08 1,401.98 1,824.63 1,192.44 3 Libya 859.35 1,623.39 1,887.69 1,694.97 1,147.38 4 Mozambique 245.36 138.76 214.04 5,942.75 383.16 5 Kenya 1,002.08 1,044.85 717.30 1,225.69 1,438.17 6 Ethiopia 1,078.30 967.75 1,234.59 937.57 1,199.89 7 Tanzania 1,057.81 680.77 782.23 901.24 846.17 8 Djibouti 521.04 615.79 383.98 487.87 684.79 9 Uganda 388.07 43.79 189.70 518.12 461.63

10 DRC 233.25 240.77 284.39 307.39 359.01 11 Others 2,250.51 688.04 952.35 997.15 955.87

Total 19,260.14 15,988.85 8,170.79 16,088.91 8,668.51



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Table 3.15 Export of Wheat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporters 2011 2012 2013 2014 2015

1 South Africa 241.43 237.18 220.01 326.90 225.95 2 Tanzania, 15.00 54.92 13.14 38.95 0.08 3 Kenya 2.47 5.36 8.11 1.18 2.58 4 Egypt 2.67 0.54 11.29 0.49 0.24 5 Mozambique 3.84 0.00 0.22 4.59 4.33 6 Malawi 11.21 0.05 1.52 0.00 0.17 7 Djibouti 0.00 1.57 0.23 0.00 4.72 8 Zambia 0.00 0.09 1.78 8.92 0.02 9 Uganda 5.54 1.77 0.56 0.19 1.64

10 Libya, State of 0.00 0.00 0.00 0.00 1.89 11 others 2.66 2.58 0.57 0.92 3.39

Total 284.81 304.05 257.43 382.15 245.00


4) Cotton


Most of the cotton farmers in Zambia grow the cotton only through support from ginning

companies in terms of seasonal input loans recoverable from the deliveries of seed cotton. The

farmers are currently coordinated through the Cotton Association of Zambia (CAZ) which was

formed in 2005 under an affiliation to the apex Zambian farmer organisation, the Zambia

National Farmers Union (ZNFU)39.

Recently around 40,000 tonnes of cotton lint is produced in Zambia and most of them are

exported to abroad.


Figure 3.18 Production and Trade of Cotton Lint by Zambia

39 Cotton and its by-products in Zambia, UNCTAD December 2016

0

20

40

60

80

100

2011 2012 2013 2014

(1,000 ton) Production Export Import


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Table 3.16 Export and Import of Cotton Lint by Zambia by Country (Unit: 1,000 ton)

Name 2011 2012 2013 2014 2015 Average

(2011-2015) Export South Africa 7.94 27.93 21.60 13.98 18.25 17.94 Switzerland 12.62 23.45 14.83 10.09 3.54 12.90 Singapore 4.65 3.13 3.51 4.06 4.08 3.89 China 0.48 0.15 0.02 5.09 4.11 1.97 Lesotho 0.47 1.48 2.92 1.90 1.76 1.71 Swaziland 0.38 4.45 0.02 0.00 1.86 1.68 Indonesia 0.00 0.00 0.00 0.00 0.86 0.86 Hong Kong, China 0.00 1.42 0.07 0.60 1.30 0.85 United Arab Emirates 0.00 0.00 0.00 0.00 0.60 0.60 Thailand 0.00 0.02 0.00 0.00 0.19 0.10 Others 8.73 6.59 3.97 2.57 0.19 4.41 Total 35.26 68.62 46.95 38.29 36.73 46.90 IMPORT South Africa 0.00 0.03 0.00 0.04 0.10 0.03 United Arab Emirates 0.01 0.00 0.01 0.00 0.00 0.00 China 0.00 0.01 0.02 0.01 0.00 0.01 Others 0.02 0.04 0.03 0.04 0.10 0.04 Total 0.03 0.08 0.05 0.08 0.19 0.09

Source: UN Comtrade


Zambia has favourable soil and climatic conditions for cotton production. Cotton can be

grown in Southern, Central, Lusaka, Eastern, parts of the Copperbelt and Western Provinces.

The potential for cotton production in terms of suitable land and climate is vast, over 800,000

ha but only about 300,000 ha are currently under cotton cultivation.

The cotton is produced by small scale farmers under out-grower contracts with the ginning

companies. Therefore, development of the cotton production strongly relies on the private

companies. The government has expected a Farm Block in Eastern Province of about 100,000

ha of land shall be allocated for the cotton sector.


The cotton requires a long and warm growing season. It is, therefore, grown in majority of

tropical countries and in many sub-tropical countries. The leading world producers are China

(26% of world production), India (20%), USA (12%), Turkey (8%) and Pakistan (8%), Brazil

(7%), Australia (4%) and Uzbekistan (3%)40.

Africa’s share in the world cotton trade is only 5%. The main cotton producing countries in

Africa are Egypt, Sudan, Burkina Faso, Mali, Zimbabwe and Tanzania. Zambia is one of the

important cotton growing countries in the East-South Africa.

In the integrated region, Egypt, South Africa and Mauritius are main importers of cotton.

However, the market of cotton in the integrated region is smaller so that the target market of

cotton may not be in the region but in the other area such as Asia. 40 Cotton and its by-products in Zambia, UNCTAD December 2016


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Figure 3.19 Import of Cotton Lint by County in the Integrated Region

Table 3.17 Import of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Egypt 43.65 12.88 70.03 75.35 70.32 2 Mauritius 22.32 19.19 21.61 19.41 27.27 3 Mozambique 0.00 0.00 0.00 0.00 0.44 4 South Africa 32.99 39.13 41.61 28.00 9.66 5 Lesotho 16.56 8.70 N/A 1.53 1.24 6 Swaziland 0.31 0.95 1.47 1.61 2.14 7 Tanzania, United Republic of 0.02 0.01 0.00 0.00 0.00 8 Zimbabwe 0.62 5.72 8.30 0.65 1.26 9 Djibouti 0.13 0.79 1.25 1.09 0.77

10 Kenya 1.95 0.10 0.08 0.08 0.01 11 Others 2.44 3.25 5.32 9.64 4.83

Total 120.97 90.70 149.67 137.36 117.93


Table 3.18 Export of Cotton Lint by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporters 2011 2012 2013 2014 2015

1 Egypt 61.22 72.97 42.03 24.76 47.83 2 Zambia 35.26 68.62 46.95 38.29 36.73 3 Tanzania, United Republic of 30.33 92.82 68.27 35.69 23.61 4 Mozambique 8.95 2.19 53.80 23.42 21.64 5 Zimbabwe 89.47 132.37 58.39 40.04 34.18 6 South Africa 11.11 12.57 4.89 3.44 4.89 7 Uganda 1.58 3.90 2.40 1.60 1.11 8 Madagascar 0.30 0.77 3.67 7.90 8.46 9 Malawi 9.46 26.25 11.45 11.47 16.09

10 Lesotho 0.01 0.02 N/A 0.09 0.00 11 Others 6.99 0.02 0.55 0.07 1.63

Total 254.67 412.49 292.39 186.77 196.16



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5) Meat Production


In 2014, 4 million heads of cattle, 1.1 million heads of pigs and 38 million of chickens are in

the country. Among them, 3.3 million of cattle, 1 million of pigs are held by small and

medium scale farmers. The Southern Province accounted for the highest percentage of cattle

population at 31.2 % and Eastern Province follows at 30.7%. Regarding the pig population,

Eastern Province accounted for the highest percentage at 51.5%.

The number of cattle and chickens is increasing as shown in the table below. The number of

pigs has decreased since 2012, because of pandemic of African Swine Fever (ASF).

There is goat and sheep rearing mainly carried out by small scale farmers. As of September

2014, the goat population was estimated at about 2.6 million and the sheep population was

about 130,000. The Southern Province accounted for the highest percentage of goats held at

34.1% and sheep held at 47.7 %.

Source: FAOSTAT

Figure 3.20 Number of Livestock by Zambia

Source: FAOSTAT

Figure 3.21 Number of Small Livestock by Zambia

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2011 2012 2013 2014

Cattle Pig Chicken (right)(1,000 heads)


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The meats and live animals are mainly consumed in domestic markets and some quantities are

exported as shown in the tables below. Import quantities of any types of meats are minimal.

Most of the bovine meat is exported to DRC. Tanzania also imported a limited amount and it

is decreasing since 2013. Zambia imported some bovine meats and also live animals from

South Africa constantly.

Table 3.19 Export and Import of Bovine Meat by Zambia by Country (Unit: ton)


(2011-2015)

Export DRC 0.41 92.98 58.13 21.60 5.63 178.75 United Rep. of Tanzania 0.25 3.01 0.00 0.08 0.10 3.43 Congo 0.33 0.00 0.00 0.00 0.00 0.33 Malawi 0.00 0.10 0.00 0.00 0.00 0.10

Total 0.99 96.09 58.13 21.67 5.73 182.61

Import South Africa 0.39 0.15 0.10 0.15 0.04 0.17 Ireland 0.00 0.29 0.00 0.00 0.00 0.06 United Rep. of Tanzania 0.00 0.13 0.00 0.00 0.00 0.03 Others 0.00 0.02 0.04 0.01 0.00 0.01

Total 0.39 0.59 0.14 0.16 0.04 0.26

Source: UN Comtrade

Table 3.20 Export and Import of Live Bovine Animal by Zambia by Country (Unit: ton)


(2011-2015) Export DRC 0.00 0.00 165.00 0.00 0.00 165.00 Malawi 0.00 97.20 18.20 0.00 9.90 125.30 Others 6.67 2.60 0.00 0.03 41.85 51.14

Total 6.67 99.80 183.20 0.03 51.75 341.44

Import South Africa 0.08 0.37 0.55 0.49 0.60 0.42 Namibia 0.00 0.04 1.02 0.47 0.01 0.31 Others 0.01 0.00 0.00 0.03 0.00 0.01

Total 0.09 0.40 1.56 0.99 0.61 0.73

Source: UN Comtrade

The international trade of sheep and goats by Zambia is not active at this moment, but it has a

significant character that the imported number of the livestock or quantities of the meats

excessed that which was exported.


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Table 3.21 Export and Import of Live Goats and Sheep and Sheep Meat by Zambia by Country (Unit: ton)


(2011-2015) Goats, live

Export Malawi 0.00 0.00 0.60 0.00 0.70 0.26

total 0.00 0.00 0.60 0.00 0.70 0.26

Import 0.00 0.00 0.00 0.00 0.00 0.00 South Africa 1.86 0.90 23.72 8.45 13.74 9.73 Namibia 9.00 3.75 0.00 2.50 10.64 5.18 Botswana 0.00 0.00 0.00 0.00 0.20 0.04

Total 10.86 4.65 23.72 10.95 24.58 14.95 Sheep, live

Export United Rep. of Tanzania 0.00 0.55 0.00 0.00 0.00 0.11

Total 0.00 0.55 0.00 0.00 0.00 0.11

Import Namibia 0.45 9.00 0.45 0.00 0.17 2.01 South Africa 0.15 0.00 2.31 1.26 2.73 1.29

Total 0.60 9.00 2.76 1.26 2.90 3.30 Meat of sheep

Export DRC 0.03 2.48 2.05 4.34 0.03 1.79

Total 0.03 2.48 2.05 4.34 0.03 1.79

Import South Africa 0.00 4.26 17.63 8.10 9.57 7.91 Lebanon 0.00 0.19 0.07 0.00 0.00 0.05 Namibia 0.00 0.00 0.50 0.00 0.00 0.10

Total 0.00 4.45 18.20 8.10 9.57 8.06

Source: UN Comtrade

In general, the amount of poultry meat exported from Zambia to DRC is increasing. Angola

also imported a large amount in 2011 and 2012, and Antigua and Barbuda in 2011, but they

stopped to export such large quantities. On the other hand, Zambia imports the poultry meat

from South Africa and its amount is increasing. Regarding the export of live poultry, the

export amounts to DRC, Zimbabwe, Botswana and Malawi are increasing. However, it is

decreasing for Mozambique.


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Table 3.22 Export and Import of Meat and Edible Offal of Poultry by Zambia by Country (Unit: ton)


(2011-2015) Export Angola 25.00 25.00 0.00 0.00 0.00 50.00 DRC 1.00 8.37 15.15 7.29 17.44 49.24 Antigua and Barbuda 23.96 0.00 0.00 0.00 0.00 23.96 United Rep. of Tanzania 0.00 0.00 1.00 0.00 0.00 1.00 Malawi 0.00 0.00 0.00 0.01 0.00 0.01

Total 49.96 33.37 16.15 7.30 17.44 124.21

Import South Africa 181.06 45.59 155.92 2,109.51 4,043.31 1,307.08 Ireland 807.88 1,463.20 603.23 691.61 592.79 831.74 Brazil 0.00 7.00 32.48 732.37 704.84 295.34 Belgium 0.00 0.00 56.72 418.40 992.34 293.49 USA 0.00 0.00 286.24 391.33 420.42 219.60 Others 0.27 37.50 227.70 107.82 61.80 87.02

Total 989.20 1,553.28 1,362.28 4,451.04 6,815.51 3,034.26

Source: UN Comtrade

Table 3.23 Export and Import of Live Poultry41 by Zambia by Country (Unit: ton)


(2011-2015) Export DRC 0.00 0.00 1.00 1.12 63.75 13.17 Zimbabwe 3.03 6.77 5.53 9.02 12.13 7.30 Botswana 5.74 2.34 4.13 6.75 9.25 5.64 Malawi 1.24 1.34 1.52 4.07 3.77 2.39 Mozambique 1.36 0.45 2.29 1.34 0.00 1.09 Angola 1.23 0.63 0.63 1.53 1.25 1.05 Others 2.88 3.89 2.28 0.00 1.25 2.06

Total 15.48 15.41 17.39 23.83 91.40 32.70

Import Netherlands 19.20 18.49 17.62 25.98 1.42 16.54 United Kingdom 4.26 4.49 9.26 8.04 12.91 7.79 South Africa 2.73 2.63 6.20 2.64 5.53 3.94 Others 1.27 3.68 3.00 1.15 2.46 2.31

Total 27.47 29.29 36.07 37.80 22.32 30.59

Source: UN Comtrade


Cattle, goats and sheep – The cattle population growth is 1.3 times within five years, which is

from 3.1 million heads in 2010 to 4.1 million heads in 2014. The abundance of cattle in the

province provides investment opportunities in dairy farming.

Poultry – The poultry sector is one of the fastest growing sectors in Zambia. Current

production has not yet saturated domestic markets, and there is considerable demand in the

41 Poultry, live (i.e., fowls of the species Gallus domesticus, ducks, geese, turkeys and guinea-fowls)


3-39

regional markets, such as Malawi, Mozambique and the DRC, countries in which dressed

chickens and eggs are widely consumed.

Meat Processing: It was projected that Zambia’s total meat demand in 2017 would be 600,000

tonnes42, but current supply capacity is only 69,000 tonnes. Large opportunity for meat

production exists in the country. Moreover, there is a potential to serve markets in Malawi and

the DRC, and to supply meat and meat products (sausages, biltong, etc.) to supermarket chains,

wholesalers, restaurants and tourism resorts, both locally and regionally. Shoprite currently

sources locally packaged meat products, and has an interest in sourcing locally for exports43.

Moreover, there are several strong stakeholders like Zambeef, which are expected to lead

development of the meat sector.


< Bovine Meat >

Considering demands for bovine meat in the integrated region, Egypt and Angola are large

markets for the bovine meat. In 2013 and 2014, the imported amount of Angola exceeds to the

same of Egypt about 100,000 to 200,000 tonnes per year. South Africa also imported a certain

amount, but they are decreasing the import amount gradually. Opposite to that, DRC and

Mozambique have increased import although the amount is small.

With respect to the export of bovine meats, Botswana, South Africa and Namibia are the big

three countries. Botswana and South Africa have increased their export amounts. Export

amount by Namibia is relatively stable.


Figure 3.22 Import of Bovine Meat by Country in the Integrated Region

42 IAPRI, 2014 43 See the previous footnote.


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Table 3.24 Import of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Egypt 153.30 189.73 100.63 62.23 296.51 2 Angola 41.00 45.60 192.22 229.21 124.98 3 South Africa 26.53 30.35 27.81 23.78 13.38 4 Libya, State of 5.69 19.47 16.92 16.26 9.67 5 Mauritius 3.55 3.29 3.58 3.54 4.19 6 Swaziland 3.02 6.26 3.82 4.08 3.31 7 DRC 0.30 1.97 4.27 5.27 5.73 8 Lesotho 3.21 1.42 0.00 1.66 2.73 9 Mozambique 1.09 1.40 1.91 3.43 3.82 10 Comoros 0.12 0.16 0.04 2.38 2.46 11 Others 2.49 2.38 2.76 5.62 4.90

Total 240.30 302.03 353.94 357.46 471.69


Table 3.25 Export of Bovine Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 Botswana 10.15 16.37 26.85 26.34 29.74 2 South Africa 12.76 14.64 16.03 27.79 29.57 3 Namibia 22.18 18.08 17.13 17.88 19.34 4 Kenya 0.89 1.04 1.88 2.01 0.85 5 Swaziland 0.86 0.48 1.14 0.91 1.04 6 Ethiopia 2.33 0.42 0.01 0.01 0.05 7 Egypt 0.22 0.26 1.25 1.65 0.28 8 Madagascar 0.00 0.00 0.02 1.47 1.10 9 United Rep. of Tanzania 0.00 0.17 0.00 0.03 0.03 10 Uganda 0.03 0.01 0.07 0.05 0.02 11 Others 0.85 0.16 0.12 0.06 0.02

Total 50.26 51.63 64.49 78.20 82.04


< Meat of Sheep and Goat >

South Africa imported the largest amount of meat of sheep and goat in the region and it is

decreasing. They imported it from Namibia, Australia and New Zealand. Mauritius, Egypt and

other countries excluding Angola imported constantly. The imported amount by Angola is also

increasing like their increasing of bovine meat.


3-41


Figure 3.23 Import of Meat of Sheep and Goat by Country in the Integrated Region

Table 3.26 Import of Meat of Sheep and Goat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 South Africa 17.68 15.55 13.35 9.73 9.01 2 Mauritius 4.98 5.11 5.00 4.83 5.71 3 Egypt 0.86 2.21 1.70 1.23 1.76 4 Libya, State of 0.49 3.62 1.18 1.33 0.47 5 Angola 0.94 0.77 1.09 1.24 2.91 6 Seychelles 0.36 0.33 0.32 0.22 0.28 7 Lesotho 0.22 0.19 0.00 0.16 0.42 8 Botswana 0.22 0.18 0.19 0.22 0.19 9 D.R Congo 0.19 0.17 0.11 0.25 0.13 10 United Rep. of Tanzania 0.10 0.11 0.11 0.32 0.11 11 Others 0.14 0.42 0.40 0.37 0.52

Total 26.17 28.64 23.45 19.89 21.49


Table 3.27 Export of Meat of Sheep and Goat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 Ethiopia 14.71 13.64 13.31 15.27 17.40 2 Namibia 11.75 12.06 13.59 8.04 5.76 3 Kenya 2.16 2.00 1.59 2.38 2.92 4 South Africa 2.47 0.97 1.11 1.61 1.05 5 Sudan (before 2012) 4.60 0.00 0.00 0.00 0.00 6 United Rep. of Tanzania 0.01 0.05 0.10 0.30 1.82 7 Djibouti 0.00 0.02 0.09 0.02 0.00 8 Egypt 0.10 0.01 0.01 0.02 0.01 9 Libya, State of 0.00 0.00 0.05 0.00 0.00 10 Mauritius 0.00 0.00 0.02 0.00 0.01 11 others 0.00 0.01 0.03 0.04 0.01

Total 35.79 28.76 29.90 27.68 28.99



3-42

<Poultry>

The imported volume in Uganda, Zambia, Tanzania, Mozambique and Zimbabwe is

increasing gradually although in a small amount. The import of Botswana, Namibia and

Lesotho are stable. South Africa, Zimbabwe and Zambia import the poultry meat but also

export an excess amount of it, so they are basically exporters of the poultry meat.

Table 3.28 Import of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 South Africa 9.28 8.27 8.29 8.62 4.65 2 Botswana 3.28 2.67 2.94 2.72 2.98 3 Uganda 1.77 1.80 1.70 3.36 3.60 4 Zambia 1.86 2.20 2.84 2.74 3.17 5 Egypt 0.03 7.41 1.94 3.31 0.28 6 United Rep. of Tanzania 1.29 1.34 1.64 3.93 2.40 7 Mozambique 1.13 0.74 3.01 3.67 3.30 8 Namibia 1.65 2.06 2.16 2.17 1.84 9 Zimbabwe 0.92 1.70 1.59 2.26 2.79 10 Lesotho 1.91 1.49 2.61 1.43 1.41 others 10.65 11.36 10.51 10.86 12.14

Total 33.76 41.05 39.21 45.07 38.55


Table 3.29 Export of Poultry Meat by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 South Africa 12.97 9.85 10.37 10.82 5.87 2 Malawi 0.16 19.64 0.12 0.29 0.57 3 Zimbabwe 1.71 1.83 2.14 2.90 3.03 4 Zambia 1.10 1.03 1.49 2.40 2.88 5 Kenya 0.99 0.99 1.76 1.68 1.84 6 Mauritius 1.43 1.67 1.08 0.68 0.81 7 Swaziland 1.04 1.59 1.10 0.44 1.18 8 Uganda 0.54 0.12 0.08 0.24 0.54 9 Egypt 0.34 0.05 0.07 0.47 0.12 10 Madagascar 0.00 0.01 0.00 0.02 0.02 Others 0.04 0.01 0.06 0.06 0.05

Total 20.31 36.79 18.25 20.00 16.93



3-43

6) Fish


Currently the total fish production is

around 100,000 tonnes in Zambia. Of

which 60,000~80,000 tonnes is from

capture fishing and 10,000~20,000

tonnes is from aquaculture. A small

amount is exported, but most of the fish

are consumed in domestic markets.

However, demand for domestic fish for

consumption still outstrips production.

The national demand for fish is

conservatively estimated at 160,000

tonnes per year, and this gap between

supply and demand is filled by imported

fish from neighbouring countries; South Africa, Zimbabwe and Tanzania.

Table 3.30 Export and Import of Fish by Zambia by Country (Unit: ton)

Countries 2011 2012 2013 2014 2015

Average (2011-2015)

Export 1 DRC 0.51 13.81 7.44 40.74 103.20 33.14 2 Malawi 4.00 0.00 5.58 11.61 46.80 13.60 3 Namibia 0.00 0.00 0.00 0.00 29.30 5.86 4 South Africa 22.48 0.76 0.64 1.31 0.00 5.04 5 China 4.52 5.04 1.54 4.96 4.60 4.13 6 Zimbabwe 18.00 0.00 0.00 0.00 0.00 3.60 7 Germany 4.61 1.69 2.57 0.74 1.52 2.23 8 Poland 1.25 0.59 1.85 2.75 3.99 2.08 9 China, Hong Kong SAR 1.00 3.16 1.11 0.21 1.18 1.33

10 USA 0.00 0.30 1.20 2.04 0.32 0.77 11 Others 3.52 3.41 4.07 1.63 1.93 2.91

Total 59.90 28.75 26.00 65.99 192.85 74.70

Import 1 Namibia 1,329.06 6,345.28 14,661.56 37,418.98 59,417.81 23,834.54 2 China 1,398.01 3,553.76 9,556.06 9,830.59 11,371.75 7,142.03 3 Zimbabwe 3,685.09 4,826.36 5,911.97 5,962.24 5,448.32 5,166.80 4 India 705.24 1,230.75 25.50 100.00 0.14 412.33 5 China, Hong Kong SAR 74.84 25.20 886.55 785.45 0.00 354.41 6 South Africa 134.63 244.73 276.80 210.31 571.90 287.67 7 United Kingdom 0.06 299.94 176.11 101.56 0.00 115.53 8 Viet Nam 0.00 0.00 74.58 208.00 3.00 57.12 9 Others 0.00 115.05 87.00 0.00 0.00 40.41

Total 7,326.93 16,641.07 31,656.14 54,617.12 76,812.93 37,410.84


0

20

40

60

80

100

120

2011 2012 2013 2014

Production (Zambia)(1,000 tons)

Source: FAO

Figure 3.24 Fish Production 2011-2014 by Zambia


3-44


In Zambia where has large bodies of water for freshwater fisheries, demand for domestic fish

for consumption still outstrips production and the gap between supply and demand is foreseen

to increase further with population growth. Investment opportunities therefore exist to produce

more fish on a sustainable basis with the development of aquaculture and rational management

of capture fisheries.

The main fish farming production systems applied in Zambia are cages and ponds. However,

there is a huge potential to produce fish from Small Water Bodies (SWB) especially in

Southern and Eastern Provinces. Aquaculture production has increased from about 4,500

tonnes in 2005 to 20,000 tonnes in 2013.

If the maize and soya bean production is developed by the effective use of the Nacala Corridor,

agro-processing such as maize milling and soy oil production will also expand its activities.

Residues by the processing is able to use for fish feed production; therefore, fisheries might be

combined in such clusters.

(c) Potential Markets in the Integrated Region (COMESA, SADC and EAC)

Generally, the import of fish is increasing in DRC, Mauritius, Mozambique, Zambia and

Kenya. Angola, South Africa, Seychelles are stable. South Africa exported a higher amount of

fish than its imported amount, but its export amount has been decreasing recently.


Figure 3.25 Import of Fish by Country in the Integrated Region


3-45

Table 3.31 Import of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 DRC 80.66 86.37 127.75 130.32 566.23 2 Angola 194.80 114.56 137.32 222.76 180.63 3 Egypt 158.21 0.02 87.11 494.96 5.93 4 Mauritius 154.26 1.56 160.55 173.19 170.06 5 Mozambique 96.07 25.38 61.39 397.73 207.98 6 South Africa 71.25 80.92 85.67 93.64 82.96 7 Seychelles 69.88 62.93 60.69 67.01 67.62 8 Zambia 7.95 17.10 31.73 55.03 77.06 9 Namibia 69.75 9.69 12.40 14.10 17.81 10 Kenya 15.66 15.93 13.13 21.96 22.16 11 Others 54.69 52.16 72.25 88.62 71.95

Total 973.19 466.61 849.97 1,759.31 1,470.38


Table 3.32 Export of Fish by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 Namibia 319.06 312.47 367.72 73.62 346.30 2 South Africa 330.61 134.56 100.12 36.22 88.96 3 United Rep. of Tanzania 37.27 33.76 33.66 38.21 30.92 4 Mauritius 25.61 37.62 40.48 6.77 57.11 5 Uganda 19.30 11.42 20.18 17.94 17.97 6 Egypt 9.76 0.03 18.08 19.63 0.22 7 Kenya 9.97 10.65 8.93 7.45 6.63 8 Seychelles 9.48 0.61 7.96 0.08 0.63 9 Mozambique 3.93 4.15 4.79 8.11 8.70 10 Zimbabwe 2.01 2.52 2.01 0.08 5.82 11 Others 5.56 2.68 6.94 5.38 9.95

Total 772.55 550.47 610.86 213.49 573.21


(3) Potential and Challenges of Development on Processed Products

1) Edible Oil (Sunflower oil and soya bean oil)


While Zambia has a certain amount of domestic production of soya bean oil, it also has

several-fold import of production; it does not have enough capacity to export. Regarding

sunflower oil, it has the same or larger amount of export with/than production, although

varying from year to year (main destinations are DRC, Malawi and others).


3-46

【Soya Bean Oil】【Sunflower Oil】

Source: FAOSTAT, ITC/UN Com Trade

Figure 3.26 Production and Trade of Edible Oil by Zambia

Table 3.33 Export and Import of Soya Bean Oil by Zambia by Country (Unit: 1,000 ton)


(2011-2015)

Export 1 DRC 0.04 0.01 0.14 0.00 0.00 0.04 2 South Africa 0.00 0.00 0.00 0.00 0.12 0.02 3 Malawi 0.00 0.00 0.05 0.00 0.03 0.02 4 Others 0.06 0.00 0.03 0.00 0.00 0.02

Total 0.10 0.01 0.22 0.00 0.15 0.10

Import 1 South Africa 7.88 10.91 8.30 18.00 17.27 12.47 2 Mauritius 1.00 9.65 0.48 0.85 0.20 2.43 3 Singapore 1.48 3.82 1.71 0.00 0.00 1.40 4 Argentina 0.96 0.67 0.00 0.00 0.00 0.33 5 Others 0.88 1.13 0.10 0.11 0.00 0.44

Total 12.19 26.18 10.58 18.96 17.47 17.08

Source: UN Comtrade

Table 3.34 Export and Import of Sunflower Oil by Zambia by Country (Unit: 1,000 ton)


(2011-2015)

Export 1 DRC 6.21 0.25 9.33 0.20 0.18 3.24 2 Malawi 0.19 0.00 0.01 0.00 0.00 0.04 3 Other 0.05 0.00 0.02 0.01 0.00 0.01

Total 6.45 0.25 9.35 0.21 0.18

Import 1 South Africa 0.58 0.69 1.05 1.54 1.17 1.01 2 Egypt 0.03 0.07 0.14 0.38 0.03 0.13 3 Kenya 0.11 0.15 0.17 0.03 0.01 0.09 4 Oman 0.06 0.10 0.06 0.05 0.05 0.06 5 Others 0.00 0.03 0.05 0.01 0.00 0.02

Total 0.78 1.03 1.47 2.01 1.26 1.31

Source: UN Comtrade

0

5

10

15

20

25

30

2011 2012 2013 2014

Production Expoｒｔ Import

(1,000 tons)

0

2

4

6

8

10

2011 2012 2013 2014


(1,000 tons)


3-47

(b) Potential Market in the Integrated Region (COMESA, SADC and EAC)

South Africa is the largest importing country of soya bean oil among the neighbouring

countries (importing mainly from Europe and Argentina). Zimbabwe has been rapidly

increasing import (mostly from South Africa), Mozambique and Madagascar have been also

steadily increasing the import of soya bean oil (from Argentina, etc.). When Zambia can

strengthen its production of soya bean oil and supply it not only to the domestic market, but

also to the outside market of the above mentioned countries, it could have a possibility of

export expansion.

Source: ITC/UN Com Trade

Figure 3.27 Import of Soya Bean Oil by Country in the Integrated Region

Table 3.35 Import of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015 1 South Africa 277.73 198.92 205.59 171.07 174.64 2 Egypt 350.10 28.97 130.47 99.74 325.19 3 Angola 272.04 87.70 124.73 27.45 3.48 4 Zimbabwe 30.98 46.92 27.33 47.76 104.66 5 Mozambique 20.95 7.71 31.97 20.93 29.16 6 Mauritius 20.35 22.22 19.50 25.83 23.72 7 Madagascar 15.50 15.14 15.28 21.24 24.43 8 Zambia 11.82 26.18 10.59 18.96 17.47 9 Malawi 17.44 9.53 7.45 10.20 9.39 10 United Rep. of Tanzania 14.40 11.61 3.00 6.82 4.17 11 Others 12.63 23.63 20.33 11.33 11.84

Total 987.88 821.30 1,060.26 974.10 904.47


0

50

100

150

200

250

300

2010 2011 2012 2013 2014 2015

South Africa

Zimbabwe

Madagascar

Ethiopia

Tanzania

Mozambique

(1,000 tons)


3-48

Table 3.36 Export of Soya Bean Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 South Africa 30.01 88.61 127.85 82.59 98.34 2 Egypt 29.31 60.10 63.48 40.17 87.96 3 Kenya 1.30 2.33 1.79 1.35 1.10 4 Mauritius 0.00 0.00 0.24 0.65 3.24 5 United Rep. of Tanzania 0.04 0.00 0.50 0.93 0.57 6 Mozambique 0.09 0.12 0.00 0.50 2.10 7 Uganda 0.16 0.94 0.96 0.87 0.26 8 Zambia 0.18 0.21 0.04 0.36 0.00 9 DRC 0.25 0.08 0.07 0.00 0.00 10 Namibia 0.02 0.00 0.01 0.04 0.08 11 Others 0.13 0.02 0.06 0.03 0.01

Total 61.50 152.41 195.00 127.48 193.65


South Africa is also the largest importing country of sunflower oil (importing mainly from

Europe and Argentina). Zimbabwe has drastically decreased its import, Botswana and

Namibia have become stable importers (mainly importing from South Africa). Mozambique

had increased import until 2014 (from Argentina, Romania, South Africa, etc.). Therefore,

Zambia could expand export when they are able to enter into the above mentioned countries’

markets (excluding Zimbabwe).


Figure 3.28 Import of Sunflower Oil by Country in the Integrated Region

Table 3.37 Import of Sunflower Oil by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Egypt 262.76 674.74 446.57 436.97 159.91 2 South Africa 87.16 200.46 132.11 138.93 78.19 3 Zimbabwe 72.31 65.33 34.80 16.64 5.04 4 Botswana 14.75 16.91 17.21 19.10 25.51 5 Namibia 12.69 17.02 14.82 19.51 19.07 6 Mozambique 2.22 3.43 12.51 24.94 6.17 7 Libya, State of 13.06 22.81 1.54 2.58 7.67 8 Mauritius 8.34 7.18 6.58 9.04 4.15 9 DRC 6.65 12.99 10.92 2.51 1.45 10 United Rep. of Tanzania 4.42 6.94 1.76 12.80 8.41 11 Others 45.689 33.45 38.462 30.741 42.163 Total 530.05 1061.25 717.28 713.75 357.72



3-49

2) Sugar Cane and Sugar


The process of separating sugar from the sugar cane plant is accomplished in two steps: at

sugar mills and at sugar refineries. The sugar mills are located near the sugar cane fields. It is

here that raw sugar and molasses is separated from the plant and shipped to a refinery. The

Cane Sugar Refinery transforms raw sugar into granulated sugar, brown sugar, and other

consumer and food industry products.

<Raw Sugar>

In Zambia, sugar cane was produced about 4 million tonnes in 2014, and 450,000 tonnes of

raw sugar and 139,000 tonnes of molasses were produced with it. Almost half of the produced

raw sugar and the molasses are exported to neighbouring countries. The largest amount is

exported to Mauritius in general, but it varies by year. The second larger volume is exported to

DRC stably. Export to South Africa and Kenya is increasing in recent years.

Source: FAOSTAT, UN Com Trade Database

Figure 3.29 Production of Sugar Cane and Trade of Sugar by Zambia


3-50

Table 3.38 Export and Import of Raw Sugar by Zambia by Country (Unit: 1,000 ton)


(2011-2015) Export

1 Mauritius 142.34 81.31 108.13 71.69 22.54 85.20 2 DRC 64.29 62.13 54.11 76.33 81.44 67.66 3 South Africa 10.51 2.30 3.70 22.75 55.90 19.03 4 Kenya 3.99 0.55 17.65 18.01 14.35 10.91 5 Burundi 10.59 13.33 1.61 6.95 6.95 7.89 6 Rwanda 13.65 4.10 1.88 4.42 6.61 6.13 7 Zimbabwe 4.85 5.74 2.53 2.81 0.13 3.21 8 Mozambique 0.00 0.00 10.90 3.96 0.24 3.02

Others 7.51 0.82 0.94 0.76 5.76 3.16

Total 257.73 170.29 201.45 207.68 193.92 206.21

Import 1 South Africa 0.00 0.00 0.53 0.11 0.02 0.13 2 Swaziland 0.00 0.00 0.00 0.02 0.04 0.01

Others 0.00 0.00 0.00 0.01 0.01 0.00

Total 0.01 0.00 0.53 0.14 0.07 0.15

Source: UN Comtrade

<Refined Sugar>

Although Zambia has a substantive capacity of sugar production, their export amount of

refined sugar is strictly limited. It has been capriciously exported to neighbouring countries

including the Republic of Congo, DRC, Tanzania, Kenya, and Zimbabwe.


Figure 3.30 Production and Trade of Refined Sugar


3-51

Table 3.39 Export and Import of Refined Sugars by Zambia by Country (Unit: 1,000 ton)


(2011-2015) Export

1 DRC 4.23 10.21 9.42 12.20 26.81 12.57 2 Mauritius 0.00 40.14 0.00 0.00 0.00 8.03 3 Congo 0.00 0.00 0.00 2.92 1.19 0.82 4 Zimbabwe 0.00 1.20 0.00 0.07 0.04 0.26 5 others 0.01 0.07 0.00 0.15 0.07 0.06

Total 4.24 51.61 9.42 15.34 28.10

Import 1 South Africa 0.01 0.01 1.92 0.13 0.05 0.42 2 Mauritius 0.00 0.78 0.00 0.00 0.00 0.16 3 Brazil 0.00 0.00 0.42 0.00 0.00 0.08 4 Singapore 0.00 0.00 0.00 0.00 0.37 0.07 5 others 0.01 0.01 0.00 0.00 0.11 0.03

Total 0.02 0.80 2.35 0.13 0.52 0.76

Source: UN Comtrade, ITC

<Sugar Confectionery>

Export of sugar confectionery by Zambia drastically increased from 2010 to 2012, and has

been shifting around 16 million dollars since then. The main destination countries are

Zimbabwe, DRC and Malawi. The import value has been almost stable.


Figure 3.31 Trade of Sugar Confectionery by Zambia


Sugar cane in Zambia is grown under irrigation in the northern and southern parts of the

country. Miller owned estates contribute about 60% of the total sugar cane production, and

40% of the sugar cane production is from independent farmers, out-growers and contract

farming schemes.

The Zambia sugar industry is dominated by three sugar milling companies, namely Zambia

Sugar Plc, Kafue Sugar (Consolidated Farming Ltd) and Kalungwishi Kasama Sugar. Zambia

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2010 2011 2012 2013 2014

Others

South Africa

Malawi

DR Congo

Zimbabwe

Import

($1,000)

DRC


3-52

Sugar Plc is the most dominant company contributing about 92.5% of the total sugar

production, and its majority shareholder is Illovo Sugar Pty Ltd (South African based Sugar

Company), and Kafue Sugar and Kalungwishi Kasama Sugar, both privately owned

companies, contribute about 7.2% and 0.3% to the total sugar production, respectively44.

Despite of this monopolistic or oligopolistic situation of sugar production, the GOZ is seeking

participation of the private sectors to be partners to develop the Farm Block in order to further

enhance agro-industry development which also contributes to small scale farmers’ livelihood.

Currently, in 2017, an Indian company, Nava Bharat Ventures of India, decided to set up an

integrated sugar estate in the Luena Farm Block in Kawambwa District. Competition and

Consumer Protection Commission (CCPC)45 is investing in order to analyse the monopolistic

or oligopolistic situation which might restrict investment of the sugar industry. After the

investigation, the measures will be taken if the situation restricts new investment.


With respect to refined sugar, the neighbouring countries with relatively large markets

imported it; South Africa, Tanzania, Uganda and Kenya have increased import, and other

countries like Madagascar, Mozambique, Botswana and Namibia have also been increasing

import, although the amounts are still small. Therefore, Zambia can expect to increase the

export to these neighbouring countries.


Figure 3.32 Import of Refined Sugar by Country in the Integrated Region

44 The supply and demand for sugar in Zambia, USDA 2017 September 45 The Competition and Consumer Protection Commission (CCPC), established in 1997 under the name Zambia Competition Commission (ZCC), is a statutory body established with a unique dual mandate to protect the competition process in the Zambian Economy and also to protect consumers. CCPC regulates the Zambian economy to avoid restrictive business practices, abuse of dominant position of market power, anti-competitive mergers and acquisitions and cartels as these erode consumer welfare. The Commission is also mandated to enhance consumer welfare( cited by CCPC website)

0

50

100

150

200

250

300

350

2010 2011 2012 2013 2014

South Africa

Botswana

Namibia

Zimbabwe

Tanzania

Mozambique

DR Congo

Kenya

Rwanda

Uganda

(1,000 tons)

DRC


3-53

Table 3.40 Import of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Djibouti 158 203 260 200 216 2 United Rep. of Tanzania 162 234 222 175 210 3 Libya, State of 150 228 259 181 88 4 Kenya 121 149 177 129 200 5 Angola 156 204 228 56 11 6 South Africa 72 175 316 171 147 7 Ethiopia 13 122 162 182 228 8 Egypt 104 129 25 131 156 9 Uganda 117 162 176 130 155 10 Madagascar 49 47 60 93 95 11 Others 307 300 339 426 415

Total 1,716 2,255 2,563 2,302 2,336


Table 3.41 Export of Refined Sugar by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 Mauritius 318 277 335 343 346 2 Egypt 277 119 233 276 248 3 South Africa 171 258 380 333 116 4 Uganda 29 89 107 101 100 5 Swaziland 35 52 38 35 58 6 United Rep. of Tanzania 6 0 98 135 0 7 Zambia 4 52 9 15 28 8 Malawi 6 1 1 0 8 9 Zimbabwe 14 0 15 15 7 10 Madagascar 0 4 18 8 4 11 Others 3 2 11 6 4

Total 866 856 1,255 1,273 922


Regarding the sugar confectionery, South Africa is the largest importing country among the

neighbouring countries (mainly importing from Swaziland, China, Turkey, etc.). Other smaller

importing countries are DRC, Namibia, Uganda, Tanzania and Botswana. They import from

various countries including Brazil, China, South Africa, India, Kenya, etc. Zambia can expect

to expand its sugar confectionery export through supplying to these countries in addition to the

current market.


3-54


Figure 3.33 Import of Sugar Confectionery by Country in the Integrated Region

3) Daily Delivery Goods: Soap and Detergent

In general, soap and detergent are not classified as processed food, but those goods are made

from raw materials original from agriculture product. In fact, the one of biggest soap company

is TRADEKING, confectionary manufactured company.

Export of Zambian soap and detergent has steadily increased, with particular increase with

Zimbabwe. On the other hand, the import volume has not changed.


Figure 3.34 Trade of Soap and Detergent by Zambia

Among the neighbouring countries, DRC and Tanzania have rapidly been increasing import

(DRC imports from Tanzania, South Africa, Uganda, and Tanzania imports from various

countries such as Kenya, Uganda, China and Indonesia). While Zimbabwe has decreased

import mainly from South Africa, countries like Malawi, South Africa and Rwanda have been

gradually increasing import. Zambia could expand its export through supplying its products to

these countries in addition to the current main market.

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 2014

South Africa

Botswana

Namibia

Zimbabwe

Tanzania

Mozambique

DR Congo

Uganda

Malawi

($million)

DRC

0

5,000

10,000

15,000

20,000

25,000

2010 2011 2012 2013 2014

Others

Mozambique

Malawi

DR Congo

Zimbabwe

Import

(tons)

DRC


3-55


Figure 3.35 Import of Soap and Detergent by Country in the Integrated Region

Table 3.42 Import of Soap and Detergent by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Angola 51.92 85.81 115.57 87.03 31.52 2 Zimbabwe 75.41 57.60 59.36 46.45 57.60 3 DRC 35.92 52.83 67.26 61.14 41.51 4 Egypt 44.10 23.51 55.80 47.77 21.37 5 Ethiopia 40.22 37.75 28.10 39.51 45.39 6 Djibouti 40.40 31.45 40.71 30.94 38.23 7 United Rep. of Tanzania 27.43 35.20 31.86 63.03 34.58 8 Malawi 28.18 26.30 31.45 36.89 49.68 9 South Africa 20.20 21.37 24.72 28.67 28.88 10 Botswana 19.23 20.28 21.94 21.22 20.96 11 Others 163.01 160.23 129.91 161.18 116.14

Total 546.00 552.33 606.67 623.84 485.87


3.2 Industry

3.2.1 Overview of the Industry

The value added of the industry sector was ZMW 39.98 billion or 32.7% of the GDP in 2016

at 2010 constant price46, while the service sector produced the largest value added of ZMW

72.88 billion or 59.6% of the total. The mining and quarrying contributed 11.1% to the total

and the manufacturing did 8.5%, which are 3rd and 4th largest value among the industries.

The mining and quarrying sector increased by 7% in the last year, while, the growth of the

manufacturing is slower, at 2.6%, which was lower than the growth rate of the total GDP.

46 The Industry sector is including Mining and quarrying, Manufacturing, Electricity generation, Water supply and sewerage and Construction.

0

10

20

30

40

50

60

70

80

2010 2011 2012 2013 2014

Zimbabwe

DR Congo

Malawi

Mozambique

Tanzania

Rwanda

Madagascar

South Africa

Botswana

(1,000 tons)

DRC


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In the industry sector, 516,670 persons or 8.8% of the total employment were engaged. This is

rather smaller, compared with the value added of the sector. The employment in the

manufacturing and construction sectors accounted for 3.8% and 3.1% of the total employment

respectively, which are equivalent to nearly 80% of the employment of the industry sector.

Table 3.43 GDP and Employment by Industry

GDP 2016

(2010 Constant Price) 2015-2016

Growth Rate Employment 2014

(million ZMW) (Share) Persons Share (%) Agriculture, forestry and fishing 9,483.50 7.8% 3.6% 2,864,158 48.9% Mining and quarrying 13,608.60 11.1% 7.0% 82,725 1.4% Manufacturing 10,455.70 8.5% 2.6% 223,681 3.8% Electricity generation 1,779.40 1.5% -13.6% 16,175 0.3% Water supply; sewerage 338.7 0.3% -3.9% 11,283 0.2% Construction 13,802.50 11.3% 9.3% 182,806 3.1% Wholesale and retail trade 28,651.50 23.4% 0.1% 692,078 11.8% Transportation and storage 4,204.70 3.4% -4.0% 152,052 2.6% Accommodation and food services 2,390.00 2.0% 1.0% 72,078 1.2% Information and communication 5,133.60 4.2% 18.7% 20,322 0.3% Financial and insurance 4,728.10 3.9% -2.6% 17,342 0.3% Real estate 4,429.70 3.6% 3.1% 5,154 0.1% Professional, scientific and technical 2,328.70 1.9% 6.0% 13,856 0.2% Administrative and support service 1,205.80 1.0% 6.8% 52,631 0.9% Public administration and defence 6,791.10 5.6% 9.9% 72,767 1.2% Education 9,819.50 8.0% 5.8% 158,617 2.7% Human health and social work 1,681.80 1.4% 0.8% 63,255 1.1% Arts, entertainment and recreation 513.5 0.4% -0.6% 10,163 0.2% Other services 1,001.10 0.8% 3.3% 107,310 1.8% Others - - - 1,040,774 17.8%

Total Gross Value Added 122,347.40 100.0% 3.8% 5,859,227 100%

Source: GDP: Central Statistical Office, The Monthly June 2017. Employment: CSO, 2014 Labour Force Survey.

3.2.2 Current Condition and Potential of Industrial Development Along Nacala Corridor

Similar to agriculture, investment potentials and opportunities in some industries in Eastern

Province will be further promoted by the development of the Nacala Corridor. However,

industries in other provinces may have the potential for development through utilization of the

corridor, as the products are more tolerant to a longer time of transportation than perishable

agro-products. They include followings.

(1) Agro-Processing

According to ‘Agro Processing Sector Profile 2014’ published by ZDA, the agro-processing

industry and the manufacturing industry contribute about 11% to Zambia’s GDP. In 2013, the

processed and refined foods sector’s export earnings rose by 35.6% from USD 417,387 in

2012 to USD 565,808. The growth in the export trend has continued to be attributed to wider

market access in both regional and international markets. The SADC market is the country’s

largest export market bloc. SADC alone accounted for 35% of the total non-traditional exports


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(NTEs) in 2013. South Africa accounted for 72%, followed by Tanzania and Namibia with

less than 10% each. The COMESA region is also important market for Zambia’s NTEs

exports. DRC is by far the largest market, followed by Zimbabwe, Malawi, Namibia and

Tanzania. The total export to COMESA and SADC excluding South Africa amounted to 78%

of total NTEs47.

The sector has continued to be dominated by Zambia Sugar Plc which is the largest sugar

producer in Zambia with an estimated market share of about 90%. The company grows over

65% of its own cane on over 16,550 ha, and the rest of the cane is grown by Out- grower

Schemes such as the Magobbo, Manyoyo and Kaleya48. Other large scale processor includes

soya bean processors such as COMACO, Mount Meru and Tiger Animal Feeds, as well as

meat processors such as Zambeef and TradeKing, one of the largest FMCG (fast moving

consumer goods) manufacturers in the Southern African region. The expansion of the business

of these companies and other small scale producers largely depends on the growth of demand

in the Southern and Eastern African countries mentioned above, and the development of the

Nacala Corridor will stimulate the trade of agro-processed products along the corridor.

(2) Steel, Metal Fabrication and Parts49

Zambia has identified steel and copper fabrication, among many engineering products, as

targets for accelerating growth of engineering products industries in Zambia. Over the last five

years, several steel making and copper fabrication companies have emerged dynamically in

Zambia. Basic metals and fabricated engineering products accounted for 25% of the total

manufacturing GDP. This category covers the companies’ manufacturing of products from

copper and steel, include copper wire, cable and rods, alloys and ingots, carbon brushes,

switch-gears, pipes and railway sleepers. Steel products include deformed bar, flat bar and

metal tubes. While the recent development of the steel sector in Zambia has been remarkable,

there are many opportunities for more investment to catch sharply increasing demands in both

the Zambian and the regional markets. The country constantly records trade deficit in the iron

and steel products, and therefore; exports of the Zambian-made steel products are to be

encouraged. It is required that Zambia increases its ranges of steel products and also increases

its integration along the long production (supply) chain of the iron and steel sector. As regards

the resources, steel scrap is the main source of raw material for steelmaking in Zambia.

However, Zambia has huge reserves of iron ores, which can be used to produce steel products

using the Direct Reduced Iron (DRI) technology. When the feasibility of DRI production in

Zambia becomes clearer, investment opportunities in the iron and steel sector in Zambia will

47 ZDA, “Agro Processing Sector Profile 2014” 48 Ibid. 49 The Best of Zambia http://thebestofzambia.com/directory/manufacturing-and-wholesale/materials-and-merchants/steel/; http://thebestofzambia.com/directory/manufacturing-and-wholesale/industrial-products/metal-fabrication-and-parts/ ZDA, “Sub-Sector Profile: Iron and Steel”, August 2012.


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enormously increase in all stages of the long production (supply) chains of the sector from

upstream to downstream50.

3.3 Mining

3.3.1 Overview of the Mining

In 2016, the mining and quarrying sector contributed ZMW 13,609 million or 11.1% of the

value added to the national economy. Since 2010, the share of the sector in the GDP has been

stable between 10% and 13%; however the sector production declined by 2.3% in 2014 and

then increased about 7% in 2016, reflecting the price of copper.

The mining and quarrying sector employed 82,700 people, accounting for 1.4% of the total

employment in 2014, which increased from 56,227 people in 2005

Table 3.44 Contribution of the Mining and Quarrying Sector to the National Economy (Million ZMW at 2010 Constant Price)

2010 2011 2012 2013 2014 2015 2016 Mining and Quarrying 12,428.70 12,435.70 12,538.00 12,985.20 12,687.20 12,716.70 13,608.60

Total Gross Value Added 91,836.30 96,946.60 104,312.30 109,589.80 114,703.60 117,887.20 122,347.40

Share of Mining Sector in GDP 13.5% 12.8% 12.0% 11.8% 11.1% 10.8% 11.1%

Growth Rate - 0.06% 0.82% 3.57% -2.29% 0.23% 7.01%

Source: 2010-2014 Data: Central Statistical Office. 2016. National Accounts Gross Domestic Product (GDP) Report 2014 & 2015. 2015-2016 Data: Central Statistical Office, the Monthly June 2017.

3.3.2 Mineral Production in Zambia

The production of major mineral commodities from 2009 to 2013 is presented in Table 3.45.

The detailed data of production of copper, the main mineral commodity, is provided in

Figure 3.36 with the copper price. Copper production has been on an upward trend in the last

ten years, despite the decline of the price of copper. The production amount was indeed lower

than the government’s projection. The repeated power outages and reduced investment due to

the country’s weak currency were pointed out as some of the factors that may have affected

the production. Zambia’s copper production was the seventh largest in 2016 in the world51.

50 Universal Mining and Chemical Industries Limited (UMCIL), a steel manufacturing subsidiary of TradeKings, plans to increase its production capacity from current 12,000 tonnes to 250,000 tonnes. According to TradeKings, it is commissioned by African Union to produce steel to be used for rail track in connection with the Integrated High Speed Train Network project indicated in the Agenda 2063. 51 USGS. 2017. Mineral Commodity Summaries. Copper. https://minerals.usgs.gov/minerals/pubs/commodity/copper/index.html#mcs


3-59

Table 3.45 Mineral Production in Zambia from 2009 to 2013 (Metric ton unless otherwise specified)

1 Reported figure. 2 Terms used are as defined by the International Copper Study Group. 3 From the Chambishi and the Nkana acid recovery plants. 4 From the U.S. Energy Information Administration.

Source: USGS. 2013 Minerals Yearbook. ZAMBIA [ADVANCE RELEASE]. https://minerals.usgs.gov/minerals/pubs/country/index.html#pubs

Source: Copper Production: Central Statistical Office Zambia. Copper Price: IMF. Primary Commodity Prices *Copper price - Copper, Grade A Cathode, LME spot price, CIF European Ports, USS per metric ton.

Figure 3.36 Copper Production and Copper Price

2013

Cobalt: Mine output, Co content 4,900 6,200 5,400 4,200 5,200Metal1 1,506 5,026 5,746 5,665 5,000

Copper:2

Mine output, Cu content: 637,000 672,000 663,000 695,000 760,000Metal, smelter, primary , includes low -grade electrow on 402,000 535,000 520,000 519,000 520,000Refinery , primary : 440,000 528,000 517,000 530,000 568,000

Gold (kilograms) 3,300 3,600 3,800 4,500 4,500Iron and steel, crude steel 10,000 40,000 50,000 50,000 55,000Manganese:

Gross w eight 40,000 120,000 120,000 120,000 120,000Mn content 13,000 40,000 40,000 40,000 40,000

Nickel, Ni content of concentrates 280 2,482 1 2,724 1 -- 1 --6,000 6,500 6,500 6,400 6,400

Cement 880,000 1,126,728 1 1,200,000 1,200,000 1,200,000Gemstones:

Amethy st (kilograms) 1,400,000 1,300,000 1,000,000 1,050,000 1,150,000Bery l (million carats) 6 13 7 10 11Emerald (million carats) 11 20 14 17 19Tourmaline (kilograms) 21,000 20,000 20,000 21,000 20,000

Lime, calcined (thousand metric tons) 130 140 50 200 200Limestone:

For cement and lime (thousand metric tons) 2,000 2,500 2,400 2,600 2,700Crushed aggregate (thousand metric tons) 750 800 1,000 1,000 1,050

Sand and grav el, construction (thousand metric tons) 320 350 360 360 370Sulfur:

Gross w eight: Py rite concentrate 100,000 -- -- -- --Sulfuric acid3 600,000 990,000 800,000 950,000 910,000

Sulfur content: 242,000 300,000 240,000 310,000 290,000

Coal, bituminous 200,000 200,000 220,000 200,000 200,000Petroleum, refinery products4 (thousand 42-gallon barrels) 3,700 3,800 4,700 -- --

Silv er (kilograms)

METALS

INDUSTRIAL MINERALS

MINERAL FUELS AND RELATED MATERIALS

Major Commodities 2009 2010 2011 2012

560,731 575,037

698,646 767,008 739,759 721,446

763,805 708,259 710,860

770,909

7,132 6,963

5,165

7,538 8,823

7,959 7,331 6,863

5,510 4,868

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Copper Price: USD per Metoric Ton

Production (MT)

Year Copper Copper Price


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3.3.3 Export of the Mineral Commodities

The export of mineral products is an important source of earning foreign currency and has

been supporting the Zambian economy. Those mining products include copper, precious and

semi-precious stones, cobalt, cement, lime, and sulphur. In particular, copper export accounts

for 79% of the total export value in 2016, though its export value declined by 34% since 2012.

The export value of each of the other mining products is less than 5% of the total value. The

second largest mineral commodities for export is precious and semi-precious stones of which

export slightly increased to 4%, followed by other base metals mostly consisting of copper,

cobalt, and manganese ore and concentrations.

Table 3.46 Export of Major Mineral Products from 2012 to 2016 (million USD)

Product label 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Copper and articles thereof 6372.9 6890.1 7210.8 5150.8 4190.4 68% 65% 74% 74% 79% Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad ... 282.7 328.5 272.5 200.1 194.9 3% 3% 3% 3% 4%

Other base metals; cermet; articles thereof 214.5 132.9 122.7 75.2 101.9 2% 1% 1% 1% 2%

Ores, slag and ash 71.4 94.1 57.9 27.3 30.9 1% 1% 1% 0% 1%

Iron and steel 54.8 55.0 74.5 49.7 18.9 1% 1% 1% 1% 0% Salt; sulphur; earths and stone; plastering materials, lime and cement 121.0 274.2 134.3 104.1 18.6 1% 3% 1% 1% 0%

All products 9364.7 10594.1 9687.9 6979.5 5305.4

Source: ITC calculations based on UN COMTRADE statistics since January, 2012 and until January, 2015 and Central Statistical Office statistics since January, 2015. http://www.trademap.org/Index.aspx

3.3.4 Export Destinations of Mineral Commodities

The export values to major destinations of mineral commodities are presented from Table 3.48

to Table 3.53. Nearly 60% of copper has been exported to Switzerland, followed by China of

which export fluctuates between 20 to 30%. This is because the largest copper mine firm,

Mopani Copper Mines, is owned by GLENCORE based in Switzerland. Therefore, it is said

that the actual largest importer of Zambian copper is China.

According to Bolloré, the largest logistics firm in Zambia, copper produced in the Copperbelt

is exported to East Asia, such as China and South Korea via Dal es Salaam Port and Durban

Port. Approximately 70% of the handling volume of copper by Bolloré is transported by truck

to Dal es Salaam. However, the Zambian Railway is promoting the railway for the transport of

copper, and the GOZ is trying to introduce a statutory instrument to mandate the quota of

railway use for transport of commodities including copper52. Currently the Copperbelt region,

especially Chingola, has been emerging as a hub of copper production in Zambia and DRC to

refine copper ore imported from DRC in the smelters and export the products abroad.

52 For example, 50% of usage of rail is mandated for copper transport, while, 100% is required for sulphur transport.


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Table 3.47 Export Value and Destinations of Copper from 2011 to 2015 (million USD)

Importers 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

World 6,645.0 6,372.9 6,890.1 7,210.8 5,150.8 100.0% 100.0% 100.0% 100.0% 100.0%

Switzerland 4,282.8 3,881.8 3,856.0 4,236.0 3,004.6 64.5% 60.9% 56.0% 58.7% 58.3%

China 1,312.9 1,645.7 2,109.7 1,719.6 987.4 19.8% 25.8% 30.6% 23.8% 19.2%

Singapore 0.0 0.0 14.0 265.4 486.6 0.0% 0.0% 0.2% 3.7% 9.4%

Australia 0.0 0.0 0.4 348.1 198.7 0.0% 0.0% 0.0% 4.8% 3.9%

South Africa 437.2 176.8 237.8 194.8 186.8 6.6% 2.8% 3.5% 2.7% 3.6%

Hong Kong, China 0.6 0.0 0.0 30.0 99.8 0.0% 0.0% 0.0% 0.4% 1.9%

Japan 3.6 0.8 55.9 77.1 80.6 0.1% 0.0% 0.8% 1.1% 1.6%

Mozambique 50.8 0.0 9.9 14.7 22.3 0.8% 0.0% 0.1% 0.2% 0.4% United Arab Emirates 62.1 216.7 245.5 128.7 18.7 0.9% 3.4% 3.6% 1.8% 0.4%

* Product: 74 Copper and articles thereof


The most of commodities except precious and semi-precious stones and manganese were

exported to the regional market, namely, South Africa, DRC, Zimbabwe, and Malawi. A half

of the export value of precious and semi-precious stones was exported to Singapore,

Switzerland, India, and South Korea. Almost all of manganese ore and concentration was

exported to China.


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Table 3.48 Export Value and Destinations of Precious Stones and

Semi-Precious Stones in 2015

Importers Exported Value (Thousand USD)

Share (%)

World 200,109 100.0% South Africa 93,080 46.5% Singapore 40,508 20.2% Switzerland 37,775 18.9% India 16,865 8.4% Korea, Republic of 9,653 4.8%

* Product 7103 Precious stones and semi-precious stones, whether or not worked or graded, but not strung


Table 3.49 Export Value and Destinations of Cement in 2015


Share (%)

World 25,280 100.0% DRC 18,253 72.2% Zimbabwe 3,422 13.5% Malawi 2,835 11.2% Congo 667 2.6% Tanzania, 80 0.3% South Africa 18 0.1% Egypt 5 0.0% * Product 2523 Cement, incl. cement clinkers, whether or not coloured Source: ITC calculations based on UN COMTRADE statistics since January, 2012 and until January, 2015 and Central Statistical Office statistics since January, 2015. http://www.trademap.org/Index.aspx

Table 3.50 Export Value and Destinations of Lime in 2015


Share (%)

World 39,122 100.0%

DRC 36,836 94.2%

Malawi 1,433 3.7%

Zimbabwe 853 2.2%

* Product: 2522 Quicklime, slaked lime and hydraulic lime



Share (%)

World 75,237 100.0%

South Africa 72,668 96.6%

United Arab Emirates 2,569 3.4%

*Product: 8105 Cobalt mattes and other intermediate products of cobalt metallurgy; cobalt and articles thereof, ...


Table 3.51 Export Value and Destinations of Cobalt in 2015

Table 3.52 Export Value and Destination of Sulphur in 2015


Share (%)

World 9,046 100.0%

DRC 8,994 99.4%

Russian Federation 52 0.6%

* Product: 2503 Sulphur of all kinds (excluding sublimed sulphur, precipitated sulphur and colloidal sulphur


Importers Exported Value (Thousand USD) Share (%)

World 3,965 100.0%

China 3,745 94.5%

South Africa 220 5.5%

*Product: 2602 Manganese ores and concentrates, incl. ferruginous manganese ores and concentrates, with a ...


Table 3.53 Export Value and Destination of Manganese in 2016


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3.3.5 Government Policy of Mining Sector

The economic development of Zambia is dependent on mining. Copper contributes

approximately 77% to total exports. The government has considered that the diversification of

the economic development is essential.

In the 7NDP 2017-2021, “A Diversified and Export-Oriented Mining Sector” is the 2nd

Development Outcome to achieve the goal. The Plan emphasises on broadening the range of

minerals to cover non-traditional mining of gemstones, gold and industrial minerals as well as

promotion of value addition to mining products and include energy and material efficiency

strategies to increase productivity and reduce environmental pollution. In addition, the Plan

also focuses on formalising and empowering small-scale miners to make them more

productive, supporting the development of lapidaries and local auction sales of gemstones and

enhancing the capacity of local businesses to participate in the mining value chains and boost

export revenue.

The following are the strategies and programmes identified under the Development Outcome.

Strategy 1: Promote the exploitation of gemstones and industrial minerals

Programmes:

a) Geological information generation and provision; b) Mineral processing technology development; c) Small-scale miners’ empowerment; d) Small-scale mines regulatory framework enforcement; e) Market linkages development; f) Strategic environmental assessment and risk management; and g) Mineral exploration promotion

Strategy 2: Promote local and foreign participation in mining value chains and

industrialisation

Programmes:

a) Capacity development; b) Policy and regulatory framework review and enhancement; c) Access to finance promotion; d) Mining value-chain development; e) Research, innovation and technology promotion; and f) Investment Promotion

Strategy 3: Promote petroleum and gas exploration

Programmes:

a) Policy and regulatory framework review and enhancement; b) Capacity development; c) Geological and geophysical information generation and provision; and d) Environmental management

Strategy 4: Promote small-scale mining

Programmes:

a) Small-scale miners’ empowerment;


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b) Small-scale miners access to finance promotion; c) Occupational health, safety and environment strengthening; d) Small-scale mining skills development; and e) Small-scale miners and investors partnerships promotion.

3.3.6 Development Potential of the Mining Sector in the Nacala Corridor Region

Eastern Province has a variety of mineral deposits, which are not fully exploited. Gemstone

mining dominates most of the current mining activity in the Province. Aquamarine and

tourmaline are mined in Lundazi and Nyimba, amethyst is also currently being mined in

Lundazi District. Other gemstones available for economic exploitation include: tourmaline,

granite, garnets, aquamarine amethyst and quartz. The Province also has the potential for the

mining of gold in the Chadiza and Vubwi Districts. The province’s broad spectrum of mineral

resources such as copper, gold and gemstones present excellent investment opportunities in

the extraction and processing of these minerals53.

3.4 Trade

3.4.1 Overview of the International Trade

The international trade of Zambia had expanded since the mid-2000s until 2013, except the

time of the global financial crisis in 2009, and the amounts of the export and import nearly

tripled. However, after 2013, the trade amounts, especially the value of the export, declined. In

2015, the import value, USD 8.4 billion, exceeded the amount of the export, USD 7.0 billion.

The trade deficit was recorded.

Source: WITS - UNSD Comtrade

Figure 3.37 Export and Import Values from 2006 to 2015

53 The provincial administration of the Eastern Province, “Eastern Province Investment Potentials and Opportunities”.

3,770 4,617

5,099 4,312

7,200

9,001 9,365

10,594 9,688

6,983

3,074 4,007

5,060

3,793

5,321

7,178

8,805

10,162 9,539

8,420

0

2,000

4,000

6,000

8,000

10,000

12,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(US$

million)

Export Import


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Zambia’s top export partner was Switzerland where USD 3.1 billion or 44% of the total value

was exported, followed by China (14%) and Singapore (8%). The Top Ten Partners consisted

of European, Asian, and African countries. The export values to Malawi and Mozambique,

two countries along the Nacala Corridor, were USD 107.2 million (1.5%) and USD 40.2

million (0.6%) or 8th and 15th respectively in the ranking of the export volume. Zambia’s

African export partners in the Top Ten, including South Africa, the Democratic Republic of

the Congo, Zimbabwe, and Malawi accounted for 20% of the total export value.

On the other hand, Zambia’s major import partners were African countries. The top import

partner was South Africa where USD 2.6 billion or 31% of the total value was imported from.

Zambia imported 53% of the total values from Top Four African countries including South

Africa, DRC, Mauritius, and Kenya. However, imports from Malawi and Mozambique were

USD 17.5 million and USD 82 million respectively, of which ranking were 42nd and 18th in

terms of the imported value. Thus, the trade among Zambia, Malawi, and Mozambique is less

active compared with the other neighbouring countries such as DRC, Zimbabwe or Kenya.

The development of the Nacala Corridor can enhance the trade opportunities among the three

countries by improving transport infrastructure as well as custom procedures.


Figure 3.38 Top 10 Export Partners in 2015


Figure 3.39 Top 10 Import Partners in 2015

3.4.2 Traded Commodities

In the last decade, both traditional and non-traditional export expanded. The traditional export

e.g., copper is dominant and its value reached ZMW 4,468 million. Though the share of

traditional export was increased from 62% to 77% of the total value, non-traditional export

such as maize, gemstone and industrial metals is expanded by 21.4% per annum, which is

faster than that of the traditional export, 11.7%. To minimize the impacts of the price

3,091

1,009

545 534 523 267 209 107 103 82

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Switzerland

China

Singapore

South Africa

Dem. Rep. of the Congo

Zimbabwe

Australia

Malawi

China, H

ong Kong SA

R

Japan

(US$

million)

2,604

947 689

475 412 394 363 213 191 182

0

500

1,000

1,500

2,000

2,500

3,000

3,500South Africa

Dem. Rep. of the Congo

China

Mauritius

Kenya

Kuwait

India

Spain

United Kingdom

Japan

(US$

million)

DR

C

DR

C


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fluctuation of copper and diversify the export commodities, the government adopted a policy

to increase the non-traditional export54.

Source: Central Statistics Office

Figure 3.40 Traditional and Non-Traditional Export from 2007 to 2017

The dominant exported goods of Zambia in the last ten years were intermediate goods, which

accounted for 84% of the total export in 2015. It is assumed to be copper products as discussed

below. The imported goods consisted of capital goods, consumer goods, and intermediate

goods relatively equally. The share of consumer goods increased from 25% in 2006 to 32% in

2015, while, the share of capital goods declined from 36% to 26%. From the mid-2000s, the

Zambian economy grew rapidly and the GDP per capita increased from USD 1,163 to USD

1,607 per capita in ten years. The economic growth of the country increased demands for the

import of consumer goods.

The Zambian economy depends on the export of copper. Among the exported commodities in

2015, the exported value of copper products reached USD 5.2 billion or 74% of the total

exported value. The share of each of the other commodities was less than 3%. The second

dominant commodity was cereals (maize), followed by precious or semi-precious stones or

metals, and then sugar. Among the imported commodities, mineral fuels, mineral oils and their

distillation products or simply fuels accounted for USD 1.6 billion or 18.7% of the total

imported value, followed by the categories of boilers, machinery and mechanical appliances

(14.6%) and then ores, slag and ash (7.6%).

54 Ministry of National Development Planning. Seventh National Development Plan 2017-2021

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Jan

2007

Jan

2008

Jan

2009

Jan

2010

Jan

2011

Jan

2012

Jan

2013

Jan

2014

Jan

2015

Jan

2016

Jan

2017

May

2017

(Million

ZMW)

Total‐Exports (fob) Non‐Traditional Exports (fob) Traditional Exports (fob)


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Figure 3.41 Export by Product Category from 2006 to 2015

Source: WITS - UNSD Comtrade.

Figure 3.42 Import by Product Category from 2006 to 2015

0

2,000

4,000

6,000

8,000

10,000

12,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

（US$

million）

Capital goods Consumer goods Intermediate goods Raw materials

0

2,000

4,000

6,000

8,000

10,000

12,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

（US$

million)



3-68

Table 3.54 Top Ten Export and Import Commodities in 2015

Export Import

Rank Commodities (HS description) USD

million Share Rank Commodities (HS description)

USD million

Share

1 Copper and articles thereof 5,153.41 73.8% 1

Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

1,577.70 18.7%

2 Cereals 204.63 2.9% 2 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

1,225.32 14.6%

3

Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin

200.23 2.9% 3 Ores, slag and ash 613.07 7.3%

4 Sugars and sugar confectionery 134.79 1.9% 4 Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof

552.26 6.6%

5


110.87 1.6% 5

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

538.14 6.4%

6 Tobacco and manufactured tobacco substitutes

106.48 1.5% 6

Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes

391.28 4.6%

7 Salt; sulphur; earths and stone; plastering materials, lime and cement

104.19 1.5% 7 Fertilisers 361.21 4.3%

8 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

93.64 1.3% 8 Articles of iron or steel 332.75 4.0%

9

Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes

83.44 1.2% 9 Rubber and articles thereof 329.75 3.9%

10 Other base metals; cements; articles thereof

75.28 1.1% 10 Plastics and articles thereof 231.93 2.8%

Source: WITS - UNSD Comtrade.

3.4.3 Trade Along Nacala Corridor

At the Mwami Border Post, on the Zambian side of the border with Malawi, the trade values

of both export and import showed a declining trend since 2013 to 2016, which probably

reflected the decreasing international trade of Zambia as described above. The exported value

from Zambia far exceeded the import values to Zambia as shown in Table 3.55.

Regarding the export, almost all the goods of the export passing through Mwami Border Post

were exported to Malawi (see Table 3.54). In 2015 and 2016, 98% of the value of the exported

goods was for Malawi. However, the shares of the imports from Malawi to Zambia shifted in

the rage between 45% and 64% in the four years. The imports from China and Japan, reached


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nearly 35% in 2014 and 2015. Though there is no data available, these goods from the Far

East might be imported from Nacala Port in Mozambique.

According to the export and import trends from 2013 to 2016 presented in Table 3.55 the

major export commodities from Zambia include tobacco and maize of which export values

ranged between 40% and 65%, while the imported goods are groundnuts, transformers,

vehicles, urea, etc.

Therefore, these data indicate that the development of the Nacala Corridor could further

encourage the export from Zambia to Malawi and the Nacala Corridor has a potential to be a

transport route of the imported goods from Asia to Zambia. A caveat is that because this

analysis is based on the export and import values, the trade volume should be examined to

consider the better use of the Nacala Corridor.

Source: Central Statistics Office.

Figure 3.43 Export and Import Values at Mwami Border Post

205,868

142,327

105,798 107,083

46,870 47,792 37,868

13,646

0

50,000

100,000

150,000

200,000

250,000

2013 2014 2015 2016

(US Thousand)

Export Import


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Table 3.55 Top Five Destinations of Export and Import at Mwami Border Post from 2013 to 2016

2013 Rank Export USD (1,000) Share Rank Import USD (1,000) Share

1 Malawi 182,506.8 88.7% 1 Malawi 25,417.5 54.2% 2 South Africa 19,193.4 9.3% 2 China 6,060.2 12.9% 3 Switzerland 3,234.2 1.6% 3 Japan 5,271.3 11.2% 4 Republic of Thailand 434.0 0.2% 4 United Arab Emirates 4,078.2 8.7% 5 Germany 419.8 0.2% 5 Tanzania 2,097.2 4.5% Export Total 205,868.2 Import Total 46,870.0

2014 Rank Export USD (1,000) Share Rank Import USD (1,000) Share

1 Malawi 135,485.1 95.2% 1 Malawi 21,521.2 45.0% 2 Republic of Thailand 1,977.4 1.4% 2 China 10,269.0 21.5% 3 Switzerland 1,379.1 1.0% 3 Japan 5,421.8 11.3% 4 Mozambique 1,043.2 0.7% 4 Tanzania 2,732.0 5.7% 5 South Africa 796.2 0.6% 5 Saudi Arabia 2,590.6 5.4%

Export Total 142,326.9 Import Total 47,792.2 2015

Rank Export USD (1,000) Share Rank Import USD (1,000) Share 1 Malawi 103,737.4 98.1% 1 Malawi 16,999.2 44.9% 2 Mozambique 980.6 0.9% 2 China 9,714.6 25.7% 3 China 420.8 0.4% 3 Japan 3,519.6 9.3% 4 South Africa 367.9 0.3% 4 India 3,472.3 9.2% 5 Republic of Thailand 105.3 0.1% 5 United Arab Emirates 1,657.0 4.4%

Export Total 105,798.0 Import Total 37,868.2 2016

Rank Export USD (1,000) Share Rank Import USD (1,000) Share 1 Malawi 105,599.6 98.6% 1 Malawi 8,758.7 64.2% 2 South Africa 1,217.2 1.1% 2 Japan 1,239.4 9.1% 3 Mozambique 83.4 0.1% 3 South Africa 1,200.0 8.8% 4 Rwanda 67.5 0.1% 4 China 802.7 5.9% 5 Uganda 48.3 0.0% 5 United Arab Emirates 769.0 5.6%

Export Total 107,083.0 Import Total 13,646.0



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Table 3.56 Top Five Exported and Imported Commodities at Mwami Border Post from 2013 to 2016

2013

Rank Export USD

(1,000) Share Rank Import

USD (1,000)

Share

1 Tobacco, not stemmed/stripped 77,065 37.4% 1 Groundnuts, shelled, whether or not broken

7,871 16.8%

2 Maize (excl. seed) 38,472 18.7% 2 Vehicles with engine capacity exceeding 1,500 cc but not exceeding 3,000 cc - OTHER.

5,016 10.7%

3 Cotton, not carded or combed 16,621 8.1% 3 Mixtures of urea and ammonium nitrate in aqueous or ammoniacal solution

4,089 8.7%

4 Portland cement (excl. white) 16,136 7.8% 4 Mineral or chemical fertilizers with nitrogen, phosphorus and potassium

2,013 4.3%

5 Cotton seeds 7,524 3.7% 5 Vehicles with engine capacity exceeding 1,000 cc but not exceeding 1,500 cc: OTHER

1,650 3.5%

Export Total 205,868 Import Total 46,870 2014

Rank Export USD


USD (1,000)

Share

1 Tobacco, not stemmed/stripped 45,650 32.1% 1 Groundnuts, shelled, whether or not broken 5,641 11.8%

2 Candles, tapers and the like 24,126 17.0% 2 Liquid dielectric transformers, power handling capacity >10,000 kVA 3,924 8.2%

3 Self-propelled bulldozers, excavators, nes 12,359 8.7% 3 Urea 3,710 7.8%

4 Maize (excl. seed) 9,045 6.4% 4 Knotted netting of man-made textile materials (excl. fishing nets) 2,684 5.6%

5 Soap in other forms, nes - Other 5,968 4.2% 5 Vehicles with engine capacity exceeding 1,500 cc but not exceeding 3,000 cc - OTHER.

2,418 5.1%


Rank Export USD


USD (1,000)

Share

1 Tobacco, not stemmed/stripped 44,107 41.7% 1 Liquid dielectric transformers, power handling capacity >10,000 kVA

6,370 16.8%

2 Maize (excl. seed) 26,352 24.9% 2 Groundnuts, shelled, whether or not broken

3,200 8.4%

3 Soap in other forms, nes - Other 5,851 5.5% 3 Prefabricated structural components for building, etc., of cement...

1,824 4.8%

4 Cartons, boxes and cases, of corrugated paper or paperboard

4,316 4.1% 4 Vehicles with engine capacity exceeding 1,500 cc but not exceeding 3,000 cc - OTHER.

1,673 4.4%

5 L sections of iron/steel, hot-rolled..., <80 mm high

2,021 1.9% 5 Urea 1,565 4.1%


Rank Export USD


USD (1,000)

Share

1 Maize (excl. seed) 22,947 21.4% 1 Groundnuts, shelled, whether or not broken 1,118 8.2%

2 Tobacco, partly or wholly stemmed/stripped 21,047 19.7% 2 Sacks and bags, for packing goods, of

polyethylene / polypropylene strip nes 955 7.0%

3 Portland cement (excl. white) 11,194 10.5% 3 Plywood, veneered panels and similar laminated wood nes 861 6.3%

4 Tobacco, not stemmed/stripped 9,111 8.5% 4 Cartons, boxes and cases, of corrugated paper or paperboard

826 6.1%

5 Iron/steel bars & rods, hot rolled, twisted/with deformtns from rolling proc. - Other

5,518 5.2% 5 Vehicles with engine capacity exceeding 1,500 cc but not exceeding 3,000 cc - OTHER.

628 4.6%

Export Total 107,083 Import Total 13,646



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3.4.4 Development Potential and Challenges of the Trade Sector in the Nacala Corridor Region

A long-standing development issue of the trade sector in Zambia is diversification of the

export commodities. The expansion of non-traditional export of agricultural and mining

commodities and tourism is strongly needed for economic diversification. The 7NDP

identified eight constraints to economic diversification, including inadequate infrastructure,

cost and limited availability of the long-term finance, inadequate water resource and supply,

lower labour productivity, limited access to land, inadequate skills and innovation, high cost of

transportation, and insufficient market information system and economy wide coordination.

To address these constraints, while the 7NDP suggests three strategies for trade promotion

relevant to this study namely:

1) Improvement of trade facilitation: transport infrastructure development, corridor

development, border management, and OSBP establishment;

2) Improvement of logistics management: intercountry trade centre and dry port

development; and

3) International cooperation: COMESA, EAC-SADC Tripartite Framework

implementation etc.

The development of the Nacala Corridor Region with the Nacala Corridor is in line with this

newly published plan. Eastern Province has a great development potential of agriculture and

the mining sector. With the development of the Nacala Corridor, therefore, the expansion of

exports of cereals such as maize and non-traditional mining products such as precious and

non-precious stones can be expected, although the current exported values are less than 3% of

the total. In particular, maize and tobacco are two major commodities exported through

Mwami Border Post to Malawi. The improvement of the Nacala Corridor, including OSBP

and extension of the railway from Chipata can contribute to increase of the export of these

commodities to Malawi.

In the neighbouring countries of Zambia, the integrated region trade with Malawi and

Mozambique is less active, compared with DRC and Zimbabwe. The development of the

Nacala Corridor connecting Zambia with Malawi and Mozambique can increase a trade

opportunity with these two countries, especially with Mozambique.

Nevertheless, the trade on the Nacala Corridor is not expanding as discussed. This is because

the Corridor is primarily used for the trade with Malawi where the market is not large. Thus, it

is crucial to promote international trade through the Nacala Corridor, in addition to the

intra-region trade with the neighbouring countries. Moreover, the cost reduction of the

transport of the fuel, the largest value of the imported commodity by the use of the railway of

the Nacala Corridor can contribute to the reduction of the trade deficit.

Thus, a strategy to expand international trade, both export and import on the Nacala Corridor

is required for Zambia’s trade sector. The rehabilitation and upgrading of the railway of the

Malawi section is a necessary component to support the promotion of international trade

between Zambia and Malawi and Mozambique.


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3.5 Tourism

3.5.1 Overview of the Tourism

In Zambia, the direct contribution of the tourism sector to GDP was ZMW 6.9 billion (USD

600 million) or 3.2% of the total and the total contribution of the sector to GDP was estimated

ZMW 15.2 billion (USD 1.4 billion), or 7.0% of GDP in 2016. The increase of 4.4% is

expected in 201755.

Tourist arrivals in Zambia increased from 859,088 persons in 2012 to 931,782 persons in 2015.

The annual earning of the tourism sector in 2015 was ZMW 4,408 million or USD 401 million.

The earning increased in local currency, though it was decline by about 9% in USD.

Africans account for 76% of the total tourists in 2015, followed by Europeans and Asians who

accounts for 10% and 8% respectively. The share of African tourists has gradually increased

from 2011.

More than half of the tourists came to Zambia for business purposes. In 2015, 54% of the

tourists arrived in Zambia for business, followed by the purpose of leisure or holidays

accounting for 25%. Though the total number of tourist arrivals and the number of tourists

coming for leisure have shown a slight increasing trend from 2011 to 2015, the share of each

of the purposes of visits remained stable.

Table 3.57 Tourist Arrivals and Annual Tourism Earnings

2012 2013 2014 2015 Average Annual

Growth Rate Tourist Arrival (persons) 859,088 914,576 946,969 931,782 2.1% ZMW (million) 2,271.47 2,971.15 3,945.71 4,408.16 18.0% USD (million) 441.06 540.21 616.52 401.11 -2.3% Exchange Rate (ZMW/1USD) 5.15 5.5 6.41 10.99

Source: Ministry of Tourism and Arts, Republic of Zambia., 2015 Tourism Statistical Digest. July 2016.


Figure 3.44 Tourist Arrivals by Continent

55 World Travel & Tourism Council. Travel & Tourism Ravel & Tourism & Tourism Economic Impact ZAMBIA. https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2017/zambia2017.pdf

625 654 720 732 710

52 32

41 45 49 13 11 10 11 12 90

97 64 82 72

114 66 79 78 89

0

100

200

300

400

500

600

700

800

900

1,000

2011 2012 2013 2014 2015

Tourists Num

ber (100

0 pe

rson

s)

Year

Asia

Australia

America

Europe

Africa


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Source: Ministry of Tourism and Arts, Republic of Zambia. 2015 Tourism Statistical Digest. July 2016.

Figure 3.45 Tourist Arrivals by Purpose of Visit

Tourist arrivals by Top Ten Oversea markets and by Top Ten African markets in 2015 are

shown in Figures bellow. Among the oversea markets, about 37,000 to 39,000 came from the

United States and United Kingdom each. On the other hand, a large number of tourists visited

Zambia from neighbouring countries, especially Zimbabwe and Tanzania, which are 225,500

persons and 168,800 persons respectively. However, only 31,500 Malawian came to Zambia

in 2015.


Figure 3.46 Tourist Arrivals by Top Ten Overseas Markets in 2015

194 223 252 250 235

501 465 480 506 500

23 8 39 21 23

47 1

17 17 21 69

58

43 63 60 86

104 85 90 94

0

100

200

300

400

500

600

700

800

900

1,000

2011 2012 2013 2014 2015

Other

VFR

Study

Conference

Business

Leisure/Holiday

38,496 36,997

25,517 20,648

10,193 8,742 8,025 6,310 4,861 4,165

05,000

10,00015,00020,00025,00030,00035,00040,00045,000

Persons


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Figure 3.47 Tourist Arrivals by Top Ten Africa Markets in 2015

In Zambia, national parks are the most popular tourist attraction. There are 20 National Parks

and 36 Game Management Areas (GMAs), the total area of which is 31.4% of the land of the

country, or 236,400 km2 56.

The visitors to four major national parks were increasing from 2012 to 2015 as shown in

Figure 3.48. South Luangwa National Park covering Eastern, Muchinga and Central Provinces

is the most popular park. The visitors to South Luangwa National Park accounted for 49%,

though its share declined from 57% in 2012.


Figure 3.48 Tourists Visited Major National Parks

56 Ministry of Tourism and Arts, Republic of Zambia. National Tourism Policy 2015

225,527

166,833

96,201 94,030

31,53922,311 15,120 14,968 10,190 8,242

0

50,000

100,000

150,000

200,000

250,000

Persons

35,480

40,943 41,97043,653

14,65917,883

20,98523,083

6,9379,371 9,289 9,011

5,461

9,085

9,71812,960

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

2012 2013 2014 2015

Visitrs (person)

South Luangwa

Mosi‐oa‐Tunya

Lower Zambezi

Kafue


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3.5.2 Tourism Sector of the Nacala Corridor Region

Tourism, including arts and culture, is the second major economic activity (next to

agriculture/agribusiness sector) in Eastern Province. Tourism is a major contributor to

socioeconomic development in the province as it is an important source of jobs, and

generation in both the private and public sectors. The main tourism activities in the province

include hotel and lodge accommodation, game viewing, safari walking, game hunting and

cultural ceremonies.

Eastern Province has three National Wildlife Parks–South Luangwa (9,050 km2), Lukusuzi

(2,720 km2) and Luambe (254 km2), and four Game Management Areas (GMAs)–Lupande

(4,840 km2), Lumimba (4,500 km2), West Petauke (4,140 km2) and Sandwe (1,530 km2)–

which act as buffer zones to the National Wildlife Parks, allowing for free movement of

animals between the Parks and GMAs. The National Wildlife Parks and GMAs in the

province have the largest variety of animals and bird life in Africa. Although most of the

South Luangwa National Wildlife Park lies outside Eastern Province, its management and

the only public road access is from the province.

In the country, Naconde, on the border with Tanzania, and Kenneth Kaunda International

Airport in Lusaka are the two busiest ports to receive tourists in 2015. Among 932,000 tourist

arrivals in 2015, about 20% entered the country through each of the two ports, followed by

Chirundu, on the border with Zimbabwe where 15% of the tourists arrived.

There are three ports of entry in Eastern Province, namely Chanida, the border with

Mozambique, Mfuwe International Airport at South Luangwa National Park, and Mwami, the

border with Malawi on the Nacala Corridor. The number of tourists who entered Zambia

through the Mwami border in 2015 was 30,063 tourists and the largest visitors at the border,

45,370 tourists recorded in 2013 during the last five years.


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Table 3.58 Tourist Arrivals by Port of Entry in 2015

PROVINCE PORTS OF ENTRY Tourists (%)

Copperbelt Kasumbalesa 91,186 9.79 Mokambo 5,188 0.56 Sakania 4,314 0.46 Simon Mwansa Kapwepwe International Airport 35,207 3.78

Eastern Chanida 3,879 0.42 Mfuwe International Airport 762 0.08 Mwami 30,063 3.23

Northern Nakonde 194,851 20.91 Mpulungu 2,764 0.30 Nsumbu 418 0.04

Southern Harry Mwaanga Nkumbula International Airport 56,013 6.01 Kariba 46,829 5.03 Kazungula 28,441 3.05 Victoria Falls 67,321 7.22

Western Katima Mulilo 32,285 3.46 North-Western Jimbe 208 0.02

Kipushi 5,507 0.59 Lusaka Kenneth Kaunda International Airport 180,795 19.40

Feira/Luangwa 7,398 0.79 Chirundu 138,353 14.85

Total 931,782 100.00


Table 3.59 Tourist Arrivals in Eastern Province from 2011 to 2015

Ports of Entry 2011 2012 2013 2014 2015

Chanida 7,630 4,704 3,879 Mwami 31,016 35,754 45,370 37,783 30,063 Mfuwe 878 697 782 820 762


In Eastern Province, there are 6,644 rooms with 8,764 beds, which account for 15.4% and

11.6% of the country’s total rooms and beds respectively in 2015. Eastern Province has the

third largest accommodation capacity, following Lusaka and Southern Provinces, because of

the existence of the most popular national park, South Luangwa National Park, though the

Southern Province where Victoria Fall is located has the second largest accommodation

capacity. The annual average room occupancy rate in Eastern Province, 79.1%, is higher than

the national average of 69.8%, probably due to the increasing visitors to the South Luangwa

National Park. The tourism industry created 57,384 jobs in 2015 and 6,522 people were

engaged in Eastern Province, which accounted for 11.4% of the total employment of the sector.

The accommodation annual direct earning in Eastern Province was ZMW 53.3 million (USD

4.85 million). This was significantly low, compared with Lusaka and Southern Province, and

implies that the tourism sector did not benefit the accommodations in Eastern Province very

much, but probably other domains such as tourist agencies or transportation. Thus, one of the

issues of the tourism sector in the Nacala Corridor Region is how to increase the direct

contribution of the tourism sector to the region.


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Table 3.60 Tourism Statistics by Province in 2015

Number of

Rooms No. of Bed

Spaces Annual Average Room

Occupancy Rates Employees

Accommodation Annual Direct Earnings

(million ZMW) Central 3,396 6,791 64.6 2,620 4.14 Copperbelt 2,298 4,276 72.8 1,895 61.51 Eastern 6,644 8,764 79.1 6,522 53.30 Luapula 737 1,074 73.8 958 3.20 Lusaka 13,671 29,062 53.1 18,679 1,842.14 Muchinga 855 1,390 77.8 857 6.84 North Western 1,134 1,204 87.8 1,197 31.77 Northern 962 1,713 59.2 836 4.66 Western 880 1,263 57.9 948 3.03 Southern 12,542 19,716 71.7 22,872 1,993.35 Country 43,119 75,253 69.8 57,384 4,003.94


3.5.3 Policy Direction and Challenges of Tourism Sector

The tourism sector is expected to be one of the driving forces of the country’s economy to

become a middle income nation as stated in the Vision 2030. According to the Tourism Sector

Policy 2015, the tourism sector vision is defined, “Make Zambia an exciting and growing

destination that realizes its full potential and rewards tourists with unique, authentic and

treasured experiences.” The objective is to be among the top five tourist destinations in

Sub-Saharan Africa by 2030.

The Ministry identified the development issues of the sector in:

a) infrastructure

b) limited tourism products

c) domestic tourism

d) community participation

e) marketing and promotion

f) perceived high cost of the destination

g) inter-ministerial and institutional coordination

h) sector investment

i) standards, inspections and licensing

j) skills training in tourism and hospitality industry

k) institutional capacity

l) gaming industry

In order to achieve the sector vision and objective and address the development issues, the

government proposed eight guiding principles and fourteen measures shown in Table 3.61.


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Table 3.61 Guiding Principles and Measures for Tourism Sector Development

Guiding Principles Measures

1) Sustainable Tourism Development 1) Policy Coordination, Consultation and Inter-Sectoral Linkages. 2) Rural Development 2) Gender Issues 3) Inter-Agency Cooperation and Coordination 3) Tourism Planning and Development 4) Conservation and preservation of nature and culture 4) Domestic tourism 5) Ethical and transparent tourism development 5) Tourism related infrastructure 6) Quality and value 6) Tourism Investment 7) Communities Involvement 7) Environmental Management and Conservation 8) Improved quality of life 8) Empowerment of Local Communities in tourism development 9) Public Awareness, Sensitization and Education 10) Product Development and Diversification. 11) Tourism Marketing and Research 12) Skills in Tourism and Hospitality Industry 13) Quality Assurance 14) Management of the Tourism Sector

Source: Ministry of Tourism and Arts, Republic of Zambia., Tourism Sector Policy 2015

3.5.4 Development Potential and Challenges of the Tourism Sector in the Nacala Corridor Region

The Nacala Corridor Region in Zambia, Eastern Province in particular has high potential for

the tourism development. There are the South Luangwa National Park and Lukusuzi National

Park in Eastern Province, North Luangwa National Park and Nyika National Park in Muchinga

Province, and Lower Zambezi National Park in Lusaka. South Luangwa National Park is the

most popular national park in Zambia as described. However, the contribution of the visitors

to South Luangwa National Park to the region is not so large, because they do not visit other

places in the region and the annual accommodation earning is low. Thus, a strategy to promote

the tourism sector in the Nacala Corridor Region would be to develop various tourism

attractions in the region and network them with the South Luangwa National Park in order to

divert the tourist destinations and lengthen their stay in the region. Considering the current

development of Chipata City, development of cultural tourist attractions in Chipata such as

cultural events, a museum or cultural village would be one option to divert the tourists from

the National Park. In the long-run, the planned railway from Chipata or Petauke to Serenje can

be developed as a tourist train, though the impacts of the development of the railway on

environment and the wildlife should be carefully examined since the railway alignment may

pass near the South Luangwa National Park.

Malawi-Zambia (Nyika) Transfrontier Conservation Area, which is established between

Zambia and Malawi, offers a good model for tourism development and international

collaboration in the Nacala Region. Transfrontier Conservation Areas (TFCAs) are established

across the boundaries for collaboration on the management of natural and cultural resources

for biodiversity conservation and socio-economic development under the support from

Southern African Development Community. The TFCA has the area of 19,280 km2 including

Nyika National Park, Lundazi, Mitenge and Mikuti Forest Reserves and Musalangu Game

Management Area in Zambia, and Nyika National Park and Vwaza Marsh Wildlife Reserve in

Malawi. Because improvement of the Nacala Corridor can contribute to the promotion of


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inter-country tourism in Zambia and Malawi, TFCAs and similar inter-country collaboration

should be sought and initiated for the tourism development of the Nacala Region. For example,

in addition to the TFCAs, a tourism route from South Luangwa National Pak to Lake Malawi

can be proposed, using the Nacala Corridor, and inter-county tourism promotion arrangements

such as single visa entry to the two countries should be negotiated between the countries

involved. In any case, infrastructure improvement for the smooth mobility of tourists is

indispensable to promote tourism development in the region.

3.6 Energy

3.6.1 Current Situations of the Electricity Sub-Sector

A goal of the universal access to electricity by 2030 is set by the government. However, the

access to power supply is still limited in Zambia. Only 3.8% of the rural population has access

to electricity, compared with 61.5% of the urban population who has access to electricity. At

the national level, 27.9% of the population has access to electricity.

Table 3.62 Electricity Access

1990 2000 2010 2014

Access to electricity (% of population) 13.9 16.7 22.0 27.9

Access to electricity, rural (% of rural population) 1.8 2.2 3.1 3.8

Access to electricity, urban (% of urban population) 34.7 44.1 49.8 61.5

Source: World Development Indicators

The energy sector of Zambia has the installed capacity of 2,827 megawatts (MW) and

increased from 2,411 MW in 2015 with stating operation of two new plants, Maamba coal

power plant (300 MW) and Itezhi-Tezhi hydro power plant (120 MW). 84% of the power

plants are hydro power generation, followed by coal generation of 11%. The diesel and heavy

fuel oil generation (HFO) accounted for 3% and 2% only respectively. With the economic

growth, the demand for power has been expanded in Zambia. Compared with the installed

capacity of 2,811 MW, the peak demand for the power was estimated to exceed 2,500 MW by

201557. The power generation plants owned by ZESCO and independent power producers

(IPPs) are listed in Table 3.63.

The total power generation in 2015 was 13,440 GWh, which was a 7% decline from the

generation of the year 2014, 14,453 GWh and the generation further declined to 11,696 GWh

in 2016 with reduction of 13%, because the shortage of rainfall in the year 2015 and 2016

affected the generation of the hydro power plants. As shown in Figure 3.49, two hydropower

plants, Kafue North and Kafue Gorge, produce 80% of the total power.

57 Ministry of Energy and Water Development. Power System Development Master Plan for Zambia 2010 – 2030. February 2010.


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Source: Energy Regulation Board. Statistical Bulletin 2016.

Figure 3.49 Installed Capacity by Type of Generation

Table 3.63 Power Generations in Zambia

Operator Power Station Installed Capacity

Type of Generation

ZESCO

Kafue Gorge 990 Hydro Kariba North Bank 720 Hydro Kariba North Bank Extension 360 Hydro Victoria Falls 108 Hydro Small and Mini Hydro Power Plants (Lusiwasi, Chishimba, Shiwang'andu, Mosonda falls, and Lunzua)

33.5 Hydro

Itzhi-Tezhi Power Corporation Itzhi-Tezhi 120 Hydro Lunsemfwa Hydro Power Company (LHPC)

Mulunguish 32 Hydro Lusemfwa 24 Hydro

Zengamina Power Limited (ZPL). Ikelengi 0.75 Hydro Maamba Collieries Limited Maamba 300 Coal

ZESCO Diesel Power Plants (Zambezi, Kabompo, Lukulu, Luangwa, Mufumbwe, and Chavuma)

8.6 Diesel

Copperbelt Energy Generation Plants

Bancroft 20 Diesel Luano 40 Diesel Luanshya 10 Diesel Mufulira 10 Diesel

Ndola Energy Company Limited (NECL)

Ndola 50 HFO

Rural Electrification Authority Samfya 0.06 Solar Total 2826.91

Source: Energy Regulation Board, Statistical Bulletin 2016.


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Source: Energy Regulation Board, Energy Sector Report 2015

Figure 3.50 Power Generation by Power Plant

The current consumption by economic sector is shown in Table 3.64. The mining sector

consumed 55% of the total power, followed by the domestic sector. The power consumption

of the two dominant sectors accounted for 85% of the total. Thus, how to respond to the power

demand from the mining sector, the country’s leading economic sector and the domestic sector

is a key to the development of the energy sector in Zambia.

Table 3.64 Consumption of Power by Sector in 2015

Consumption (GWh) Proportion (%)

Mining 6,245.6 55% Domestic 3,482.0 30% Finance & Property 516.9 5% Manufacturing 530.8 5% Agriculture 260.4 2% Others 98.5 1% Trade 109.8 1% Energy & Water 89.1 1% Quarries 68.2 1% Transport 33.4 0% Construction 15.2 0% Total 11,449.9 100%

Source: Energy Regulation Board, Energy Sector Report 2015.

Zambia is a member of the Southern Africa Power Pool (SAPP) scheme. As part of the system

and through bilateral agreements, Zambia traded power with the other countries as shown in

Figure 3.51. From 2010 to 2016, Zambia’s power export gradually increased and reached

1,256 GWh in 2014. However, import of power in 2016 jumped to 2,185 GWh due to the

power shortage caused by the lack of rainfall.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2010 2011 2012 2013 2014 2015

(GWh)

Kariba North Kafue Gorge Kariba North Bank Extension

Victoria falls Diesel power generation Small & Mini Hydro

Independent Power Producers


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Source: Energy Regulation Board, Energy Sector Report 2015 and Statistical Bulletin 2016.

Figure 3.51 Power Import and Export

3.6.2 Current Situations of the Petroleum Sub-Sector

The Zambia imports petroleum through Tanzania-Zambia Mafuta (TAZAMA) Pipelines

Limited, the share of which was jointly owned by the governments of Zambia and Tanzania.

TAZAM has 1,705 kilometre long pipelines to transport petroleum feedstock from Dar es

Salaam to Ndola, Zambia, which is processed by INDENI Refinery. The processed various

petroleum products are distributed to the Ndola Fuel Terminal and Government storage depots

and then to Oil Marketing Companies (OMCs)58.

The petroleum that Zambia imports is divided into two categories: feedstock and refined

petroleum. Refined petroleum such as refined petroleum and diesel is transported by road. As

Figure 3.52 shows, the government import of feedstock exhibits a decreasing trend. The

amount of the import of feedstock dropped to 483,887 tonnes in 2016. On the other hand, the

import of finished products from 2011 to 2016, steadily increased, though with slight

fluctuations. The import of diesel became more than doubled to 415,796 m3 from 2010, while

the import of refined petroleum was 259,905 m3 in 2016. The enactment of S.I. No 21 of 2016

which permits the import of diesel by authorized OMCs resulted in the reduction of the import

of diesel by the government in 2016.

The largest amount of petroleum product refined by INDENI in 2016 was diesel of 261,829

tonnes, followed by petrol 95,285 tonnes and kerosene of 15,737 tonnes. INDENI production

and the imported refined petroleum account for 50% each of the total petrol and diesel of the

country. The international oil prices and the exchange rate of the Zambian Kwacha to USD are

two key factors to determine the prices of the petroleum products59.

58 Energy Regulation Board. Statistical Bulletin 2016. http://www.tazama.co.zm/ 59 Ministry of National Development Planning. Seventh National Development Plan 2017-2021


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Source: Energy Regulation Board, Energy Sector Report 2015 and Statistical Bulletin 2016.

Figure 3.52 Government Import of Petroleum Feedstock and Finished Products from 2011 to 2016

Source: Energy Regulation Board, Statistical Bulletin 2016.

Figure 3.53 Refinery Production of Petroleum Products in 2016

In 2015, the total national consumption of petroleum products was 1,379,781 tonnes. Diesel

was the most consumed at 818,418 tonnes, followed by petrol at 366,524 tonnes and Heavy

Fuel Oils at 129,149 tonnes. The consumption of these products rapidly increased from 2010

to 2015 due to the economic growth and the increase of vehicles. The least amount consumed

product was LPG at 3,230 tonnes, though the consumption of LPG and Jet-A1 are growing.

Only the consumption of kerosene is remained stable at 18,300 tonnes60.

60 Energy Regulation Board. Energy Sector Report 2015

577,098

642,683606,463

559,916

643,180

483,887

197,442

283,759

429,378389,183

519,948

415,796

71,005 145,374 249,208 264,777 294,876 259,9050

100,000

200,000

300,000

400,000

500,000

600,000

700,000

0

100,000

200,000

300,000

400,000

500,000

600,000

2011 2012 2013 2014 2015 2016

Petroleum Feed Stok (M

T)

Diesel and Petrol (m

3)

Diesel Petrol Petroluem feedstock

95,285

212,638

18,4999,464 4,839

102,133

0

50,000

100,000

150,000

200,000

250,000

PETROL DIESEL KEROSENE JET A1 BUTANE/LPG

HFO

(MT)


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Table 3.65 National Fuel Consumption from 2010 to 2015 (metric ton)

M Heavy Fuel

Oils LP Gas Jet-A1 Kerosene

Unleaded Petrol

Diesel Total

2010 46,845 1,848 29,130 17,330 160,982 496,568 752,703 2011 49,461 2,424 32,593 19,898 182,123 577,836 864,335 2012 60,222 658 49,477 14,669 234,224 675,756 1,035,006 2013 50,793 3,021 49,613 12,315 275,604 676,078 1,067,425 2014 116,821 3,680 38,049 13,776 304,562 700,577 1,177,465 2015 129,149 3,230 44,160 18,300 366,524 818,418 1,379,781

Annual Average Growth Rate 2010-2015

22.5% 11.8% 8.7% 1.1% 17.9% 10.5% 12.9%

Source: Energy Regulation Board. Energy Sector Report 2015.

3.6.3 Development Potential and Challenges of the Energy Sector

The primary issue that the energy sector in Zambia is facing is to increase the capacity of

power generation. Despite 6,000 MW potential of the hydropower resources in the country,

the current capacity is only 2,827 MW. The country has uncultivated coal reserves to be

developed. With the expected demand increase of 150 to 200 MW per year, the peak demand

will reach 3,000 MW by 2020. Lack of investment in power plants and transmission due to the

deficient of incentives, with climate change, severely affect the capacity to generate sufficient

power. Moreover, diversification of the energy mix including coal and renewable energy is

strongly required to cope with the impact of the climate change. Meanwhile, in the petroleum

sub-sector, inefficient petroleum supply value chain and fluctuation of the prices of fuel are

identified as major challenges61.

The major projects under implementation and planned to address the development issues and

implement the energy policy are listed in Table 3.66. Among the project, “the Construction of

the Mozambique - Zambia Interconnector, Telecommunications and a Coal Generation Power

Plant” and “the project of a 300 megawatts power plant in Chipata” could significantly

increase the development potential of the Nacala Corridor Region. The Mozambique-Zambia

Power Interconnector Project is currently in the tendering process of a consultant for the

feasibility studies under the SAPP. The F/S will be financed by AfDB through the NEPAD

Infrastructure Project Preparation Facility (NEPAD-IPPF)62.

In the petroleum sub-sector, Zambia has only one pipeline owned by TAZAMA running from

Dar es Salaam, which was constructed in 1968. In addition to the import through TAZAM,

fuel is imported through road. For example, ZESCO imported over 100 tonnes of natural gas

per month in 2015 via Beira Port63. Currently TAZAMA is proposing two projects for pipeline

construction for gas and finished petroleum to meet increasing demands and to secure the

supply of the energy in the country, both of which intend to import fuel from Dar es Salaam.

According to the interview, the Ministry of Energy has a plan to develop a gas pipeline from

61 Ministry of National Development Planning. Seventh National Development Plan 2017-2021 62 Southern African Power Pool Website. http://www.sapp.co.zw/docs/24-04-17_Mozambique-Zambia_Request%20for%20Expression%20of%20Interest_rev.pdf 63 ZESCO imported a total of 148 MW in September, 2015 via Beira Port. http://www.zambiainvest.com/energy/zambia-proposes-natural-gas-pipeline-from-mozambique-to-boost-energy-imports


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Tete to Chipata. In terms of energy security from a geographical perspective, it may be

preferable to construct another gas pipeline in the south-east region, which is much shorter

than Dar es Salaam pipeline and close to Lusaka as well. This pipeline is also able to provide

the energy to Malawian market and then benefit the Nacala Corridor Region.

Table 3.66 Major Projects in the Energy Sector

Project Name Description 1 Development of Kafue

Gorge lower hydro power project*1

The Kafue Gorge lower hydro power project will be located in Kafue Gorge, about 65 km upstream of the confluence of the Kafue and Zambezi Rivers and 9 km downstream of the existing 990 MW Kafue Gorge hydropower plant. Once developed, the power plant will have an installed capacity of 750 MW. The project is estimated to cost USD1.94 billion and will be developed under a PPP on a Build, Own, Operate and Transfer (BOOT) basis with ZESCO.

2 Construction of the Mozambique – Zambia Interconnector, Telecommunications and a Coal Generation Power Plant*2

The project is to interconnect ZESCO’s transmission system to that of EdM through a 330 kV or 400kV transmission line from Chipata West substation in Zambia to the existing Songo Substation or the new proposed Cataxa Substation in Mozambique. EdM and ZESCO may establish a partnership to develop suitable new coal power generation up to 1200 MW, utilising the natural resource in the Tete Province for power generation to the domestic and regional markets. The aforesaid interconnections shall make it possible for bilateral power and telecommunications trade between EdM and ZESCO Limited as well as trade with other members of the Southern African Power Pool (SAPP), the East African Power Pool (EAPP) and any other interested entity.

3 Kariba Dam Rehabilitation Project*3

The project includes a series of rehabilitation works for its continued safe operation. The works will include 1. reshaping of the plunge pool to limit scouring and erosion that could potentially undermine the dam foundations; and, 2. refurbishment of the spillway and associated infrastructure to improve the dam’s stability and operations. The total cost of the works of works is estimated at USD294 million. The Governments of Zambia and Zimbabwe have mobilized financing from the African Development Bank, the European Union, the Government of Sweden, and the World Bank to support the Zambezi River Authority in implementation of the project.

4 Batoka Energy Project*4

The project is to develop 2,400 MW Batoka Gorge hydroelectric schemes, the cost of which is estimated USD6 billion financed by AfDB. The construction phase is expected to begin later this year or in early 2018 under an arrangement between Zambezi River Authority.

5 Electricity Transmission and Distribution System Rehabilitation Project for Zambia*5

The project will reinforce and upgrade the power transmission and distribution infrastructure in Lusaka Area as a priority to increase the capacity and improve the reliability of the electricity network for consumers throughout the area. This programme is expected to provide access to reliable, clean and affordable electricity services to at least 63,000 households, or about 300,000 people, to social and public infrastructure and to eligible Micro Small Enterprises (MSEs). 2013-2019. Co-financed by European Investment Bank, the World Bank and ZESCO Limited.

6 ElectriFI (Electrification Financing Initiative)*6

ElectriFI is a financing scheme to bridge the gaps in structuring and financing, stimulate the private sector, and mobilise financiers. ElectriFI provides financial support primarily through risk capital and encourages the adoption of renewable energy, with a particular emphasis on decentralised energy solutions by providing interim financing solutions to help projects overcome obstacles or otherwise reach a sufficiently mature stage that could attract private financiers. The maximum amount of any financing solution is EUR 10 million (or local currency equivalent).

7 300 megawatts Power Plant Development in Chipata*7

The project is to develop 300 a megawatts coal thermal power plant in Chipata by a South African company. A potential site is a site along Mwami border road just after the railway line crossing. The coal is imported from Tete in Mozambique via the Nacala Corridor. The project cost would be USD 900 million. F/S is currently conducted and completed by 2019. The construction is expected to start in 2020.

8 Combined cycle gas fired power plant*8

TAZAMA proposes to construct a combined cycle gas fired power plant in Chinsali by importing and transmitting gas from Tanzania and Mozambique through Dar es Salaam via a 36-inch pipeline. The plant could have 400 MW to 1,200 MW capacities and the pipeline will be 1,100 km length to be built alongside the existing TAZAMA crude oil pipeline. The estimated cost is USD 900 million including USD 400 million for a 400 MW power plant and USD 500 million for a 1,100 km length Dar es Salaam-Chinsali pipeline.

9 Petroleum Pipeline Project*8

The project is to build an 18-inch finished product pipeline with a delivery capacity of 4.0 million tonnes per annum with depots at Morogoro, Makambako, Mbeya and Mpika for the supply of diesel and petroleum products to southern Tanzania, Malawi, Zambia and Congo. The pipeline will be possibly extended to Solwezi and Lusaka depots. The cost is estimated to be USD 1.5 billion including an 18-inch pipeline complete with pump stations and a supervisory control and data acquisition system.

10 Rural Electrification Projects*9

1,217 Rural Growth Centres (RGCs) are targeted throughout the country for electrification during the period 2008 to 2030. The project scheme includes grid extension, mini hydro (from 200 kw to 10 mw) development, solar mini grids, solar home system installations, biomass and biogas, and wind. A total of 413 RGCs are targeted to be implemented from 2017 to 2021 at a total cost of ZMW1, 302.4 million.

Source:

*1 Energy Regulation Board, Energy Sector Report 2015. P. 17.


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*2 Inter - Governmental Memorandum of Understanding for the Construction of The Mozambique - Zambia Interconnector, Telecommunications and a Coal Generation Power Plant between the Government of the Republic of Mozambique and the Government of the Republic of Zambia, March 2016.

*3 http://www.worldbank.org/en/region/afr/brief/the-kariba-dam-rehabilitation-project-fact-sheet.

*4 http://www.hydroworld.com/articles/2017/04/afdb-named-lead-coordinator-for-2-400-mw-batoka-gorge-hydropower-project-in-africa; .htmlhttps://www.afdb.org/en/news-and-events/afdb-pledges-support-to-batoka-energy-project-at-investors-conference-in-zambia-16917/

*5 http://projects.worldbank.org/P133184/zambia-electricity-transmission-distribution-system-rehabilitation-project?lang=en; http://ec.europa.eu/europeaid/news-and-events/eu-signs-eu65-million-grant-zambia-improve-access-energy_en

*6 http://electrifi.org/what-we-do/

*7 http://breezefmchipata.com/?p=8793; https://www.daily-mail.co.zm/chipata-to-have-thermal-power-plant/. Ministry of Energy. Interview. July, 2017.

*8 Ministry of National Development Planning. Seventh National Development Plan 2017-2021.

*9 http://eepafrica.org/wp-content/uploads/Presentation-Status-of-Rural-Electrification-In-Zambia-KEF.pdf

3.7 Foreign and Domestic Investment

3.7.1 Investment in Zambia

Figure 3.54 shows the investment data (pledged investment amount and number of pledged

investment projects) from 2010 to 2016 in Zambia, based on the information provided by

ZDA. The data includes both foreign and domestic investment. 2012 has seen substantial

increase in the pledged investment both in terms of amount and number – 354 investment

projects amounting to USD 8,485 million in total. This was due to the drastic increase in

mining sector – USD 4,277 million which accounted for 50% of the pledged total investment

amount in 2012. For other years, investment amount generally remained on the same level

except in 2015 and 2016 when potential investors awaited the outcomes of the presidential and

parliamentary elections for making investment decisions. According to ZDA, potential

investors postponed their investment applications to wait and see the situation of the new

political administration.


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Source: Prepared by the study team based on the information provided by ZDA

Figure 3.54 Investment in Zambia (Pledged base, 2010-2016)

Figure 3.55 shows the pledged investment data from 2010 to 2016 by sector (for both foreign

and domestic investment). In terms of amount, manufacturing occupies a largest share (22%),

followed by mining (19%), energy (17%) and construction (13%). The share of agriculture is

7%, which is about one third of manufacturing. In terms of number of investment pledges,

manufacturing also has the largest share (28%), followed by service (13%), agriculture (12%),

construction (10%), real estate (9%) and tourism (9%). The share of mining is 7% and that of

energy is only 2%. This indicates that investment amount per project is large in mining and

energy sector where as agriculture sector investment per project is relatively small.

a. Investment Amount b. Number of Investment Pledges


Figure 3.55 Investment in Zambia (Pledged base, 2010-2016) by Sector

222

332354

332315

328328

0

50

100

150

200

250

300

350

400

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2010 2011 2012 2013 2014 2015 2016

Others

Transport

Tourism

Service

Real Estate

Mining

Manufacturing

ICT

Health

Finance

Energy

Education

Construction

Agriculture

Number of Pledges

（million USD）（Number of Pledges）

Agriculture7%

Construction13% Education

1%

Energy17%

Finance1%

Health0%

ICT1%

Manufacturing

22%

Mining19%

Real Estate10%

Service2%

Tourism6%

Transport1%

Others0%

Agriculture12%

Construction10%

Education1%

Energy2%

Finance1%

Health1%

ICT1%

Manufacturing

28%Mining7%

Real Estate9%

Service13%

Tourism9%

Transport6%

Others0%


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Figure 3.56 shows the pledged investment data in 2016 by area (for both foreign and domestic

investment). Lusaka is attracting the biggest share of investment in terms of amount (64%)

and number (68%), followed by Copperbelt (amount: 9%, number: 14%) and Central (amount:

4%, number: 9%).

a. Investment Amount b. Number of Investment Projects


Figure 3.56 Investment in Zambia (Pledged base, 2016) by Area

Figure 3.57 shows the stock of FDI liabilities by source country in 2014 and 2015. Canada,

UK, China and Switzerland collectively accounted for 71.3% in 2014 and 73.1% in 2015

Figures declined in 2015 compared with the previous year for countries such as Ireland, South

Africa, Bermuda, Netherlands, Nigeria, USA and Botswana.

Source: Foreign Private Investment & Investor Perceptions in Zambia – 2016 by Balance of Payment Statistical Committee

Figure 3.57 FDI Liabilities Stocks by Source Country, 2014-2015

4,141.3

3,456.5

2,192.6

1,724.6

765.4

485.5

724.2

318.0

362.1

107.2

316.1

152.0

292.3

177.7

933.8

4,187.2

3,146.8

2,244.3

1,908.7

736.0

708.9

707.8

311.6

283.2

234.2

195.9

152.3

146.1

123.0

618.6

0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 3,500.0 4,000.0 4,500.0

Canada

UK

China

Switzerland

Ireland

Mauritius

South Africa

Bermuda

Netherlands

France

Nigeria

Congo DR

USA

Botswana

Others

2015 2014 million USD

DRC

Lusaka64%

Copperbelt9%

Central4%

Southern11%

Luapula10%

Northern2%

N/Western0%

Eastern0%

Western0%

N.A.0%

Lusaka68%

Copperbelt14%

Central9%

Southern5%

Luapula1%

Northern0%

N/Western2%

Eastern0%

Western0%

N.A.1%


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Figure 3.58 shows the stock of FDI liabilities by industry in 2014 and 2015. Mining and

quarrying dominated 60.7% of the total stock in 2014 and 70.9% in 2015. This was followed

by manufacturing, deposit taking corporations, wholesale and retail trade, real estate.

Source: Foreign Private Investment & Investor Perceptions in Zambia – 2016 by Balance of Payment Statistical Committee

Figure 3.58 FDI Liabilities Stocks by Industry, 2014-2015

3.7.2 Investment in Eastern Province

Figure 3.59 shows the investment data (pledged investment amount and number of pledged

investment projects) from 2010 to 2016 in Eastern Province, based on the information

provided by ZDA. The data includes both foreign and domestic investment. 2012 has seen a

substantial increase of investment amount. In fact, China Africa Cotton received investment

approval in 2012, which has pushed up the pledged amount. In 2013, an agriculture company

of Indian capital received investment approval. For subsequent years, the investment amount

remained low, partly due to the effect of the presidential and parliamentary elections.

(According to ZDA, potential investors postponed their investment applications to wait and

see the situation of the new political administration.)

11,019.3

2,108.2

852.1

668.9

343.7

337.4

164.0

163.1

155.6

144.1

93.7

76.6

22.5

11,132.3

2,189.2

539.0

537.2

382.4

263.1

109.4

181.9

123.6

99.6

58.3

70.2

18.6

0.0 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 12,000.0

Mining and Quarrying

Manufacturing

Deposit Taking Corporations

Wholesale & Retail Trade

Real Estate

Electricity

Insurance & Other Financial Services

Agriculture, Forestry and Fishing

Accommodation & Fod

Construction

Transport & Storage

Information &Communication

Others

2015 2014 million USD


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Source: Prepared by the Study Team based on the information provided by ZDA

Figure 3.59 Investment in Eastern Province (Pledged base, 2010-2016)

Table 3.67 shows the investment trend in Eastern Province in comparison with the entire

country. So far, investment in Eastern Province, both in terms of amount and number is very

limited (less than or around 1% of the entire country). In fact, concerns have been pointed out

regarding the low level of investment and limited value added especially in the agriculture and

agribusiness sector in the interview survey with the Provincial government of Eastern

Province and Eastern Province Chamber of Commerce & Industry.

Table 3.67 Investment in Eastern Province in Comparison with the Whole Country (Pledged base, 2010-2016)

2010 2011 2012 2013 2014 2015 2016

Investment amount to Eastern Province (million USD) 1 13 39 30 1 3 3

Investment amount to the whole country (million USD) 4,835 5,579 8,485 4,920 5,162 3,322 3,272

Ratio (%) 0.03 0.24 0.46 0.62 0.01 0.09 0.10

Number of investment projects in Eastern Province 2 4 3 2 2 4 1

Number of investment projects in the whole country 222 332 354 332 315 328 328

Ratio (%) 0.90 1.20 0.85 0.60 0.63 1.22 0.30

Source: Prepared by the Study Team based on the information provided by ZDA

Amount（USD）

2

4

3

22

4

1

0

1

1

2

2

3

3

4

4

5

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

2010 2011 2012 2013 2014 2015 2016

Servivce

Energy

Manufacturing

Construction

Tourism

Agriculture

Number of Pledges

Number of Pledges


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3.8 Transport Infrastructure and Logistics

This section analyses the current situation of the transport and logistic sector of Zambia and

the study area in general, since the current situation of the Nacala Corridor was discussed in

Chapter 2.

3.8.1 Current Transport Sector

(1) Plans and Policies

MTC has published the 2016 National Transport Policy (ZNTP) based on review of 2002

National Transport Policy in order to ensure that it responds to emerging challenges of the

transport infrastructure and service provision.

ZNTP recognises the importance of an efficient transport system in the country especially

since Zambia is a landlocked country and serves as a transport hub for transit traffic entering

other nations. Furthermore, the Policy also states that transport is critical to the economic

development of Zambia and highlights that railway transport is the backbone of Zambia's

transport system. As part of the solutions to the current transport problems, the policy outlines

the under-listed measures:

Strengthen the Ministry responsible for transport to ensure that it plays its role of

effective coordination and regulation of the transport sector;

Create capacity commensurate with the transport requirements of the economy by

ensuring that sufficient resources are invested in the transport sector;

Allocate available resources among the various transport modes so that the resultant

modal mix meets transport requirements at optimum cost to both the provider and the

user;

Promote transport pricing that will ensure a reasonable return on transport investments;

Recognise and account for environmental concerns within the transport sector in line with

the National Environmental Action Plan;

Introduce sound management through appropriate policies and institutions in the transport

sector that will lead to rapid sustainable development and poverty reduction.

In 2017, the GOZ prepared the National Transport Master Plan (ZNTMP). ZNTMP aims to

support the achievement of this vision by providing a guide for the development of the

transport sector over the next twenty years, by addressing the strategic considerations.

1) Transport Modes

To sustain the growth, Zambia needs to upgrade its transportation infrastructure. Zambia is a

landlocked country in the centre of the Southern African Region, and to this effect heavily

relies on her neighbours for vital routes to various import and export destinations. The

transport sector consists of five modes:

Roads

Railways

Aviation


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Waterway

Pipeline: TAZAMA pipeline for crude oil importation

The state of transport infrastructure, however, remains inadequate to sustain and match the

desired levels of growth due to weak structural and management capacity resulting in over

commitments, high cost of construction and low investment.

Table 3.68 Yearly Finding Requirement (USD) for the Transport Sector 2013-2016

Sector 2013 2014 2015 2016 Total

Roads 4,254,494 7,694,155 11,444,202 8,359,32 31,752,171 Railway 812,765 432,865 142,560 - 1,526,640

Air 1,265,840 1,305,612 - - 2,571,455 Water 18,176 21,900 25,125 27,867 93,068

Total 6,351,275 9,454,535 11,611,887 8,522,637 35,940,334

Source: ZNTMP

2) Responsible Organisation for Transport Sector

The overall management and responsibility for the transport sector in Zambia is under the

authority of the MTC, Ministry of Works & Supply (MWS) and Ministry of Housing &

Infrastructure Development (MHID). The roles of each Ministry are as follows:

MTC: Policy and programme planning

MWS: Asset management

MHID: Implementation management

3.8.2 Road Sub-Sector

(1) Key Agencies for Road Sub-Sector

Zambia’s road network is currently managed by The Road Development Agency (RDA),

which reports to the MHID. The Road Transportation & Safety Agency (RTSA) and the

National Road Fund Agency (NRFA) are responsible for road safety and managing the sector

funds respectively.

1) Road Development Agency (RDA), set up under the Public Road Act No. 12, 2002

RDA is the most important agency in Zambia, concerning the Road Sector. RDA is mandated

with and actually issues, selects, and supervises all road construction and maintenance

contracts (with private contractors), as well as managing weigh bridges and highway operation.

RDA also assesses road conditions and conducts annual traffic counts as part of its highway

management.


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2) Road Transportation & Safety Agency (RTSA), set up under the Road Transport Act No.11, 2002

The Road Transport Safety Agency (RTSA) is responsible for "coordinating road safety

programs that are aimed at reducing the likelihood and impacts of road crashes". Road safety

is a significant problem in Zambia.

3) National Road Fund Agency (NRFA), set up under the Road fund Act 2002

The National Road Fund Agency (NRFA), established under Road fund Act 2002, was

mandated to manage the provision of direct funds to the road sector, derived from various

users of the roads, in particular the levy on petrol and diesel by road users. The idea behind the

Road Fund was to develop an independent source of revenue for the roads sector, which will

ensure sufficient funds for construction, and perhaps even more importantly, the constant flow

of funds for road maintenance. This is to ensure appropriate road maintenance, and prevent

road deterioration, due to insufficient maintenance funds.

(2) Road Network

Zambia has a total classified network of 67,671 km of public roads comprising Trunk (3,088

km), Main Road (3,691 km), District (13,707 km), Urban (5,294 km), Primary Feeder (15,800

km), Secondary Feeder (10,060 km), Tertiary (4,424 km), Park Roads (6,607 km); and

Community roads (5,000 km).

Source: ZNTMP

Figure 3.60 Core Road Network in Zambia


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(3) Road Conditions

The core road network is estimated at around 41,000 km of which less than 7,000 km is paved.

Of the paved roads, the majority were estimated to be in good to fair condition, however only

30% of the unpaved TMD (Trunk, Main and District Roads) were estimated to be fully

travelable throughout the year. Feeder roads, both paved and unpaved, which make up the

largest portion of the national road network are generally in poor condition. This directly

impacts a large part of the population who live in rural area for securing their traffic needs.

Table 3.69 Road Conditions by Road Type for 2014 (RDA 2014)

Road Type Poor Fair Good Trend from Previous Years

1 Paved Trunk Road 3% 7% 90% Increase in good road from 32% in 2006 Paved Main Road 3% 8% 89% Increase in good road from 32% in 2006 Paved District Road 14% 7% 79% Increase in good road from 15% in 2006

2 Unpaved TMD 70% 24% 6% Decrease in quality of unpaved roads since 2006

3 Paved Urban Roads 35% 19% 46% Increase in good road from 6% since 2009 and improvement in number of poor road

4 Unpaved Urban Road 87% 10% 3% Decrease in overall road quality since 2009 5 Primary Feeder Network 82% 14% 4% Decrease in overall road quality since 2011

Source: ZNTMP

(4) Road Maintenance

The NRFA has been mandated to manage and administer the Road Fund which comprise two

main sources of revenue, namely, Local Resources (Tolling Revenue, Fuel Levy, Other Road

User Charges and Government of the Republic of Zambia Project Direct Allocations) and

External Resources from Cooperating Partners (CPs).

The Local Resources of Tolling Revenue, Fuel Levy and ORUCs are contributions by the road

user, while the External Resources from CPs are dedicated to the routine and periodic

maintenance of the road network. Following tables show the funding sources and budget

allocation by type of activities in 2016.

Table 3.70 Funding Sources for Road Works in 2016

No. Fund Sources Final Budget 2016 [1,000 ZMW] Percent [%]

1 External 3,216,100.657 48.51% 2 GRZ Direct Financing 1,584,223.00 23.89% 3 Road Fund (Fuel Levy and ORUC) 1,829,615.12 27.60%

Grand Total 6,629,938.78 100.00%

Source: NRTA


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Table 3.71 Budget Allocation by Programme in 2016

Type/Programme Budget 2016 [1,000 ZMW] Percent

Other 197,709.00 3% Transport & Safety 194,000.00 3% Designs & Studies 144,796.00 2% Axile Load 105,010.00 2% Toll Programme 52,000.00 1% Maintenance 862,750.00 13% Upgrading 2,298,940.97 35% Rehabilitation 2,457,464.67 37% Bridges 317,268.14 5%

Total 6,629,938.78 100%

Source: NRTA

(5) Major Challenges on Road Sub-Sector

1) Motorization Rate and Congestion

Road congestion as yet, is not a major problem in Zambia. However, the bigger cities such as

Kitwe and Lusaka as well as a few main intercity road links suffer some degree of congestion.

RDA traffic counts 2007-2015, show the highest traffic on the following roadways:

Table 3.72 Areas of Congestion and their Causes

Area of Congestion Current Status Causes

Lusaka Metropolitan Area Congestion during AM and PM peak periods

・High private vehicle use ・Low quality urban roads ・Concentrated peak travel times ・Heavy trucking moving through city centre

Kitwe and Ndola

Trunk roads leading into Luska : T-2 and T-4 roads

Congestion during AM and PM peak periods

・Single carriageway roads ・Heavy trucking moving along roads

Copperbelt to Lusaka Pockets of congestion throughout the day

・Single carriageway roads ・Heavy trucking moving along roads ・Frequent road accidents

Source: ZNTMP

2) Rural Transportation

The condition of the Primary Feeder Roads (PFR) has deteriorated significantly. According to

ZNTMP, more than 80% of primary feeder roads are categorized as being in a poor condition.

Furthermore, the survey results of 2013 also showed that only 74.4 per cent of this network is

passable by a 2-wheel drive vehicle while the remaining 25 per cent is impassable for the most

part of the year. This condition has acted as a deterrent to the movement of goods and services

on these roads and thus negatively impacting on economic development in the affected areas.

The Primary Feeder Roads Network in Zambia plays a critical role to farming communities in

rural areas by providing access to transportation for the movement of farm produce from farm

sites to marketing centres. They also feed into the Trunk, Main and District Roads Network.

Agriculture is an important part of the livelihoods of many poor people, and it is frequently

argued that agricultural growth is a fundamental pre-requisite for widespread poverty

reduction.


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Source: ZNTMP

Figure 3.61 Feeder Road Density

Source: ZNTMP

Figure 3.62 Road Network and Per Capita Agricultural Production for 2015


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3) Key Sector Development Projects

In this context, the GOZ has been forging the way ahead with the following projects.

RDA annual maintenance: Annual maintenance projects for the RDA (ongoing)

Link Zambia 8000: Strategic road improvement project for all of Zambia (in progress)

LSK 400: Strategic road improvement project for Lusaka (in progress)

CB 400: Strategic road improvement project for Copper-belt (in progress)

Urban Roads Program: 40 projects for 700 km upgrading local road networks (in progress)

Pave Zambia 2000: Urban road project utilizing cost effective materials to improve urban

roads across Zambia (in progress)

Lusaka Decongestion Project: Lusaka Traffic Decongestion Project Implementation (in

progress)

Feeder Roads Program (Countrywide Roll-Out of the Output and Performance based Road

Contracts - OPRC Region I (Eastern, Luanpula, Northern and Muchinga Provinces)

financed by WB): 20 projects for 650 km of rural access roads (in progress)

City Bypass Road Program: Bypass roads at major urban areas to remove through traffic

from urban centres (Lusaka, Kabwe, Kapiri Mposhi, Kitwe, Chingola, Choma, Mazabuka,

Livingstone) (planning)

T2 Road Upgrade: Upgrade of T2 road to dual carriageway between Lusaka to Ndola

(approx. 350 km) (procurement)

Toll Roads Program: Comprehensive toll gates program including operations (in progress)

3.8.3 Rail Sub-Sector

(1) Key Agencies for Rail Sub-Sector

The main railway lines are Zambia Railways Limited (ZRL) which is owned by the

Government and the TAZARA line which links Zambia with Tanzania, and is jointly owned

by the Zambian and Tanzanian governments. In 2003, the operations of the ZRL were given

concession to Railway Systems of Zambia (RSZ). However, in 2012, ZRL replaced the

concession by RSZ.

According to the latest information, GOZ intends to divide ZRL into ZRL and ZRA (Zambia

Railway Authority). Functions and roles of ZRA will be same as RDA of road sector.

1) Railway Network

(a) Main Lines

ZRL: 1,248 km in total

Mainline – Victoria Falls Bridge to Kitwe: 848 km

Various Branch Lines: 149 km

Choma – Masuku Line: 65 km

Mulobezi Line: 162 km

Chipata – Mchinii Line: 24 km


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TAZARA Railway: 891 km in Zambia, New Kapiri Mposhi-Mpika-Kasama-Dar es

Salaam.

(b) Branch Lines

Maamba Colliery Railway: Choma to Masuka

Mulobezi Railway: Mulobezi to Livingstone

Njanji Commuter Line

Nacala Corridor: Chipata to Malawi border

Source: ZNTMP

Figure 3.63 Railway Network in Zambia

(2) Rolling Stocks and Human Resources

1) Rolling Stocks

ZRL owns a total of 37 Locomotives and 2,094 wagons out of which 25 Locomotives and

1,353 wagons are active. The active fleet of locomotives and wagons represents a hauling

capacity of close to 1,000,000 tonnes. However, ZRL recently entered into a re-manufacturing

agreement with SMH-Rail for the re-engineering of a further ten locomotives. This additional

fleet of locomotives will give ZRL an extra 1,200,000 tonnes in capacity per annum.


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2) Human Resources

Currently ZRL has a total workforce of 1,124 employees of which 89% of the total staff

establishment are directly linked to operations. There is a staff reservoir with rail operations

experience in total around 1,000 employees.

(a) Service Provided

ZRL – Zambia Railways Limited

The current ZRL total route length is 1,248 km of single track mainline. It provides

service along seven mainline routes, only two of which provide passenger services, the

rest being reserved for freight trains. Although there is growth in usage and passenger

ridership, the market share has decreased preventing ZRL from increasing its supply

to match the increasing demand. In order to truly compete with road borne freight

transport, the railway sector needs to increase its operating frequency and speeds to

reduce the costs borne by the shipper. This however requires accurate investment in

the railroad, completion of maintenance backlogging, etc.

TAZARA – Tanzania - Zambia Railway Authority

The TAZARA system connects Zambia with the port of Dar es Salaam in Tanzania,

the route has a length of 1,860 km and connects with Zambia Railway Line (ZRL) at

New Kapiri - Mposhi. The average travel time according to TAZARA management is

roughly 48 hours. Freight train travel times are even longer at approximately 3 - 4

days, this is a result of difficult track conditions and low priority status on the mainline.

TAZARA has fallen into a dilapidated state both in terms of rolling stock and track

maintenance resulting in low speeds and market share, the route fails to compete with

road borne cargo hauling.

(3) Major Challenges on Rail Sub-Sector

The Zambian railways generally operate well below their original design capacity, and cannot

increase their volume due to poor track condition, lack of locomotive and wagon availability

and low operating capital. The rail network remains the dominant mode of transportation for

goods on the local and international routes. The biggest single setback suffered by the rail

mode against road, in terms of competing for the market share is the low average speeds of rail

transport, resulting from the poor state of the rail track, rolling stock and signalling system.

There are two major railway systems operating ZRL and the TAZARA.

Table 3.73 ZRL Market Share in 2013

Sector of the Economy Market Share Mining Sector (Imports and Exports of Mining Products) 9%

Inter-mine Movements 15% Agriculture Sector 5%

Construction Sector 2% Energy 15%

Others and Over Boarder Traffic 25% Average Market Share 12%

Year Market Share

Target Achievement by ZRL

2013 8% 9% 2014 10% 11%

Freight Passenger

Source: ZNTMP


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ZRL’s Strategic Business Plan, 2013 indicates the following weaknesses and threats to ZRL,

in the period 2014 - 2018:

Poor State of the Rail Track – Due to the current condition of the rail track, freight and

passenger trains move at an average speed of only 20 km/hr. This has resulted in long transit

time, and overall inefficiency of the train service.

Lack of Reliable and Adequate Rolling Stock – The current rolling stock (wagons and

locomotives) are also in a deplorable state, and therefore cannot fully support the

transportation of both freight and passengers in a sustainable manner.

Problems in Contiguous Rail Administrations – Zambia being a land locked country, ZRL

is linked to neighbouring railway administrations and, therefore, the performance of these rail

entities have a great impact on ZRL as over-border traffic must be hauled through other

countries to different ports, such as, Durban and Dar-E-Salaam.

(4) Key Sector Development Projects

The Government intends to expand its railway network in the country to develop the surface

transport sector. The development of rail routes linking important exit points is not only vital

for facilitating smooth access to the outside world but also for the overall boosting of trade in

the sub region and making Zambia a competitive country for doing business.

The main railway lines are Zambia Railways which is owned by the government and the

TAZARA line which links Zambia with Tanzania, jointly owned by the Zambian and

Tanzanian governments. The recent opening of the Chipata-Mchinji railway link provides

connectivity into the Malawi railway network and further connects Zambia to the northern

Mozambique railway network thereby opening up new and exciting opportunities for the

private sector in Zambia, Malawi, and Mozambique. The government is seeking private sector

participation in the development and rehabilitation of the railway infrastructure. Key sector

development projects in the Rail Sub-Sectors include:

TAZARA - Kasama-Nkonde Rerouting: Rerouting and upgrading of rail section for safety and speed (contracting)

TAZARA - Kapiri-Kasama track rehabilitation :Rehabilitation of rail sections (contracting)

ZRL - annual maintenance: Maintenance of all aspects of ZRL infrastructure (ongoing) ZRL - Comprehensive rehabilitation: Rehabilitation of essential infrastructures and

rolling stock (in progress) ZRL - Mainline signalling: 2 Phase project implementing signalling systems on ZRL

mainline (in progress) Serenje - Chipata greenfield railway: 388 km of track providing connection to the Port of

Beira, Mozambique (procurement) Greenfield freight railways: Kafue - Lion’s Den, Potential connections to Mpulungu, and

Shesheke (planning) Fast passenger rail: Upgraded passenger rail between Kafue - Chingola (planning) Establishment of the Railway Development Agency (planning)


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(5) New Transport Quota System proposed by ZRL

The total heavy bulky cargo market in the transport sector is around 11 million tonnes and is

expected to grow to 18 million tonnes by 2020. The prevailing market share for rail is 9%.

Further, the Zambian transport sector is largely composed of foreign road haulers that account

for about 85% of the total road fleet currently traversing Zambia’s road network. This entails

that the revenue generated by these foreign road companies is all externalised to their

countries of origin but the cost of maintaining roads in Zambia is financed by the people of

Zambia thereby creating a huge economic imbalance and a negative contribution to the

economic development of Zambia.

Given this background, considering the expected benefits of using rail transport for heavy and

bulky cargo hauling, ZRA proposes the enactment of a statutory instrument in the Zambian

transport sector to regulate the movement of cargo in the country.

Table 3.74 Proposed New Transport Quota System by ZRL

Commodity Current Estimated Annual Tonnage

Proposed Rail Quota Expected Guaranteed

Rail Tonnage Copper/ Copper-Cobalt Concentrates 1,300,000 50% 650,000

Sugar 400,000 50% 200,000 Coal - Local 350,000 50% 175,000 Coal – Imported 340,000 50% 170,000 Cement 3,300,000 50% 1,650,000 Sulphur 100,000 100% 100,000 Fuels – Local 500,000 50% 250,00 Fuels – Imported 700,000 60% 420,000 Total 6,990,000 － 3,765,000 Other Commodities (Lime, fertiliser, Maize etc.) 4,010,000 Status - Quo －

Grand Total 11,000,000 －－

Source: ZRL

3.8.4 Aviation Sub-Sector

(1) Key Agencies for Aviation Sub-Sector

The aviation sub sector is regulated by the Civil Aviation Authority (CAA) which is an Agent

of the Government under the MTC. The CAA took over the responsibility of the predecessor

Department of Civil Aviation (DCA) in charge of regulation, certification and licensing of the

aviation industry in Zambia.

(2) Aviation Network

There are four international airports, five secondary airfields and five airstrips serving the

international and domestic flights. The Kenneth Kaunda International Airport is Zambia’s

main airport connecting the country with the rest of the world. This is complimented by three

smaller airports at Ndola, Livingstone and Mfuwe, as well as secondary airfields at Chipata,

Kitwe, Kasama, Mongu, Solwezi and Mansa.


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1) Service Provided

Zambia has no national airline but is served by a number of airlines that connect to

international routes via Johannesburg, Durban, Cape Town, Addis Ababa, Nairobi, London,

Amsterdam, Dubai and Dar es Salaam. Proflight Zambia is a privately run airline with

proposed regional flights to Johannesburg and Congo DRC as well as local flights to various

destinations within the country. The country recently adapted an “open sky policy” and is

currently promoting the establishment of an air cargo hub for the Southern African region.

2) Key Sector Development Projects

In 2011, Jacobs Consultancy prepared for the then National Airports Corporation limited a

"Feasibility Study for the Zambia Airport Master Plan". The Study includes detailed feasibility

studies for each of the four International Airports.

Based on this Study, GOZ has embarked on a programme to improve the infrastructure at all

the international airports. This is being done in collaboration with private sector participation.

The developments include runways, terminals and auxiliary facilities in and around the

airports such as hotels, shopping malls, conference facilities etc. The scope for private sector

participation in the development of airports also exists in the identified airfields at Chipata,

Kitwe, Kasama, Mongu, Solwezi and Mansa.

Kenneth Kaunda International Airport Upgrade Project: This airport will serve the Lusaka

provinces in carrying both passengers and goods (in progress)

Copperbelt International Airport: This airport will serve the Copperbelt and Northwestern

provinces in carrying both passengers and goods (in progress)

Mfuwe International Airport: This airport will serve Eastern and Muchinga Provinces in

carrying both passengers and goods (financing/negotiation)

Provincial Aerodrome Program: Ten key provincial airports for rehabilitation, organised

into Lots 1, 2 and 3 (in progress)

CAA Expansion and Capacity Building: There is a need for the capacity building of

technical personnel, especially with regard to Economic Regulation, Approved Training

Organisation (ATO) Certification, General Surveillance and Resolution of Safety

Concerns. (planning)

ZASTI Capacity Building: Four projects focused on bringing ZASTI up to international

standards as a centre of excellence for aviation training in the region (in progress)

Nationwide adaptation or design of road portions as emergency landing areas to facilitate

for the Zambia Aeronautical Search and Rescue Organisation (ZASARO): There is need

for nationwide adaptation or design of road portions as emergency landing areas for aircraft

in distress or search and rescue missions. The Road Development Agency (RDA) should be

mandated to spearhead this project. (planning)


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3.8.5 Waterway Sub-Sector

(1) Key Agencies for Waterway Sub-Sector

The Department of Maritime and Inland Waterways was established in the Ministry of

Communications and Transport by a Ministerial Administrative Directive in 1994 without any

legal instrument. However, the Harbour Master and the surveyor of Vessels are mandated

through Cap 466 of the laws of Zambia to enforce safety regulation on waterways and ports.

Plans are underway to review Inland Waterways Act Cap 466 and the Merchant Shipping Act

Cap 468 of the laws of Zambia. The Department is however responsible for all matters relating

to the Inland Water Transport and ports & shipping.

(2) Waterway Network

Zambia has an approximately 2,700 km network of navigational canals and waterways.

However, the water transport mode has not been utilized to a significant degree due to the lack

of maintenance of inland waterways and canals. Zambia has a large portion of its population

dependent on waterways for their basic transport needs. The management, regulation and

funding of this sub-sector is under the authority of the Department of Maritime and Inland

Waterways which is part of the MTC.

(3) Key Sector Development Project

Canals are a major issue in the navigability of Zambia’s waterways. This is especially the case

in swamp areas where changing water levels and canal conditions can cut off dependent

populations. Dredgers are used to clear canals but this equipment is in disrepair. A small

number of dredgers are able to work although their capacity is insufficient to keep up with

demand. Overall, the resources needed to maintain the canals in a good state of repair have not

been allocated. The following projects are ongoing.

Mupulungu Harbour Modernization: Complete modernization of Mupulungu Harbour on

Lake Tanganyika (in progress)

Port Terminal Facilities (Inland Container Depot, ICD) Rehabilitation Program: Dar es

Salaam - Mukuba Depot, Mumbasa Copper Yard, Walvis Bay ICD (privately financed) (in

progress)

Harbor rehabilitation projects: Projects distributed across Zambia for harbor rehabilitation:

Lake Tanganika, Lake Mweru, Lake Banguelu, Lake Kariba, Zambezi River, Kafue River,

Chambeshi River (in progress)

Canal Rehabilitation projects: Provincial canal projects distributed across Zambia

including a limited number of large scale canal projects (in progress)

Inland Waterways Master Plan: Long term strategy and prioritization of investments

(conceptual)

(4) Dry Port Project

Zambia does not have direct access to the sea. However, it does have numerous overland

connections to foreign ports. At the most important of these ports, Walvis Bay and the Port of


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Dar es Salaam, Zambia owns inland container depots. These depots allow containers and other

cargo to be unloaded from ships and eventually be sent toward Zambia. Unfortunately, due to

competition in these ports for freight handling, Zambia bound cargo often is handled by other

depots or directly shipped via truck. This point further marginalizes more sustainable modes of

transport such as railways.

Table 3.75 Dry Port and ICD Facilities and Select Information

Dry Port/ICD Facility Status Location Relevant Sea Port Connection to

Zambia

Mukuba Depo Operational Kurasini, Tanzania Dar es Salaam Road and Rail

(TAZARA) Walvis Bay Dry Port Operational Walvis Bay, Namibia Walvis Bay Road Zambia Copper Yard Not Operational Mombasa, Kenya Mombasa Road Lusaka Dry Port Planned Lusaka All Road and Rail Chipata Dry Port Planned Chipata Beira Road and Rail Ndola Dry Port Planned Ndola All Road and Rail

Livingstone Planned Livingstone Walvis Bay

S. African Ports Road and Rail

Source: ZNTMP


4-1

Chapter 4 Present Condition of Malawi

The existing condition of the Nacala Corridor Region in

Malawi is analysed in this chapter. Because the Nacala

Corridor Region or the study area covers the entire country of

Malawi (see Figure 4.1), the analysis discusses the sector

wide issues in general, but with the attentions to the role of

the Nacala Corridor in relation to each sector, such as the

current use of the Nacala Corridor by sector and potential

bottlenecks to the usage of the Nacala Corridor for the sector.

The results of the analysis provide valuable inputs for the

impact analysis discussed in the next chapter.

The demographic characteristics are presented in Table 4.1.

The population of the study area has grown at 3.21% since

2008. This high population growth over 3% is expected to

continue until 2032 according to the population projects1.

Table 4.1 Demographic Characteristics

Region Population (thousand persons)

Annual Average Growth Rate

Urban Population

(2008)

Poverty (2011)

1998 2008 2016* 98-08 08-16 Northern 1,234 1,709 2,235 3.31% 3.41% 14.1% 79.9 Central 4,066 5,510 7,316 3.09% 3.61% 15.1% 63.4

Southern 4,634 5,858 7,282 2.37% 2.76% 15.9% 85.0

Malawi 9,934 13,077 16,833 2.79% 3.21% 15.3% 75.2

Source: Population 1998 and 2008: Malawi Population and Housing Census, 2016 data: Population Projections Malawi (based on 2008 Census) Poverty: Integrated Household Survey (HIS-3) 2011

1 National Statistics Office, Malawi.2008. Population Projections Malawi. http://www.nsomalawi.mw/images/stories/data_on_line/demography/census_2008/Main%20Report/ThematicReports/Population%20Projections%20Malawi.pdf


Figure 4.1 The Nacala Corridor Region in Malawi


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4.1 Agriculture

4.1.1 Overview of the Agriculture2

Malawi is characterised as ‘an agriculture-based economy’. According to the 2016 Annual

Economic Report of Ministry of Finance, Economic Planning and Development in Malawi,

agriculture, including forestry and fishery, accounted for 28.6% of the GDP in 2015 and

generated over 80% of national export earnings in 2014. The 2013 Malawi Labour Force

Survey report indicates that agriculture employs 64.1% of the country’s workforce between

15-64 years.

The agriculture sector in Malawi is comprised of the small scale farmers operating less than 5

ha of land and the commercial agriculture (estate) sub-sector, with more than 70% of

agricultural GDP coming from small scale farmers. These farmers mostly grow food crops,

such as maize, rice, cassava, sweet and irish potatoes, and legumes to meet the subsistence

requirements of their households, as well as cash crops, such as tobacco, tea, sugarcane and

coffee. The estate subsector focuses primarily on the commercial production of high-value

cash crops as tobacco, tea, sugarcane, coffee, and macadamia, all of which contribute

significantly to the agricultural exports of the country. The estate subsector also provides

opportunities of contract farming called Out-grower Scheme for small scale farmers.

The total land area under cultivation is about 2.5 million ha, of which 0.1 million ha are

irrigated as of 2014. Most of crop production is practiced under rain-fed condition and

affected by erratic rain, drought and flood as well as by low access of farm inputs and

agricultural technologies. Hence the crop production and productivity always low, which is a

critical issue in the country.

In the light of current situation and in alignment with several international agreements and

protocols on agriculture, including CAADP and regional commitments under SADC and the

COMESA, the National Agriculture Policy in Malawi (NAP) defined the vision for

development of the agricultural sector in Malawi for the five years (2016 to 2020). The

emphasis of this policy is on achieving farmer-led agriculture transformation and

commercialization that entails treating farming as a business.

4.1.2 Agriculture Condition

(1) Land Use and Availability

The arable land is mostly used for agriculture production by small scale farmers under rain-fed

conditions in Malawi. The country has approximately 12 million ha of which 2.4 million ha is

water area thus 9.4 million is land. Among the land area, according to the FAO data in 2014,

about 60% of total land is used for agriculture (5.9 million ha), 34% is forestry (1.7 million ha)

and 6% is for other use (0.4 million ha) 3. With the increasing human population recently, the

2 Based on the Ministry of Agriculture, Irrigation and Water Development (MOAIWD,) “National Agriculture Policy”, September 2016. 3 FAOSTAT Country Indicators (http://www.fao.org/faostat/en/#country/130)


4-3

pressures have limited renewable natural resources (land, soils, water, fisheries, forests and

wildlife). Most of the arable land in Malawi has already been reclaimed and the land should be

subdivided when the land is inherited among family members, which causes a decrease in

areas attributed to small scale farmers. In fact, the population growth rate is over 3% in the

most recent seven years, and farmland area per household became 0.61 ha (1.5 acres) by 20144.

Some studies or organisations reported that land conflicts are occurring, especially in the

southern region5.

The land tenure in Malawi is classified into three categories: ‘Public Land,’ which is managed

by the Government; ‘Private Land,’ ownership of which is secured by the British monarch in

the colonial era; and ‘Customary Land,’ which is managed by village heads or traditional

chiefs. The former Land Act did not grant a right of land tenure to individuals and most of the

land used by small scale farmers belong to the Customary Land. The small scale farmers have

a right to posse or use a part of Customary Land traditionally but not to own it. Therefore, the

small scale farmers could not increase agricultural productivity by improving farmland

condition until the present. The implementation of the measures toward such land tenure

system which impedes to raise the productivity of the individual farmers, and to develop

agriculture sector in the country is mentioned in the NAP.

Accordingly, the conventional land law has been reviewed from 2017 and will be revised in

the near future. As a feature of the New Land Law, traditional Customary Land will be

abolished, and that individual small scale farmers, organisations and corporations that

Malawian are participating in can register their lands as ‘Customary estate’. In addition, the

lands for commercial agribusiness will be identified, and Malawi Investment and Trade Centre

(MITC) will manage allocation and promotion of the lands for commercial farming6.

(2) Agro-Ecological Condition

Malawi is a country with significant agro-ecological diversity reflecting the diverse landforms

associated with the Great Rift Valley which runs the length of the country 7 . The

agro-ecological zone in Malawi used to be classified into three types based mainly on

elevation: i) the Lower Shire valley with an elevation of less than 250 m, ii) the lake shore

plains with an elevation of 250~650 m and iii) the Upper Shire valley and the mid-altitude

plateau and (sometimes) the highlands, with an elevation of more than 650 m. Recently,

however, six classifications were made up based on agro-ecology as well as the market

situation including population density to identify agricultural development potentials as shown

the following figure.

4 Integrated Household Survey 2016-2017, National Statistic Office 5 For example, Challenges of Land Conflict Negotiation in Mulanje District of Malawi,Felix Benson Mwatani Editor Lombe, University of the Western Cape, 2009 and Land Governance in Malawi: Lessons from Large-Scale Acquisition, Joseph Gausi and Emmanuel Mlaka Land Net Malawi, Institute for Poverty, Land and Agrarian Studies 2015c, etc. 6 New Land Acts and Implications on Customary land holding, access to land for large commercial agriculture, women’s and youth access to land, James Namfuko, Ministry of Lands, Housing and Urban Development (MoLUHD) 2017 7 Detailed Crop Suitability Maps and an Agricultural Zonation Scheme for Malawi, Todd Benson, Athur Mabiso, and Flora Nankhuni, IFPRI 2016


4-4

Source: Detailed Crop Suitability Maps and an Agricultural Zonation Scheme for Malawi, IFPRI 2017

Figure 4.2 Agricultural Development Domains for Malawi

Development domain District

Lower Shire valley, poor market access, low population density

Nsanje, Chikwawa

Lakeshore & Upper Shire valley, poor market access, low population density

Karonga, Likoma, Nkhata Bay, Nkhotakota, Mangochi, Neno, Mwanza

Lakeshore & Upper Shire valley, good market access, low population density

Salima, Balaka

Mid-altitude plateau, poor market access, low population density

Chitipa, Rumphi, Mzimba, Kasungu, Mchinji, Ntcheu, Machinga

Mid-altitude plateau, good market access, low population density

Ntchisi, Dowa, Dedza

Mid-altitude plateau, good market access, high population density

Lilongwe, Zomba, Blantyre, Chiradzulu, Mulanje, Phalombe, Thyolo

Lower Shire Valley, poor market access, low population density Lakeshore & Upper Shire Valley, poor market access, low population density Lakeshore & Upper Shire Valley, good market access, low population density Mid-attitude plateau, poor market access, low population density Mid-attitude plateau, good market access, low population density Mid-attitude plateau, good market access, high population density


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(3) Water Resources8

It is said that Malawi has significant

volume of water resources, which are

stocked in its lakes, rivers and aquifers.

However, as the surface water is limited,

seasonally distributed and increasingly

becoming scarce, it utilisation is competed

over by individuals and various social and

economic sectors due to population

pressure, deforestation and successive

droughts by climate change.

About 3,000 cubic metres of water per

capita are renewed by rainfall etc. in rivers

and lakes annually. However, only 300

cubic metres per capita are available in the

dry season due to seasonal variable

distribution of rainfall and water

resources9.

On the other hand, groundwater sources are widespread throughout the country but have not

been well developed. The development and utilisation and management of groundwater lacked

sustainable strategies for a long time. In accordance with the Water Resources Act in 2013, the

National Water Resources Authority (NWRA) was established to control and manage the

country’s water resources10. For agriculture purposes, it will be expected to use abundant

water resources properly to promote irrigated agriculture and fisheries.

4.1.3 Structure of Agriculture Producers

More than 98% of agriculture producers are small scale farmers with less than 5 ha of

farmland and a small number of large farmers and firms called estate subsectors in Malawi.

In order to obtain staple food, 80% of small scale farmers focus on growing maize and to some

extent legumes and vegetables interred or mixed in maize field under a ‘Maize Based Farming

System’. In fact, maize production occupied 67% of all cultivated land by 2014 and

approximately 80% shared by staple crop production including maize, cassava and rice. As a

cash crop, tobacco is grown dominantly the same as maize, which shares about 55% of all

income from agricultural export in 201511. However, the demand of tobacco has been

decreasing. In Malawi, there are few cash crops can be replaced to the tobacco and other cash

8 Analysis of water governance in Malawi: Towards as favourable enable environment?, Journal of Water, Sanitation and Hygiene for development, June 2014 9 Policies Influencing Patterns of use of Water Resources in Malawi, D. H. Ng'ong'ola Mvalo & Company, Legal Practitioners and Consultants,1999 10 Water Resources Act 2013, Parliament 15th March 2013, Government of Malawi 11 UN Comtrade, https://comtrade.un.org/data/

Source: Journal of Water, Sanitation and Hygiene for development

Figure 4.3 Distribution of Water


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crops are not profitable like the tobacco, and thus it is said that revenue of farmers has been

decreasing in recent years.

Table 4.2 Distribution of Landholdings and Cultivated Area by Farm Size

Area of Land per Household Small Scale Farmer Estate Subsectors

Total 0–2 ha 2–5 ha 5–10 ha >10 ha

# of farms 2,355,461 217,757 18,446 10,230 2,601,893 % of total # of farms 90.53% 8.37% 0.71% 0.39% 100% Total area cultivated (ha) 1,496,465 567,556 113,241.6 776,407.6 2,953,670 Total landholdings (ha) 1,693,828 619,700.7 116,838.7 897,553.8 3,327,921 Mean farm size (ha/HH) 0.72 2.85 6.33 87.74 1.28 Mean ratio of land cultivated to land owned

0.86 0.92 0.97 0.87 0.89

% of total landholdings 50.9% 18.6% 3.5% 27.0% 100% % of total cultivated land 50.7% 19.2% 3.8% 26.3% 100%

N.B. This table is made based on the results of the Integrated Household Panel Survey 2013 conducted by National Statistical Office of Malawi and of reports published by World Bank.

Source: The Quiet Rise of Medium-Scale Farms in Malawi, Ward Anseeuw et al, Land 2016, 5, 19; doi: 10.3390/ land 5030019 provided from World Bank 2013

4.1.4 Current Situation of Agriculture Production and Distribution

The main agriculture products are grown by small scale farmers in Malawi, which are maize,

rice, cassava, sweet and irish potatoes, and legumes, to meet the subsistence requirements of

their households. As cash crops, tobacco, sugar cane, tea and coffee are grown. There are also

efforts to increase their engagement in other commercial crops such as cotton, horticulture,

and fruit production (mango, banana and citrus). The large scale farms or firms focus

primarily on the commercial production of high-value cash crops such as tobacco, tea, sugar

cane and macadamia nuts, all of which contribute to export expansion12. The livestock,

including beef, dairy cow, goat, sheep, pig, chicken and eggs, was not well developed in the

past, but have steadily increased. Fishery is considered more important in the country because

it is practiced for both consumption and income generation. The summary of the production

and distribution for each commodity is described below.

(1) Crops

1) Cereals and Tubers

Malawi is a maize dominant country, depending on the climate condition, but produces

approximately 2.8 to 3.6 million tonnes per year. In accordance with NAP, the Government of

Malawi (GOM) aims at increasing self-sufficiency of maize to several programmes and

projects from 2006. The second major cereal is rice, producing 100,000 to 120,000 tonnes per

year, twenty times less than maize. Millet and sorghum are produced for consumption but

mostly as an ingredient of local beer. Cassava production has nearly tripled in ten years

because it is becoming commercially important as a raw material of a staple food called

‘Nshima’ when maize cannot be produced enough.

12 National Irrigation Policy, MOAIWD, September 2016


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Source: FAOSTAT

Figure 4.4 Production of Maize (left) and Other Cereals (right)

These staple food products are mostly distributed in domestic markets after self-consumption

by farmers. Maize is sometimes exported to neighbouring countries when there is a surplus at

national level. For instance, 360,000 tonnes of maize was exported to Kenya in 2011, while

only about 2,000 tonnes was exported in 2014 due to a deficit in the country.

2) Legumes

The major legumes grown in Malawi are groundnuts, pigeon peas, soya beans and mixed

beans. Those are mainly produced by small scale farmers for self-consumption and for cash

income. Even there is not surplus, small scale farmers tend to sell the legumes to wholesalers

or small vendors to gain income, groundnuts in particular. Groundnuts used as a source of

income at the household level as well as a source of foreign currency at the national level.

However, high level of aflatoxin contamination were detected in groundnuts produced in

Malawi, and then they could not be sold to the EU and USA13 (see details in 4.1.7 (4) ).

Instead of groundnuts, the production and export value of pigeon peas is increasing, even if

there is no official statistic data. This is marketable domestically and internationally because

Malawians consume it and Indian traders are recently buying it in a large quantity.

13 Saving Malawi’s groundnuts from Aflatoxin ( http://www.times.mw/saving-malawis-groundnuts-from-aflatoxin/)


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Source: FAOSTAT

Figure 4.5 Production (left), Import and Export (right) of Legumes

3) Cash Crops

The main cash crops are tobacco, sugar cane, tea, coffee, cotton, horticulture and fruits at the

present. The productions of the main three crops in 2014 are 126,000 tonnes for tobacco,

45,000 tonnes for tea and 2.8 million tonnes for sugar cane. Seeing the production, the

production of horticulture crops such as vegetables and fruits are slightly increased,

accounting for 200,000 tonnes for each. In particular, tomatoes and irish potatoes are sold not

only in the domestic but also in sub-regional markets such as 40,000 tonnes and 1.0 million

tonnes14.

Malawi is well known as one of the leading tobacco producers in the world, which has been

contributing to export expansion in the country15. Tobacco export earnings increased by 23%

from USD 292 million in 2010/11 to USD 361 million in 2013/14. The demand for tobacco

tends to decrease gradually in the international market. Therefore it is necessary to diversify

cash crop production especially export oriented ones in order to ensure farmers’ income and

acquisition of national foreign currency.

14 Comparative analysis of tomato value chain competitiveness in selected areas of Malawi and Mozambique, Nelson Mango et al, Mango et al., Cogent Economics & Finance (2015), 3: 1088429, 2015 15 Malawi Growth and Development Strategy (MGDS) II Review and Country Situation Analysis Report, Ministry of Finance, Economic Planning and Development (MFEPD), 2016


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Source: FAOSTAT

Figure 4.6 Production of Cash Crops

Source: FAOSTAT

Figure 4.7 Volume of Export Crops

(2) Livestock

The livestock sub-sector is basically not so strong in Malawi. Because of a number of

challenges, including limited pasture land due to population pressure, inadequate production

and storage technologies in feed and breeding programmes, and insufficient animal health

support infrastructure and services, such as dip tanks.

Source: FAOSTAT

Figure 4.8 Number of Livestock - Cattle, Goats, Pigs and Sheep (left), Chickens (right)

Due to their adaptability to dry weather conditions, the number of goats and pigs were superior

to other animals. Goats were stocked at over 6 million heads and pigs were 2.8 million heads

in 2014. The number of cattle was increased slightly, to over 1.3 million cattle in the country.

The chickens, the number of which have surged, were raised to 18 million heads that same

year, because of a high demand in domestic and sub-regional markets, such as Zambia and

DRC. Even the self-consumption is lower than the standard of Africa.

There are a large number of animals apparently, though the meat productions of all ruminants

were very small, 25,000 to 30,000 tonnes according FAOSTAT. Therefore export is also very

small, less than 600 tonnes for chicken meat at maximum. The trade of live animals is also a


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small number, less than 300 heads of cattle. Both small scale farmers and estate subsectors are

involved in animal production, with more intensive production systems found on estate farms.

(3) Fishery

The fishery sub-sector could have been developed in Malawi since one fifth of national land is

water area, but the production of commercial fishery has not been increased until the present.

One of the major problems identified with commercial aquaculture is that the species cultured

are slow growing and have a poor feed conversion, making the products of aquaculture

expensive to produce16.

The fish production in capture fisheries varies annually with estimates by year, but averaging

70,000 tonnes per year. The estimated fish production has increased for the past decade mainly

due to the promotion of offshore deep water fishing in Lake Malawi. The aquaculture has not

been developed even though it has potential for fishery development in order to increase the

production. Thus fish production by the aquaculture has estimated at 4,800 tonnes in 2014,

even total fish production was reached around 100,000 tonnes17.

The fish provided 70% of the animal protein intake of the Malawi population and 40% of total

protein supply for the country twenty years ago. These figures have declined as rapid

population growth over the last thirty years. The per capita consumption of fish in Malawi has

subsequently fallen by more than 60%, from 14 kg per person per year in the 1970s, to about

5.6 kg in 201118.

(4) Forestry

The forests plays a critical role in the country, the same as other sub-Saharan countries, as a

source of food and livelihood; timber, fruit, firewood, and charcoal production, etc.

As mentioned above, Malawi’s forest cover is about 3.2 million ha, 34% of the total land area

in 2014, while 13% of forest has disappeared compared to 5.6 million ha, 47% of the total land

in 197519. That deforestation is the major challenge associated with land cleaning (slash and

burn) and the increasing demand for charcoal and firewood as fuel20.

In the light of this situation, the GOM has been promoting plantation and agroforestry, which

can improve soil fertility, reduce soil erosion, and help addressing climate change.

Nevertheless, the adoption of agroforestry among farmers is low due to the long time horizon

for obtaining a return on the investments in trees.

16 National Agriculture Policy, MOAIWD, September 2016 17 National Agriculture Policy, MOAIWD, September 2016 18 National Fisheries Policy 2012-2017, Ministry of Agriculture and Food Security (former name of MOAIWD), 2012 19 Status of Forests and Tree Management in Malawi, Coordination Union for Rehabilitation of the Environment (CURE),2010 20 National Agriculture Policy, MOAIWD, September 2016


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4.1.5 Agribusiness Clusters and Players

Since the national economy in Malawi is dependent on agriculture, related business is

developed in the country. The major stakeholders of agribusiness are suppliers of agricultural

inputs and materials, farmers producing primary products, large scale agro-processing

industries, retailers, and transport companies. Farmers produce primary products in rural areas,

while medium and large companies, which sell agricultural inputs, trade commodities or

process foods in a large quantity, are located in urban areas such as Lilongwe and Blantyre, or

primary production places such as Salima. Agro-dealers, who sell agricultural inputs and also

trade as a retailer or wholesaler are located in rural areas, but some of them do not function

well due to the lack of financial sources and business capacity21. Instead of agribusiness

companies, National Smallholder Farmers Association (NASFAM) and Farmers Union of

Malawi (FUM) are trying to provide agricultural inputs and technical and marketing services

in rural areas22. Brief situations of agribusiness clusters (or supply chain players) are described

below.

(1) Agricultural Input and Machinery Suppliers

Farmers World is one of the biggest Malawian agribusiness companies providing farming

inputs and technical services in cooperation with the governmental and non-governmental

programmes and projects. Most farmers obtain farming input through NASFAM, FUM or

governmental projects such as the Fertiliser Support Programme (see 4.1.6 (2) 4)), or purchase

those inputs within the realms of possibility in financial source or market accessibility. More

than the financial situation of individual farmers, it should be noted that the inputs, especially

fertiliser, are too expensive for small scale farmers to obtain due to transportation cost; there is

no fertiliser manufacturing companies in Malawi. All input, equipment and machinery are

imported mainly from South Africa, EU and Asia, such as India and China, recently.

(2) Primary Producers

As mentioned above, most of the exported commodities are primary products such as tobacco,

tea, sugar, coffee, maize, rice and groundnuts. The number of medium and large scale

producers is increasing in Malawi recently by consolidating small scale farmers’ land by

themselves or the government for producing certain quantity of products. The small scale

farmers used to sell their agriculture products to small vendors or agro dealers individually

right after harvesting, but there are several types of production and marketing methods

recently. For example, the small scale farmers grow and trade under the In-grower23 or

Out-grower Scheme associating with commercial farms or trading or processing firms, or

21 Agribusiness SMEs in Malawi, USAID, 2014 22 According to interview with NASFAM and FUM 23 The out-grower is an individual farmer or farmers groups which agree on trading agriculture products with a company, whereas the in-grower is a farmer who grows certain products autonomously using farm field, technical services and inputs provided by landowner (large scale farmer or company). Generally the products or the amount sold are shared in a certain percentage(i.g. 50:50) between in-grower and the land owner, which is similar to ‘Tenant Farmer’ in Japan, (Reference: Grow Africa Smallholder working Group Briefing paper "Women smallholders" :https://www.growafrica.com/groups/smallholder-working-group-briefing-paper-women-smallholders)


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collective selling with farmers associations or cooperatives, or selling products through private

wholesalers such as the Agricultural Development and Marketing Corporation (ADMARC)

and commodity exchanges companies (see detail in the sections below).

(3) Agro Processing Industry Firms

Except sugar processed in the southern region, Malawi has been mostly exporting the primary

commodities for the gain of foreign currency. In recent years, several agro- processing

companies are established in major cities such as Blantyre, Lilongwe and Salima.

In the case of cooking oil, only traders which are permitted to import by the GOM can import

the cooking oil. Such import licenced traders are mainly based in Blantyre and distribute their

products to the whole country. Small and medium enterprises (SMEs), which occupy 90% of

all manufactures24, are starting to process cooking oil to supply domestic and regional markets

at present25.

The agro processing industry has been active in Salima in the Central Region. Mtalimanja

Holdings has been producing, threshing, polishing and selling rice in Nkhotakota since its

establishment in 2011. 10,000 farmer households which are formed into four cooperatives are

producing rice as out growers under the contract with the company. With the assistance of the

land procurement by the Green Belt Initiative (GBI, see details in 4.1.6), the Malawi Mangoes

(operation) Limited established also in 2011 focuses on producing fruit juice with high market

value such as mango juice, and have established a new value chain of mango juice including a

network of mango farmers. Salima Sugar Company was established in 2016 with the

assistance of the GBI as PPP between an Indian company and the GOM for sugar production

mainly for exporting to regional markets.

(4) Retailers

Currently many grocery retailers run businesses in Malawi. Most of the supermarkets are from

South Africa such as Shoprite, Game and Spar, but Chipiku store is originally from Malawi.

Those supermarkets purchase local products at the present such as perishable commodities;

vegetables, fruits, meat and fish and grocery food such as maize flour, wheat flour and

cooking oil. Additionally the Chipiku store purchases confectioneries such as biscuits, candy

and chewing gum from South Africa and Zambia because these are not produced in the

country.

(5) Trading Companies

Thousands of commodity traders are running their own businesses formally and informally in

Malawi and in regional markets. Since most of the agribusiness players are small scale farmers

and SEMs in Malawi, there is particularity of trade system of commodities.

24 Malawi Country Commercial Guide, https://www.export.gov/article?id=Malawi-agricultural-products 25 Trade Policy Reviews, Government of Malawi and WTO, 2016


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Before the liberalisation in 1900s, ADMARC, a governmental agency, has contributed to the

trade of agriculture commodities produced by small scale farmers within most areas,

especially in unexploited areas which were nearly inaccessible to private traders26. The

ADMARC are no longer officially in full operation, but it is still functions in reality.

In 2004, focusing on making grain business in Malawi and to increase transparency both to

sellers and buyers by identifying the basic standard grades being offered for sale, the

Agricultural Commodity Exchange in Malawi (ACE) was formed by a working group,

comprising of both private and public sector stakeholders of Malawi’s maize market27. The

ACE provides farmers market information, facilitates the trade of their products and enhance

the agriculture production though the Warehouse Receipt System28.

In 2013, another commodities exchange company, AHL Commodities Exchange Limited

called ‘AHCX’ was founded as a platform to aim at the transparency of commodities

transaction and formalisation of agriculture trade. The AHCX has warehouses in twelve sites

over the country, including Blantyre, Balaka and Liwonde for export. The membership

consists of 30,000 households and cooperatives who receive market information and credit

services from AHCX.

4.1.6 Related Policies, Programmes and Projects

(1) Development Policies, Strategies and Plan

In order to improve the current situation of

agriculture production and agribusiness, the

NAP defines the vision for development of

the agricultural sector in Malawi over the five

years (2016 to 2020) in alignment with

several international agreements and

protocols on agriculture development under

NEPAD, SADC and the COMESA. The NAP

emphasizes achieving farmer-led agricultural

transformation and commercialization that

entails treating farming as a business

targeting not only the domestic market but

also regional and international markets by

2020.

The movement of commercial agriculture has

26 National Agriculture Policy, MOAIWD, September 2016 27 Malawi Agricultural Commodity Exchange: Converting Growth into Sustainable Success, ACE, 2015 28 This system gives a farmer the ability not to sell immediately after harvest when prices are traditionally too low. Farmers and other clients can deposit and safely store their commodities at ACE certified warehouses (cited by web site :http://www.aceafrica.org/ )

Source: Department of Irrigation, MOAIWD

Figure 4.9 Potential Irrigation Area


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already been stated in the country’s Vision 2020 document and the Second Malawi Growth

and Development Strategy (MGDS II). This is also in line with other sub-sectoral and

cross-sectoral policies and strategic documents of the government of Malawi, including the

National Export Strategy (NES). Within the agriculture sector, the NAP is linked to the

Agriculture Sector Wide Approach (ASWAp) investment plan and all sub-sectoral policies.

In order to realise those policies and strategies on the ground, two significant directions are

established in 2016 and 2017 summarised as follows.

1) Irrigation Development Master Plan and National Irrigation Policy

The ministry of Agriculture, Irrigation and Water Development (MOAIWD) launched the

National Irrigation Master Plan in 2015 and National Irrigation Policy 2016 to promote the

irrigation scheme development. In Malawi, as mentioned above, the total irrigated lands

were 104,000 ha in 2014 which benefited 56,600 farmers’ households29. In the Master Plan,

the top 30 ranked irrigation schemes are mentioned as priority. The MOAIWD have already

found financial sources to develop about half of the 30 irrigation schemes, where crop

production will be started within five years30. If it will happen, the total irrigated areas in

Malawi will increase 40% from that in 2014. The average yield of unmilled rice in Malawi

is about 2.0 tonnes/ha, while the yield in properly managed irrigation schemes is about 5 to

6 tonnes/ha, according to the interview with the MOAIWD31. Thus, assuming that rice is

produced at half of the newly developed irrigation scheme and its average yield is about 3.0

tonnes/ha, the rice production can be increased 600,000 tonnes per year.

Table 4.3 Top 30 Ranked Irrigation Schemes and Current States of their Financing

Scheme District Area (ha)

Capital Costs (1,000 USD)

Rank # Financial

agreement Dowa Dambo Dowa 375 1,033 1 Done Nkawinda/Bakasala Blantyre 560 790 2 Done Nthiramanja Mulanje 6,316 22,223 3 Mlooka Zomba 153 730 4 Done Ruo - Diversion Thyolo/Nsanje 8,858 16,811 5 SVIP Chikwawa 26,653 193,770 6 Done Dwambazi Nkhata bay/Nkhotakota 1,769 3,466 7 Done Matoponi Zomba 115 590 8 Done Welusi Karonga 1,742 3,756 9 On discussion Linga Nkhata bay 1,514 4,054 10 Done Chipofya Diversion Rumphi 369 1,379 11 Done Msenga Nkhata bay 836 3,232 12 Likabula/Kholiwe Mulanje 628 3,947 13 Done Marko Chitipa 727 3,763 14 Done Ukanga Karonga 3,690 9,529 15 On discussion Mpamba Nkhata bay 788 4,246 16 Done Likhubula/Nthumbula Chikwawa 419 3,410 17 Done Lembani Ntcheu 1,624 4,125 18 Ilengo Chitipa 2,367 9,857 19 Mwambazi Nkhata bay 3,015 15,932 20 Kholongo Dowa 2,238 13,983 21 Lichenya Mulanje 1,249 7,619 22

29 National Irrigation Master Plan, MOAIWID, 2015 30 Interview with the Chief Irrigation Engineer of Department of Irrigation Headquarters, MOAIWD 2017 31 Interviewed with Department of Irrigation Headquarters, MOAIWD, August 2017


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Scheme District Area (ha)

Capital Costs (1,000 USD)

Rank # Financial

agreement Mteperera Nkhata bay 1,415 10,299 23 Bwanje Dam Ntcheu 800 7,223 24 Done Ngazi Nkhata bay 1,190 2,933 25 Makwangwala Zomba 1,734 10,158 26 Mwenelupembe Karonga 1,943 4,794 27 Nkhulambe/Wowo Phalombe 300 1,444 28 Done Ngemela Karonga 4,019 28,581 29 Mtuwa Mangochi 1,194 11,024 30 Total 78,100 404,701 Total of irrigation scheme where financially agreed (Done) 35,170 229,845 Total of irrigation scheme where under discussion 5,432 13,285

Source : MOAIWD

2) Green Belt Initiative (GBI)

In order to increase agricultural production, productivity, incomes and to achieve food security

both at household and national levels, and then to spur economic growth and development, the

Government planned the Green Belt Initiative in 2009. This initiative was to realise the said

objective though the development of small and large scale irrigation and production

maximization by rain-fed agriculture practices32.

The government has committed itself to offer domestic and international investors land for

irrigated agriculture lying within 20 km of the country’s three lakes and thirteen perennial

rivers (which exhibit a continuous flow of water throughout the year). Target areas to be

developed were identified namely;

i) Karonga/ Hora-Ntora-Ilola-Ngoch in the northern region,

ii) Salima/ Chikwawa in the central region and

iii) Mangochi/Malonbe and Chikwawa/Chilengo in the southern region.

The implementation has not progressed as planned due to the lack of budget. Nevertheless, the

GBI has facilitated a land procurement for Malawi Mango (Operation) Limited launched in

2011 and also supported the implementation of the entire project of Salima Sugar Company

under the Indian-Malawian PPP launched in 2016 as the first project. It is expected that 20,000

tonnes of sugar will be produced by Salima Sugar Company and exported to Tanzania and

Mozambique in 2018. Besides sugar manufacturing, soya beans, chicken and goats raising are

also planned to be exported overseas.

In 2017, the government decided to turn the GBI into a governmental authority, which would

possess a blend of private and public sector orientations to attract Public Private Partnerships

and joint ventures.

32 Chingaipe, H., Chasukwa, M., Chinsinga, B., Chirwa, E., (2011) ,The Political Economy of Land Alienation: Exploring Land Grabs in the Green Belt Initiative in Malawi, A Research Report for the FAC-PLAAS Country Study: University of Western Cape, South Africa


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(2) Development Projects and Programmes

Various projects are planned and implemented to develop the agriculture sector by the Malawi

government and donors. Some of these projects are expected to promote the utilization of the

Nacala Corridor, or to be promoted by the further utilization of the corridor. These are

described as follows.

1) Shire Valley Irrigation Project33

The Shire Valley Irrigation Project (SVIP) will be the largest single investment in the

agricultural sector in Malawi. The SVIP will ensure irrigated agriculture and stable production

not depended on rainfall. The SVIP is expected to be transformational investment not only for

the Shire Valley but also for Malawi by enabling fully commercial agricultural production

with irrigation, supporting establishment of land ownership for small scale farmers under the

modern land tenure system and utilising a private operator for the provision of irrigated water

supply services. The project lasts from 2017 to 2021, including detailed design, works,

construction supervision, community engagement, land demarcation, agricultural development,

support for farmers’ organisations and Out-grower Schemes, relocation and compensation of

affected households. The tentative total cost estimates currently stand at around USD 260

million covering an area of about 21,500 ha, which will be financed by the GOM, World Bank,

AfDB, other donors, funds and investment agencies.

2) Malawi Agricultural Commercialisation Project34

The objective of the Agricultural Commercialization Project for Malawi (AGCOM) is to

accelerate the commercialization of agriculture value chain products selected under the project,

with close synergy with the SVIP. This project is expected to support 70,000 farmers and 300

producer organisations. In order to create a conductive environment for farmers and

agribusinesses to operate in, the project will support last-mile infrastructure such as feeder

roads and electricity, as well as supporting agribusiness reforms and strengthening the

warehouse receipt system in Malawi. A major activity of the project will be to help establish

productive alliances between producer organisations, other value chain actors and product

off-takers. AGCOM will also support the creation of business enabling services by improving

access to finance, standards and certification, and trade facilitation. The project (USD 95

million) is funded from the World Bank’s International Development Association (IDA), and

is expected to close in 2023. It will be implemented under the joint leadership of the

MOAIWD and the Ministry of Industry, Trade and Tourism (MOITT).

3) Agro-Processing Special Economic Zone (AP-SEZ)

The MITC has planned to develop an Agro-Processing Special Economic Zone (AP-SEZ) in

order to support the promotion of commercial farming for priority crops identified in the NES.

33 World Bank, “Malawi: Shire Valley Irrigation Project (WB-P158805) Joint AfDB Preparation-WB/FAO Pre-Appraisal Mission (October 31-November 18, 2016)” 34 World Bank, “World Bank Helps Malawi Commercialize Agriculture”, May 23, 2017. (http://www.worldbank.org/en/news/press-release/2017/05/23/world-bank-helps-malawi-commercialize-agriculture)


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It aims at promoting value added products through the Nacala Corridor to Malawi's regional

markets comprising of Mozambique, Zambia, South Africa, DRC, Zimbabwe and Tanzania.

MITC has also established an office in Tete, Mozambique in order to facilitate exporting of

Malawi's products beyond Nacala corridor zones35.

The AP-SEZ was proposed to EIF (Enhanced Integrated Framework, a multi-donor financed

financial and technical support programme under the auspices of the WTO) in 2014, as a three

years project, costing around USD 3 million. It set three prioritized export-oriented clusters for

diversification: i) oil seed products : cooking oil, soaps, lubricants, fertilizer, snacks,

confectionery, etc., ii) sugar cane products : sugar, high value sugar through branding and

sugar confectionery, and iii) manufactures : beverages, agro-processing (including value added

dairy and maize, wheat, horticulture and legume products), plastics and packaging,

assembly36.

However, the proposal was rejected and the MITC is currently discussing with the World

Bank to revise the plan including candidate sites for SEZ, policy for operation, related

legislations and organisations of SEZ37.

4) Farm Inputs Subsidy Programme (FISP)

In order to enhance food self-sufficiency by small scale farmers, the FISP launched in 2005 to

enable farmers access to improved agricultural inputs such as fertiliser, hybrid seed and

pesticides at reduced prices in exchange of vouchers or coupons.

According to a country report FAO38, Maize productivity has risen significantly to two times

more and increased crop income 8.2% more than those who were not beneficiaries of the

programme. However, it is necessary to target and distribute the vouchers to the poorest and

most venerable farmers. The FISP is criticised as creating the dependency of farmers39 and

impeding private input market development40.

According to Review and Country Situation Analysis Report of MGDS II, a question is raised

whether to target to poorest and most venerable farmers or to focus more on high growth

sub-sectors with potential for more widespread benefits for a larger number of Malawians and

to generate higher agricultural value added. The latter approach would necessarily involve

35 AfDB,” Invitation to Express Interest in Consultancy Services – MALAWI - Agro-Processing Special Economic Zone (AP-SEZ)”, August 2, 2015 (https://www.afdb.org/en/documents/document/eoi-malawi-consultancy-services-agro-processing-special-economic-zone-ap-sez-08-2015-54796/); “MITC in awareness campaign drive on value-added export amid COMESA and SADC's demand for Malawi's products”, The Maravi Post, April 27, 2016 (http://menafn.com/1094730031/MITC-in-awareness-caign-drive-on-value-added-export-amid-COMESA-and-SADCs-demand-for-Malawis-products) 36 MOITT, “Enhanced Integrated Framework – Tier 2 Project Proposal: Malawi Agro-Processing and Value Addition Project”, April 2014. 37 Based on the interview with MITC in July 2017. 38 Review of food and agricultural policies in Malawi Country Report 2014, FAO 2015 39 Impact of the input Subsidy Programmes in Malawi on the Food Security Status of Smallholders Households, Elizabeth Tendai Mukozho, 2015 40 Measuring the impacts of Malawi’s farm input subsidy programme, Christopher Chibwana, US Agency for International Development, African Journal of Agriculture and Resource Economics Volume 9 Number 2 pages 132-147


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diversifying from the heavy bias on maize and tobacco, creating space for the development of

other agricultural value chains with identified high export potential41.

5) Projects for Aflatoxin Control

Aflatoxins are highly toxic to humans and animals. Aflatoxin-producing moulds affect grain

and other food crops – maize and groundnuts in particular. It is not only in Malawi, millions of

people living in Africa are exposed to high, unsafe levels of aflatoxins through their diet. Even

though food safety standards have been established in each country, some of them do not

conform to the international standard on food safety. Meanwhile, even the standard conforms

to the international standard is set in a country, farmers cannot produce commodities satisfied

the requirements due to several reasons ; the standard is not recognized among local farmers.

Therefore, farmers miss out on export opportunities42.

On 2012, the African Union launched the Partnership for Aflatoxin Control in Africa (PACA)

that aimed to protect the products from the effects of aflatoxins, and prepared PACA Strategy

2013-2022. The Malawi was selected as one of the six countries where implement pilot

activities. One of the pilot activities is called Country-led Situation Analysis and Action

Planning (C-SAAP), and based on this results, the GOM centred by MOITT prepared a

Malawi Programme for Aflatoxin Control (MAPAC) as national program to control the

aflatoxins’ affects.

The MAPAC has a vision that “MAPAC envisions Malawian farmers, farm households and

consumers living healthier and more prosperous lives as a result of reducing aflatoxin

exposure to achieve safe levels.” And it sets goals that 1) Increase Malawian farmers’ (with a

particular emphasis on small scale ones) income by enabling sustained market access; 2)

Improve Malawian consumers’ health & nutrition by reducing their aflatoxin exposure to safe

levels, and 3) Support food security through improving the quality and safety of groundnuts

and maize (and other crops) produced by Malawian farmers.

The major objective to prepare the MAPAC is to set an integrated vision, priority of the

activities, coordination among related institutions and implementation structure. For that

reason, their activities are mainly pilot investigations rather than implementation of concrete

measures. At the end of 2017, they will prepare the MAPAC II including more detailed

activities.

So far, the activities related to the aflatoxin control in Malawi have been supported by USAID

or Bill & Melinda Gates Foundation, etc. Since the MAPAC prepared in 2014, the World

Bank, IFAD, EU, etc., as shown in the table below are supporting the activities in several

projects.

41 Malawi Growth and Development Strategy (MGDS) II Review and Country Situation Analysis Report, Ministry of Finance, Economic Planning and Development (MFEPD), March 2016 42 http://www.aflatoxinpartnership.org/?q=aflatoxins


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Table 4.4 Recent Implemented Projects Related to Aflatoxins Control43

Date Activity Partners Funders Country/ Region

2013-2016

Providing trainings for farmer on different interventions to control and manage aflatoxin during pre and post-harvest period.

MOAIWD, Academia and NGOs

Multi donor Agencies (ASWAP - SP) Malawi

2014-2016

Mainly improving access to quality groundnuts seed, developing capacities on public staff and beneficiary in good groundnut production practices, enhancing market access and reducing aflatoxin contamination level

Rural Livelihood and economic Enhancement Programme

IFAD Malawi

2014-2017

Reducing mycotoxin contamination of maize, groundnuts, and beans to improve food safety and enhance health and trade.

Lilongwe University (Malawi),Zambia World Bank

Malawi, Mozambique, Zambia

2016-2017

The Malawi Programme of Aflatoxin Control (MAPAC) Conducting aflatoxin studies and mapping, testing, awareness creation and sensitization

MOAIWD, Ministry of Health, ICRISAT, NASFAM, PACA

PACA and Malawi Government Malawi

2014-2019

Providing training and awareness creation campaigns to farmers for proper grain handling from production field to drying and storage to prevent aflatoxins. Monitoring progress through extension workers. Offering seed of resistant varieties to cooperatives for aflatoxin-free yields

Government extension workers, lead farmers and local chiefs

Private Business Malawi

2015-2020

The Going Nuts Project: Training for farmers on handling groundnuts to avoid aflatoxin and grading of nuts

Twin Trading UK, Nasfam Malawi, Exagris Africa Malawi, INVC Malawi

Malawi

2014-2017

The project for stemming aflatoxin in pre- and post-harvest waste in the groundnuts value chain (GnVC) in Malawi and Zambia: Aiming to reduce pre and post-harvest waste in the groundnuts value chain and thereby increasing food and nutrition security of small scale farmers.

NASFAM, ZARI, University of Greenwich, EPFC

EU Malawi, Zambia

2014

Integrated management of Aflatoxin in maize and groundnuts in Malawi using ‘aflasafe’ technology. Developing promotion and commercialization of biological control in the groundnuts and maize value chains to improve public health, increase trade, increase of small scale farmers’ income, and enhance food security in Malawi.

Directorate of Agricultural Research Services Malawi

FtF-USAID Malawi

2014-2018

The Aflatoxin Proficiency Testing and Control in for Eastern and Central Africa (APTECA) program Performing 3rd party verification activities to provide interested parties (i.e. millers, other industry, government agencies) with objective evidence of a laboratory’s capability to produce data that is both accurate and repeatable. The program also provides biannual global proficiency testing, working controls samples of known aflatoxin concentration for internal quality control, and the APTECA seal (Aflatoxin tested Process verified by APTECA), which can be used to demonstrate a laboratory’s competence to clients, potential customers, accreditation bodies and other external entities.

many

Texas A&M Agrilife Research, Office of the Texas State Chemist

REC COMESA REC EAC REC ECCAS and theirs Malawi

2014-2017

Reducing pre and post-harvest waste in the groundnuts value chain (GnVC) and thereby increase food and nutrition security of small scale farmers in the focal countries by addressing main constraining factors of technology dissemination and adoption, knowledge and information sharing, and policies. Conducting research on aflatoxin reduction practices and technologies to benefit small scale farmers, reach scale and sustainability, and address policy constraints.

NASFAM, EPFC, FANRPAN, Natural Resources Institute-University of Greenwich, Malawi Department of Agricultural Research Services (DARS), Zambia Agricultural Research Institute (ZARI)

PAEPARD Malawi, Mozambique, Zambia

Source: PACA web site

43 http://www.aflatoxinpartnership.org/?q=malawi&page=2


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4.1.7 Development Potential and Challenges of Agriculture and Agribusiness Sector

The development of the Nacala Corridor and the railway in particular, is ardently desired by

Malawian exporters and entrepreneurs as a more prioritized route for export, which enables

the reduction of transport time and cost, as well as the risk of delay in delivery44. At the same

time, the development of the Nacala Corridor is also expected to reduce input cost for the

agriculture and agro-process industry, as it reduces transportation cost45.

The development of agriculture sector in accordance with national policy is influenced

strongly by domestic trade and export expansion and diversification dependent the

convenience of the Nacala Corridor. Based on the current situation of agriculture production in

Malawi, which is dominated by small scale farmers, the following section summarize

development potential and challenges by analysing the current usability of the Nacala Corridor

and the demand of the agriculture markets in and outside country. Additionally, several

agriculture and agro-processing products which are identified as potential commodities for

export and economic growth in the previous study46 are shown below.

(1) Overall Potentials and Challenges of Development

1) Irrigation Development

As shown in 4.1.6 above, in collaboration with private sector, agricultural infrastructure and

activities to reinforce market linkage have been implemented for the promotion of market (or

export) oriented agriculture that one of the objectives of the NAS at the present in Malawi. If

the irrigation development promoted by MOAIWD is accomplished as planned, the irrigable

areas will increase by 40% from those in 2014, expecting the increase and stable agriculture

production. In addition, if the linkage between farmers and markets progresses in these

irrigated areas, farmers can sell agricultural products sustainably without fear of food

shortages. As a result, this will contribute to the development of farmers and local economies.

Meanwhile, aiming at the agribusiness development, GBI has been developing large and small

irrigation schemes and improving productivity of rain-fed agriculture under the PPP. In fact,

the Salima Sugar Company, which started business under the GBI, employs 350 local small

scale farmers as in-growers and is going to expand out-growers, and plans to develop

agribusiness with local small scale farmers in the future. The program such as irrigation

development should be planned and implemented considering the protection of rights of small

scale farmers and rural communities.

44 According to the Export Development Fund of Malawi, delays in delivery through the Beira corridor cause default of contract by traders, that lead to bad debt loss for the Fund 45 Some companies such as Farmers World (agro-dealer) and Optichem (fertilizer manufacturer) already use the Nacala railway for import and export. They expect the improvement of cost and reliability of the railway transportation. 46 JICA (Mitsubishi UFJ Research and Consulting/PADECO), “Data Collection Survey for Potential Industries in Malawi”, August 2013


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2) Diversification of Extension Service

Considering the importance of the access to agriculture advisory service for agriculture

development, the current situation on extension service has been apparently improved in late

years through reinforcement of the extension system like the “Pluralistic and Demand-Driven

Extension System47” by utilising farmer’s cooperatives, associations, and NGOs as extension

service providers and “Farmer to Farmer Extension Approach” defined as the provision of

technical trainings extension by lead farmers to other farmers. The farmers are requiring

advices for the increase of agricultural production and market information in order to change

their subsistence agriculture to market oriented one. However, the extension officers of

MOAIWD, as well as farmers’ organisations and lead farmers have less opportunity to learn

such updated technologies and information, which is the critical issue to be solved48. Recently,

not only the government and farmers organisations, but also the private companies including

traders and distributors are expected to provide such information of commodity markets and

agriculture techniques related to ‘market oriented agriculture’ to farmers to link them with

markets both in the country and overseas.

3) Functionality Reinforcement of Farmers Organisations

FUM and NASFAM have been implementing several good practices such as collective

procurement of inputs, farming experience and knowledge sharing, and market linkage,

which have become certain good results. Due to the limited number of public agriculture

extension officers, the GOM is considering the cooperatives as an important player for

agriculture extension and development. The GOM is also trying to duplicate good practices

of FUM and NASFAM though the capacity building of farmers and cooperatives in

cooperation with donors and NGOs.

In this way, farmers’ organisations (cooperatives and associations) are strengthened

functionally as agri-business operators in order to maintain small scale farmers’ livelihood

and then create a proper market competition with private traders. It is effective to collect

products through farmer’s organisations for agro processing business and export, as one of

their fundamental activities. For this purpose, many farmers’ organisations have been

established with the support of the government and NGOs, or by farmers themselves.

However, only 234 organisations were active among the 681 organisations registered

formally by 2012, meaning that more than half of them are not functional at present

according to the Department of Agriculture Extension Services49.

47 The GOM introduced a policy that promotes the provision of decentralized, demand-driven services and encourages the participation of many service providers in agricultural extension in new extension policy in 2000. Farmers Organizations, NGOs and private sectors have been providing technical services not only technics as well as management skills or financial services for rural farmers. However, government officers are always vacant in rural area, it is difficult to support farmers and to coordinate among all extension player to emerge synergy. A new extension strategy which is compiled and dev underway in 2017 is expected to tackle challenges of such extension services for agriculture development. 48 Malawi Growth and Development Strategy (MGDS) II Review and Country Situation Analysis Report, Ministry of Finance, Economic Planning and Development (MFEPD), March 2016 49 The Malawian co-operative movement: insights for resilience, Alexander Borda-Rodriguez and Sara Vicari, February 2014


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As one of the reasons, many farmer’s organizations have financial problems to operate

marketing and provide training on capacity development of the members in the

organisations. Therefore it is favourable to raise farmer’s organisations by supporting them

in finance and capacity.

4) Linking between Farmers and Markets with Rural Infrastructure

Despite of all efforts made by the government for market access improvement, market linkage

with the small scale farmers remains weak. In the light of this circumstance, ACE and AHCX

have been trying to enhance market access to farmers by setting up shipping points and

warehouses in the local cities, providing market information though SMS and creating credit

access, etc.50. In addition to such kind of activities by private traders, the infrastructure

development related to land transportation, air transportation, and water transport is also

necessary in order to reinforce linkage between small scale farmers to the markets.

At present, small scale farmers dispersed in rural areas carry their products with a high

transportation cost to the market and sell, because investment and development of the

necessary infrastructures such as warehouses to collect products and rural roads are not

sufficiently done especially in rural areas. As a result, small scale farmers should sell small-lot

of products to vendors coming irregularly and/or informal markets near their production areas.

In consequence, the profitability of agriculture will decline, and it will be impossible to buy

expensive agricultural inputs. In this way, the small scale farmers will fall into a vicious circle

as less agriculture investment brings lower productivity, which leads less income from

agriculture. The traders also cannot collect a certain amount of agricultural products and sell it

to domestic and overseas markets taking advantage of scale with cheaper cost of transport.

If warehouses and rural roads to facilitate access to main roads including Nacala Corridor are

developed, farmers can accumulate a certain amount of their products with cheaper

transportation costs from the production place to the collection site. If this brings sufficient

agricultural income to the farmers, they stop "informal" sales and distributors will be able to

collect a certain amount of crops more efficiently and steadily. Furthermore, if the distributors

are able to select sales markets to maximise profit by trading the agricultural products, it can

be leading to raise income of farmers as virtuous circle.

5) Accumulation of Knowledge on Aflatoxin Control

As mentioned in the 4.1.6 (2)-5), through implementation of various projects at present,

knowledges on technical measures concerning production and post-harvest at the farmer level

has been gathered and tried in fields such as the utilization of aflatoxin free seed or

improvement of shelled method in post-harvest. Meanwhile, challenges in the value chain

such as the inability to test and certify the aflatoxin in Malawi are also apparent. From now on,

it is necessary to consider how to combine these findings to create a comprehensive

countermeasure with considering incentives for exporters who finally owning risks in the

50 Interview from MOAIWD and Auction Holdings Limited Commodity Exchange (AHCX)


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event of exporting, and how to reduce the risks from the production site level in the value

chain.

(2) Potential and Challenges of Development on Primary Products

1) Groundnuts


Groundnut production in Malawi is dominated by female-headed households and vulnerable

farmers. This is because groundnuts are easy to produce, requires few cash inputs, and can be

consumed by producing households where nutritional and flavour benefits are recognized. The

groundnuts also have the benefit of being an easily tradable cash crop in local markets51. In

2014, total amount of groundnuts production was approximately 296,000 tonnes.

In general, 10% of the produced groundnuts are kept as seeds for next season, 20 to 40% are

used for food and processing as roasted nuts, peanut butter, and ‘Ready to Use Therapeutic

Foods’ (RUTF), 10 % are consumed as loss and the remaining 20 to 40% are exported to

neighbouring countries.

The groundnuts are exported to Tanzania, Kenya, Zambia, and Zimbabwe, though its import is

very limited. In the past, Malawi’s groundnuts could be exported to UK and the EU. However,

the exports have dwindled with the introduction of stringent measures on aflatoxin levels

allowable in Europe and other developed countries’ markets. Despite this, it is exported

formally to South Africa and other regional markets. In addition to the formal exports, there is

a thriving informal groundnuts trade to Tanzania and Kenya, where aflatoxin testing

requirements are not enforced52. Furthermore, during the field survey, it was heard that many

groundnuts are exported informally to DRC through Zambia in these days.


Figure 4.10 Production and Trade of Groundnuts by Malawi

51 Malawi Oilseeds Sector Transformation http://www.most.mw/sectors/groundnut 52 Malawi Oilseeds Sector Transformation http://www.most.mw/sectors/groundnut


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Table 4.5 Export and Import of Groundnuts by Malawi by Country (Unit: 1,000 ton)


(2011-2015) Export United Rep. of Tanzania 15.90 11.50 15.99 10.81 0.43 10.93 Kenya 9.10 10.53 14.76 14.38 5.12 10.78 Zambia 1.29 7.76 7.94 3.46 0.76 4.24 Zimbabwe 0.86 4.36 5.03 5.98 2.72 3.79 South Africa 5.95 3.15 2.08 0.72 0.31 2.44 Others 0.51 4.83 1.40 0.67 0.19 1.52 Total 33.61 42.13 47.21 36.03 9.53 33.70 Import USA 2.55 0.00 0.00 0.00 0.00 0.51 Zambia 0.13 0.00 0.00 0.00 0.03 0.03 Others 0.00 0.00 0.00 0.04 0.00 0.01 Total 2.67 0.00 0.00 0.04 0.03 0.55

Source: UN Comtrade


Groundnuts are one of the widely grown legumes in Malawi. The crop has a potential to

contribute to food and income security, because regional demand of the groundnuts is strong

and farmers in Malawi are already quite familiar with improved methods for its production.

The export volume of groundnuts grew by 18% per year between 2004 and 201453. However,

extreme drought in 2014/2015 impacted negatively on yield and its export. Meantime, the

strict regulation for testing on aflatoxin was applied in EU and other developed countries in

2014. As the results, the export quantities of groundnuts from Malawi to the countries

including South Africa were decreased. Currently, the groundnuts are exported to the countries

where the aflatoxin test for imported groundnuts is not carried out or informal trade is

commonly observed. Nevertheless, Malawi is still a greater exporter of groundnuts in the

region. The government should offer incentives to stakeholders related to the groundnut value

chain in order to produce low-aflatoxin contaminated groundnuts for national economy

development though re-vitalizing its export and also for people’s health in Malawi.


Rwanda (Imported mainly from Uganda and Tanzania) decreased the importing amount in

2012 and 2015. Kenya imported it mainly from Uganda and Malawi, and their import was

decreased in 2013 and 2014 but slightly recovered it in 2015. The import of South Africa was

increased in 2013 mainly from Malawi and Mozambique, but they have virtually banned the

import of untested groundnuts and thus their import has decreased. Tanzania and Zambia are

also relatively large importers of the groundnuts (imported from Malawi).

53 International Trade Centre, 2014; Malawi Revenue Authority, 2014


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Figure 4.11 Import of Groundnuts by Country in the Integrated Region

Table 4.6 Import of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 Rwanda 21.46 9.66 15.88 16.29 4.19 2 Kenya 14.09 21.01 7.60 1.80 9.99 3 South Africa 8.61 16.04 19.67 10.40 8.49 4 United Rep. of Tanzania 10.86 10.03 7.12 16.86 1.99 5 Egypt 3.83 6.99 3.24 5.36 4.32 6 Zambia 4.35 7.73 6.93 3.96 3.77 7 Zimbabwe 0.27 2.32 3.50 6.07 7.69 8 Uganda 1.47 0.15 6.14 4.28 1.73 9 Libya, State of 1.06 2.77 2.05 2.70 3.77 10 Angola 0.68 1.24 1.98 2.13 1.54 Others 7.74 4.38 6.37 5.26 6.21

Total 74.41 82.30 80.48 75.10 53.69


Regarding the export of groundnut, Malawi and Egypt were major countries in the region.

However, their exports were decreased since 2014. Tanzania, Mozambique and Ethiopia are

also decreasing their exports due to the impact of drought in the region54. In contrary, South

Africa, Madagascar and Uganda increased the export. In simple term, the increased amount of

the export of South Africa in 2014 was the export for Tanzania and Mozambique. Basically,

they export the groundnuts to South Africa, because production of the groundnuts needs

labour intensive work, and the labour cost is relatively high in South Africa as their challenge,

so that surrounding countries including Malawi has competitiveness. Moreover, cause of the

increasing export in Madagascar is the export to Vietnam, which became more than 90% of

total groundnuts export in Madagascar.

54 USDA GRAIN Report, The potential import market for peanuts in South Africa, April 2015


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Figure 4.12 Export of Groundnuts by Country in the Integrated Region

Table 4.7 Export of Groundnuts by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015 1 Malawi 33.58 42.13 47.25 39.69 9.53 2 Egypt 30.97 31.12 16.45 20.25 6.28 3 South Africa 16.91 10.65 9.02 9.84 22.18 4 United Rep. of Tanzania 4.93 23.50 0.36 2.62 0.31 5 Mozambique 6.85 4.47 24.15 14.14 2.79 6 Madagascar 2.13 10.29 11.35 14.93 17.72 7 Ethiopia 2.13 23.45 3.68 0.24 0.09 8 Uganda 0.36 3.30 4.28 0.80 8.84 9 Zambia 1.10 0.60 1.69 3.56 1.12 10 DRC 0.04 0.01 0.02 0.18 0.84 Others 2.48 0.83 0.69 0.72 1.05 Total 101.47 150.35 118.94 106.97 70.74


2) Rice


The recent total rice production of Malawi, including both productions in irrigation schemes

and in local swamps (dambo), is around 110,000 to 125,000 tonnes. About 93% of the

produced rice is consumed in Malawi. Only 1,000 to 2,000 tonnes is exported and also similar

quantities are imported every year. This means the domestic supply and demand of rice is

balanced under current prices.


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Source: FAOSTAT

Figure 4.13 Production, Area Harvested, Yield and Export of Rice by Malawi

Table 4.8 Export and Import of Rice by Malawi by Country (Unit: 1,000 ton)


(2011-2015) Export Zambia 0.17 1.99 1.50 0.54 0.04 0.85 Zimbabwe 0.20 0.25 0.22 0.15 0.05 0.17 United Rep. of Tanzania 0.50 0.06 0.10 0.01 0.00 0.13 United Kingdom 0.04 0.10 0.04 0.04 0.02 0.05 South Africa 0.04 0.00 0.00 0.00 0.02 0.01 Mozambique 0.02 0.00 0.00 0.00 0.00 0.00 Others 0.00 0.01 0.00 0.00 0.00 0.00 Total 0.97 2.41 1.87 0.74 0.12 1.22 Import India 0.01 0.53 0.03 0.14 0.13 0.17 Pakistan 0.14 0.08 0.20 0.07 0.28 0.16 United Rep. of Tanzania 0.03 0.00 0.60 0.00 0.00 0.13 South Africa 0.04 0.03 0.04 0.04 0.31 0.09 USA 0.06 0.03 0.07 0.05 0.00 0.04 others 0.05 0.05 0.04 0.02 0.02 0.03 Total 0.33 0.73 0.98 0.32 0.75 0.62

Source: UN Comtrade


Rice in Malawi (aromatic rice) is known as its high quality and currently exported to

neighbouring counties (mainly Zambia and Zimbabwe). Although the productivity of unmilled

rice in Malawi is around 2.0 tonnes per ha, which is lower compared to the major rice

producing countries, it is supposed to be possible to increase it to 5.0 to 6.0 tonnes per ha.

Furthermore, as described before, about 40,000 ha of new irrigation schemes, developed under

the National Irrigation Master Plan, will commence production within five years, which means

the total irrigated areas in Malawi will increase 40% from the same in 2014. The average yield

of unmilled rice in Malawi is about 2.0 ton/ha, and the yield in matured irrigation schemes are

about 5.0 to 6.0 tonnes/ha, based on the field interview. Thus, assuming that rice is produced

at half of the newly developed irrigation scheme and its average yield becomes about 3.0

0

0.5

1

1.5

2

2.5

0

20

40

60

80

100

120

140

2010 2011 2012 2013 2014

Production (1,000

tons. left)

Area harvested (ha,

left)

Yield (ton/ha, right)

Export (1,000 tons,

right)


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ton/ha, the rice production will be increased 600,000 tonnes per year. Therefore the rice has a

huge potential for export. In addition to rice, husk and bran can be sold for as material of

feed-stuff in the regional and the domestic markets.

Neighbouring countries, Tanzania and Mozambique in particular, have increased the import of

rice. Therefore, rice has high potential to be further exported to neighbouring countries

through the Nacala Corridor, if its productivity and production in Malawi are improved. For

instance, it is worthy to note that Mtalimanja Holdings, a private agribusiness company with

farmer shareholders, is supporting 10,000 small scale farmers in Nkhotakota and Dowa

through buying rice from them and operating a large scale rice-milling factory with 10,000

tonnes of production capacity55. Mutalimanja has signed a memorandum of understanding

(MOU) with Export Development Fund (EDF) and AHCX to provide financing to 1,000

farmers to grow rice for the export market56.


Rice has become one of the major food commodities in Africa. Demands for rice in the

surrounding countries are also high as shown in the figures below. South Africa imports

around 1 million tonnes in general (mainly from Thailand, India and China). Mozambique, a

neighbouring country of Malawi, also imports rice. They imported very huge amounts in 2013

and 2014 and reduced the amounts in 2015 (from Thailand, India and Pakistan). Kenya,

Madagascar, Ethiopia, and Zimbabwe are also increasing the imported amounts. Hence, it can

be said that concrete demands for rice is existing in these area.

Source: FAOSTAT

Figure 4.14 Import of Rice by Country in the Integrated Region

55 Based on the interview with Mtalimanja Holdings in April 2017. 56 “Malawi could earn USD400m from rice – Mtalimanja”, The Nation, August 25, 2017 (http://mwnation.com/malawi-earn-400m-rice-mtalimanja/)


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Table 4.9 Import of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015

1 South Africa 885.87 1,228.89 1,267.83 910.52 717.77 2 Mozambique 400.98 100.79 1,713.58 1,820.04 432.18 3 Kenya 337.45 399.70 409.58 459.17 542.15 4 Angola 295.08 328.47 526.16 55.32 16.78 5 Madagascar 182.78 183.89 318.15 366.00 259.48 6 Ethiopia 80.39 122.88 153.76 187.72 275.47 7 Zimbabwe 129.14 153.30 159.93 175.71 201.88 8 Libya, State of 205.11 223.39 225.97 33.98 136.79 9 Uganda 92.84 133.96 115.64 172.05 122.87 10 Djibouti 49.18 68.87 108.54 112.14 180.73

Total 3,115.59 3,523.98 5,486.95 2,682.30 3,272.14


Table 4.10 Export of Rice by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015

1 Egypt 17.10 84.61 199.32 30.00 77.06 2 South Africa 75.94 74.85 75.81 71.39 70.28 3 Uganda 18.44 38.89 36.97 28.69 24.19 4 Tanzania, United Republic of 12.72 5.43 20.00 19.19 1.05 5 Rwanda 0.12 3.59 12.33 14.90 16.62 6 Botswana 0.98 1.06 16.48 0.50 0.47 7 Kenya 5.35 7.47 1.63 0.74 0.11 8 Mozambique 1.90 0.00 0.12 0.46 0.00 9 Mauritius 0.84 0.07 1.31 1.91 0.05 10 Malawi 0.73 0.75 1.63 0.50 0.05

Total 135.28 218.84 366.53 169.18 190.80


3) Legumes


Production of legumes in Malawi has been increasing in the last decade, because legumes are

important food for nutrition, especially for small scale farmers. The legumes produced in

Malawi are exported mainly for India, UAE and Zimbabwe. In general Malawi imports a

certain amount of legumes from Mozambique, but depending on the year it may export in

contrary.


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Figure 4.15 Production and Export of Legumes by Malawi

Table 4.11 Export and Import of Legumes by Malawi by County (Unit: 1,000 ton)


(2011-2015) Export India 27.59 25.98 14.07 0.00 36.46 20.82 United Arab Emirates 0.00 2.05 3.00 7.33 8.65 4.21 Zimbabwe 0.85 2.88 7.84 5.29 0.00 3.37 United Kingdom 1.45 1.00 0.76 1.96 0.89 1.21 Mozambique 3.41 1.20 0.01 0.00 0.00 0.92 Singapore 0.69 1.07 0.71 0.81 1.11 1.02 Malaysia 0.93 0.77 0.78 0.87 0.67 0.81 South Africa 0.54 0.70 0.74 0.71 0.68 0.68 Others 1.56 0.64 0.87 0.80 1.21 1.02 Total 37.01 36.30 28.79 17.77 49.67 33.91 Import Mozambique 0.07 0.12 0.08 3.03 2.27 1.11 Others 0.00 0.05 0.00 0.01 0.00 0.01 Total 0.07 0.16 0.08 3.04 2.27 1.13

Source: UN Comtrade


Demand for legumes has existed in various countries. There are growing markets of pigeon

peas in India and the United Arab Emirates. These two countries also have markets for

chickpeas. South Africa has a demand for cowpeas and chickpeas. Since legumes have a

nitrogen fixation effect, they are suitable for cultivation combined with other crops. Therefore,

legumes have a high potential to be produced and exported to the region and overseas markets.

However, India imposes a 10% tariff on imported pigeon peas, unless a MOU is agreed with

India to obtain a status of the least developed countries so that the tariff is exempted.

Mozambique already signed the MOU with India and has started exporting 350,000 tonnes

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from the Nacala Port. An urgent action is awaited to prepare the MOU between India and

Malawi57.

Pigeon peas are used extensively in preparation of ‘dhal’ (simmered ground peas). ADMARC,

a state owned company for commodity trading, has a processing factory and exports such

value-added products as 10,000 tonnes of dhal in 2016 and also other private companies can

produce it.


Egypt decreased the imported amount of chickpeas in 2013 and 2014 (imported from UK

Australia and Canada), but it was raised again in 2015. Angola is also decreasing the imported

amount (from Canada, Mexico and Portugal). The imported amounts in Libya and South

Africa are slightly increasing.


Figure 4.16 Import of Chickpeas by Country in the Integrated Region

Table 4.12 Import of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015 1 Egypt 22.27 26.09 12.12 0.65 21.95 2 Angola 28.03 12.94 4.92 1.18 0.28 3 Libya, State of 2.86 2.33 7.14 7.21 6.21 4 South Africa 1.76 1.64 2.33 1.90 2.53 5 Zimbabwe 0.91 0.00 0.01 0.00 1.65 6 Sudan (before 2012) 0.85 0.00 0.00 0.00 0.00 7 Mauritius 0.41 0.42 0.71 0.44 0.39 8 Madagascar 0.85 0.35 0.00 0.01 0.01 9 Seychelles 0.25 0.33 0.07 0.01 0.03 10 Ethiopia 0.00 0.99 0.00 0.00 0.00 Others 0.83 0.53 0.32 0.33 0.49 Total 59.02 45.61 27.62 11.73 33.54


57 Interview with Malawi Confederation of Chambers of Commerce and Industry (MCCCI) in May 2017.


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Table 4.13 Export of Chickpeas by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015 1 Ethiopia 49.50 73.89 61.62 48.74 41.95 2 Tanzania, United Republic of 21.38 29.04 31.24 42.48 51.87 3 Egypt 3.03 7.50 7.17 9.78 15.55 4 Malawi 8.28 10.25 8.50 5.84 0.43 5 Sudan (before 2012) 9.70 0.00 0.00 0.00 0.00 6 Uganda 0.02 0.00 0.00 1.11 0.01 7 Djibouti 0.45 0.02 0.17 0.05 0.10 8 South Africa 0.05 0.08 0.13 0.07 0.04 9 Kenya 0.00 0.00 0.07 0.08 0.13 10 Botswana 0.08 0.07 0.02 0.09 0.13 Others 0.02 0.06 0.03 0.00 0.00 Total 92.50 120.91 108.97 108.24 110.19


Regarding the pigeon peas, Tanzania increased its export amount rapidly in the region. Kenya

and Ethiopia are also increasing the amount of their exports. Malawi could export about

50,000 tonnes in 2016.


Figure 4.17 Export of Pigeon Pea by Country in the Integrated Region

Table 4.14 Export of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015 1 Tanzania, United Republic of 0.00 0.00 1.59 18.44 44.29 2 Malawi 0.00 0.00 0.00 0.50 0.00 3 Kenya 0.00 0.00 0.00 1.34 9.37 4 Uganda 0.00 0.00 0.00 0.00 5.03 5 Ethiopia 0.00 0.00 0.00 0.07 0.95 6 South Africa 0.00 0.02 0.01 0.06 0.02 7 Zambia 0.00 0.00 0.00 0.00 0.06 Others 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.02 1.61 20.41 59.73


Table 4.15 Import of Pigeon Pea by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015 1 Kenya 0.00 0.00 0.38 4.50 3.51 2 Zimbabwe 0.00 1.47 5.72 0.01 0.70 3 Djibouti 0.00 0.00 0.00 0.01 0.11 4 South Africa 0.00 0.00 0.00 0.00 0.08 Others 0.00 0.03 0.06 0.07 0.09 Total 0.00 1.50 6.15 4.58 4.48



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4) Cotton


Among the largest export agricultural products in Malawi, cotton is the fourth largest crop

after tobacco, sugar and tea. The cotton sector produces not only lint but also crude and

refined cotton oil and cotton cake to domestic markets for human and animal consumption

respectively. As same as in Zambia, cotton is produced by small scale farmers by Out-grower

Scheme.

In 2011, the contract farming that ginneries supply inputs for farmers was replaced to the

contract-based system that the input is delivered only for the registered producers. This change

was carried out with the GOM’s Cotton Up-scaling initiative. The cotton production in

Malawi had been steadily maintained below 20,000 tonnes until 2011, but it was increased

around 60,000 tonnes in 2012 due to the injection of the fund by the initiative. However, the

export of Cotton Lint is not following the increase of the production. Most of the cotton lint is

exported to Asia or Europe. At this moment, Malawi import only little amount of cotton lint.


Figure 4.18 Production and Export of Cotton Lint by Malawi

Table 4.16 Export of Cotton Lint by Malawi by Country (Unit: 1,000 tons)


(2011-2015) Export United Arab Emirates 0.00 4.68 2.68 1.43 4.47 2.65 Hong Kong, China 0.00 0.00 0.02 2.34 3.58 1.19 South Africa 1.31 2.52 3.15 3.28 3.52 2.76 Singapore 0.00 1.00 0.00 0.00 2.39 0.68 United Kingdom 0.40 1.88 3.46 2.47 0.88 1.82 Zimbabwe 0.79 1.80 0.78 0.00 0.49 0.77 Bangladesh 1.61 3.02 0.52 0.82 0.29 1.25 Mozambique 0.10 0.00 0.00 0.00 0.28 0.08 Portugal 0.00 0.00 0.00 0.68 0.10 0.16 Switzerland 0.00 0.09 0.07 0.00 0.05 0.04 China 1.63 7.92 0.00 0.00 0.04 1.92 Others 3.63 3.35 0.77 0.44 0.00 1.64

Total 9.46 26.25 11.45 11.47 16.09 14.94 Source: UN Comtrade

010203040506070

2011 2012 2013 2014

(1000 ton) Production Export Import


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The production potential of cotton in Malawi is high, but it has faced several issues in recent

years. Its production in Malawi peaked in the 2011/2012 season, because the GOM injected a

huge budget into the cotton sector for financing. The funds were supposed to revolve in the

sector but ended up being depleted58. It may be caused by the dysfunctional levy system for

input procurement. Because of that, the cotton production in Malawi faced trouble in the

2016/2017 season that seven of the total eight ginners in Malawi had refused to give farm

inputs to cotton farmers on credit. The reason for that is because the farmers did not repay

their own loans in the last year. In total the Cotton Ginners gave out MWK 2 billion loan in

inputs to cotton farmers in 2016 and have only managed to recover MWK 700 million.


Egypt, South Africa and Mauritius are main importers of cotton in the integrated region.

However, demand of the cotton in the integrated region is smaller than the ones in overseas

such as Asia and Middle East. Thus the target market of the cotton may be overseas markets.

Please refer the details in section 3.1.7 in the Chapter of Zambia.

5) Tobacco


Tobacco is a main export crop in Malawi, and Malawi is historically famous for burley

tobacco. However, tobacco production in Malawi has declined after its peak in 2009 and the

export quantity is also in same trend. In 2012, the export quantity was over the production,

which means stock was used to fill up the demand.

Malawi has been one of largest tobacco exporting countries, therefore export partner countries

are varied, but Belgium is the first partner. Malawi collects tobacco from Zambia and

Mozambique and exports it to EU.

Source: FAOSTAT

Figure 4.19 Production and Trade of Tobacco by Malawi

58 Malawi cotton farmers cry foul, The Nation, http://mwnation.com/malawi-cotton-farmers-cry-foul/ Sep. 21, 2017


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Table 4.17 Export and Import of Tobacco by Malawi by Country (Unit: 1000 tons)


(2011-2015) Export Belgium 22.76 60.27 17.96 34.61 27.53 32.62 Poland 6.09 6.83 5.94 109.84 6.36 27.01 Egypt 13.60 16.96 2.81 16.52 15.69 13.12 Russian Federation 10.65 14.64 15.18 13.43 10.52 12.88 Germany 12.32 10.78 9.94 11.08 10.42 10.91 United States of America 11.93 13.99 11.32 9.61 6.58 10.69 Switzerland 4.54 17.62 4.46 3.85 2.41 6.57 China 5.59 4.90 7.54 7.68 6.72 6.49 Netherlands 5.70 8.92 8.29 3.78 4.96 6.33 Korea, Republic of 5.70 6.84 5.98 3.13 2.88 4.91 Others 60.42 60.33 46.31 42.58 32.17 48.36 Total 159.29 222.09 135.73 256.10 126.23 179.89 Import Zambia 17.34 5.96 21.06 14.12 13.29 18.84 Mozambique 5.09 3.08 3.38 2.26 1.91 4.09 Tanzania, United Republic of 4.01 3.19 0.10 0.00 0.00 1.93 South Africa 0.34 0.01 0.00 0.00 0.00 0.14 Others 0.21 0.00 0.02 0.61 1.13 0.52 Total 26.98 12.23 24.56 17.00 16.32 25.52

Source: UN Comtrade


Tobacco is a main export product in Malawi. However, it seems that the total global demand

of tobacco is going to decrease gradually in the middle- to long-term with considering the

decreasing its demand in developed countries under the global anti-tobacco movement and

increasing its demand from middle income countries.

The products are transported in bulk to EU and Asian countries. Therefore, it will easily get

benefit of cost reduction by the Nacala Corridor development, in both terms of production

export and input import.


South Africa imported tobacco from Zimbabwe, Brazil and India and is decreasing the amount

slightly. The imported amount of Egypt is largely increasing (from Greece, Germany, India

and Malawi). Kenya, Mozambique and Ethiopia export constantly. But Zimbabwe’s import is

decreasing drastically. Malawi and Zambia were major exporters to the Zimbabwe.


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Figure 4.20 Import of Tobacco by Country in the Integrated Region

Table 4.18 Import of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015 1 South Africa 40.37 33.59 23.85 32.06 28.97 2 Egypt 10.33 24.09 16.92 40.30 31.73 3 Zimbabwe 29.59 43.30 19.18 15.44 1.72 4 Kenya 21.80 11.11 19.92 18.80 16.78 5 Malawi 26.98 12.23 24.56 17.00 16.32 6 United Rep. of Tanzania 3.02 2.32 2.47 4.40 4.11 7 Mozambique 2.18 1.49 4.48 2.66 2.21 8 Ethiopia 1.87 1.54 1.99 2.00 1.55 9 DRC 4.14 4.72 0.97 0.64 0.45 10 Angola 2.10 2.15 2.72 0.20 2.05 Others 9.64 4.16 4.62 4.14 3.51 Total 152.02 140.69 121.67 137.64 109.40


Table 4.19 Export of Tobacco by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015 1 Malawi 159.29 222.11 135.73 256.10 126.24 2 Zimbabwe 134.47 131.85 147.87 141.56 148.27 3 United Rep. of Tanzania 74.02 107.59 69.45 76.53 65.68 4 Mozambique 58.38 55.94 58.94 58.61 67.67 5 Zambia 31.11 37.91 41.62 32.08 26.09 6 Uganda 17.40 17.54 32.55 24.01 23.36 7 Kenya 22.03 17.87 10.12 20.29 4.66 8 South Africa 4.15 2.80 1.70 4.40 2.71 9 DRC 8.60 2.83 1.28 1.26 0.03 10 Egypt 0.35 0.38 1.49 3.49 0.93 Others 0.38 0.73 0.55 0.26 0.25 Total 510.17 597.55 501.28 618.58 465.87



4-37

(3) Potential and Challenges of Development on Processed Products

1) Sugar Cane and Sugar


As explained in sub chapter 3.1 for Zambia, processing to produce sugar is in two steps: to

make raw sugar and refine the raw sugar into granulated sugar and others.

<Raw Sugar>

In 2014, production of sugar cane in Malawi was about 2.8 million tonnes, and 295,000

tonnes of raw sugar and 95,000 tonnes of molasses are produced by them. One third of the

raw sugar was exported to EU and neighbouring countries. Portuguese imported large

amount of raw sugar in 2014, but they did not import it in 2015. The UK imported large

amounts of raw sugar biyearly. Import by Malawi is at a minimal level.

Source: FAOSTAT, UN Com Trade Database Figure 4.21 Production and Trade of Raw Sugar by Malawi

Table 4.20 Export and Import of Raw Sugar by Malawi by Country (Unit: 1,000 ton)

2011 2012 2013 2014 2015 Average

(2011-2015) Export

Portugal 35.69 72.30 97.50 37.35 0.00 48.57 United Kingdom 60.64 3.25 29.94 9.57 58.87 32.46 Zimbabwe 60.09 6.54 5.82 0.51 15.02 17.60 Spain 30.43 7.14 4.19 11.50 11.59 12.97 USA 18.85 0.61 17.29 5.75 4.70 9.44 Belgium 7.42 0.00 10.17 6.60 6.72 6.18 Kenya 22.24 2.28 0.76 3.00 0.21 5.70 United Rep. of Tanzania 12.67 0.86 0.00 0.00 9.18 4.54 Others 26.37 1.09 10.26 12.91 47.35 19.60 Total 274.39 94.07 175.93 87.18 153.64 157.04

Import Zambia 0.00 0.60 0.00 0.18 0.00 0.16 South Africa 0.05 0.02 0.01 0.01 0.10 0.04 China 0.00 0.00 0.01 0.01 0.08 0.02 Others 0.01 0.01 0.00 0.01 0.00 0.00 Total 0.06 0.62 0.02 0.20 0.18 0.22

Source: UN Comtrade


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<Refined Sugar>

Although Malawi has a substantive production capacity of sugar, their export amount of

refined sugar is strictly limited. It has been capriciously exported to neighbouring countries

including the South Africa, Tanzania, Kenya, Republic of Congo and Zimbabwe.


Figure 4.22 Production, and Trade of Refined Sugar by Malawi

Table 4.21 Export and Import of Refined Sugars by Malawi by Country (Unit: 1,000 ton)

Export 2011 2012 2013 2014 2015 Average

(2011-2015) Export

1 South Africa 0.00 0.00 0.00 0.00 6.34 1.27 2 United Rep. of Tanzania 1.80 0.83 0.00 0.00 0.51 0.63 3 Kenya 1.74 0.48 0.00 0.00 0.00 0.44 4 Congo 2.02 0.00 0.00 0.00 0.00 0.40 5 Zimbabwe 0.20 0.27 0.00 0.00 0.84 0.26 6 Others 0.66 0.03 0.00 0.00 0.00 0.14

Total 6.41 1.61 0.00 0.00 7.69 3.14 Import

1 South Africa 0.05 0.01 0.01 0.01 0.09 0.04 2 China 0.00 0.00 0.01 0.01 0.06 0.01 3 Others 0.00 0.01 0.00 0.00 0.00 0.00 Total 0.05 0.02 0.02 0.02 0.15 0.05



The sugar cane market is almost monopolized except for a few small scale companies. The

products are exported to the EU and surrounding countries. As Malawi has the highest

productivity of sugar cane among the neighbouring countries and other export countries and

the sugar cane can be processed into rum, confectionery and ethanol, the demand of sugar is

increasing according to the economic development in the neighbouring countries. Malawi’s

export of processed products from sugar cane is expected to expand. The current concern of

the sugar industry is the abolition of EU’s sugar production quota in October 2017. Due to that,

the Malawian sugar industry may lose main sugar export market which will be hardest hit.

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The neighbouring countries with either a relatively large market or small have increased

import. Therefore, Zambia and Malawi can expect to increase the export to these neighbouring

countries.

2) Tea


Tea production in Malawi was 45,000 tonne in 2014. Tea is a major export crop in Malawi

and most of the products are exported. About one third of the products are exported to South

Africa. The U.K is the second partner for tea export.


Figure 4.23 Production and Export of Tea by Malawi

Table 4.22 Export and Import of Tea by Malawi by Country (Unit: 1,000 ton)

2011 2012 2013 2014 2015 Average

(2011-2015) Export South Africa 15.65 14.04 14.10 17.57 14.02 15.07 United Kingdom 11.32 13.33 10.11 9.93 11.97 11.33 Kenya 6.96 4.99 3.36 6.12 1.55 4.60 USA 2.75 3.64 4.95 1.79 1.24 2.87 Netherlands 2.02 0.94 2.27 2.55 3.18 2.19 Germany 1.00 0.63 0.62 1.24 1.08 0.91 United Arab Emirates 0.09 1.15 1.10 1.03 0.87 0.85 Pakistan 0.76 0.76 0.44 1.70 0.05 0.74 Botswana 0.81 0.65 0.80 0.72 0.65 0.73 Singapore 0.00 0.09 1.33 1.42 0.24 0.62 Others 4.65 5.21 4.18 3.44 3.94 4.28 Total 46.01 45.44 43.25 47.51 38.79 44.20 Import South Africa 0.07 0.04 0.05 0.04 0.09 0.06 Mozambique 0.03 0.02 0.11 0.00 0.00 0.03 Others 0.03 0.01 0.07 0.08 0.04 0.05 Total 0.13 0.07 0.23 0.13 0.13 0.14

Source: UN Comtrade


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Tea is a major export product in Malawi, but Malawian tea is not famous yet in the global

market. The factors surrounding tea production such as decreasing production and an ageing

labour force will be obstacles in developing and expanding the product. Recently a coalition of

the stakeholders in the tea sector launched a programme called “Malawi Tea 2020” to improve

productivity and competitiveness of the industry as well as the living standard of the workers59.

These products are transported in bulk and are easy to get the benefit of cost reduction by the

Nacala Corridor development, in both terms of production export and input import.


Egypt imports a large quantity of tea from Kenya, then Sri Lanka, India and other countries.

South Africa increases the import amount slightly and the volumes of import and also export

by other countries are very stable. As described above, Malawi’s tea is not very famous

currently, but toward the outside market of the above mentioned countries, it have a possibility

of export expansion.


Figure 4.24 Import of Tea by Country in the Integrated Region

Table 4.23 Import of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Importer 2011 2012 2013 2014 2015 1 Egypt 100.42 109.38 104.70 103.25 87.95 2 Kenya 7.69 8.75 12.67 10.93 97.01 3 South Africa 24.05 24.08 25.56 27.00 26.05 4 Libya, State of 9.44 22.77 7.55 16.93 16.41 5 Angola 1.24 16.16 1.41 3.37 2.18 6 Botswana 1.83 2.21 1.92 1.65 1.76 7 Namibia 2.29 1.29 1.28 1.09 1.67 8 Djibouti 1.00 1.73 1.34 1.07 0.08 9 Zambia 0.80 1.10 1.14 1.26 1.17 10 Swaziland 0.00 1.12 0.69 0.83 0.88 Others 3.30 2.98 3.03 3.81 3.86 Total 152.05 191.57 161.28 171.20 239.01


59 Malawi Tea 2020. http://www.malawitea2020.com


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Table 4.24 Export of Tea by Country in COMESA, SADC and EAC (Unit: 1,000 ton)

Exporter 2011 2012 2013 2014 2015 1 Kenya 388.34 380.36 448.81 458.73 412.13 2 Uganda 55.26 55.21 62.02 59.69 53.32 3 Malawi 46.01 42.49 43.25 48.23 38.79 4 Tanzania, United Republic of 27.11 27.78 26.37 26.78 29.29 5 Rwanda 23.21 23.01 22.34 24.03 16.55 6 Zimbabwe 11.22 11.54 11.86 12.79 13.96 7 Burundi 9.41 9.73 10.06 10.44 10.03 8 South Africa 7.10 10.41 7.81 7.13 6.12 9 Egypt 4.70 5.13 2.18 2.55 3.25 10 Mozambique 1.60 2.43 4.00 4.08 0.47 Others 1.16 0.72 0.72 2.06 1.39 Total 575.11 568.82 639.42 656.51 585.29


3) Edible Oil


In 2014, the total amount of soya bean production was 120,900 tonnes. The soya bean is

mainly used for oil processing in domestic markets and some quantities are exported to

neighbouring countries like Zimbabwe, Botswana, South Africa, Kenya and Zambia.

Regarding the import, only a limited quantity is imported from Zimbabwe and other countries.


Figure 4.25 Production and Export of Oil Seeds in Malawi

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Table 4.25 Export and Import of Soya Beans by Malawi by Country (Unit: 1,000 ton)

2011 2012 2013 2014 2015 Average

(2011-2015) Export Zimbabwe 2.21 0.45 6.39 9.68 6.75 5.09 Botswana 0.95 1.72 6.38 1.67 0.00 2.14 South Africa 0.16 0.03 0.51 5.71 0.98 1.48 Kenya 0.34 0.03 0.15 3.59 0.24 0.87 Zambia 1.06 0.02 0.85 0.69 1.47 0.82 Others 0.33 2.31 0.06 1.15 0.12 0.79 Total 5.04 4.56 14.33 22.48 9.56 11.19 Import Zimbabwe 0.05 0.74 0.11 0.08 0.02 0.20 USA 0.00 0.60 0.36 0.00 0.00 0.19 Italy 0.00 0.40 0.00 0.49 0.00 0.18 Zambia 0.03 0.52 0.13 0.03 0.00 0.14 South Africa 0.01 0.00 0.00 0.40 0.03 0.09 Mozambique 0.00 0.02 0.00 0.11 0.00 0.03 Others 0.00 0.00 0.00 0.01 0.00 0.00 Total 0.09 2.28 0.60 1.12 0.05 0.83

Source: UN Comtrade

Malawi totally depends on import for soya bean oil and has only a negligible amount of

sunflower oil export, with almost the same amount of domestic production and import.

【Soya Bean Oil】【Sunflower Oil】

Source: FAOSTAT, ITC/UN Com Trade Figure 4.26 Production and Trade of Edible Oil by Malawi

Table 4.26 Import of Soya Bean Oil by Malawi by Country (Unit: 1,000 ton)


(2011-2015) Argentina 14.07 5.85 3.82 6.20 4.41 6.87 South Africa 1.33 1.20 0.90 2.63 1.47 1.50 Kenya 0.75 2.28 0.00 0.00 0.00 0.61 Malaysia 0.00 0.00 0.35 0.46 2.17 0.59 Zambia 0.00 0.06 0.21 0.21 0.32 0.16 Others 1.29 0.15 2.17 0.70 1.01 1.07 Total 17.44 9.53 7.45 10.20 9.39 10.80

Source: UN Comtrade

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Four kinds of oil seeds (sunflower, groundnut, soya, and cotton) listed in NES have a high

demand both from domestic and international markets since they can be processed into various

products including cooking oil. Although most of the companies processing oil seed in Malawi

produce and sell their products for local markets in an oligopolistic structure, it would be

possible for the companies who could acquire sufficient production capacity of edible oil to

meet the demand in the surrounding countries.


As described in 3.1.7, the market of edible oils is expanding in neighbouring countries,

therefore, Malawi could expand its export when they are able to enter into the countries’

markets.

4.2 Industry

4.2.1 Overview of the Industry

In Malawi, the industry sector has not yet developed, vis-à-vis the service and the agriculture

sector. The value added of the industry sector was MWK 187.82 billion or 14.4% of the GDP

in 2016 at the 2010 constant price, whereas the service sector made the largest contribution of

MWK 665.45 billion or 50.9% of the value added to the national economy, followed by the

primary sector of which accounted for 28.6% of the GDP. The industry grew at 1.62% from

2015 to 2016, which is slightly lower than the growth of GDP, 2.74%. In the industry sector,

the manufacturing sector contributed MWK 123.16 billion or 9.4% to the GDP, which

accounted for 65.6% of the total of the industry sector. However, the construction sector has

grown much faster than the manufacturing from 2015 to 2016.

In 2016, 472,332 persons or 7.4% of the total employment were engaged in the industry sector.

The manufacturing sector employed 261,697 persons or 4.1% of the total, followed by the

construction sector accounting for 2.6% of the total employment. The majority of the

population in Malawi is still engaged in the primary industry of agriculture, forestry and

fishery, the share of which exceeded 60% of the total employment.


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Table 4.27 GDP 2016 at 2010 Constant Price

Sector GDP 2016 (2010 Constant Price) 2015-2016

Growth Rate (million MWK) (Share) Agriculture, forestry and fishing 364,471 27.9% -0.17% Mining and quarrying 11,647 0.9% 0.43% Manufacturing 123,159 9.4% 1.37% Electricity, gas and water supply 16,020 1.2% 0.41% Construction 37,002 2.8% 3.41% Wholesale and retail trade 208,044 15.9% 2.04% Transportation and storage 35,580 2.7% 4.66% Accommodation and food services 25,957 2.0% 5.71% Information and communication 57,844 4.4% 4.80% Financial and insurance services 68,320 5.2% 5.48% Real estate activities 101,287 7.7% 3.05% Professional and support services 4,001 0.3% 3.71% Public administration and defence 27,123 2.1% 6.24% Education 35,308 2.7% 7.92% Health and social work activities 35,777 2.7% 7.18% Other Services 66,210 5.1% 5.48% GDP at constant market prices 1,306,937 100.0% 2.74%

Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017.

Table 4.28 Employment by Industry 2013

Sector Employment 2013

Persons Share (%) Agriculture, forestry and fishing 4,091,415 64.1% Mining and quarrying 19,149 0.3% Manufacturing 261,697 4.1% Electricity, gas, steam and air conditioning supply 12,766 0.2% Water supply, sewerage, waste management and remediation activities 12,766 0.2% Construction 165,954 2.6% Wholesale and retail trade and repair of motor vehicles 1,034,024 16.2% Transport, storage and communication 127,657 2.0% Accommodation and food services activities 44,680 0.7% Professional, scientific and technical 12,766 0.2% Administrative and support services 44,680 0.7% Public administration and defence 127,657 2.0% Education 140,423 2.2% Human health and social work 89,360 1.4% Other service 114,892 1.8% Activities of households as employers 82,977 1.3% Total 6,382,863 100.0%

Source: National Statistical Office. Labour Force Survey 2013

4.2.2 Current Condition and Potential of Industrial Development Along Nacala Corridor

Similar to agriculture, a previous study shows the potential for growth and export of some

industry sectors60. Among them, the following are considered to be promoted through the

development of the Nacala Corridor.

60 JICA (Mitsubishi UFJ Research and Consulting/PADECO), “Data Collection Survey for Potential Industries in Malawi”, August 2013.


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(1) Agro-processing

Apart from the agro-processing products mentioned in the previous section, the following

products has the potential for growth with fulfilling the increasing demand in domestic and

neighbouring countries’ markets.

Beer: The Carlsberg Malawi Ltd, 60% invested by the headquarters in Denmark and 40% by

local Press Corporation, produces beer in Malawi which is the only production base of

Carlsberg in Africa61. As the NES also regards beverages including beer as high value added

products with high export potential and gives policy support, the Nacala Corridor is expected

to be utilized as one of the main export routes for the product. Although 1,000 to 2,500 tons of

beer has been exported per year mainly to Mozambique, a high tariff rate on imported beer in

Mozambique (20%) has to be reduced for further facilitation and expansion of Malawi’s beer

exports.

(2) Plastic Packaging

Plastic Packages produced in Malawi have a certain export share to neighbouring counties.

The NES regards the plastic packaging industry as a necessary sector for the export of

agro-processing products with add-valuing. A working group on packaging is organised under

the Trade, Industry and Private Sector Development Sector Wide Approach (TIP SWAp) of

NES to introduce a strategy to increase added value of packaging, through the collaboration

and division of labour between expert agro-processors and packaging manufacturers. When

this strategy is successfully implemented, further expansion of distribution of the products in

the region through the Nacala Corridor could be expected. At the same time, the distribution

of the material for packaging (pellet) which is mostly imported via the Beira Port, is expected

to fully shift to the Nacala Corridor when it is developed.

4.3 Mining

4.3.1 Overview of the Mining

Unlike Zambia, the mining and quarrying sector in Malawi brings about limited contribution

to the national economy, of which accounts for 1% or less from 2011 to 2016. In 2016, the

contribution of the mining sector to GDP was 0.9%. The activities related to the mineral

production in Malawi is artisanal and small scale and mostly for domestic consumption.

Table 4.29 Contribution of Mining and Quarrying Sector to the National Economy (Million MWK at 2010 Constant Price)

2011 2012 2013 2014 2015 2016

Mining and Quarrying 9,786 11,240 12,091 11,467 11,597 11,647 GDP at constant market prices 1,069,252 1,091,543 1,157,601 1,231,911 1,272,067 1,306,937 Mining Sector Share in GDP 0.92% 1.03% 1.04% 0.93% 0.91% 0.89% Mining Sector Growth Rate - 15% 8% -5% 1% 0%

Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2014 and 2017.

61 In August 2016, the ownership was sold to the French private company, Groupe Castel.


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4.3.2 Mineral Production in Malawi

Malawi produces cement, crushed stone, agricultural lime, limestone, salt, phosphate,

gemstones and stones for decorative and/or dimensional use. Most of the mineral production

except coal and rock phosphate expanded in 2016. Coal production was 43,338 tonnes in 2016,

which declined from 58,774 tonnes in 2015, due to the cheap coal import from Moatize in

Mozambique. Major coal mines including Mchenga, Malcoal and Kaziwiziwi Mines produce

coals for domestic industry use. The coal reserves are estimated over 22 million tonnes of

proven coal reserves in the country. Cement and rock aggregates productions significantly

increased to 188,946 tonnes and about 20 million tonnes respectively, to meet a growing

demand from the expanding economic activities. The production of agricultural and hydrated

lime was also expanded to 38,278 tonnes. Gemstones production reached 1,300 tonnes in 2016

and is expected to increase up to 2,000 tonnes in 201762.

The uranium production at Kayelekera Uranium Mine has been stopped still. The first

large-scale mining project in Malawi, Kayelekera Uranium Mine, opened in 2009 in the

northern part of Malawi by an Australian company, Paladin Energy Ltd. Due to the project,

the contribution of the mining sector to GDP improved from 3% in 2008 to around 10% in

2009, and further increase was expected to at least 20% by 2020 in MGDS II. However, the

production of uranium has been suspended since 2014, because of the crash in uranium prices

to below USD 40/lb. The Kayelekera Uranium Mine was sold to a Chinese firm in 2015. The

production shall not be resumed before the price of uranium rises around USD 70 - USD 75

per pound63.

Table 4.30 Mineral Production in 2015 and 2016

Type of Mineral 2015 2016

Quantity (ton)

Value (million MWK)

Quantity (ton)

Value (million MWK)

Coal 58,774.00 791.16 43,338.00 638.92 Cement 65,560.00 71.10 188,946.00 12,500.00 Agricultural and Hydrated Lime 33,158.00 433.00 38,278.00 499.86 Uranium Concentrates - - - - Rock Phosphate 12,400.00 205.00 2,500.00 12,400.00 Rock aggregate 1,158,742.00 1,566.00 19,990,000.00 3,309.00 Gemstones 136.00 102.50 1,300.00 205.72 Dimension stone 40,500.00 13.25 70,000.00 15.87 Iron ore - - 3,800.00 9.59


4.3.3 Export of Mineral Commodities

Mineral commodities of coal, agricultural and calcite lime, dimension stones, and gemstones

were mainly exported from Malawi. The dominant export destination of coal and agricultural

lime are Rwanda and Mozambique respectively. Importers of gemstones are mostly Asian

62 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 63 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017


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countries, in addition to South Africa, USA, and European countries. Though the export value

of the mineral commodities was marginal, approximately MWK 400 million was earned from

royalties, licence processing and ground fees from July 2016 to March 201764.

Table 4.31 Mineral Export in 2015 and 2016

Type 2015 2016

Quantity (ton)

Value (million MWK)

Quantity (ton)

Value (million MWK)

Coal 7,520 85.01 8,071 159.76

Agricultural/calcite lime - - 1,550 310

Dimension stones 40,500 13.25 41,218 0.12

Rock aggregate 35 1750

Gemstones 150 185.62 292.6 382.48

Rock/Soil samples 86 4.52 32.2 8.04


4.3.4 Government Policy of Mining Sector

The agriculture sector had been prioritized in the history of economic development in Malawi.

However, the government started recognising the mining sector as important sector for the

economic development of the country. The mining sector was selected as one of nine key

priority areas in the MGDS 2006-2011 and MGDS II 2011-2015. In the MGDS II, it is

mentioned that the development of the mining industry can significantly boost the economic

growth of the country through employment creation and generation of foreign exchange.

In order to achieve the goal of the MGDS, the Mines and Mineral Policy of Malawi was

formulated by the Ministry of Mining in 2013. The policy statements mentioned in the Policy

are shown below. In the newly drafted MGDS III 2017-2022, however, the mining sector is

not identified as a key priority area, but one of the components in industrial development.

Mineral Development Generate, collect and disseminate baseline geological information

Promote and market the mineral sector

Encourage joint ventures in mining involving local and foreign companies

Ensure that supporting infrastructure and essential services are in place

Set up research and development institution for high-level skills in mineral development

technology

Provide an enabling environment in order to develop the artisanal and small scale mining

sub-sector

Promote downstream value-addition of minerals

Investment Climate in the mineral sector

Continue to maintain policies conductive to high economic growth in order to attract more

investments into the mineral sector

64 Ditto.


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Introduce and maintain competitive fees which will be reviewed regularly to always be

comparable to those obtainable internationally

Governance Strengthen institutions in the mineral sector

Review the mineral legislation

Put in place a clear, transparent and equitable regulatory framework

Environmental Management Enforce environmentally sustainable mining practices

Social Issues Address social issues in the mining and mineral sector

Regional and International Co-operation Promote regional and international co-operation in the mineral sector

4.3.5 Increased Mining Projects in Recent Years

The government is promoting foreign investments for the mining sector according to the

MGDS and the sector policy mentioned above. Recently, the potential of rare metal and rare

earth elements in Malawi is recognized by some foreign investors in addition to uranium.

Some projects are under exploration and study by foreign companies from Australia, Canada,

China, etc. Among them, the major projects are the Kanyika Niobium Project and the Songwe

Rare Earth Element project, which are expected to improve the outputs of the mining sector

drastically. The outlines of the projects are shown below:

Kanyika Niobium Project Company: Globe Metals and Mining (Australian Company)

Location: Mzimba District in the Northern Region

Products: niobium (3,000 tonnes/year), tantalum, uranium and zircon.

Production: niobium - 3,000 tonnes/year

Employment: 1,000 employment openings, including 100 expats.

Status:

- Mining agreement have been made between Malawi Government and the company

- Feasibility Study and Environmental Impact Assessment: EIA have been conducted

Concerns:

- Relocation of community is delaying because of the relocation of the customary land

ownership and compensation to the community

- The problem of power supply to the project was solved by constructing a small-scale

hydroelectric power plant at Bua River. The thermal power plant at Salima also can be

also used.

Songwe Rare Earth Element Project Company: Mkango Resources (Canadian Company)

Location: Songwe Hill, Phalombe District in the Southern Region

Products: Rare Earth Element (Element 39)

Production: 2,840 tonnes/year


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Employment: 20 expats and 200 jobs

Status:

- Pre-Feasibility Study has been conducted

- Bankable Feasibility Study is being carried out

- EIA is not approved

Concerns:

- Having good relations with the community and conducting some community projects

- Issues on the power supply – high-voltage power is needed and brought from ESCOM

substation in Mulanje

4.4 Trade

4.4.1 Overview of the International Trade

The international trade of Malawi has been expanded in the last decade. The export and import

values were almost doubled from 2006 to 2015. The values of the exported and imported

goods exceeded USD 2.3 billion and USD 1 billion, though the trade deficit also doubled to

USD 1.2 billion.

Malawi’s leading export partner in 2015 was Belgium, followed by Zimbabwe and

Mozambique. The export value to each of these top three countries exceeded USD 100 million

and the share of the total value of the export to the three countries reached nearly 30%. On the

other hand, Malawi imported USD 417 million or 18.1% of the total from South Africa,

followed by China (13.1%), the United Arab Emirates (11.0%) and India (10.3%).

The exported value to Zambia was USD 19 million, 16th largest amount, while the imported

value from Zambia ranked 5th among the partners. Among the neighbouring countries, the

trade between Malawi and Mozambique is more active than trade with Zambia. The Nacala

Corridor development can expand trade with Zambia and contribute to the growth of export to

ameliorate the trade deficit with Zambia.


Figure 4.27 Export and Import Values from 2006 to 2015

666 869 879

1,188 1,066

1,425

1,183 1,208 1,342

1,080

1,207 1,378

2,204 2,022

2,173

2,428 2,330

2,845 2,774

2,312

0

500

1,000

1,500

2,000

2,500

3,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(US$

million)

Export Import


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Figure 4.28 Top 10 Export Partners in 2015


Figure 4.29 Top 10 Import Partners in 2015

4.4.2 Traded Commodities

Raw materials have been the primary goods among the exported goods from Malawi.

Although the share of the raw materials declined from around 75% at the peak years such as

2008 or 2012, it was still high, 56% in 2015. This is because the Malawi economy is

characterized by mono-culture, depending on exporting tobacco. As described in Table 4.32,

the tobacco export value was USD 496 million and accounted for 46% of the value of the

export commodities in 2015, followed by sugar (9%) and coffee and tea (7%). Thus, it is an

urgent task to develop the industry to process raw materials and to export the value added

goods.

Similar to the situation in Zambia, import of consumer goods increased from 36% in 2006 to

42% in 2015. The intermediate goods consisted of 31% of the total of the imported goods by

product category. The share of the imports of the capital goods and raw materials were 18%

and 7%, showing a slight decreasing trend in the last decade.

In terms of commodities, the import of fuels including oil and coal accounted for the largest

value of USD 250 million or 11%, then followed by fertilizer, pharmaceutical products, and

the category of boilers, machinery and mechanical appliances, the share of which was about 8

to 10% each. The import of cereals including maize was 6% of the total value. In 2015, 48.9%

of fuels were imported from the UAE, followed by South Africa (21.6%), Mozambique

114

100 100

80

64 57 56 52 50 48

0

20

40

60

80

100

120

140

160

180

200

Belgium

Zimbabwe

Mozambique

South Africa

United Kingdom

Egypt

China

India

Germ

any

United States

(US$

million)

417

304

254 238

118

77 73 72 71 52

0

50

100

150

200

250

300

350

400

450

South Africa

China

United Arab Emirates

India

Zambia

United Kingdom

Mozambique

Japan

Switzerland

United States

(US$

million)


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(13.9%) and Kuwait (10.4%). While, two major supplies of fertilizer to Malawi are the UAE

and China accounting for 27% and 25% respectively65.


Figure 4.30 Export by Product Category from 2006 to 2015


Figure 4.31 Import by Product Category from 2006 to 2015

65 Market Analysis and Research, International Trade Centre (ITC) calculation based on National Statistical Office (NSO) of Malawi statistics. http://www.trademap.org/Index.aspx#

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(US$

million)


0

500

1,000

1,500

2,000

2,500

3,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(US$

million)



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Table 4.32 Top Ten Export and Import Commodities in 2015 Export Import

Rank Commodities (HS description) million USD

Share Rank Commodities (HS description) million USD

Share

1 Tobacco and manufactured tobacco substitutes 495.67 45.9% 1


250.21 10.8%

2 Sugars and sugar confectionery 98.26 9.1% 2 Fertilisers 223.57 9.7% 3 Coffee, tea, mate and spices 71.53 6.6% 3 Pharmaceutical products 194.20 8.4%

4 Edible vegetables and certain roots and tubers 64.73 6.0% 4 Nuclear reactors, boilers, machinery and

mechanical appliances; parts thereof 187.46 8.1%

5 Residues and waste from the food industries; prepared animal fodder 43.99 4.1% 5

Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof

149.52 6.5%


39.15 3.6% 6 Cereals 128.97 5.6%

7

Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included

35.56 3.3% 7

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

118.49 5.1%

8 Plastics and articles thereof 29.97 2.8% 8 Plastics and articles thereof 101.08 4.4%

9 Cotton 24.34 2.3% 9 Other made up textile articles; sets; worn clothing and worn textile articles; rags 92.91 4.0%

10 Fertilisers 22.75 2.1% 10 Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans

69.91 3.0%


Table 4.33 Top Five Importers and Exporters of Top Five Traded Commodities in 2015

Commodities Top Five Countries

EXPORT

1 Tobacco and manufactured tobacco substitutes Belgium (21.9%); Egypt (11.4%); China (10.2%); Germany (8.8%); Russian Federation (7.6%)

2 Sugars and sugar confectionery United Kingdom (36.7%); South Africa (10.7%); Zimbabwe (9.4%); Spain (9.1%); Italy (8.3%)

3 Coffee, tea, mate and spices South Africa (39.3%); United Kingdom (28.7%); Netherlands (7.4%); United States of America (4.1%); Germany (3.6%)

4 Edible vegetables and certain roots and tubers India (78.1%); United Arab Emirates (8.5%); Singapore (2.6%); Indonesia (1.8%); United Kingdom (1.7%)

5 Residues and waste from the food industries; prepared animal fodder

Zimbabwe (68.6%); Kenya (14.8%); South Africa (7.7%); Tanzania, United Republic of (7.0%); Mozambique (1.2%)

IMPORT

1 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

United Arab Emirates (48.9%); South Africa (21.6%); Mozambique (13.9%); Kuwait (10.4%); Switzerland (3.3%)

2 Fertilisers United Arab Emirates (27.1%); China (23.9%); Mauritius (6.8%); Switzerland (6.8%); South Africa (5.0%)

3 Pharmaceutical products India (53.8%); Belgium (9.4%); Denmark (9.3%); United States of America (7.0%); United Arab Emirates (4.9%)


South Africa (25.4%); China (21.9%); India (16.1%); United Arab Emirates (5.3%); Germany (5.3%)

5 Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof

Japan (40.7%); South Africa (21.8%); India (9.7%); United Kingdom (7.2%); United States of America (4.8%)

Sources: ITC calculations based on National Statistical Office (NSO) of Malawi statistics since January, 2011. http://www.trademap.org/Index.aspx


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4.4.3 Development Potential and Challenges of the Trade Sector in the Nacala Corridor Region

For Malawi’s trade sector, the reduction of the persistent trade deficit is a crucial issue. In

order to expand the export values, industry development is indispensable to produce and

export the value added products, not the raw materials. Although the future of the tobacco

industry is unknown, the development of high-quality tobacco products and establishing a

Malawian brand image of tobacco and tea could contribute to value addition to and the export

of these traditional commodities. Moreover, regarding the expansion of the production of

stable food, maize is important not only for the reduction of the import of maize from Zambia

but also for food security. The development of agro-processing industry development and

capacity building for that purpose is in urgent need.

The development of the Nacala Corridor can promote the export of the agricultural products,

such as tobacco, sugar, tea, and groundnuts by the improved access and reduction of the

transport cost. According to the interviews with the tobacco industry and logistics firms, the

improvement and rehabilitation of the railways of the Nacala Corridor and construction and

expansion of container terminals can significantly improve the transport and expand the export

of tobacco, sugar, and other commodities such as pigeon peas. Meanwhile, the railways have a

potential to reduce the transport cost of the fuel, the largest imported commodity. As discussed

in the trade sector of Zambia, groundnuts are the major commodity exported to Zambia from

Malawi through the Nacala Corridor. The improvement of the Nacala Corridor may be able to

contribute to expansion of the export of groundnuts and other products. The establishment of

the OSBP can reduce the trade barriers by improving the custom procedure, so that the

development of the OSBP on the border with Mozambique should be encouraged as well.

However, the corridor development might have a potential to also increase the import from

Zambia.

4.5 Tourism

4.5.1 Overview of the Tourism

The tourism sector in Malawi contributed MWK 138 billion (USD 194.9 million) to GDP

directly, and MWK 290 billion (USD 409.0 million) to GDP totally, which accounted for

3.4% and 7.2% of total GDP in 2016. The sector is expected to grow by 4.1% in 201766.

The tourist arrival was 804,900 persons in 2015 and has increased by the annual average

growth rate of 1.53% since 2010. Nearly 80% of the tourists came from Africa, followed by

those from Europe, which accounted for 12%. The primary purpose of the visit to Malawi was

work or business related. The visitors coming for business reached 73% of the visitors in 2015

and increased by 15% since 2010, while the tourists for holidays and vacation and for visiting

friends and relatives declined by 7% each.

66 World Travel & Tourism Council. TRAVEL & TOURISM ECONOMIC IMPACT 2017 MALAWI. https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2017/malawi2017.pdf


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Table 4.34 Tourist Arrivals

2010 2011 2012 2013 2014 2015 Annual Average

Growth Rate 2010-2015

Visitors (1,000 persons) 746.1 766.9 770.3 795 819.2 804.9 -

Growth Rate - 2.79% 0.44% 3.21% 3.04% -1.75% 1.53%

Source: Department of Tourism, 2015 Tourism Statistics Report.


Figure 4.32 Tourist Arrivals in 2005 by Continent

+ Source: Department of Tourism, 2015 Tourism Statistics Report.


Figure 4.33 Tourist Arrivals by Purpose of Visit

In 2015, the tourists from Mozambique, 274,122 visitors, accounted for 34% of the total

tourists, the largest share among all visitors, followed by the visitors from South Africa (14%),

Zimbabwe (12%), and Zambia (9%). The purpose of the visits of the visitors from African

countries was business and work. In particular, about 85% of the visitors from the

neighbouring countries, Mozambique and Zambia visited for business and work.

Africa79%

America6%

Asia2%

Australia1%

Europe12%

434.9 460 482.1 473.4579.1 589.1

189.2206.1 206.1 252.7

165 145.6121.9100.8 82.1

68.9 75 70.2

0

100

200

300

400

500

600

700

800

900

2010 2011 2012 2013 2014 2015

Visitors (1000 persons)

Visit Friends or Relatives

Holiday/ Vacation

Work or Business


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Figure 4.34 Tourist Arrivals by Top Ten African Markets

Most of the international tourists were from European countries. Among the top ten

international markets, the largest number of tourists, 44,886 people, originated from the

United Kingdom, followed by tourists from the United States, 35,995 people, and from the

Netherlands, 11,315 people. 55% to nearly 70% of tourists from the international markets

visited Malawi for business/ work.

Figure 4.35 Tourist Arrivals by Top Ten International Markets in 2015

The expenditure by purpose of visits and average number of nights spent are described in

Table 4.35 below. The average expenditure per visitor was MWK 116,600 (USD 265) and

total expenditure was MWK 94 billion (USD 212.7 million). The average number of nights

spent in Malawi was 8.8 nights. The annual average room and bed occupancy rates in 2015,

53% and 44% respectively were not high.

0

50,000

100,000

150,000

200,000

250,000

300,000

Tourist Arrivals (Persons)

Holiday/ Vacation Work or Business Visit Friends or Relatives

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Tourist Arrivals (Persons)

Holiday/ Vacation Work or Business Visit Friends or Relatives


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Table 4.35 Expenditures by Purpose of Visit and Average Number of Nights in 2015

Total Average Number of Nights Spent (night)

Average Expenditure (1000 MWK)

Total Expenditure (million MWK)

Holiday/ Vacation 145,644 12.2 290.0 42,201

Work or Business 589,071 8 85.0 50,059

Visit Friends or Relatives 70,197 8.7 22.0 1,539

All Visitors 804,912 8.8 116.6 93,799


Table 4.36 Annual Average Room and Bed Occupancy Rates in 2015

Room Occupancy Bed Occupancy

Annual Average Occupancy Rate 53% 44%


Among the nine ports of entry in the country, 247,720 visitors or 31% of the total visitors

entered through Mwanza, followed by Lilongwe Airport, which accounted for 16% in 2015.

The tourist arrivals via two ports on the Nacala Corridor, Mchinji/Chimaliro border with

Zambia and Chiponde border with Mozambique are 10% and 8% of the total tourists, as

presented in Table below. Nearly 85% of the visitors passing through the two borders came for

business and work purpose.


Figure 4.36 Tourist Arrivals by Port of Entry in 2015

Table 4.37 Tourist Arrivals by Port of Entry Along Nacala Corridor in 2015

Holiday/Vacation Work or Business Visit Friends or

Relatives Total

Mchinji/Chimaliro 9,307 65,107 3,714 78,128 Chiponde 9,078 57,764 731 67,573 Total Visitors 145,644 589,071 70,197 804,912


132,092

247,720

78,128 65,408

51,354 67,573 88,554

36,296

10,655

0

50,000

100,000

150,000

200,000

250,000

300,000


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4.5.2 Policy Direction of Tourism Sector

For the promotion of the tourism sector, the Malawian government prepared “Malawi 2020

Tourism Development Strategy” and “Malawi Tourism Marketing Strategy Framework

(2017-2021).” The tourism sector is planned to be one of the priority sectors in the MGDS III.

The visions and objectives with numerical targets by 2020 are summarized in Table 4.38.

Table 4.38 Visions and Objectives in Malawi 2020 Tourism Development Strategy

Visions Goals

Malawi will be a world-class sustainable tourism destination that professionally manages and actively conserves its natural and cultural heritage through vibrant collaboration with communities, business, and government.

Malawi will be well-known among the world’s most enthusiastic travellers as one of southern Africa’s premier tourism experiences.

Malawi will showcase its leadership in African hospitality through high-quality services and facilities.

Malawi will embrace tourism as one of the country’s leading vehicles for economic growth through a highly competitive environment of exemplary education, entrepreneurship, infrastructure and investment.

Double total aggregate number of visitors coming from key markets in Europe, North America, South Africa and the Middle East

Increase contribution of tourism to GDP by 15% Add 10,000 tourism-benefited jobs Increase average length of stay by 1 day Increase average annual occupancy rates of licenced

accommodations by 10% Increase tourism traffic throughout the country, with 20%

more visitation to national parks in the Northern and Southern Region.

Increase the percentage of national territory under conservation by 15%

Attract USD 100 million in new private tourism-related investment

Improve Malawi’s “ease of doing business” ranking by 20 points

Open one new airline route to a major international hub 60% of licenced tourism business committing to sustainable

tourism principles and best practices

Source: Malawi 2020 Tourism Development Strategy, Early Draft. P. 8-9.

With the articulation of the strategy and marketing under the brand name of “the Warm Heart

of Africa,” the government aims to increase tourist arrivals by 1.2 million per year by 202067.

Three strategies proposed include:

Improving the enabling environment by reducing barriers for new and operating

businesses, addressing infrastructure challenges, strengthening public-private sector

dialogue, and incentivising investment;

Strengthening Malawi’s tourism offer by building a network of regional tourism

committees to address gaps in tourism products and services and

Growing international tourism demand for Malawi through the establishment of a

public-private partnership destination marketing organisation that engages in best

practices to inspire visitation by high-value travellers68.

The Malawi Tourism Marketing Strategy Framework (2017-2021) identified that the priority

international markets including the United Kingdom, the United States, Germany, and

67 Interview with Department of Tourism on May 12, 2017 68 Malawi 2020 Tourism Development Strategy. Early Draft. P. 4.


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Netherlands, and priority regional markets such as Mozambique, South Africa, Tanzania,

Zambia and Zimbabwe. It proposes the strategic goals for development of product lines and

destination branding, and the strategic marketing action plan from 2017 to 2021.

4.5.3 Development Potential and Challenges of the Tourism Sector in the Nacala Corridor Region

There are a number of tourism resources in Malawi including lakes, mountains, forests,

wildlife, cultural artefacts, etc. However, the development potentials of the tourism sector in

Malawi were not fully cultivated yet. The development of the tourism sector of Malawi was

hampered by the lack of sufficient investment because the sector was not identified as a

priority sector for development. The sector also did not have effective marketing strategy to

attract tourists. The Malawi Tourism Marketing Strategy Framework (2017-2021) identified

issues from a lack of marketing vision and well-defined policies, activities without strategies,

missing the evaluation of the marketing efforts, and a lack of a consistent tourism marketing

strategy. As a result, the priority areas for tourism development were not specified; human

resources for the hospitality industry were not enough and infrastructure such as roads and

airports was not developed to support the tourism industries 69 . The challenges to the

development of the tourism sector are summarized in Table 4.39.

Table 4.39 Challenges to the Tourism Sector

Policy Level Sector Level

Law enforcement Weak Tourism Regulatory Framework Fluctuating, inconsistent and uncompetitive investment

incentives Undeveloped cultural assets Substandard structures and incompatible land use on

prime land for tourism development. Inadequate supporting infrastructure and services Environmental degradation of areas

Underdeveloped product Weak co-ordination and information flow amongst

stakeholders Lack of zoning of land for multisector use and unavailability

of ready land for tourism development Inconsistent and conflicting investment guidelines Accessibility Health risks

Source: Ministry of Finance, Economic Planning and Development, Final Report Malawi Growth And Development Strategy (MGDS) II Review and Country Situation Analysis Report, 25 March, 2016.

The tourism sector is identified as a priority in the new MGDS III which is under preparation.

As described, the sector-wide efforts were initiated with the development of “Malawi 2020

Tourism Development Strategy” and “Malawi Tourism Marketing Strategy Framework

(2017-2021).” Therefore, the current environment of the tourism sector is more conducive to

the promotion of tourism. By coordinating the development of the Nacala Corridor with these

newly prepared strategies, it is possible and necessary to promote the domestic tourism, to

develop and improve infrastructure, especially transport for better access and mobility, and to

initiate collaboration with Zambia and Mozambique on inter-country tourism as described in

the Zambian section.

69 Interview with Department of Tourism on May 12, 2017


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4.6 Energy

4.6.1 Current Situations of the Electricity Sub-Sector

In Malawi, only one-tenth of the population had access to electricity in 2014. The access rate

to electricity in Malawi was 46% in urban areas; however, only 5% of the rural population

accounting for 84% of the total population had the access to electricity.

Table 4.40 Access to Electricity

1990 2000 2010 2014

Access to electricity (% of population) 1.9 4.8 8.7 11.9

Access to electricity, rural (% of rural population) 0.3 1.0 3.5 4.7

Access to electricity, urban (% of urban population) .. 28.7 34.7 46.1

Source: World Development Indicators

The installed capacity of energy in 2016 was 351 MW and increased by 85 MW in the last

decade. While, the peak demand increased from 251 MW in 2007 to 328 MW in 2016. The

capacity was never sufficient, compared with the demand as shown in Table 4.41. The existing

power stations owned by Electricity Supply Corporation of Malawi Limited (ESCOM) were

listed in Table 4.42. Most of the power stations are hydropower generation.

Table 4.41 Installed Capacity and Peak Demand from 2007 to 2016

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Installed Hydro Capacity (MW) 265.9 285.9 285.9 285.9 285.9 285.9 285.9 351.0 351.0 351.0

Maximum (Peak) Demand (MW) 251.0 241.9 256.7 273.0 277.8 277.9 279.7 323.9 335.3 328.3

Source: Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017

Table 4.42 Existing Power Stations

Power Station Total Installed Capacity Type

Kapichira Falls 129.6 MW Hydro Nkula 124 MW Hydro Tedzani 92.7 MW Hydro Wovwe Mini Hydro 4.35 MW Hydro Mzuzu Diesel Unit 1.1 MW Diesel Likoma Islands Diesel Units 1.050MW Diesel Chizumulu Islands Diesel Units 2 Units at 150 KW each Diesel Total 353.1 MW

Source: Electricity Supply Corporation of Malawi Limited (ESCOM). http://www.escom.mw/generation.php

The energy generation and consumption by consumer category are shown in Figure 4.37. The

energy generation grew from 1,453 GWh in 2007 to 1,977 GWh in 2016, while the total

consumption increased from 1,154 GWh to 1,528 GWh during the same period. The average

annual growth rate of the generation amount 1.63% is higher than that of the consumption

annual growth rate, 1.48%. However, the domestic consumption, which accounted for 50% of

the total consumption in 2016, increased rapidly in the last decade by 3.03%. In 2016, the

second largest consumption was made by the power demand category customers, primarily for


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industry use (40%) (see Figure 4.38). According to the peak demand forecast for electricity

shown in Table 4.43, the peak demand already exceeded the installed capacity of 352 MW in

2015. The current installed capacity does not meet the demand for the power and its demand is

expected to keep on rising in future.


Figure 4.37 Power Generation and Consumption from 2007 to 2016

Source: Ministry of Finance, Economic Planning and Development, Annual Economic Report 2017

Figure 4.38 Consumption by Customer Category of ESCOM in 2016

Table 4.43 Peak Demand Forecast

Year Low Scenario Base Scenario High Scenario

2015 462.32 462.32 462.32 2020 567 719 982 2030 1,236 1,873 2,591 2037 2,245 3,566 5,217 2040 2,841 4,620 6,946

Source: Data of 2015: Mini Integrated Resource Plan (IRP) for Electricity in Annual Economic Report 2017; other data: Integrated Resource Plan (IRP) for Malawi, Volume I - Main Report. Final Report - May 2017. Ministry of Natural Resources, Energy and Mining.

1,4531,543

1,6421,809 1,872 1,912

1,828 1,907 1,975 1,977

435 462 502 572 594 596 578 614 699 766198 214 226

254 250 244 215 183 150 117512 527 578581 612 605 614 639 620 62012 17

1621 19 21 24 24 22 24

0

500

1,000

1,500

2,000

2,500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

（GW

ｈ）

Domestic Consumption (GWh) General (GWh)

Power Demand (GWh) ‐ Export (GWh)

Energy Generation (GWh)


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In order to deal with the power shortage, the industries install their own power supply system.

Nearly half of the industries have their own power system as shown in Table 4.44. More than

70% of the industries in mining and quarrying and financial institutions have their power

supply systems, followed by distribution, hotels, lodges, and restaurants, and transport and

communications, around 60% of which have a supply system. The industries in the category of

hotels, lodges, and restaurants generated the largest quantity of electricity, 824 kVA and have

the third highest maximum demand of 468 kVA. The second largest net mean quantity of

electricity generator is transport and communication institutions (793 kVA). The industries in

mining and quarrying sector have the largest maximum demand of 800 kVA, followed by the

manufacturing sector institutions, 513 kVA.

Table 4.44 Stand-by Power Supply Installation, Electricity Generation and Demand by Industry in 2012

Industry Proportion of institutions

having standby power supply Net quantity of

electricity generated Maximum demand of

electricity (%) Mean (net_kVA) Mean (net_kVA)

Mining and Quarrying 75.0 420.0 800.0 Financial Institutions (Banking, Insurance)

71.8 118.0 163.7

Distribution (Wholesale and Retail) 63.5 85.9 124.0 Hotels, Lodges and Restaurants 62.0 824.0 468.8 Transport and Communications 58.3 792.9 80.0 Agriculture 48.1 62.8 79.8 Public Services 40.0 247.2 168.4 Construction 36.4 229.5 286.6 Electricity and Water 35.7 52.3 122.8 Manufacturing 35.4 427.9 513.3 Agro-Processing 30.0 177.4 210.8 Total 47.7 352.2 236.1

Source: Malawi Energy Regulatory Authority and National Statistical Office, Malawi Energy Survey Report 2012

4.6.2 Current Situations of the Liquid Fuel and Gas Sub-Sector

In 2016, Malawi imported 366.5 million litters fuel, mainly consisting of diesel (52%) and

petrol (45%). The total fuel import expanded by 2.46% per year since 2000. Petrol and diesel

import increased by 4.29% and 2.67% per annum from 2000 to 2016. In particular, rapid

import of petrol was observed after 2010 for cheap fuel prices. On the other hand, the import

of paraffin significantly dropped since 2000, because of increasing use of other lighting

resources70 (See Table 4.45 and Figure 4.39).

70 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017


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Table 4.45 Fuel Import from 2000 to 2016

Year Petrol Diesel Jet A-1 Paraffin Avgas Total

Fuel Import (Thousand litres)

2000 84,896.1 124,905.9 7,238.7 31,397.2 107.3 248,545.2 2005 84,024.0 152,664.6 9,267.8 21,838.8 235.5 258,527.4 2010 101,173.6 186,539.6 11,710.6 10,639.5 318.1 310,381.4 2015 133,103.7 166,402.2 8,766.3 506.3 176.1 308,954.5 2016 166,190.2 190,395.2 8,841.8 851.8 176.2 366,455.2

Annual Average Growth Rate

2000-2005 -0.21% 4.10% 5.07% -7.00% 17.04% 0.79% 2005-2010 3.78% 4.09% 4.79% -13.40% 6.19% 3.72% 2010-2006 8.62% 0.34% -4.58% -34.35% -9.38% 2.81% 2000-2016 4.29% 2.67% 1.26% -20.18% 3.15% 2.46%



Figure 4.39 Fuel Import from 1999 to 2016

Currently, fuel is transported from mainly three corridors of Beira, Nacala, and Dar es Salaam.

The Beira has been predominantly used for fuel import since 2000. In 2016, 58% of fuel was

imported via Beira, followed by Dar es Salaam (29%) and Nacala (4%) (see Figure 4.40).

However, the fuel import of Beira dropped from 76% in 2015 to 58% in 2016 due to security

reasons, while the import from Dar es Salam and Nacala increased71. The share of the Nacala

Corridor use has fluctuated from 0.4% in 2007 to 15% in 2000 (see Table 4.46).

71 Interview with Department of Energy Affairs in May2017

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

(1000 liters)

Petrol Diesel Jet A‐1 Paraffin Avgas


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Figure 4.40 Fuel Import by Corridor in 2016

Table 4.46 Fuel Import by Corridor from 2000 to 2016 (Thousand Litres)

Fuel Import (Thousand litres) Share of Corridor

Beira Nacala Dar es

Salaam Mbeya Gweru Msasa Total Beira Nacala

Dar es

Salaam Mbeya Gweru Msasa Total

2000 126,761 42,150 51,807 20,482 41,199 282,398 44.9% 14.9% 18.3% 7.3% 0.0% 14.6% 100.0%

2001 130,586 16,134 66,136 21,369 0 234,225 55.8% 6.9% 28.2% 9.1% 0.0% 0.0% 100.0%

2002 130,763 10,140 77,013 28,880 0 246,797 53.0% 4.1% 31.2% 11.7% 0.0% 0.0% 100.0%

2003 158,653 35,988 39,857 31,998 1,066 0 267,562 59.3% 13.5% 14.9% 12.0% 0.4% 0.0% 100.0%

2004 160,122 37,362 37,362 32,024 0 0 266,871 60.0% 14.0% 14.0% 12.0% 0.0% 0.0% 100.0%

2005 182,862 6,862 43,545 25,258 0 0 258,527 70.7% 2.7% 16.8% 9.8% 0.0% 0.0% 100.0%

2006 88,509 2,718 53,337 14,595 0 59,158 218,316 40.5% 1.2% 24.4% 6.7% 0.0% 27.1% 100.0%

2007 197,010 1,164 60,114 18,356 0 0 276,643 71.2% 0.4% 21.7% 6.6% 0.0% 0.0% 100.0%

2008 214,597 20,688 56,619 28,309 0 0 320,213 67.0% 6.5% 17.7% 8.8% 0.0% 0.0% 100.0%

2009 198,528 43,640 86,012 1,276 0 0 329,456 60.3% 13.2% 26.1% 0.4% 0.0% 0.0% 100.0%

2010 211,144 21,708 42,803 22,297 0 0 298,353 70.8% 7.3% 14.3% 7.5% 0.0% 0.0% 99.9%

2011 167,766 17,241 50,846 13,343 0 0 249,196 67.3% 6.9% 20.4% 5.4% 0.0% 0.0% 100.0%

2012 258,443 7,553 35,918 9,459 0 311,373 83.0% 2.4% 11.5% 0.0% 3.0% 0.0% 100.0%

2013 268,560 10,715 43,820 0 323,095 83.1% 3.3% 13.6% 0.0% 0.0% 0.0% 100.0%

2014 225,767 11,368 41,001 0 0 0 278,136 81.2% 4.1% 14.7% 0.0% 0.0% 0.0% 100.0%

2015 233,480 6,250 69,224 0 0 0 308,955 75.6% 2.0% 22.4% 0.0% 0.0% 0.0% 100.0%

2016 213,462 15,172 104,462 32,967 0 0 366,455 58.3% 4.1% 28.5% 9.0% 0.0% 0.0% 99.9%

Source: Ministry of Finance, Economic Planning and Development, Annual Economic Report 2017

4.6.3 Development Potential and Challenges of the Energy Sector

The government set the target to increase electricity access from current 10% to between 30%

and 50% by 2030 and initiated various attempts to achieve the objectives. Among them, a

Mini Integrated Resource Plan (IRP) for Electricity was prepared as a road map from 2015 to

2020 and based on that, the Integrated Resource Plan was formulated with a long-term

investment plan targeting from 2017 to 2037. The peak demand forecast in Table 4.43 was

estimated for the IRP. In the forecast, a low scenario shows the current trend; a base scenario

aims to achieve 30% access; and a high scenario is for 50% access rate. The install capacity

must be expanded by 62% by 2020 in order to achieve the base scenario. According to the IRP,

the estimated maximum demand will increase to be 719 MW by 2020 by the annual average

growth rate of 17.5% and then 1,873 MW by 2030 by the annual average growth rate of 10%.


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In order to improve the power supply and achieve the stated objective, a number of projects

are proposed and on-going. Major projects are listed in Table 4.47. These projects will

contribute to the expansion of the power supply that benefits development of industry and

welfare of people. Because no projects will be completed until 2020, however, the power

shortage is expected to continue for the coming three years72.

Among them, two transmission line projects between Malawi and Mozambique and Zambia

not only take advantage of the Nacala Corridor development, but also promote development of

the Nacala Corridor Region, while strengthening inter-region cooperation and collaboration.

According to the Malawi Energy Policy 2003, the fuel haulage is determined as 50% from

Nacala, 20% from Dar es Salam ad 30% from Beira, in consideration of transport mode and

geographical distribution. The target of the fuel imports from the Nacala Corridor is high

because rail transport on the corridor is supposed to offer lower cost and sufficient capacity;

however, various problems concerned with capacities, costs, efficiency and functions of the

port handling, infrastructure, etc. inhibit the use of the corridor for fuel imports. The number

of interviews with the government officials and logistics firms confirmed that the import of the

rail transport of the Nacala Corridor is even higher than that of the road transport of Beira.

One of the reasons is because only single supplier of fuels, Mozambique National Petro

Company (PetroMoc) operating in the Nacala results in a lack of competition. The Nacala Port

is not equipped with sufficient infrastructure and facilities such as depot and handling

facilities73. However, it is no doubt that rail transport of the Nacala has the great potential for

cost saving and expansion of fuel imports and the Nacala Port, a natural deep-sea port, has

more advantage over the Beira Port, which is located at the river mouth and needs periodical

dredging. Therefore, it is necessary to improve the functions of the Nacala Port by installing

new facilities and improving its operation, with effort to lower the total cost of the corridor

transport including both rail and port related cost, in order to increase the use of the Nacala

Corridor for fuel import to Malawi.

72 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017 73 Interviews with Department of Energy Affairs and Malawi Energy Regulation Authority in May2017


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Table 4.47 Major On-Going and Planned Projects and Investments Proposed in IRP

Project Description 1 Rural Electrification

Programme (MAREP)*1 The programme has been implemented since the 1980s. MAREP Phase 7 electrified 81 trading centres and over 51 beneficiary centres. 336 centres will be electrified n Phase 8. The estimated cost is MWK 8 billion.

2 Projects by ESCOM* 10 MW diesel peaking plant in Lilongwe (on line by 2016). 6 MW diesel peaking plant in Mzuzu currently under procurement. (on line by 2017)

3 Tedzani IV Power Station Construction*

18MW power station will be additionally constructed with Japanese grant aid of a 5.772 billion yen.

4 300 MW Kammwamba Coal Fired plant*2

China’s Gezhouba Group Corporation (CGGC) will develop a coal-fired power plant at Kam’mwamba in Neno. The project cost will be USD 667 million. A 300 MW plant will be developed in the first stage and expanded up to 1000 MW. Plans will start partial operation by 2019 and be fully operational by 2021.

5 Nkula A hydropower plant*3

The project will modernise, rehabilitate and upgrade the existing Hydropower Plant from the current 24 Megawatts (MW) to 36 MW under the US fund scheme of the Millennium Challenge Corporation.

6 Songwe River Basin Hydro Electric Project Phase I*4

The project will be implemented by Malawi and Tanzania governments and includes construction of a multipurpose dam to impound water for a 180-MW hydro powerhouse, irrigation of 3,000 ha in each country, and flood control in the densely populated lower part of the basin. The F/S and design studies were funded by African Development Bank.

7 Mpatamanga Hydro Electric Project*

Construction of 350 MW Mpatamanga hydro plant. The World Bank funded the feasibility study as a part of the Energy Sector Support Project. It is expected to benefit downstream like Kapichira Power station, the future Hamilton Falls Hydro Electric Project, and also the Lower Shire Irrigation Project. It is planned to start operation from 2021.

8 Kholombidzo Hydro Electric Project*

AfDB funded the feasibility and design studies of construction of 100MW plant and probably some storage.

9 Lower Fufu Hydro Electric Project*

The World Bank funded the feasibility study as a part of the Energy Sector Support Project. The project will be construction of the plant on South Rukuru River with North Rumphi and Lower Fufu River transfer.

10 Cogeneration (Renewable)*

The proposal is to use bagasse from sugarcane mills at Dwangwa and Nchalo to generate power for the grid. The World Bank funded the feasibility study as a part of the Energy Sector Support Project.

11 Mozambique – Malawi Interconnection*

The first phase is to connect Tete in Mozambique and Phombeya in Malawi at 400 kV, with the fund from World Bank. The initial design was to construct a line with a transmission capacity of 280MW during drought conditions. The feasibility and design studies are being updated and the line will start operation in 2018. EDM (Mozambique Power Supply Company) will provide 50MW. The second phase will be the construction of a 400kV line from Phombeya in Malawi to Nampula (Nacala) Province. As a result, Malawi will be able to import and transmit power from Tete Province to Nampula Province. This interconnection is not only for power import and export, but also may provide an opportunity for railway electrification from Phombeya substation.

12 Zambia – Malawi Interconnection*

A MoU was signed between the Governments of Malawi and Zambia in August 2015. The project to develop a 330 kV line connecting Chipata in Zambia to Nkhoma in Malawi.

13 Renewable Power Development*5

Development of renewable power of solar (CSP), solar photovoltaic (PV), and wind for grid connection or off-grid use. The World Bank and the University of Strathclyde are supporting the government.

14 Recommended Projects in IRP*1

Kapichira III hydropower: 70 MW by 2020 New double circuit 132 kV overhead line from Nkhoma substation in Lilongwe and via a substation in Salima

15 IPP Projects* 40-100 MW solar energy project by U.S. company Atlas Energies 40 MW hydropower project on the Bua River at Mbongozi with local firm HE Power 30 MW solar energy project with Canadian firm JCM Capital 50 MW solar energy project with Tanzania company Grow Mine Africa

* https://www.export.gov/article?id=Malawi-Energy

*1 Ministry of Finance, Economic Planning and Development. Annual Economic Report 2017

*2 http://www.nyasatimes.com/malawi-in-coal-fired-power-plant-mou-with-china-group-to-boost-economy/

*3 http://malawianonline.com/economy/nkula-a-project-kicks-off-to-increase-power/

*4 http://www.hydroworld.com/articles/2017/05/mou-signed-to-develop-songwe-river-basin-program-including-180-mw-hydropower-facility.html

*5 University of Strathclyde website, https://www.strath.ac.uk/media/departments/eee/cred/Scoping_Study.pdf


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4.7 Foreign and Domestic Investment

Inflow of foreign direct investment to Malawi is shown in Figure 4.41 and Figure 4.42. 2014

saw a substantial increase in the investment due to the large investment in the energy sector,

which was 77% of the total investment amount in the same year. Apart from the energy,

agriculture, mining, infrastructure and ICT sectors attracted MWK 80-120 million investments

respectively in 2014, which amounted 4-6% of the total investment.

Source: COMESA RIA (Regional Investment Agency) (http://www.comesaria.org/site/en/fdi-inflows.79.html)

Figure 4.41 FDI Inflow to Malawi (2011-2014)

Source: COMESA RIA (Regional Investment Agency)

Figure 4.42 FDI Inflow to Malawi by Sector (2014)

According to the investment database of MITC, the number of authorised investment project

by domestic and foreign investors in 2016 was 57, amounted 933 million MWK. Its

breakdown by sector in terms of number and amount are as followings.


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a. Number of Investment Projects

b. Investment Amount

Source: Prepared by the study team based on the information provided by MITC

Figure 4.43 Authorized Investment in Malawi (2016) by Sector

In terms of number or the project, agriculture & agro-processing, manufacturing and service

have the major share (72% on aggregate). However, in terms of amount, mining and energy

share 61%, and agriculture & agro-processing shares 28%. These sectors involve the following

large scale projects.

Table 4.48 Major Large Scale Investment Projects in 2016

Sector Company Origin Investment Amount

(million MWK)

Agriculture & Agro-processing

Tianjin Teda Dafeng Cereals Company Limited

Malawi 10%, China 90% 100

Nyasa Agro Limited India 70 China Grand Holding Cigarettee Corporation

China 50

Mining Volantis Mining Company Limited USA/Turkey 139

Energy

Water Wheel International, Inc. USA 170 Sustainable Energy Services International Limited

Malawi/New Zealand 120

Reliable Electricity Limited Malawi 100

Source: MITC

According to the AfDB, there are some investment plans in the agriculture sector prepared by

private companies and organisations in Malawi, which may have substantial impact on the

Malawi economy. They include the followings.

- Agribusiness plan by the Press Agriculture: The Press Agriculture ltd., a subsidiary of the

Press Trust, aims to strengthen agriculture production through irrigation, processing,

contract farming and so on.

- Agro-processing promotion by NASFAM: NASFAM plans to set up warehouses in the

Northern region to expand agriculture and agro-processing production.

Agriculture &

Agro‐processing

19%

Mining

2%

Manufacturin

g27%

Energy

7%

Service

26%

Real Estate

4%

Tourism

5%

Infrastructure

5%

Construction

5%

Agriculture &

Agro‐processing

28%

Mining

15%

Manufacturin

g3%

Energy

46%

Service

3%

Real Estate

1%

Infrastructure

3%

Construction

1%


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4.8 Transport Infrastructure and Logistics

This section analyses the current situation of the transport and logistics sector of the study area,

namely the entire Malawi, in general, since the current situation of the Nacala Corridor is

discussed in Chapter 2.

4.8.1 Current Transport Sector

(1) Malawi Growth and Development Strategy

Transport infrastructure plays a major role to the Malawian economy in terms of the

distribution of exports and imports. In MGDS II (2011 – 2016), infrastructure was identified

as a key component for creating an enabling environment for private sector driven growth and

provision of timely and quality social services. There are five sub themes under infrastructure

development, namely: energy, transport, water development, information and communication,

and housing and urban development. According to the MGDS II review and country situation

analysis report, in the absence of a more visionary and long term strategy upon which the

national development strategy is anchored, coupled with very limited investment during the

implementation of MGDS II, the major challenges and binding constraints in the transport

infrastructure sector have barely been tackled.

The MGDS III 2017 has been prepared based on the above reviews. With the expected GDP

growth of 6.2% from 2017 to 2022, the MGDS III focuses on five key priority areas (KPAs):

Agriculture and Climate Change Management; Education and Skills Development; Energy,

Industry and Tourism Development; Transport and ICT infrastructure; and Health and

Population Management.

Development of the transport corridors is specified as a strategy to improve the

competitiveness of Malawian goods and services on the regional and international markets,

under the Outcome of enhanced access to the local and international markets in the KPA of

transport and ICT infrastructure. For that purpose, the identified action proposed is to ensure

maintenance and rehabilitation of infrastructure along the major corridors for improved access

to ports.

Recognizing the efficiency and effectiveness of rail transport for transport cost reduction,

MGDS III directs transport development toward a multi-modal transport consisting of road,

rail, air, and water transport. The improvement of Nacala Corridor by the private sector is

expected, to achieve the Outcome of increased private sector investment in the operation and

management of rail transport infrastructure in the KPA of Rail Transport. The reduction of

travel time and transport cost between Blantyre and Nacala Port is adopted as key performance

indicators to measure the progress in achieving the outcome toward MGDS Goal 4,

“development of a safe, affordable, reliable, equitable and sustainable transport system and

ICT infrastructure, and to manage and promote a vibrant tourism industry.”


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(2) National Transport Policy (MNTP)

The improvement of Malawi’s transport infrastructure is a priority of MGDS II, which

highlights the link between transport infrastructure and growth and development. The 2015

MNTP is linked to, and reflects the priorities of the National Vision, MGDS II and Economic

Recovery Plan and outlines eight priority areas mentioned below that collectively provide a

comprehensive set of policies, all of which contain policies and strategies for each transport

sub-sector. The vision of MNTP is the development of a coordinated and efficient transport

infrastructure that fosters the safe and competitive operation of viable, affordable, equitable

and sustainable transport services.

The eight priority areas of the MNTP are: transport infrastructure; transport services provision;

NMT; international transport corridors; private sector participation; good governance;

strengthening of institutional framework, and; crosscutting issues.

(3) National Transport Master Plan (MNTMP)

The GOM recognizes the significant role played by the transport sector in attainment of the

sustainable economic and social development of the country. Ministry of Transport and Public

Works (MOTPW) has therefore formulated a comprehensive MNTMP designed to achieve

this goal in 2017. The scope of the master plan covers all modes of transport: roads and road

transport, urban and rural transport, railways, marine, civil aviation and pipeline

The national transport goal is to ensure the provision of a coordinated transport environment

that fosters a safe and competitive operation of commercially viable, financially sustainable,

and environmentally friendly transport services and enterprises. The approach adopted to

achieve this goal is to move from a highly controlled transport sector to a more liberalized

market oriented transport sector. In this liberalized environment, private sector participation in

the provision and operation of transport infrastructure is emphasized, including promotion of

effective and fair competition among and within all modes of transport. The role of the

government becomes that of providing an enabling environment in which the private sector or

other bodies operating commercially can succeed.

MNTMP has been developed with the primary objective of guiding the sustainable

development of an integrated multi modal transport sector over the next twenty years. The

plan provides measures to reduce transport costs and improve GDP. It not only addresses the

current pressing issues such as road safety, but looks forward to meeting the transport needs of

a changed economy in which growth sectors such as mining, oil and tourism will be fostered

through improved transport links.

(4) Transport Modes

Malawi is served by four transport modes namely road, rail, lake and air transport which

consists of a road network with an estimated distance of 15,451 km; 797 km of railway track

from Mchinji border with Zambia to Nsanje boarder with Mozambique and further to the east

from Nkaya to Nayuchi (Entre Lagos) at the Mozambican border; five (major) harbours on


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Lake Malawi that handle cargo mainly from Mtwara in Tanzania; and five commercial

airports (two major international airports in Lilongwe and Blantyre) including 33 aerodromes.

Although the modes of transport include road, rail and water transport, dependency on road

transport is high (93% in 2015). Next is transportation by rail at 7%. Therefore, as shown in

Table 4.50, of the budget allocated to the traffic and transportation section, 81% goes to the

road sub sector.

Table 4.49 Freight Demand by Mode in 2015 (1,000 ton)

Volume %

Road 2,574.0 93

Rail 180.0 7

Waterway 2.0 0

Air 3.8 0

Total 2,759.8 100

Source: MNTMP

Table 4.50 2016/17 Transport Sector Budget (billion MWK)

Source: MNTMP

(5) Responsible Organisation for Transport Sector

The overall management and responsibility for the transport sector in Malawi is under the

authority of MOTPW.


Figure 4.44 Organization Structure of MOTPW

Ministry of Transport

& Public Works

Department of

Transport Planning

Roads

Department

Department ofRoad Traffic &Safety Services

Department

of RailServices

Department

of Marine Services

Department

of CivilAviation


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4.8.2 Road Sub-Sector

(1) Key Agencies for Road Sub-Sector

There are a number of institutions which have road traffic responsibilities as summarised

below.

Source: MNTMP

Figure 4.45 Institutions Relating to Road Traffic

1) Ministry of Transport and Public Works (MOTPW)

The Ministry has a role through its Principal Secretary to guide the overall implementation of

the national road safety strategy, ensuring that a National Steering Committee and technical

working groups are established for its successful implementation. The National Steering

Committee comprises the Principal Secretaries (Chief Executive Officers) of the MOTPW and

the Technical Working Group (TWG) comprises directors and senior managers on road safety

to monitor and report on progress of the implementation of the road safety strategy. The TWG

will also build partnerships to enhance coordinated planning, implementation, monitoring and

evaluation and act as technical advisors to the National Steering Committee.

2) Directorate of Road Traffic and Safety Services (DRTSS)

The DRTSS has statutory powers to manage road traffic as derived from the Road Traffic Act

(1997) and provisions in the MNTP (2004).

The Director of Road Traffic is subject to general directions of the Minister and exercises

powers and duties to ensure the Road Traffic Act is upheld, and can delegate duties to


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authorised officers. Furthermore, the Ministry has established a Committee for Road Traffic

Law Enforcement who ensures the laws under the Road Traffic Act are enforced.

3) Road Authority (RA)

The RA is a statutory body. RA is the primary agency responsible for the maintenance and

rehabilitation of Malawi’s roads. A Board of Directors governs the RA. Most of the actual

road maintenance and rehabilitation work will be done by contract. The RA is funded by a

dedicated road fund currently financed through user charges. This fund may be supplemented

by the addition of licensing and registration fees currently collected by the Road Traffic

Department. At present the road fund is supplemented by a government subvention plan which

prepares road works programmes for construction, rehabilitation and maintenance annually.

The RA has a significant safety-engineering role in road design, markings, and signs.

Improved road shoulders, for example, might help keep bicycles out of the main traffic lanes

where they are more likely to be involved in road accidents.

4) National Construction Industry Council (NCIC)

The NCIC was established under the NCIC Act (CAP 53.05) 1996 to regulate, promote and

develop the construction industry in Malawi. Its role within the transport sector is to register

all transport infrastructure projects and to provide support to local contractors for road

infrastructure projects. It registers contractors, consultants, material suppliers and

manufacturers and monitors their progress.

5) Road Fund Administration

The Road Fund Administration is a statutory body whose mandates are to raise and administer

funds for construction, maintenance and rehabilitation of public roads, and to account it to the

Ministry of Finance. This institution also manages, administers and accounts the Roads Fund

(comprising of proceeds from fuel levy and transit fees).

(2) Road Network

The classified road network comprises 15,451 km of roads. These include main, secondary,

tertiary, urban and district roads. Figure 4.46 shows the main and secondary roads, which

constitute a comprehensive network. The national highway, M1, spans the length of the

country from Nsanje in the south to Karonga in the north. Malawi’s classified road network is

complemented by another 9,478 km of undesignated community roads, which were identified

in 2005 as being an essential part of the highway infrastructure, and by a wider network of

tracks.


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Source: MNTMP

Figure 4.46 Road Network in Malawi

(3) Road Conditions

The public road network coverage remained at 15,451 km of which about 28% are paved and

the rest (72%) being unpaved and mostly of earth standard. The condition of the paved road

network is considerably better than that of the unpaved road network, and while the figures are

out of date this is indicated in Table 4.52. The condition of unpaved roads tends to be

compromised by dusty conditions, uneven surfacing and potholes, while paved roads across

the country exhibit signs of general wear-and-tear and shoulder degradation.

Zomba

Mizuzu

Lichinga

Zambia

Blantyre

Lilongwe

Mozambique

Tanzania


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Table 4.51 Malawi's Road Network at the Time of 2009

Road Class

Paved Unpaved Total

km % Asset Value

(USD/m) km %

Asset Value

(USD/m) km %

Asset Value

(USD/m) Main 2,809 70 2.827 548 5 114 3,357 22 2,942 Secondary 442 10 385 2,683 24 653 3,125 20 1,038 Tertiary 44 1 29 4,077 36 815 4,121 27 844 District 8 0 4 3,492 31 524 3,499 23 527 Urban 770 19 386 578 5 115 1,349 9 501 Community (undesignated) 0 - - 9,478 100 N/A 9,478 100 N/A Tracks 0 - - N/A N/A N/A N/A N/A Total Classified Rural (non-urban) Roads

3,304 - 10,800 - 14,102 -

Total Classified 4,074 - 3,630 11,378 - 2,222 15,451 - 5,852

Source: MNTMP

Table 4.52 Condition of Malawi’s Classified Road Network as of June 2010

Road Class Paved Unpaved Total

km % km % km % Good 2,426 60 5,000 44 7,426 48 Fair 1,361 33 2,654 23 4,015 26 Poor 286 7 3,274 33 4,010 26 Total 4,073 - 11,378 - 15,451 -

Source: MNTMP

(4) Road Maintenance

The main source of recurrent revenue funding for the road sub-sector is from the RFA. The

2016/17 budget provides for an allocation for road maintenance of MWK 20.6 billion. This is

intended to split between national roads (MWK 12.6 billion) and urban roads (MWK 8 billion).

This skewed distribution in favour of national roads reflects the lack of recent attention to

urban road maintenance, and although the allocation has not been based on a formal needs

assessment, it is intended to address rehabilitation as well as pressing periodic maintenance

needs. In terms of recurrent revenue funding the road transport sub-sector generates income

through fees for the services of vehicle registration, licensing and driver licences. Expected

income from these sources for 2016/17 is expected to be around MWK 3.0 billion, against

costs of MWK 0.4 billion.

The fuel levy, collected by Malawi Energy Regulatory Authority (MERA), is routed directly

to the RFA’s account. The overall allocation for road maintenance is therefore

non-discretionary with funding being legally ring-fenced, thereby making the funding source

for road maintenance sustainable.

Table 4.53 Actual Roads Fund Income and Road Works Expenditures (million MWK)

2011/2012 2012/2013 2013/2014 2014/2015 2015/2016

Total Income 7,605 9,363 11,875 15,399 26,353 (Fuel Levy) - - - (10,687) (21,203) Road Works Expenditure 3,030 3,381 8,552 9,279 12,111

Source: Malawi Road Fund Annual Report 2016


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The fuel levy is forecast to raise MWK 23 billion in 2016/17. The levy provides a reasonably

predictable source of funds, and is sustainable to the extent that it should continue to

contribute an increasing source of funds for road maintenance over the next 20 years.

According to the MNTMP, the total cost for the paved network would be USD 42.4 million

annually. As such the fuel levy at present rate may not rise sufficiently to meet the expected

increase in maintenance costs.

(5) Major Challenges on Road Sub-Sector

Road transport is the dominant mode of transport in Malawi. In this respect, the country has

over the years been constructing, rehabilitating, and upgrading the road infrastructure.

However, most feeder roads still remain in poor condition especially in rural areas. Also, even

in regard to trunk roads, high transportation costs remain prevalent due to insufficient road

development as a result of insufficient funding. The goal is to ensure the provision of a safe,

affordable, accessible and high quality road transport system. In the medium-term improved

road transportation is expected to contribute to:

- Reduced lead times and cost on exports and imports and

- Improved domestic and cross border mobility and connectivity.

1) Key Strategies

Ensuring comprehensive and coordinating planning of road and other modes of

transport;

Providing an adequate network of roads based on appropriate standards;

Enhancing routine road maintenance and upgrading;

Building technical and institutional capacity at all levels;

Promoting competition in the construction industry;

Improving management of a road network throughout the country;

Enhancing axle load control;

Promoting high road safety standards and traffic management and

Enhancing PPPs in the transport system.

2) Eight ‘Action Areas,’ proposed by MNTMP

Increase resources for road sub-sector, particularly rural roads;

Strengthen the domestic trucking industry to reduce transport costs;

Improve road safety;

Improve road infrastructure;

Enhance rural roads and access to services;

Strengthen regulation;

Institutional reform and

Axle load control.


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(6) Major Road Improvement Projects

1) Ongoing Projects

Table 4.54 Ongoing Reconstruction Projects

Name Funding Agency Length (km) Allocation 2017/18)

(USD/m) Mzuzu-Nkhata Bay AfDB 47 13.9 Kiwonde-Mangochi AfDB 75 16.7 Liwonde-Naminga OFID 25 - Blantyre-Zomba endopoints AfDB - 5.6 Karonga-Songwe World Bank 45 17.4 Kapahatenga-Nkhotakota- Dwangwa GOM 130 - Total 322 53.5

Source: MNTMP

2) Potential Projects

Table 4.55 Potential Reconstruction Projects

Road Name Potential Funding Agency

Lilongwe-Chingale-Machinga KF／BADEA／OFID

Nsanje-Marka GOM Ntcheu-Kasinje GOM KIA Junction-Kasungu-Jenda-Mzimba T/O COMESA Mangochi-Chiponde AfDB Mzimba T/O-Mzuzu-Kacheche World Bank

Source: MNTMP

3) Proposed Road Interventions in the MNTMP

Road projects proposed on the basis of role in economic growth (Agriculture, Mining,

Tourism, etc.) (Road projects for the 20 year plan period)

Table 4.56 MNTMP Capital Road Projects

Project Length Cost (USD/m)

Urban Lilongwe North-West bypass 18 40 Mthandizi-Mpingwe (Blantyre) 3.6 8 Ndirande-Nkolikoti (Blantyre) 3 7 Misesa-Soche Hill-Maja (Blantyre) 4 9 Lilongwe Eastern Bypass 25 60 Blantyre Elevated Expressway 8 168

Rural Rural Road Upgrading Programme 2,255 2,100

Strategic M12 NMT Demonstration project 90 30 Main road NMT upgrades 200 70 Paved road rehabilitation programme 334 167

Total 2,940.6 2,659

Source: MNTMP


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4.8.3 Rail Sub-Sector

(1) Key Agreements for Rail Sub-Sector

1) Concession Agreement

CEAR operate the railway concessions in Malawi. The first concession agreement was signed

by CEAR and the Government of Malawi on 15th November 1999 with the start of operation

from 1st December 1999. This was one of the first genuine private concession agreements (for

rail) in Africa, and in this Malawi set a path that other countries have since followed. The new

owners were the consortium CDN including RDC (Railroad Development Corporation – lead),

ERL (Bermuda), MANICA (Mozambique), Mozambican private investors and CFM

(Mozambique's Port and Railway Administration). CDN formed the concessionaire company

CEAR and began operations on December 1, 1999. It is understood that passenger rail services

were operated as part of a Public Service Obligation (“PSO”) agreement within the 1999

concession, with services subsidised by the State. As part of the 2013 Concession Agreement

the Malawian Government removed the need to provide passenger services as part of a PSO

requirement. Instead the concessionaire is obliged to provide a passenger service as part of

their Corporate and Social Responsibility requirement, thus removing the funding requirement

from the Government.

2) Malawi Railway Corridor Agreement

On 22nd December 2011, the Government of Malawi made the Malawi Railway Corridor

Agreement with VALE. The agreement will run for 30 years from the start of traffic until

2045 with a right to extend by an additional 20 years. In particular, the Corridor Agreement

gave the Vale the powers to build the new railway from Kachaso (on the Mozambique border)

to Nkaya and a requirement to upgrade the rest of the railway as specified in particular the

route from Nkaya to Nayuchi.

Capacity should be reserved on “the Nacala Corridor in order to guarantee access (on the

Nacala – Nkaya route for) transportation services comprising of two trains in each

direction per day of up to 120 wagons per train for Malawi general freight and one

(passenger train) per day...”.

CEAR should have “no obligation to allow other trains to operate over the (entire)

Railway (of Malawi).” This clause gives Vale exclusive rights over this rail route for coal

traffic from Moatize.

The capacity of Nacala railway is 22 million tonnes per year, 18 million of which is covered

by exportation of coal. The capacity available for use by CEAR is 4 million tonnes per year,

although current usages stand at five to six hundred thousand tonnes per year.

3) Tripartite Nacala Development Corridor Agreement

On 27th August 2010 the Governments of Malawi, Zambia and Mozambique signed the

Tripartite Railway Transport Agreement on the Nacala Development Corridor to “cultivate


4-78

active cooperation” in particular with regard to customs and immigration matters to allowed

traffic to run unimpeded.

(2) Railway Network

The railway network in Malawi consists of 797km of mainline single cape gauge. Of this

network, 101km between Nkaya and Nayuchi is being upgraded by the private sector as part

of the route from the coal mines at Moatize in Mozambique to Nacala on the coast. The

remaining 696km from Mchinji via Salima to Marka is in poor condition because of a lack of

investment by the concessionaire. Particularly, regarding the southern section of Limbe –

Mutarara (approx.200km), passage has been stopped due to the area near Bangra and Chiromo

Bridge over the Shire River being swept away in 1997 by heavy rainfall. Also, in February

2017, due to flooding, several bridges and a part of the road section was swept away in the

380km section between Chipata and Balaka presenting difficulty in passage, although

recovery was achieved in April 2017. The locomotive equipment and rolling stock is old and

unreliable. Construction of a new link from Nkaya to the coal mines at Moatize in Western

Mozambique commenced in 2012 to provide mainly for coal transit traffic into the Nacala

Corridor.

The condition of coal transportation via the Nacala Railway is as follows:

Up to May 2015: Completion of rail works and transportation of the first 50 tonnes

(preparation start)

Up to November 2015: Inspection and conduction of a test run.

December 2015: Commencement of full scale.

March 2016: Completion of the railway works construction. 2016: 6.5 million

tonnes of coal has exported.

May 2017: Official Opening Ceremony


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Source: MNTMP

Figure 4.47 Historic Development of the Railway Network in Malawi

Damages by heavy rain in 2017 Feb

Salima

Balaka Nkaya

Limbe

Kchaso

Nayuchi

Makka

Mchinji

Blantyre

Lilongwe


4-80

(3) Service Provided

1) Freight Train Services

The freight services have been divided into three categories: Transit, (Malawi) International

and (Malawi) Domestic freight traffic, each of which are operated differently.

(a) Transit

Transit trains account for the majority of traffic on Malawi’s railway network. CLN (Corredor

Logístico Integrado do Norte) are moving increasing volumes of coal traffic, which is

expected to grow to up to eight trains per day each. Each coal train consists of 120 wagons and

four locomotives. Each train is operated as a single block train. This is the most efficient way

of operating freight trains and is consistent with international best practise. In addition, there

has been some transit traffic between Chipata and Nacala although these are currently

irregular. At the moment though this traffic is typically combined with Malawi wagons

to/from Nacala. At the moment the operational practice for these trains is that Zambian

Railways will haul the traffic between Kanengo and Chipata, CEAR haul the traffic between

Kanengo and Entre Lagos, and CDN haul the trains between Entre Lagos and Nacala.

(b) International

These trains are typically formed of traffic to/from the Limbe (south) route although there is

also more irregular traffic to/from the Nkaya – Chipata (north) line. Most Limbe line

international trains are composed of up to 42 wagons, though often smaller, with two

locomotives. The trailing load of trains from Kanengo/Mchinji/Chipata is typically 30-35

bogies. CEAR used to effectively operate a mixed traffic train on a daily (or near daily) basis

but have now attempted to plan on the basis of block movements and weekly train plans.

Trains from Nacala stop at Liwonde to be cleared by customs. This typically takes around one

hour. This is in addition to a further one hour required at the border itself to confirm the train

manifest is consistent with the actual trains seeking to cross. Westbound trains have a similar

arrangement with CDN using Entre Lagos instead of Liwonde. CEAR are currently working

with the Government of Malawi and Mozambique to move the customs clearance to Nkaya

which will save the one hour stops as the train has been stopped at Liwonde and then the train

has to be marshalled at Nkaya anyhow.

(c) Domestic

Domestic services are relatively less common. There is some cement traffic and fertilizer

traffic to/from Kanengo. These wagons are generally carried along with other block

movements to/from Nkaya.

2) Passenger Train Services

The passenger service currently typically operates as a weekly service. It currently only

operates from Limbe via Blantyre to Bilila, and then back to Balaka and then from Balaka to

Nayuchi. And then back to Limbe via Balaka. The passenger service is effectively a local

service only centred in the south and east of the country. In part this is because of the history


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of the railway with the line to Lilongwe being closed north of Balaka between 2003 and 2005

and because the service is relatively slow with a large number of local stops.

3) Rolling Stocks

CEAR currently have five main types of locomotive (including 2 on loan from CDN and

excluding 2 locomotives that are no longer operational). Additionally, CEAR operates around

798 wagons (excluding CLN’s Moatize coal fleet and CDN’s fleet). Nearly all of which have

been acquired new or have been refurbished. CEAR also regularly lend or borrow wagons

with CDN on a wooden dollar arrangement to ensure that between the two concessions that

the two fleets are managed optimally.

(4) Major Challenges on Rail Sub-Sector

Although rail volumes as a percentage of all traffic have grown since 2005, rail as a mode

accounted for only 11.7% of exports in 2015 and 5.1% of imports, and an insignificant

percentage of domestic traffic. Rail, therefore, is not a vital part of the existing transport mix

but it could be a vital element of helping improve the Malawi economy and giving shippers

greater modal choice. This point is emphasised in the Malawi NES 2013 – 2018: “The top

priority for the MOTPW is to supply a multi-modal transport system to reduce the dependence

on road transport, particularly for bulk transportation.

On the other hand, the railway infrastructure in the country is in poor condition due to a lack

of maintenance and inadequate investment. A study commissioned to ascertain the investment

required to revamp the rail transport sub sector has revealed that there is a need for urgent

financial injection into this sub-sector for emergency work before overhaul rehabilitation work

can commence. The poor state of the infrastructure has greatly compromised railway safety

and efficiency. The sub-sector is greatly uncompetitive despite the fact that the rail freight cost

is cheaper than road and air transport. Therefore in the MNTMP, by developing efficient and

effective rail networks, the following mid-term objectives have been set, and accordingly, the

chief strategies and necessary projects have been suggested.

Improved regional and international connectivity;

Improved regulatory and institutional framework; and

Improved rail infrastructure and reliability.

1) Key Strategies

Rehabilitating and expanding the railway line and related infrastructure;

Creating linkages to ports, industrial sites and regional and international markets;

Promoting railway safety and environmental protection; and

Improving the operational efficiency and commercial viability of the existing railway

infrastructure and levels of service.

2) Key Potential Investments Based on MNTMP

Moatize avoiding line;

Restoration of Sena (Beira) line north and south options);


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Upgrade of axle load (and line speed) of Nkaya – Chipata;

*Nkaya-Salima is scheduled to be upgraded to 18t in 2018. With this, all routes will

be able to bear 18t axle loads, and CEAR currently judge that that is sufficient.

Upgrade of axle load (and line speed) of Nkaya – Limbe/Sandama;

*Upgrading to 18t of the axle load between Nkava – Limbe will be completed in

2017. (The works will only leave the last section). However, upgrading of the

structures (bridges, etc.) is not included.

New line from Kanengo/Salima to north of Malawi;

Provision of intermodal facility at Liwonde;

Investment in freight facilities (sidings and loading/discharge equipment);

Train control technology extension;

Capacity building: operational and management training; and

Heritage rolling stock restoration.

(5) Hearing Survey Conducted with CEAR (Summary)

The following comments were received in a hearing survey with CEAR.

The capacity of Nacala railway is approximately 22 million tonnes/year, of which 18

million tonnes/year is covered by coal transportation. The CEAR capacity usable is

approximately 4 million tonnes/year, of which only 500,000 to 600,000 per year is

currently being used.

There is a challenge of transportation of agricultural products which is high in the

harvest season (January to October) but is low in the other months. Consideration is

underway to increase transportation vehicles from Zambia and obtain a steady amount.

Source : CEAR

Figure 4.48 Freight Volume at Nayuchi from 2012 to 2016

229,255

137,122107,212

150,264

102,822

133,813

72,182

42,269

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2012‐2013 2014‐2015 2015‐2016 2016‐2017

WEIGHT (ton)

Year

Nayuchi

EXP

IMP


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Table 4.57 2015 Annual Accumulative (ton)

Cargo

Total

Annual

Actual

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Import Cargo 104,565 4,190 5,357 1,594 2,693 6,882 14,506 10,540 7,991 8,896 11,619 14,842 15,455

Export Cargo 86,248 614 1,906 8,453 8,469 5,426 11,046 14,073 14,254 9,638 7,947 3,885 537

Local Cargo 24,146 103 54 32 29 1,405 2,642 4,696 2,858 3,385 1,905 3,561 3,476

ZR- Cargo 10,739 - - - - - - 1,438 1,373 1,727 3,460 1,805 936

Total 225,698 4,907 7,317 10,079 11,191 13,713 28,194 30,747 56,476 23,646 24,931 24,093 20,404

Source : CEAR

To increase the transportation capacity of CEAR, increasing and strengthening of

locomotives is necessary. The number of locomotives currently in possession is 4.

Previously there were 6 locomotives in possession, but two of them suffered damage

under heavy rainfall in Mozambique. Also, there is need for reinforcement with

wagons.

Although there is criticism that CEAR has a small capacity, this is mainly due to lack

of full understanding by the users.

There is no room for the expansion of Liwonde Station. Therefore, in case of increased

demand in the future (increase in the number of connected wagons), it will be difficult

to have freight trains in Limbe. Therefore, CEAR are exploring the idea of moving

their vehicle base to Nkaya. Nkaya is thought to be having sufficient provision for site.

CEAR consider that it is important to improve the vehicle handling capacity for both

ends (Limbe, Lilongwe) and improve on their drawing power for companies.

4.8.4 Aviation Sub-Sector

(1) Key Agencies for Aviation Sub-Sector

The aviation sub sector is regulated by the MOTPW. Given this background, MNTMP

recommends the establishment of a Civil Aviation Authority as a high priority challenge. It

meets both domestic needs and international obligations. The Civil Aviation Authority should

be an autonomous entity for the oversight of civil aviation in Malawi. It should perform its

functions without political or commercial interference. The Authority should regulate and be

responsible for the safety, security, economic and technical oversight of civil aviation in

Malawi generally. It should have powers to issue licences, certificates and authorization for

the operation of aircraft and provision of civil aviation services.

According to the latest information, on June 13th 2017, the “Civil Aviation Bill” was

approved by Parliament. The department of Civil Aviation was corporatized as “Malawi Civil

Aviation Authority”. The actual process of corporatization is scheduled to take one year.

Operation of the airport is being conducted by Airport Development Limited.

(2) Aviation Network

The aviation infrastructure consists of two international airports at Lilongwe and Blantyre, and

five domestic airports at Likoma, Karonga, Mzuzu, Salima and Club Makokola in Mangochi.

International air services are provided by Kenyan, Ethiopian and South African national


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airlines to both Kamuzu International Airport (KIA) and Chileka International Airport. The

national carrier, Air Malawi, was liquidated in 2013 and a new company Malawian Airlines

has been formed with Ethiopian Airlines as a strategic partner in the new arrangement. The

new airline is expected to expand on the network that was serviced by Air Malawi and

improve Malawi’s connectivity regionally and internationally. It should be noted that domestic

services are provided by small private companies, largely in support of international tourism.

(3) Current Demand

Table 4.58 shows the handling volume of passengers and luggage at Kamuzu International

Airport. As can be seen from the data, the number of outbound flights and passengers in 2016

is approximately double that of 2010. Although the comparison of cargo is between 2015 and

2010, the amount handled had grown 1.5 times.

Table 4.58 Current Demand at Kamuzu Airport

2010 2011 2012 2013 2014 2015 2016

Number of Services

International 3,923 3,723 7,068 7,226 7,443

4,902 5,369 Domestic 2,680 2,917 Total 3,923 3,723 7,068 7,226 7,443 7,582 8,286 as a percentage of 2010 - 95% 180% 184% 190% 193% 211%

Passenger

International 136,377 112,465 194,273 214,982 267,791

192,393 227,606 Domestic 28,555 52,318 Total 136,377 112,465 194,273 214,982 267,791 220,948 279,924 as a percentage of 2010 - 82% 142% 158% 196% 162% 205%

Cargo (ton)

International NA 3,370 4,045 4,595 5,108 5,658 NA Domestic NA 482 296 337 114 81 NA Total NA 3,852 4,341 4,932 5,222 5,739 NA as a percentage of 2011 - - 113% 128% 136% 149% -


(4) Major Aviation Improvement Project

Interventions on Kamuzu Airport are ongoing in a JICA grant aid project. In this project,

terminals at the Kamuzu International Airport will be renovated and expanded. Introduction of

radar monitoring systems is included in the project, and it is scheduled to be completed in

2019.

There is information of the start of improvement works on Chileka Airport under Chinese

support.

4.8.5 Waterway Sub-Sector

(1) Key Agencies for Waterway Sub-Sector

A concession of the shipping services has been given to the Malawi Shipping Company which

is managing and operating ships owned by the Government. The Malawi Shipping Company

is the major operator providing freight and passenger transport services on the lake. However,

the current concessions are not managed or implemented effectively. Sub-sector institutions

need to be strengthened in order that port and lake service concessions operate to reduce

transport costs, and support economic growth in Malawi.


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(2) Waterway Network

Malawi’s inland water transport system comprises of Lake Malawi, Lake Chirwa and the

Shire-Zambezi inland water corridor. Lake Malawi has four ports as designated under the

Inland Waters Shipping Act and some landing points along the shores. The country’s water

transport system is not fully developed and faces a number of challenges including dilapidated

port infrastructure, and capacity problems.

(3) Major Waterway Improvement Project

Water transport is relatively cheaper than any other mode of transport. It provides a better and

cheaper alternative for transporting bulky and heavy goods domestically and internationally.

Malawi has an advantage in water transport as it is endowed with lakes and navigable rivers.

However, the country’s water transport system is not fully developed and faces a number of

challenges including dilapidated port infrastructure; ageing fleet of vessels; and capacity

problems. Given the current transport constraints, this mode of transport has been prioritized

to compliment other transport modes. The Government of Malawi focus on the development

of Nsanje world inland port and Shire-Zambezi Waterway, construction and rehabilitation of

ports along Lake Malawi and acquisition of vessels. The goal is to promote the inland water

transport system and improve access to the sea, which is a goal that has also been indicated in

MNTMP. The medium term expected outcomes are:

• Improved inland water transportation system;

• Improved interface with rail; and road transport; and

• Reduced transport costs.

(4) Key Strategies

Also in the MNTMP, the following strategies have been identified to wards as “the

development of efficient and productive waterway transport systems”

• Developing an efficient and productive maritime transport system;

• Improving port infrastructure;

• Opening up navigable rivers;

• Promoting affordable and safe water transport system; and

• Promoting Public Private Partnerships in the industry.


5-1

Chapter 5 Overall Issues and Impact Analysis of Nacala Corridor Development

This chapter mainly focuses on the analysis of overall issues and impact analysis of Nacala

Corridor Development. In order to grasp Nacala Corridor Development in the contexts of

national development and region economic integration, the existing policies and plans on

national development and of regional organisations are reviewed at first, followed by an

examination of currently on-going projects and plans on the ground that would be driving

forces for Nacala Corridor Development. Based on the two analyses, the overall issues of

Nacala Corridor Development are identified and discussed from the perspectives of

development of corridor transport infrastructure and economic sectors, and regional economic

integration. The impact which could be brought by Nacala Corridor Development is analysed

in the end of the chapter.

5.1 Evaluation of Relevance of Nacala Corridor Development to Existing Policies and Plans

The relevance of Nacala Corridor Development is evaluated in relation with the development

plans of Zambia and Malawi as well as the regional economic integration policy owned by the

regional organisations in this section. At first, the consistency and contribution of Nacala

Corridor Development to the goals of national development as well as the transport policy in

the two countries are reviewed, followed by the examination of its relevance from a broad

perspective of regional market integration and trade facilitation specifically.

5.1.1 Zambia’s National Development Plan and Nacala Corridor

The 7NDP is prepared to materialise the Vision 2030 that envisages becoming “a strong and

dynamic, middle income industrial nation,” following the previous national development

plans1. Aiming at the Vision 2030, the macroeconomic targets are also defined and some of

them are listed in Table 5.1. There are several indicators which are also set, in addition to the

targets, such as 25% formal employment ratio, working poverty ratio of 32%, and 10% youth

employment rate in 2021.

1 Ministry of National Development Planning. 2017. Seventh National Development Plan 2017-2021. P. 51.


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Table 5.1 Macroeconomic Targets

Macroeconomic Targets

a) Achieve an average annual real GDP growth rate of above 5%

b) Sustain single-digit inflation

c) Raise domestic revenue collections to over 18% of GDP

d) Reduce the budget deficit to less than 3%

e) Create 1,000,000 productive and gainful job opportunities while improving the country‘s competitiveness

f) Increase the share of earnings from non-mining exports to about 50%

g) Improve infrastructure development in the transport and energy sectors, with emphasis on increased private sector participation

Source: Ministry of National Development Planning. 2017. Seventh National Development Plan 2017-2021. P. 41

For the sake of achieving sustainable growth and altering the socio-economic structure into the

one with a focus on agriculture, mining and tourism, five strategic objectives are identified:

a) To diversify and make economic growth inclusive,

b) To reduce poverty and vulnerability,

c) To reduce developmental inequalities,

d) To enhance human development, and

e) To create a conducive governance environment for a diversified and inclusive

economy.

Under the objective of diversification and inclusive economic growth, ten critical development

outcomes are specified as shown in Table 5.2. For the strategy of improvement of trade

facilitation to achieve Outcome 5, corridor development is identified as one of infrastructure

development programmes. As a strategy of construction and rehabilitation of railways for

Outcome 6, construction of the Chipata-Petauke-Serenje railway line (Eastern Railway) to

connect Zambia with Nacala Port is proposed, together with the rehabilitation of Zambia

Railways and revitalization of TAZARA. The identified national long-term development

projects include construction of the Eastern Railway, and road infrastructure development of

the Nacala Corridor, which is the first listed project among the five corridors as a mid- and

long-term project. Moreover, as a strategy for Outcome 1, the production expansion of crops

such as cashew nuts, coffee, maize, wheat, sugar, fish, etc., is proposed. A strategy for

Outcome 2 is introduced for the mining sector, non-traditional mining of gemstones, gold and

industrial minerals.


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Table 5.2 Ten Critical Development Outcomes for Diversification and Inclusive Economic Growth

Ten Critical Development Outcomes

1. A diversified and export-oriented agriculture sector

2. A diversified and export-oriented mining sector

3. A diversified tourism sector

4. Improved energy production and distribution for sustainable development

5. Improved access to domestic, regional and international markets

6. Improved transport systems and infrastructure

7. Improved water resources development and management

8. Enhanced information and communication technology

9. Enhanced decent job opportunities in the economy

10. Enhanced research and development

Source: Ministry of National Development Planning. 2017. 7NDP. P. 64

5.1.2 Zambia’s National Transport Policy (ZNTP) and Nacala Corridor

The ZNTP 2016 states its objective as building cost effective transport infrastructure and

services that meet market demands. It clarifies a goal to develop Zambia as a regional

transport and logistics hub in the SADC region. Although the policy does not clearly identify

the Nacala Corridor, it does state the importance of international corridors connecting Zambia

with sea ports and a preference to the corridors with multi-modal international corridor

consisting of roads, railways, and waterways. The existence of international corridors,

especially with the rail benefits Zambia by lowering transport costs.

Thus, the development of the Nacala Corridor is consistent with the ZNTP for the sake of

transport cost reduction as well as making Zambia a regional transport and logistics hub by

strengthening the connectivity of Zambia in the region. It is important to notice that the Nacala

Corridor consisting of roads and railways suits the national policy favouring railways over

road. In particular, construction of the Chipata-Petauke-Serenje railway that connects

TAZARA Railway with the Nacala Corridor can significantly enhance Zambia’s function as a

regional transport hub.

5.1.3 Zambia’s Budget Allocation Related Nacala Corridor Development

According to the 2018 Budget Address, the Zambian economy has grown at over 4.0% in

2017, which is higher than the growth rate of 3.8% in 2016, due to the good performance of

mining, agriculture, and manufacturing, with recovered power supply. The expansion of the

export generated a large trade surplus of USD 388.3 million, compared to USD 45.8 million,

the surplus in 2016. The rise in copper price from USD 4,868 per tonne to USD 5,827 per

tonne contributed to the expansion of the export earnings, though the NTE indicated a slight

drop.

The numerical macroeconomic targets set for 2018 include 1) minimum 5 % GDP growth, 2)

inflation rate between 6 to 8%, 3) minimum foreign reserves equivalent to 3 months of import


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value, 4) minimum 17.7% of domestic revenue, 5) maximum 6.1% of fiscal deficit, and 6)

limit of domestic financing up to 4% of GDP. The budget is proposed to achieve the five

strategic objectives in the 7NDP, taking an integrated multi-sectoral approach to

development2.

In the 2018 budget, the expenditure is estimated to be ZMW 71.662 billion, which has grown

by 11.1% from 2017 (see Table 5.3). Though a largest portion of the budget is allocated to the

general public service function, the economic affairs receives 24.1% of the expenditure,

followed by education (16.1%) and health (9.5%), of which order remains unchanged. Among

the selected functions of economic affairs, environmental protection, and housing and

community amenities, ZMW 8,660 million or 12 % of the total expenditure is distributed for

development of road infrastructure. Two agricultural programmes, Farmer Input Support

Programme with E-voucher and Strategic Food Reserves receive ZMW 1,785 million and

ZMW 1,051 million respectively (see Figure 5.1).

For the objective of economic diversification and job creation, Farm Block development is

proposed to be promoted in Copperbelt, Muchinga, and Northern Provinces, with PPP

investment of USD100 million in mechanisation of agriculture. In the transport sector, in

addition to road development projects under Link Zambia 8000 and other plans, revitalisation

of ZRL and TAZARA, and development of the Chipata-Petauke-Serenje railway line by PPP

are aimed in 2018. Though the development related to the Nacala Corridor is not specifically

mentioned in the budget statement, development of roads as well as railways, especially the

progress on the new Chipata-Petauke-Serenje line project will significantly contribute to

Nacala Corridor Development.

The revenue of ZMW 71.662 billion is estimated, consisting of domestic revenue (68.5%),

foreign grants (3.4%), and international loans and domestic financing (28.1%). Compared to

the 2017 revenue, domestic revenue is expected to grow by 14.3%, while loans and financing

will rise by 4.1% (see Table 5.4).

Table 5.3 Expenditure by Function in 2017 and 2018

2017 2018

Million ZMW (%) Million ZMW (%) General Public Services 17,970 27.9% 25,898 36.1% Defence 3,204 5.0% 3,498 4.9% Public Order and Safety 2,343 3.6% 2,145 3.0% Economic Affairs 20,133 31.2% 17,258 24.1% Environmental Protection 616 1.0% 951 1.3% Housing and Community Amenities 823 1.3% 816 1.1% Health 5,762 8.9% 6,782 9.5% Recreation, Culture and Religion 324 0.5% 451 0.6% Education 10,642 16.5% 11,562 16.1% Social Protection 2,693 4.2% 2,301 3.2%

Total 64,510 100.0% 71,662 100.0%

Source: Republic of Zambia, 2017 and 2018 Budget Address

2 See five strategic objectives of 7DNP in p. 5-2.


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Source: Republic of Zambia, 2018 Budget Address

Figure 5.1 Expenditure for Selected Functions in 2018 (Economic Affairs, Environmental Protection and Housing and Community Amenities)

Table 5.4 Revenue in 2017 and 2018

Description 2017 2018

Million ZMW

(%) Million ZMW (%)

A. Total Domestic Revenue and Domestic Financing 46,776 72.5% 60,240 84.1% I. Total Domestic Revenue 42,940 66.6% 49,087 68.5% Total Tax Revenue 37,622 58.3% 41,140 57.4% Income Tax 19,648 30.5% 20,338 28.4% Company Income Tax 4,858 7.5% 6,116 8.5% Personal Income Tax 9,815 15.2% 10,264 14.3% Withholding and Other 3,083 4.8% 3,958 5.5% Value Added Tax 9,463 14.7% 12,369 17.3% Customs and Excise Duties 7,993 12.4% 8,099 11.3% Customs Duty 3,224 5.0% 3,302 4.6% Excise Duty 4,700 7.3% 4,745 6.6% Export Duty 68 0.1% 52 0.1% Other Revenues 519 0.8% 334 0.5% Non Tax Revenues 5,317 8.2% 7,947 11.1% Mineral Royalty 1,891 2.9% 3,528 4.9% Other Non-Tax - - 4,420 6.2% II. Domestic Financing 3,836 5.9% 11,153 15.6% B. Total Foreign Grants and Financing 17,734 27.5% 11,422 15.9% Project Grants 2,231 3.5% 2,438 3.4% Programme Loans 8,033 12.5% 1,425 2.0% Project Loans 7,470 11.6% 7,559 10.5%

Total Domestic Revenue, Grants and Financing 64,510 100.0% 71,662 100.0%

Source: Republic of Zambia, 2017 and 2018 Budget Address


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5.1.4 Malawi Growth and Development Strategy (MGDS) III and Nacala Corridor

The MGDS III has been prepared, following the MGDS I and II, guided by the Vision 20203.

With the expected GDP growth of 6.2% from 2017 to 2022, the MGDS III focuses on five

KPAs: Agriculture and Climate Change Management; Education and Skills Development;

Energy, Industry and Tourism Development; Transport and ICT infrastructure; and Health and

Population Management.

Development of the transport corridors is specified as a strategy to improve the

competitiveness of Malawian goods and services in regional and international markets, under

the Outcome of Enhanced Access to the Local and International Markets in the KPA of

Transport and ICT Infrastructure. For that purpose, the identified action proposed is to ensure

maintenance and rehabilitation of infrastructure along the major corridors for improved access

to ports.

Recognising the efficiency and effectiveness of rail transport for transport cost reduction, the

MGDS III directs transport development toward multi-modal transport consisting of road, rail,

air, and water transport. The improvement of the Nacala Corridor by the private sector is

expected, to achieve the Outcome of Increased Private Sector Investment in the Operation and

Management of Rail Transport Infrastructure in the KPA of Rail Transport. The reduction of

travel time and transport cost between Blantyre and Nacala Port is adopted as key performance

indicators to measure the progress in achieving the outcome toward MGDS Goal 4,

“development of a safe, affordable, reliable, equitable and sustainable transport system and

ICT infrastructure, and to manage and promote a vibrant tourism industry.” The indicators are

presented in Table 5.5 below.

Table 5.5 Improvement of Nacala Corridor (Rail) as Indicators in MGDS III

MGDS Goal 4: Development of a safe, affordable, reliable, equitable and sustainable transport system and ICT infrastructure, and to manage and promote a vibrant tourism industry.

MGDS III KPA

Expected Outcomes

Key Performance Indicator

Base Year (2016/17)

Targets Respon- sible 2018 2019 2020 2021 2022

4.1.3 Rail Transport

Increased private sector investment in the operation and management of rail transport infrastructure

Average travel time by rail between Blantyre and Nacala. (days)

2.3 2.3 2 2 1.6 1.6 MOTPW

Average transport cost by rail: Blantyre – Nacala (USD/t)

68 65 61 58 54 51 MOTPW

Source: Malawi Growth and Development Strategy (MGDS) III. July 2017.

3 Vision 2020 aims to achieve that “by the year 2020 Malawi as a God fearing nation, will be secure, democratically mature, environmentally sustainable, self-reliant with equal opportunities for and active participation by all, having social services, vibrant cultural and religious values and a technologically driven middle-income economy.


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5.1.5 Malawi’s National Transport Policy and Nacala Corridor

Directed by the MGDS II and the Economic Recovery Plan as well as the Vision 2020, the

National Transport Policy formulated in 2015 offers the policy direction of the transport sector.

The sector is one of the key priority areas in the Vision 2020 aiming to be a middle income

economy by 2020 and its impact goes beyond the performance of the sector itself into

development of the economy, especially the priority sectors in the MGDS II, tourism, mining

and agriculture. The MNTP identifies high transport cost as the major challenge to the sector

and its supporting role to the economic sectors, and adopts the goal, which is “to ensure the

development of a coordinated and efficient transport infrastructure that fosters the safe and

competitive operation of viable, affordable, equitable and sustainable transport services”4.

In the MNTP, as one of the main policy objectives, development of transport corridors is

proposed to enhance the competitiveness of Malawian products and reduce import costs. The

theme of international transport corridors is selected among eight priority areas5. The MNTP

points out needs for, firstly coordination with corridor countries for consensus building on

corridor development and in investments in the corridor areas and border points, and secondly,

establishment of a Shipper’s Council for protection of their interests.

The policy for international transport corridors aims to:

1) Promote the establishment of inland dry ports

2) Ensure the establishment of one stop border posts where viable

3) Ensure the existence and operation of Malawi Shipper’s Council

4) Ensure that infrastructure along the major corridors is maintained and rehabilitated to

improve access to ports

5) Promote efficiency in the operations of Malawi Cargo Centre Limited

6) Develop a database of statistics on corridor operations

7) Remove barriers within the transport sector to facilitate domestic and cross-border

trade and travel, and ensure provision of efficient transport services

8) Integrate safeguards into corridor development and operations to prevent adverse

impacts such as environmental degradation, social disruption and HIV and AIDS

The development of the Nacala Corridor is currently implemented in such a way to fulfil the

policy on international transport corridors stated above. The projects related to the

development of the Nacala Corridor such as transport infrastructure improvement and OSBP

development will address or contribute to the mitigation of some of the causes of high

transport costs, such as cumbersome border documentation and procedures, and high fuel

prices, described in the policy. It will also promote improvement of the railway system and

private sector participation, which are also among the eight priority areas.

4 P. 8 in the National Transport Policy. 5 Eight priority areas include: 1) transport infrastructure, 2) transport service provision, 3) non-motorised transport, 4) international transport corridors, 5) private sector participation, 6) good governance, 7) institutional framework, and 8) cross cutting issues.


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5.1.6 Malawi’s National Transport Master Plan (MNTMP) and Nacala Corridor

The MNTMP targeted the year of 2036 and developed three strategic objectives aiming to

achieve the vision envisaged in the MNTP6 and to address the challenge of high transport

costs: 1) Reduce transport costs and prices across all modes; 2) Improve the safety of transport

infrastructure and services; and 3) Enhanced and sustainable passenger and freight transport

systems. A modal shift from road to rail transport, intermodal integration, and development of

transport system for the sectors of agriculture and mining are identified among others as

operational objectives under the three strategic objectives.

In the MNTMP, the Nacala Corridor is recognised as one of the important backbones

supporting the transport network in Malawi. The corridor consists of the sole railway line

operational in the country currently, with roads; however, it is underutilised partly due to the

limited number of shipping lines visiting Nacala Port, and for Malawi, Beira is the most

preferred port that is only connected by road. Thus, the MNTMP proposes a strategy on

railways to expand the railway network from Beira and other ports, for increased choices and

competition among them, in addition to the improvement of operation and the existing

network of CEAR. Among the three scenarios, the integrated transport network suggested by

the MNTMP is presented in Figure 5.2, which is composed of the two railways of

Beira-Limbe and Chilumba-Mbeya and two inland water transport links of Chilumba-Nkhata

Bay-Salima-Liwonde and Nkhata Bay-Mbamba Bay. The MNTMP assumes that the

Chipata-Petauke-Serenje Railway would not be connected in the planning period. Yet, a large

volume of traffic demand will be induced by the construction of a dry port in Chipata in the

short-term.

By 2036, the port volumes at Nacala to/from Malawi are forecasted to expand from 174,300

tonnes at the present to from 364,000 to 478,500 tonnes with the rail interventions or between

459,300 to 480,500 tonnes with the inland water transport interventions, depending on the

choice of interventions.

6 The vision of the National Transport Policy is ‘the development of a coordinated and efficient transport infrastructure that fosters the safe and competitive operation of viable, affordable, equitable and sustainable transport services.’


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Source: MNTMP. July 2017. Page 148.

Figure 5.2 Proposed Integrated National Transport Network

5.1.7 Malawi’s Budget Allocation Related Nacala Corridor Development

The expenditure and revenue from 2016/17 to 2018/19 are presented in Table 5.6 and

Table 5.7. The Malawi’s economic growth is expected to increase from 2.7% in 2016 to 6.1%

in 2017, owing to the better weather condition. The expenditure in the fiscal year of 2017/18 is

estimated to be MWK 1,301.2 billion, which is expanded by 15.2% from the previous year.

The expenditure in 2018/19 is projected based on the expectation of 5% GDP growth. The

development policy is guided by the MGDS and SDGs and the development expenditure

accounts for 26.8% of the total expenditure in 2017/18.

The expenditure of major programmes is shown in Figure 5.3. The largest amount of MWK

139,900 billion is allocated to Road Infrastructure Management, followed by Agricultural

Productivity and Risk Management (MWK 84,089 billion), Sustainable Rural Development


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(MWK 55,009 billion) and Mining, Energy Generation and Supply (MWK 44,667 billion).

Despite the small amount, MWK 897.6 billion is allocated for trade development and

facilitation. The Green Belt Initiative and irrigation development are included in Sustainable

Rural Development programme.

In the 2017/18 budget, two projects related to Nacala Corridor Development are included. The

Nacala Corridor Project Phase IV will receive MWK 4,200 million by the AfDB loan and

MWK 5,100 million is allocated for Southern Africa Trade and Transport Facilitation Project

as an IDA grant.

Table 5.6 Expenditure from 2016/17 to 2018/19

Category 2016-17 Revised Budget 2017-18 Estimates 2018-19 Projection Million MWK (%) Million MWK (%) Million MWK (%)

Recurrent Expenditure 868,929 76.9% 948,876 72.9% 982,230 73.2% Wages and salaries 270,769 24.0% 303,576 23.3% 334,342 24.9% Interest on debt 168,537 14.9% 185,835 14.3% 187,323 14.0% Foreign 12,317 1.1% 14,880 1.1% 16,368 1.2% Domestic 156,220 13.8% 170,955 13.1% 170,955 12.7% Goods, services and transfers 252,744 22.4% 258,207 19.8% 245,938 18.3% Generic goods and services 97,041 8.6% 133,044 10.2% 107,774 8.0% Storage Levy 1,595 0.1% 1,851 0.1% 2,036 0.2% Roads Maintenance 22,622 2.0% 6,229 0.5% 21,737 1.6% Other Statutory Expenditures 5,017 0.4% 3,000 0.2% 5,500 0.4% Agriculture Sector 3,861 0.3% 4,984 0.4% 5153 0.4% Health Sector 36,025 3.2% 35,635 2.7% 39,484 2.9% Education Sector 24,586 2.2% 25,255 1.9% 22414 1.7% Elections 1,500 0.1% 8,000 0.6% 7140 0.5%

Public Finance and Economic Management

5,495 0.5% 7,007 0.5% - -

National AIDs Commission 12,807 1.1% 7,669 0.6% 1700 0.1% Winter Cropping (Irrigation) 4,000 0.4% - - 4000 0.3% Maize Purchases 35,100 3.1% 22,000 1.7% 22,000 1.6%

Housing and Population Census 0.0% 3,534 0.3% 0.0% Subsidies and Transfers 173,880 15.4% 197,259 15.2% 204,627 15.3%

Pensions and Gratuities 52,247 4.6% 70,601 5.4% 74,504 5.6% Transfer to Revenue Authorities 22,647 2.0% 27,021 2.1% 31,041 2.3% FISP 33,150 2.9% 33,150 2.5% 33,150 2.5%

Fertilizer Purchases 27,000 2.4% 27,000 2.1% 0.0%

Seed Subsidy 5,150 0.5% 5,150 0.4% 5,150 0.4% Logistics 1,000 0.1% 1,000 0.1% 0.0% Transfer to public entities 49,677 4.4% 56,126 4.3% 58,932 4.4% Iron Sheet Subsidy 7,000 0.6% 7,000 0.5% 7,000 0.5% WB reconstruction 3,349 0.3% 3,360 0.3% - - Legume Purchases 5,810 0.5% - - - - Arrears (Small scale) 3,000 0.3% 4,000 0.3% 10,000 0.7% Development Expenditure 260,544 23.1% 348,351 26.8% 354,520 26.4% Domestically financed projects 42,715 3.8% 132,212 10.2% 166,902 12.4% Foreign financed projects 217,829 19.3% 216,139 16.6% 187,618 14.0% Net Lending 3,460 0.3% 4,000 0.3% 5,000 0.4% Total Expenditure 1,129,433 100.0% 1,301,227 100.0% 1,341,750 100.0%

Source: Ministry of Finance, Economic Planning and Development. Draft 2017-18 Financial Statement


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Figure 5.3 Expenditure of Major Programmes

The estimated revenue in 2017/18 is MWK 1,301.2 billion, consisting of domestic revenue

(75.3%), grant (9.8%), and international and domestic borrowing and financing (14.9%). The

domestic revenue is expanded by 16.6% to MWK 980,157 million. With the high inflation rate,

the dependency on short-term domestic lending is identified as a risk in the Draft 2017-18

Financial Statement, because it could bring about a negative impact on private sector

investment, and increase a risk of defaulting of the government.7

7 The average inflation rate in 2016 was 21.8%. (Ministry of Finance, Economic Planning and Development. Draft 2017-18 Financial Statement.)

139,900 84,089

55,009 44,667

38,025 34,706

13,045 4,730 4,125 2,870 2,031 1,638 1,365 1,312 980 898 774 173 60

0 25,000 50,000 75,000 100,000 125,000 150,000

Road Infrastructure Management

Agricultural Productivity and Risk Management

Sustainable Rural Development

Mining, Energy Generation and Supply

Economic and Financial Management

Water Resources Development, Management and Supply

Transport Infrastructure

Tourism and Cultural Development

Environment and Climate Change Management

Livestock and Fisheries Production

Communication and Technology Services

Tourism Development

Small Scale Business Development

Wild Life Conservation and Management

Urban Development

Trade Development and Facilitation

Mining and Geological Services

Industrial Development

Private Sector Development

(Billion MWK)


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Table 5.7 Revenue, Grants and Financing from 2016/17 to 2018/19

Category 2016-17 Revised Budget 2017-18 Estimates 2018-19 Projection Million MWK (%) Million MWK (%) Million MWK (%)

Revenue 840,463 74.4% 980,157 75.3% 1,122,082 83.6% Tax revenue 754,909 66.8% 900,714 69.2% 1,034,694 77.1% Non-tax revenue 85,554 7.6% 79,444 6.1% 87,388 6.5% Departmental receipts 22,930 2.0% 25,233 1.9% 27,756 2.1% Receipts from PIL for NRA 22,622 2.0% 26,229 2.0% 28,852 2.2% Parastatal dividends 27,863 2.5% 20,649 1.6% 22,714 1.7% Storage Levy 1,595 0.1% 1,851 0.1% 2,036 0.2% Road Tax 4,733 0.4% 5,482 0.4% 6,031 0.4% Grants 158,697 14.1% 127,736 9.8% 127,736 9.5% Program 11,500 1.0% 35,902 2.8% - - Dedicated grants 54,639 4.8% 32,539 2.5% 32,539 2.4%

PFEM Pool Trust Fund (WB) 5,495 0.5% 7,007 0.5% - -

Agriculture SWAp (Pool ) 18,502 1.6% 5,806 0.4% - - NAC grants 3,215 0.3% 6,169 0.5% - - Health SWAP Pool 7,045 0.6% 6,569 0.5% - - Education SWAp Pool 3,769 0.3% 6,987 0.5% - - Project Grants 92,558 8.2% 59,295 4.6% 59,295 4.4% Total Revenue and Grants 999,160 88.5% 1,107,893 85.1% 1,249,817 93.1% Foreign (net) 76,602 6.8% 165,761 12.7% 90,132 6.7% Borrowing 105,123 9.3% 194,282 14.9% 111,127 8.3% Program Loans 31,937 2.8% 71,290 5.5% 11,290 0.8% NAC 8,092 0.7% - - - - World Bank 16,193 1.4% 60,000 4.6% - -

Malawi Floods (Disaster) - WB 0.0% 6,450 0.5% 6,450 0.5%

Agriculture 7,653 0.7% 4,840 0.4% 4,840 0.4% Project Loans 73,186 6.5% 122,992 9.5% 99,837 7.4% Amortization -28,521 -2.5% -28,521 -2.2% -20,995 -1.6% Domestic Borrowing (Net) 42,346 3.7% 27,573 2.1% 1,801 0.1% Domestic Borrowing 85,782 7.6% 78,606 6.0% 1,801 0.1% Amortization (Promissory Notes) -32,111 -2.8% -51,033 -3.9% 0.0% Proceeds from PPP Commission 11,325 1.0% 0.0% 0.0% Total Financing 130,273 11.5% 193,334 14.9% 91,933 6.9% Total Revenue, Grants and Financing 1,129,433 100.0% 1,301,227 100.0% 1,341,750 100.0%


5.1.8 Regional Economic Integration Policy and Nacala Corridor

The regional integration agenda has been pursued by SADC, COMESA and the Tripartite

Agreement among SADC, COMESA and the EAC. The goal of regional economic integration

of SADC and COMESA is to establish a unified economic union sharing a common currency

ultimately.

(1) SADC

SADC, which was formally founded in 1992 and has fifteen member states, aims for the

development and peace and security on the principles of democracy and equitable and

sustainable development. SADC formulated the Regional Indicative Strategic Development

Plan (RISDP) 2005-2020, a comprehensive development and implementation framework for

SADC, in 2001, for the ultimate objective of regional integration and cooperation for poverty

alleviation and economic and non-economic development. In the RISDP, two groups of

priority intervention areas are proposed, in relation with sectoral cooperation and integration,


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and cross-sectoral interventions. The development of transport corridors is recognised in the

interventions for infrastructure support for regional integration and poverty eradication in the

sectoral cooperation and integration. It expects to contribute to building an efficient,

cost-effective, safe and fully-integrated transport system that promotes investments through

strengthened competitiveness and activated trade, improves production, and provides the

market access to rural communities in the Region. The RISDP adopts the spatial development

initiative, namely development corridors, growth triangles, growth centres and transfrontier

conservation areas, as one of the implementation principles.

(2) COMESA

COMESA was organised to replace the former Preferential Trade Area (PTA) in 1994,

primarily for economic cooperation and integration of member states. Currently, with the

largest 21 member states in the African regional markets, it approaches to regional integration,

through the three pillars of market integration, industrialisation and infrastructure development.

As a priority and strategic area, infrastructure development enhancing connectivity and

infrastructure integration is proposed for cost reduction and improved competitiveness. The

2016-2020 medium-term strategic plan proposed eight strategic objectives including

strengthening market integration; attracting increased investments; strengthening the blue

economy; harnessing the benefits of strategic co-operation; strengthening the development of

economic infrastructure (energy, transport and ICT); industrialisation; fostering gender

equality and social development; and ensuring regional and Secretariat readiness. The strategic

objective of market integration suggests the improvement of border management on the

priority regional corridors. The strategic objective of economic infrastructure development is

facilitated by the corridor approach entailing three components of development of priority

regional physical infrastructure, policy and regulatory harmonisation and facilitation.

(3) COMESA-EAC-SADC Tripartite Agreement

The Tripartite Agreement among COMESA, EAC and SADC was signed in June, 2011 for the

establishment of COMESA-EAC-SADC Free Trade Area (FTA) for a market covering 600

million population in 26 countries and producing the GDP of USD 1 trillion. Through the

Agreement, the three regional organisations aim to coordinate policies and activities in trade,

customs and infrastructure development for economic integration of Southern and Eastern

Africa.

The Tripartite Strategy composed of three intervention areas of market integration,

infrastructure development, and industrial development is proposed to achieve economic

development by removing trade barriers including both tariff and non-tariff ones. The

programmes and actions will be implemented, mainly focusing on:

Harmonisation and improvement of functionality of regional trading arrangements and

programmes, including establishing a Tripartite FTA;

Enhancement of trade facilitation to improve the flow of goods along regional transport

corridors by lowering transit times and the cost of trading; and


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Joint planning and implementation of infrastructure programmes, which mainly

comprises surface (road, rail, border posts, seaports) and air transport, ICT, and energy8.

In addition to the field of trade facilitation, corridor development is identified as one of the

priority areas of regional infrastructure in the Agreement.

(4) Regional Economic Integration Policy and Nacala Corridor

In short, SADC, COMESA and the COMESA-EAC-SADC Tripartite Agreement integrate

corridor development into their regional integration policy as a strategy for infrastructure

development. Corridor development is recognised as an effective measure to facilitate trade in

the concerned regions, by lowering transport cost and improving connectivity among the areas

which will otherwise be isolated. Eventually, the production, competitiveness, and

attractiveness of investments in the regions connected by a transport corridor are expected to

be improved with reduced trade barriers through interventions on border management, in

addition to the physical infrastructure development. It is noteworthy that these organisations

perceive corridor development as an approach not only for infrastructure development, but

also for industry promotion and spatial development.

Nacala Corridor Development with prospective projects such as development of dry ports and

OSBP is consistent to the regional economic integration policy proposed by the three

organisations. The Nacala Corridor is one of the few corridors equipped with both rail and

roads that may bring about a significant impact on the regional development and trade. Due to

its locational advantage, it provides Zambia and Malawi with access to the Tripartite Region

not only via land transport but also via maritime transport. Therefore, the Nacala Corridor has

the potential to contribute to the regional economic integration among Zambia, Malawi and

Mozambique. The expected impacts of the Nacala Corridor including trade facilitation and

industry promotion are examined in detail in the following section.

5.2 Possible Driving Forces for Nacala Corridor Development

This section aims to assess development activities and opportunities that could affect the

potential of the Nacala Corridor Region. A number of on-going and planned projects and plans

of various activities identified in the field survey, which can be driving forces for development

of the Nacala Corridor Region are reviewed, with discussion on development opportunities

that have been appearing in the regions of Zambia and Malawi.

5.2.1 Zambia

In the Nacala Corridor Region of Zambia, significant projects for infrastructure development

are on-going or planned, including most notably, transport and logistics infrastructure projects

related to the Nacala Corridor, such as development of the Great East Road, a new rail line, an

OSBP and a dry port. In addition, agricultural and industrial development initiatives are found

8 http://www.sadc.int/about-sadc/continental-interregional-integration/tripartite-cooperation/#Coordination


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in the region, with emerging development opportunities that might be also stimulated by the

infrastructure development.

(1) Infrastructure Development

1) Rehabilitation Works of the Great East Road (T4)

The on-going rehabilitation works of the Great East Road (T4) is progressing, with the support

from the EU and AfDB 9 . The mid-term evaluation report of the Great East Road

Rehabilitation Project by the EU pointed out that 1.3 million people will benefit from the

project and that the project road will strengthen the link between Eastern Province and Lusaka

- the availability of affordable farm inputs has improved, and crops can be more readily

marketed in Lusaka, Malawi and Mozambique. Referring to the data from the Central

Statistical Office, the report also indicated that there has been considerable development in the

Eastern Province production of many of the main food and cash crops over the last ten years,

although it is still too early to detect any production boost due to the road rehabilitation since

the road improvement works commenced only in late 2013.

Table 5.8 Food and Cash Crop Production in Eastern Province, 2005/06–2014/15

Crop Estimated Crop Production (1,000 ton)

2005-06 2010-11 2011-12 2012-13 2013-14 2014-15 Maize 285.5 622.6 643.7 600.1 789.6 622.1 Cotton 70.3 … 139.5 … … … Groundnuts 21.3 25.2 30.3 31.8 29.4 32.5 Sunflower 10.9 13.9 18.7 24.2 19.5 28.3 Burley tobacco 6.2 … 5.7 7.9 7.3 7.4 Virginia tobacco … … 1.3 1.8 3.4 2.6 Soya beans 9.1 5.6 7.4 12.9 13.6 18.5 Sweet potatoes 7.5 … 3.5 … … … Rice 4.6 … 2.7 1.3 1.7 0.7

Source: EU, “Mid-Term Evaluation of the Great East Road Rehabilitation Project”, March 2017

The report indicated that other long-term project beneficiaries include freight forwarders,

exporters and importers, transport operators, the business community and the wider population

in Zambia, Malawi and Mozambique and within SADC. The report envisages further impact

with the development of the Chipata-Petauke-Serenje rail line, a dry port in Chipata, and the

OSBP at Mwami.

2) Construction of the Chipata-Petauke-Serenje Rail Line

The GOZ is planning to construct a new railway line from Chipata to Serenje via Petauke with

assistance of China. The new section of the railway line is 388.8 km and the construction cost

is estimated at USD 2.6 billion. The project is mentioned in 7NDP 2017-2021 as one of

9 T4 is divided into following sections for rehabilitation:

- Luangwa Bridge-Nymba: completed with EU support (contractor: Monta Engil Engenharia E Construcao of Portugal)

- Nymba-Sinda: rehabilitation work still on-going with AfDB support (contractor: Condril Engenharia SA) - Sinda-Mwami completed with EU support (contractor: Monta Engil Engenharia E Construcao of Portugal)


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strategies to improve transport systems and infrastructure. The EIA and the feasibility study

for the project are being implemented by a Chinese company.

Eastern Province is connected to the Port

of Nacala by the Chipata-Mwami /Mchinji

rail line (total length of about 378 km),

passing through Malawi. The

Chipata-Petauke-Serenje rail line which

will connect to the TAZARA line will

enable the province to have access to the

Port of Dar es Salaam through the Dar es

Salaam Corridor, thereby, creating

strategic alternative routes to the Nacala,

North-South, and Beira Corridors. The rail

line is expected to start from Chipata and

reach Serenje (in Central Province)

through Katete, Sinda and Petauke Districts. This rail line connection will link Copperbelt,

Serenje, Chipata, Mwami/Mchinji to the Port of Nacala via Malawi. According to the

interview survey with the Ministry of Mines and Minerals Development, Nacala Corridor

Development is critical in the sense that Lusaka can be bypassed for more efficient

transportation once the Chipata-Petauke-Serenje Rail Line is developed. Copper in Zambia is

refined to 99% blister copper, to be exported through Durban and Livingstone from

Copperbelt, utilising the North-South Corridor. With the development of the

Chipata-Petauke-Serenje route, the Nacala Corridor is expected to become an alternative route

for export, enabling a bypass of Lusaka.

The plan, however, may take some time to actualise as a result of comprehensive analysis of

information gathered through various interview surveys. According to the MTC, the total

estimated project cost is USD 2.6 billion. Of which, the ceiling for a sovereign loan approved

by the IMF is USD 1.9 billion and the remaining USD 0.7 billion needs to be secured from the

private sector. Currently, the GOZ is negotiating with the Chinese government regarding USD

1.9 billion sovereign loan portion. According to the Embassy of China, once committed, this

project will become the largest Chinese project in Zambia, and it will take time to implement

the project – given the huge investment, and the Chinese government needs to ascertain the

profitability and sustainability of the project before making a final decision.

According to ZRL head office in Kabwe, once implementation of this Chipata-

Petauke-Serenje rail is realised and operation of the rail commences, corridors passing through

Zambia will be connected and Zambia would become a logistics hub in Southern Africa,

thereby enhancing efficiency and convenience of transportation within the region as well as

facilitating further industrial promotion targeting regional market.

Source: JICA Survey Team.

Figure 5.4 Location of Chipata- Petauke-Serenje Rail Line


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3) Dry Port in Chipata

Currently Eastern Province has no operational dry port facilities but there is a plan to construct

a dry port at Chipata Railway Station. According to the MTC, a feasibility study for dry port

development in Chipata has been conducted; however, an EIA as well as operation and

maintenance strategy have not been undertaken yet. As regards the necessary financing, an EU

group is showing interest to provide support10. A dry port will benefit freight forwarders,

exporters and importers, transport operators, the business community and the wider population

and facilitate utilisation of the Nacala Corridor in the long-run.

4) OSBP and Inter-Country Trade Centre (ICTC) at Mwami Border Post

Regarding the development of OSBP at the Mwami Border Post, a feasibility study has been

undertaken and the designs are being reviewed. The MTC expects that finalizing the OSBP

should have a positive effect on the traffic levels of the Nacala Corridor as a viable alternative

to other routes. According to the interview survey with the MOCTI, there is a plan to develop

a Trade Centre in Mwami for the purpose of formalising and facilitating inter country trade

between Zambia and Malawi.

5) Development of Coal Fired Power Plant in Chipata

According to the Department of Planning, Eastern Province, as well as the Ministry of Energy

(MOE), there is a plan to develop a coal fired power plant (350 MW class) in Chipata by

utilising coal in Tete, Mozambique. The coal would be imported from Tete via the Nacala

Corridor. The development will be undertaken by IPP – Black Rhino Group of South African

capital, according to the company’s website11 . The company has already concluded a

Memorandum of Understanding (MOU) with the government and a feasibility study is now

being conducted (expected project cost is about USD 900 million). Black Rhino Group will

start negotiation with ZESCO regarding off-take agreement. Given that Eastern Province has

not had any power plants thus far, according to the Department of Planning, Eastern Province,

the new power plant will surely contribute to increased and stable power supply in the

province, which would serve as a critical boost to the business development of the area. Also

the project might create an opportunity to improve the Nacala Railway of the Malawi section

between Liwonde to Mchinji.

6) Gas Pipeline and Transmission Line Development

According to the interview survey with the MOE, there is a plan to put up a gas pipeline into

Chipata from Mozambique. Moreover, with the vast coal plants Mozambique has, Zambia

plans to construct a transmission line through the Nacala Corridor to Tete for a power

connection.

10 According to interview survey with EU, the dry port design and preparation of tender documents have been conducted with EU support. European Investment Bank (EIB) is considering financial support on physical infrastructure development. EIB has a financial instrument to provide loans to private sector, since the dry port is a private facility. 11 http://blackrhinogroup.com/#Aboutus


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(2) Economic Sector Development

1) Development of an Industrial Park and Multi Facility Economical Zone (MFEZ) in

Chipata

In Chipata, an Industrial Park and MFEZ are planned for development by the private sector

and the government, respectively. According to the interview survey with the MOCTI, the

proposed Chipata Industrial Park is situated along Chadidza Road on a 100 hectare piece of

land. The Industrial Park is being promoted by an indigenous Zambian enterprise who is a

majority shareholder. The developers of the Industrial Park have already invested USD 8

million in rehabilitating infrastructure and have so far attracted three enterprises engaged in

manufacturing and processing activities. It is estimated that more than twenty companies will

be located in the Industrial Park with projected employment levels estimated at 4,000

employees. On the other hand, according to the Department of Planning, Eastern Province,

MFEZ is planned by the government, however, there is no prospect for a financial source at

the moment, and the plan is still at the concept phase.

2) Movement Toward Export Oriented Agriculture and Agribusiness Development

The GOZ has been implementing Farm Block Development Programme since 2002. If

commercial farm production is carried out on the scale of 100,000 ha in the areas close to the

Nacala Corridors, export oriented agricultural production and agribusiness will also be

activated. In addition, it is expected that the transportation of fertiliser and the export of

products will be increased by using the Nacala Corridor. On the other hand, it is necessary to

pay attention to the protection of rights of small scale farmers and rural communities in the

implementation of large scale agricultural development.

Especially in the area near the Nacala Corridor, according to the Department of Planning,

Eastern Province, the government has already identified 100,000 ha of land in Lundazi which

is high potential area for cotton production, and agro-processing development (including

cotton and livestock) is expected with Out-grower Scheme to affiliate with small scale

farmers.

Moreover, the private company, which is planning to develop the Chipata-Petauke-Serenje

Railway, indicates an intention to develop a Farm Block in Petauke and the GOZ is examining

the plan12. Additionally, the investors are identified for Manshya in Muchinga Province and

Luswish in Copperbelt Province. Farm Block development is planned around Ndola in

Copperbelt Province and Chongwe in Lusaka Province. After these developments progress,

agricultural commodities and processed agricultural products will be distributed to the

domestic and foreign markets via the rehabilitated Great East Road (T4), planned Chipata -

Petauke - Serenje railway, and a dry port in and Chipata. As a result, the development of both

the regional economy and the corridor infrastructure would be boosted.

12 Interview with Department of Agriculture, MOA


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Meanwhile, capacity building and market access improvement for small-scale farmers are also

being implemented for promotion of export oriented agriculture in Zambia (See 3.1.6). In

collaboration with agribusiness companies such as NWK Agri-Services and Cargill,

enhancement of small scale farmers’ production of not only the company’s main business

crops but also other crops is also developing steadily. For example, the demand of soya beans

and related products like oil, soy powder, soy cake etc. is high. Thus, if the farmers in the

region, mainly small scale farmers, increase these productions, the diversification of

agriculture and agribusiness will be promoted (see 3.1.7 (2)). As for livestock products, the

government is trying to increase the production to export one million goats and sheep a year to

Saudi Arabia (see 3.1.7 (1)).

(3) Expansion of Development Opportunities

1) Rapid Growth of Chipata Urban Centre

The major urban centres existing along the Nacala Corridor in Zambia and Malawi are Lusaka,

Chipata, Lilongwe and Blantyre. Populations of the urban centres are 1,747,152 (2015),

146,088 (2015), 1,098,200 (2016) and 920,200 (2016) respectively13. Chipata is growing

rapidly in recent years and was declared as city in February 2017, which is the capital of

Eastern Province, and the centre of trading of agricultural products such as maize, soya beans,

cotton, tobacco and sunflowers, a gateway to the Nacala Port via the Mwami border post, and

a tourist service town for the tourism around the Luangwa National Park. Chipata has the

potential to function as an important urban centre to support and contribute to economic

development of the Nacala Corridor Region, in combination with strengthening of the

transport function of the Nacala Corridor.

2) Competition among the Rail Corridors

While the development potential of the Nacala Railway Corridor is expected to expand by the

railway extension from Chipata to Serenje, construction and improvement of other railways

are also under study or planned by the public and private sectors. Those include the

construction of the Chingola-Solwezi-Jimbe Railway (600 km) to link North-Western

Province of Zambia to the Port of Lobito, construction of the Livingstone-Kazungula-Sesheke

Railway to link Zambia to Walvis Bay in Namibia (200 km), the Solwezi-Kaoma-Sesheke

Railway to link North-Western Province of Zambia to Walvis Bay, and upgrading of the

North-South Rail Corridor. In addition, the revitalisation of existing railways, Zambia Railway

and TAZARA, is planned by the government with support of the World Bank, EU and China.

If the railways of those corridors are developed and improved, competition among the

different rail corridors could emerge and the Nacala Corridor has to make efforts to compete

with the others. This competitive environment will improve transport services and costs and

can promote the utilisation of the Nacala Corridor in the future.

13 Thomas Brinkhoff: City Population, http://www.citypopulation.de


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5.2.2 Malawi

Similar to the case of Zambia, there are several on-going projects and plans for infrastructure

development and economic sector development that could affect development of the Nacala

Corridor Region in Malawi. In the infrastructure sector, logistics and energy infrastructure

development projects are identified, while large scale mining projects, and agriculture and

industry sector related projects and initiatives are discussed in the economic sectors.

(1) Infrastructure Development

1) Dry Ports in Lilongwe and Blantyre and a Wet Port in Liwonde

The above mentioned MNTMP recommends the development of dry ports in Lilongwe and

Blantyre, in addition to the proposed dry port construction in Salima. The MNTMP also

suggests the construction of a wet port in Liwonde at the crossing point of the railway and

Shire River water transportation route with the aim to enhance the utilisation of both railway

and water transportation from Lake Malawi to the Shire River. These initiatives will enhance

the usability of the Nacala Corridor, leading to further activation of the transportation of goods

and services.

In fact, Vale and its partner Mitsui Corporation have shown an interest in a railway

rehabilitation programme for the Nkaya-Mchinji route, and negotiation with the GOM is in the

final stages14. As pointed out by the officials of the Malawi government, this initiative will

help to complete the movement of goods from Nacala Port in Mozambique to Chitapa, Zambia

through Lilongwe and Mchinji. Given this new initiative, Nkaya, which has enough land for

development, may have a potential to be developed as rail yard or clearance point of rail

transport.

2) Power Sector Development

According to the interview survey with the Ministry of Finance, Department of Economic

Planning and Development, and AfDB, there is a plan to develop power generation facilities in

Neno District, supported by the Chinese government (the contractor is China’s Gezhouba

Group Corporation (CGGC)). The plan is to construct a 300 MW class coal-fired power plant

in the Mwanza area (fist stage), utilising coal produced in Tete in Mozambique, and to be

transported to Mwanza from Moatize. The plan is to eventually expand the generation capacity

up to 1,000 MW. The partial operation is planned by 2019 and the plant will be fully

operational by 2021. As part of a medium to long term transmission plan, a north-south

backbone 400 kV system development is expected and would be connected to neighbouring

utilities – Phombeya near Blantyre to be connected to Mozambique (Matambo and/or

Ncondezi in Tete Province). In addition, there is another plan to develop a coal fired power

plant of 80 MW class capacities in northern Malawi through IPP. Once the power plants have

become operational, power supply problems, especially in the key load centres of the country

14 https://www.nyasatimes.com/vale-mitsui-plan-nkaya-mchinji-railway-line/


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– Blantyre and Lilongwe – will be alleviated and then industrial development (including

manufacturing) and investment will be facilitated. (See 4.6.3 Table 4.47)

(2) Economic Sector Development

1) Development of Special Economic Zone (SEZ)

According to the interview survey with the MOITT, there is a plan to develop SEZ in the

country15. The Ministry expects to prepare a feasibility study with support from development

partners. The feasibility study will identify candidate location(s) and come up with operation

strategies of SEZ, as well as come up with measures to improve production, expand

employment, generate foreign currency, etc. According to the interview survey with the MITC,

several candidate locations are under consideration – Lilongwe (with 350 ha of land in the

vicinity of the airport), Blantyre (with 38 ha of land), Liwonde, Shire Valley, North Karonga,

Salima, etc. The GOM expects the private sector to undertake the development and marketing

of SEZ. Legal and institutional frameworks regarding SEZ development and operation, as well

as selection criteria and various incentive structures for SEZ developers and operators have

not been decided yet. Concrete tax incentives will be decided in coordination with pertinent

authorities including the Ministry of Finance and Economic Development, MOITT, MRA, and

MITC to facilitate private sector participation. According to the MITC, a private company in

the USA (Water Wheels International) has proposed to develop a private SEZ, apart from the

SEZ development mentioned above. The company plans to construct a 2MW power plant

(through IPP) near Nkhata Bay to secure necessary power in the SEZ. The remaining power

will be sold to ESCOM, and negotiation between the company and ESCOM is on-going. As

such, facilitating development of power generation through promotion of IPP may be one of

options to mitigate power supply problems for SEZ development.

2) Development of Irrigation Scheme

Large-scale irrigated farmland has been developed in Malawi through assistance from

development partners and private business operators. Among 78,100 ha of agricultural land

planned to be development of irrigation system, financial sources were identified for 35,170

ha of land. The irrigation scheme of 21,500 ha will be developed in Shire Valley Irrigation

Project (see 4.1.6). Since the rain-fed agriculture is mostly practised in the country, the

decrease or stagnant of the productivity and production due to unstable rainfalls and droughts

are main challenges in the agriculture sector. If the irrigation can be implemented in

appropriate time, increase of the productivity and production can be expected. Although the

GOM (as well as the GOZ) has anticipated that the agricultural programmes promoting market

oriented agriculture adversely affect national food security, the food surplus has been

increasingly observed due to the recent growth of agricultural production. Therefore, if the

15 According to the MITC, the project was originally proposed as an EIF (Enhanced Integrated Framework, a multi-donor financed financial and technical support programme under the auspices of the WTO) in 2014, as a three year programme, costing around 3 million dollars. Three prioritized export-oriented clusters were identified for diversification – oil seed products, sugar cane projects and manufactured products. However, the proposal was rejected and the MITC is now discussing with the World Bank on how to revise the plan including candidate sites for SEZ, a policy for operation, related legislations and organisations of SEZ.


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agricultural production by small scale farmers is increased and stabilised by the development

of irrigation infrastructure, it may be possible to promote development of market oriented

agriculture targeting the neighbouring countries while achieving the food security.

3) Functional Enhancement of Farmers Organizations and the Private Sector

As mentioned in 4.1.5 and 4.1.7, farmers’ organisations such as FUM and NASFAM, taking a

role of agricultural extension workers, have been working on improving agricultural

production though supporting agricultural inputs and providing technology assistance for

small-scale farmers. Furthermore, they serve as an intermediary between small-scale farmers

and distributors to optimise their commercial transactions, and also started exporting

agricultural products.

Besides, private commodity exchangers such as ACE and AHCX are trying to improve

farmers’ market access by establishing collection warehouses in local cities and by creating

market information dissemination and credits systems for small-scale farmers. If the activities

and functions of these organisations and operators are expanded and enriched in the future,

both agricultural production and its sales by small-scale farmers are expected to be

strengthened.

4) Mining Sector Development

According to the interview survey with the AfDB, major investment projects in Malawi’s

mining sector are: (i) Songwe Hill Rare Earth Project, owned by Mkango Resources Ltd.,

which is listed on Canada’s TSX Venture Exchange and the AIM Market of the London Stock

Exchange, and (ii) Kanyika Niobium Project in Mzimba and Chiziro Graphite Project in

northeast of Lilongwe, run by the Australian-listed, metals and rare earths company called

Globe Metals & Mining Ltd.

As regards (i) Songwe Hill Rare Earth Project, it features broad zones of outcropping rare

earth elements mineralisation on the northern slopes of a steep sided hill in Phalombe, which

is located about 2 km from the Mozambique border. Mkango completed a Pre-Feasibility

Study for the Project in September 2014, which was subsequently updated in November

201516. EIA has not been conducted yet. According to the interview survey with Mkango

Resources, a refining plant (sulphuric acid plant and flotation plant) will be constructed at the

project site, and inputs necessary for the production including sulphur will be imported

utilising the Nacala Railway. In regards to rare earth outputs produced from the plant, Mkango

Resources is considering transporting the products to Liwonde by truck and then loading them

on the Nacala Railway for exporting to Europe. Currently, the rare earth market is dominated

by China – 98% of supply comes from China. Although the expected share of this project

output is very small, it will create an alternative supply source other than China.

16 http://www.mkango.ca/s/songwe.asp


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Regarding (ii), Kanyika Niobium Project is Globe’s most advanced project aiming to produce

high purity niobium pentoxide and tantalum pentoxide powders17. Niobium production is

expected to be 3,000 tonnes per year and the company has exploitation rights for 50 years.

According to the interview survey with Globe Metals & Mining, the Kanyika mining site is

located in Mzimba District, which is located between Kasungu and Nkotakota. Globe Metals

& Mining intends to utilise the Nacala Rail to import production materials as well as to

transport Niobium via Nacala Port. As such, the company expects the rail infrastructures to be

upgraded. Currently, Brazil is dominating the Niobium market – about 90 to 92% of supply

(equivalent to 55,000 tonnes per year) comes from Brazil – followed by Canada (4,000 tonnes

per year). Once this project is realised, it will become third place in the world.


Figure 5.5 Location of Possible Driving Force Projects and Plans

17 http://www.globemm.com/Projects/Kanyika-Niobium-Project.aspx#.WU-4mDuQwkI


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5.3 Overall Issues on Nacala Corridor Development

With the understandings of Nacala Corridor Development in the national plans and regional

integration policies as well as the current initiatives for development on the ground of the

Nacala Corridor Region discussed, a set of overall issues for promoting development in the

Nacala Corridor Region is identified and discussed in this section. In particular, the issues are

examined from three perspectives of development of corridor transport infrastructure,

promotion of economic sectors, and regional economic integration.

5.3.1 Issues on the Nacala Corridor Transport

(1) Incomplete Corridor Infrastructure Development

Nacala Corridor is considered as one of the most important corridors for Zambia and Malawi.

Landlocked countries such as Zambia and Malawi have to rely on international corridors for

their international and regional trade, and how to reduce transport costs for both export and

import is the key issue for economic development of the countries. The Nacala Corridor is

considered as a potential corridor to provide an alternative route of transport for Malawi and

Zambia, and to reduce the cost of transport for export and import by utilising the railway.

The development of transport infrastructure of the Nacala Corridor has been progressing in

these recent years by certain fundamental projects including the road construction projects

between the Luangwa Bridge and Mwami border funded by EU/EIB and AfDB, construction

and upgrading of the Nacala Railway between Moatize and Nacala Port via Malawi by Vale,

and the rehabilitation of Nacala Port.

In spite of the expectations from the stakeholders and the progress of the infrastructure

development, the actual use of the Nacala Corridor is not significantly increasing in both

countries, and the share of the corridor in freight transport is still low. In Malawi, the share of

freight transport of the Nacala Corridor for export and import is only around 10-20%, while

the Beira and Durban Corridors account for around 50-60% and 20-30% respectively. In

Zambia, the share of the Nacala Corridor in freight transport is only 5% in export and 2% in

import. It can be said that the Nacala Corridor is not fully utilised as expected at present.

This is because the Nacala Corridor’s transport infrastructure is still incomplete and has not

reached the level to function as an international corridor at present, although various

infrastructure projects have been implemented for Nacala Corridor Development in recent

years in the three countries. The railway between Chipata (Zambia) and Mchinji (Malawi) was

constructed in 2010 and started its operation in 2014. In addition, the railway for coal transport

from Moatize in Mozambique to Nacala Port via Malawi was constructed and upgraded by

Vale and commenced the operation in the beginning of 2016. However, the railway section

between Nkaya and Mchinji is still not in good condition and is frequently damaged by

flooding around Salima. Due to the condition, the railway in the section is not reliable for

freight transport and the speed of the trains is very slow (10-15 km/hour). The axle load of the

railway between Chipata (Zambia) and Limbe (Malawi) is 18 tonnes, except for the section

between Salima and Nkaya of which the axle load is 15 tonnes, while the axle load in the


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section from Nkaya to Nayuchi, which was constructed by Vale, is 20.5 tonnes. Currently, the

freight transport through the Nacala Rail Corridor is functioning only between Blantyre and

Nacala Port by the upgraded railway for the coal transport. The railway section between

Nkaya and Mchinji in Malawi is the bottleneck in completion of the functioning the Nacala

Rail Corridor. Recently, however, it was revealed that a rehabilitation plan is prepared for the

Nkaya-Mchinji section by Vale and Mitsui Corporation and is to be implemented once a

contractor is selected this year.

Similar to the railway, because the Nacala Road Corridor also has bottlenecks in completion

of the functioning road corridor, the traffic volume passing through the Nacala Corridor

between Malawi and Mozambique is limited. These bottlenecks include the steep uphill road

sections in mountainous areas in Malawi around the border with Mozambique, unpaved trunk

roads between Chiponde and Cuamba and also between Cuamba and Malema in Mozambique

and a lack of OSBP at the borders between Zambia and Malawi, and Malawi and Mozambique.

Meanwhile, the sections of Cuamba-Nampula (348 km) and Madimba-Cuamba (160 km) have

been improved under co-financing of JICA, AfDB and South Korea so that the road condition

will be upgraded shortly.

Lastly, Nacala Port was rehabilitated under the Japanese grant aid and a project to upgrade its

cargo handling capacity is currently underway by the Japanese ODA loan. Hence, after the

completion of the project three years later, the handling capacity of the Port will be expanded

to make the most of its potential.

(2) Improvement of Rail Freight Transport Services to Attract the Private Sector to

Utilise the Nacala Corridor

The Nacala Corridor’s advantage to other corridors is the existence of a reliable railway from

Moatize to Nacala Port, which will be maintained in good condition for the coal transport until

the closure of the coal projects. An expected advantage of using railways for freight transport

is the lower cost compared with the cost of truck transport. It is also the advantage that

railways can haul heavy and bulky freight as well as a large volume of freight at a time.

At present, none of corridors in Zambia and Malawi are successful in taking full advantage of

railways’ merit, although there are corridors which consist of both railway and road, namely

the Dar es Salaam Corridor and the North-South Corridor. The price of rail transport is about

the same or higher in some cases compared with truck transport. Customers do not prefer

railway in consideration of cost, time, availability and security. The share of railway in the

heavy bulky freight market in Zambia is only 9%. Under the concession agreement, the quota

of the cargo volume of 4 million tonnes per year is granted to CEAR; however, the current

volume reaches only about 500,000 tonnes, equivalent to 8% of the quota. On average, 47

wagons were carried by a train per one way, though CEAR is allowed to operate a rail

carrying up to 120 wagons per one way.

There are other factors beside the infrastructure to explain the underutilised Nacala Railway.

There are only a handful of ship lines calling at Nacala Port compared with other ports, and

not many logistics firms have opened branch offices in Nacala. Moreover, a dry port that


5-26

offers an effective connection between the rail and road has not been developed yet, so that the

advantage of multimodal transport of the Nacala Corridor is unexploited. A lack of

locomotives and wagons owned by CEAR is another constraint to expand the operation. It is

also necessary to enhance the management, operation and maintenance capacity of CEAR for

improved handing capacity. The publicity of the Nacala Railway is also identified in

interviews with the stakeholders. Because the opening ceremony of the Nkaya-Moatize line

was only held in May 2017, one year after the commencement of the coal transport in 2016,

not many people have recognised the potential of the Nacala Corridor Railway for freight

transport.

The critical issue for the promotion of the Nacala Corridor is how to provide good rail freight

transport services in terms of time, security and availability and how to lower the transport

costs. Efforts should be made not only by improving the transport infrastructure, but also by

developing supporting facilities, improving the railway operation and making good

coordination among the railway operating companies in Zambia, Malawi and Mozambique.

5.3.2 Issues on Economic Sectors

(1) Basic Understanding on Impacts of Transport Corridor Development on

Economic Sectors

The basic understanding on the relationship between transport corridor development and

economic sector development is that there is no straightforward positive association between

them. Even if the railway and roads of the Nacala Corridor are developed or upgraded from

Nacala Port up to Malawi, a potential of economic sectors would not emerge instantly nor be

cultivated to export commodities via Nacala Port without any interventions. Likewise, in

Zambia, the road development of the Nacala Corridor does not lead to a sudden surge of

development potential of an industrial sector and automatic expansion of export oriented

production and trade. In other words, improvement of the railway or roads on the corridor

offers only a new opportunity for economic sectors through the reduction of transport costs or

improvement of market access. An action for change must be initiated to cultivate the

development potential of economic sectors, taking advantage of opportunities for trade or in

newly connected markets by the improvement of the transport corridor. Therefore, there

should be initiatives or interventions to promote the development of economic sectors, which

are described as follows.

(2) Reinforcement of Export Oriented Agriculture

A primary economic sector in the Nacala Corridor Region in Malawi and Zambia is

agriculture and the key issue is how to develop the agriculture sector and how to promote

agribusiness for the development of the Region while protecting the rights of small scale

farmers and rural communities.

As above mentioned, the use of the Nacala Corridor is still low in total freight transport;

however, the corridor started being used to no small extent for the transport of agricultural

inputs and materials, as well as agriculture products including processing ones. Therefore, the


5-27

agriculture and agribusiness sectors first benefit from the development of the railways and

roads on the Nacala Corridor among others, by the reduction of transport cost added to the

price of commodities. Specifically, an opportunity for expansion of regional trade with

neighbouring countries is expected to emerge by newly established market access through the

corridor development.

In Zambia, a cluster composed of agricultural production and processing has been under

formulation. In particular, maize, soya beans, its edible oil and by-products are exported to

regional markets. As described in 3.1.7, various products can be produced in Zambia because

of the favourable agro-ecological condition, the demand of the products is high in the regional

markets, and thus the export of agriculture products is one of the important income sources of

foreign currency. The NAIP certainly mentioned that the export oriented agriculture is to be

promoted. However, the current detailed strategies, initiatives and regime (system) for export

oriented agriculture are less developed, hindering the promotion of export oriented agriculture

development. The strategies and implementation mechanism should be modified so as to be

based on the current situation that small scale farmers are dominant in the region, to consider a

balance between food security and product export, and to be implementable on the ground of

each of the potential crops.

In Malawi, the export of primary products such as tobacco and cotton is predominant for

international markets. The export oriented agriculture has been promoted based on the NES

formulated in 2012, which clarified the promotion strategy and the implementation mechanism

by cluster. According to the interview with MITC, however, the implementation has not been

progressed as expected, despite some attempts for export by cluster.

Among those which have not been performed well, there is a slump in the export of

groundnuts. The significant amount of groundnuts after tobacco had been exported until the

late 1990's; however, due to the aflatoxin problem, these are no longer exported to Europe and

the United States, which used to be large markets for groundnuts. For that reason, academic

scientific research and field studies on aflatoxin control are being conducted by many projects

and programmes, but comprehensive countermeasures at the production site have not been

implemented (see 4.1.6, 4.1.7).

(3) Development of Large Scale Agriculture and Agricultural Industries in the

Nacala Corridor Region

As mentioned above, the agriculture products in Zambia and Malawi are exported to the

regions and overseas counties. However, the transport cost is high and the competitiveness is

low in international markets due to their location as inland countries. Thus, to promote the

export of agricultural products with competitiveness enhancement from macro-aspect, it is

important to attract more investment from the private sector in the large scale agriculture and

agro-processing industry that can reduce the production cost by taking advantage of economy

of scale, while paying attention to the rights of small scale farmers and rural communities.

In Zambia, a policy or programmes toward export-oriented production should be introduced,

since until now large-scale farmers are often oriented to a domestic market, of which the scale


5-28

is rather limited. At present, the government is promoting the development of large-scale

commercial farming as Farm Block Development Programme and has identified 100,000 ha as

Farm Block in each province.

Although the government tries to carry out the programme, Farm Block development has not

progressed as planned. As shown in Table 3.5, core investors have been determined for some

Farm Blocks, but the most Farm Block development is not going well due to the delay of

infrastructure development by the government. Moreover, the Farm Blocks had been set in

each province by the programme, apart from the blocks shown in Table 3.5, and there are

Farm Blocks that have not been developed such as Mwase-Mphangwe (Lundazi District) in

Eastern Province, Chongwe (Chongwe District) in Lusaka Province, Solwezi in

North-Western Province and Simango in Southern Province, etc. Furthermore, the

consideration for local small scale farmers should be taken into account in Farm Black

development. Therefore, it is necessary to examine the reasons of this stagnancy by

conducting detail studies on the current situation and to propose concrete measures to make

the Farm Blocks successful.

The GBI is conducted for promotion of large scale commercial farming and agricultural

processing as agribusiness development in Malawi. According to the GBI, business

development in three areas was planned, but only Malawi Mango and Salima Sugar in Salima

are currently operating (4.1.6 (2) -2) reference).

(4) Special Consideration to Small Scale Farmers

The majority of farmers in the Nacala Corridor Region as well as in the two countries in

general are small scale farmers. The important issues include how to link small scale farmers

to markets, access to which may be improved by Nacala Corridor Development, and how to

involve them in the regional development.

Also, the development requires continual awareness that small-scale farmers in the region

should not suffer a disadvantage due to the promotion of the large-scale commercial

agriculture or other development activities. Therefore, while promoting the large scale

commercial farming mentioned above, various measures should be taken for the small scale

farmers to improve agricultural production and market access (marketing). For instance,

introduction of Out-grower scheme, and Citizens Economic Empowerment Commission

(CEEC)’s cluster based loan programme for small scale investment are good examples of the

interventions for small scale farmers to link with markets. However, these measures should be

implemented with respect to the will of small scale farmers. Upon making such decisions, it is

necessary to take sufficient measures to ensuring fairness and transparency, for example by

providing information in appropriate methods with the serious consideration on the

environment of small scale farmers where access to information is limited. Thus, the effective,

existing interventions should be reviewed and evaluated before introducing new initiatives for

small scale farmers.


5-29

5.3.3 Issues on the Relationship Between Corridor Transport and Economic Sectors

(1) Creation of Demand of Transport for the Sustainability of Nacala Corridor by

Making it Business Friendly

The most important issue to promote Nacala Corridor Development is the creation of enough

demand of transport to sustain the transport functions of the Nacala Corridor. At present,

agricultural products such as sugar, pigeon peas, tea, tobacco and macadamia nuts are

exported from Malawi through the Nacala Corridor to the Nacala Port, and soap noodles,

wheat, fertilizer, spare parts, bicycles, etc. are imported through the Nacala Corridor to

Malawi. For Zambia, international trade through the Nacala Corridor is very limited. 70% of

the freight for export and 78% of the freight for import at Mwami border with Malawi are for

the trade between Zambia and Malawi. Cotton, cement, clinker, maize and tobacco are

exported to Malawi. Because only about one year has passed since the commencement of the

operation of the Nacala Corridor Railway and Nacala Port, activities for the publicity and

advertisement of the Nacala Corridor have been rarely conducted to spur a demand for freight

transport. In fact, as a result of that, the current traffic volume accounts for more or less 10%

of the transport quota (two around trips per day and 120 wagons per one way) given to Malawi

under the concession. Moreover, Nacala Port and transit points lack necessary equipment,

handling facilities for transhipment, and warehouses. Only a handful of major logistics firms

opened their branch offices in the port, such as Bolloré.

To utilise the transport functions of the Nacala Corridor for regional development, it is

necessary to increase the demand of transport to the level that the infrastructure and transport

services are maintained in the long term, in addition to the coal transport from Moatize to

Nacala Port. It is not easy to increase the demand of transport in the short term in

consideration of the current conditions of infrastructure and economic activities along the

Nacala Corridor. Yet, a first step should be taken to develop support facilities and to install

necessary equipment in order to make the Nacala Corridor and Port more business friendly

and to induce the traffic demand from the economic sectors. Dry port development is one of

those projects that bring about the benefits of the multimodal transport of the Nacala Corridor

to the private sector. Meanwhile, it must be mentioned that the traffic demand to support the

Nacala Corridor is not necessarily international freight toward Nacala Port. As discussed,

intra-regional trade should be activated in the initial stage, not international trade. The Nacala

Corridor, the rail in particular, could be sustained, should intra-regional trade generate

sufficient traffic demands.

(2) Insufficient Use of the Nacala Corridor by Economic Sectors

In Malawi, the Nacala Corridor Railway started to be used from Blantyre, for export of

tobacco, sugar, tea, etc., using the bay-line connected to the factories or warehouses. Fuels and

fertiliser are already imported via the Nacala Corridor, though the traffic demand from the

economic sectors is not sufficiently large. The transport cost of the Nacala Railway is

relatively cheaper compared with truck transport, but a difference in the cost of the two modes


5-30

of transport is not so significant as logistics firms and customers have started considering the

shifting from truck to rail transport. In Zambia, the use of the railway and road of the Nacala

Corridor is not very active due to the inefficiency, unreliable operation, and security reasons.

5.3.4 Issues on Regional Economic Integration

(1) Regional Coordination for Promotion of Nacala Corridor Development

Promotion of Nacala Corridor Development can be achieved by the stakeholders of all sectors

throughout the Nacala Corridor Region. To promote and sustain the Nacala Corridor in the

long term, it is essential to accommodate transport demand in wider areas of the Nacala

Corridor Region in Zambia, Malawi and Mozambique through the utilisation of the Nacala

Corridor. Necessary infrastructure development should be realised along the corridor, in order

to complete the transport corridor and improve the transport/logistics functions. Economic

development in the Nacala Corridor Region should be promoted by integrating the region and

making links between different industrial and commercial centres. At present, there is no

mechanism of regional coordination among Zambia, Malawi and Mozambique to promote

Nacala Corridor Development, and it is an urgent issue to be considered.

(2) The Nacala Corridor for Regional Economic Integration

The ratification process of the COMESA-EAC-SADC Tripartite Free Trade Area that was

brought into effect in June 2015 has been making slow progress in each of the member states.

In the past, the efforts for regional economic integration by SADC and COMESA in the

Southern African region were not successful18 so that the member states might be reluctant to

take actions for the regional integration, unlike the countries in the West African region, under

West African Economic and Monetary Union (UEMOA) or Economic Community of West

African States (ECOWAS), or in Eastern Africa as members of EAC.

The trade barriers to export, such as a ban on export of certain commodities are found on the

agricultural commodities with a potential to export via the Nacala Corridor. These trade

barriers including both tariff and non-tariff should be removed to encourage the export of

potential agricultural commodities. In Zambia, the 7NDP adopted a policy to promote

export-oriented agriculture. Thus, the agricultural policy of the two countries should be

redirected in line with the export strategies as well as the regional integration policy and trade

agreements. The export oriented agriculture proposed in the 7NDP should be developed by

offering incentives to the potential farmers for the expansion of commodity production for

export, by archiving balanced development that brings about benefits to small scale farmers

18 SADC delayed the target years to achieve the goal of complete trade liberalization and foundation of a custom union. As the issues in achieving the goals of SADC, Mapuva and Muyengwe-Mapuva (2014) pointed out “over ambitious targets set by the SADC as a roadmap to economic regional integration; multiple and concurrent memberships of different regional economic communities (RECs); the heterogeneous nature of the SADC economies which has provided an uneven economic environment; duplication emanating from the activities of the SACU and the SADC; the intricacies of rules of origin; different levels of economic development within SADC member states; as well as the failure of the SADC Tribunal to provide recourse to justice and act as a unifying platform for member states” (25-26). Mapuva, Jephias and Loveness Muyengwa-Mapuva. (2014). “The SADC Regional Bloc: What Challenges and Prospects for Regional Integration? Law, Democracy & Development 18 (2014): 22-36.


5-31

dominant in this area, and at the same time by preventing negative impacts on vulnerable

farmers.

5.4 Impact Analysis

5.4.1 Perspectives on Nacala Corridor Development

In coming up with a development scenario, the following two perspectives were taken up for

both Zambia and Malawi: (i) approaching the Nacala Corridor from the entire country

perspective (i.e. from the macro perspective) and (ii) focusing on potentials of the Nacala

Corridor itself (i.e. from the micro perspective).

(1) Zambia

Zambia is already connected with neighbouring countries as well as sea ports through various

corridors which pass through the country. Each corridor has competitive relationships in terms

of transport/logistics, regional development, industrial promotion and so on. When viewing

from traffic volume/freight, the Nacala Corridor is the sixth corridor after the North-South,

Beira, Lobito, Dar es Salaam and Walvis Bay.

The benefits of Nacala Corridor Development for Zambia are: (i) it connects to a sea port with

the second shortest distance compared after the Beira Corridor, (ii) the Port of Nacala is the

deep sea port which enables to handle giant container vessels and (iii) it can secure an

alternative route from the country’s security-related point of view. On the other hand, the

following issues have been pointed out: (i) the rail system is inefficient and not reliable mainly

due to problems of ZRL on operation and maintenance and (ii) insufficient development of

infrastructures including dry port and container handling facilities. Because of these issues, the

Nacala Corridor has not been fully utilised – these bottlenecks need to be tackled with in order

to improve the utilisation of the Nacala Corridor.

Looking from a regional perspective, Eastern Province in Zambia, especially the provincial

capital Chipata, will benefit as the physical connection point through the road and rail network

to Malawi.

The following figures summarise the industry share to the total GDP at current prices, 2015

for each province along major corridors passing through Zambia.

Nacala Corridor: Eastern Province, Lusaka Province

North-South Corridor: Lusaka Province, Central Province, Southern Province

Dar es Salaam Corridor: Central Province, Muchinga Province, Northern Province

Lobito Corridor: Central Province, Copperbelt Province


5-32

Eastern Province Lusaka Province

Source: JICA Study Team, based on the data from National Accounts: Provincial Gross Domestic Product (GDP) –Charts: Industry Share to the GDP at Current Prices (Central Statistical Office, Republic of Zambia)

Figure 5.6 Industry Share to the Total GDP at Current Prices, 2015: Nacala Corridor

The share of “wholesale and retail trade” is the largest for both Eastern Province and Lusaka

Province. For Eastern Province, “agriculture, forestry and fishing” has the second largest share

where as “construction” comes in second in Lusaka. The share of “manufacturing” is zero

percent in Eastern Province where it is the third largest share in Lusaka Province.

Lusaka Province Central Province

Southern Province


Figure 5.7 Industry Share to the Total GDP at Current Prices, 2015: North-South Corridor

Agriculture, forestry and fishing, 14.5

Mining and quarrying, 0.0

Manufacturing, 0.0

Electricity generation, 0.0

Water supply; Sewerage, 0.1

Construction, 14.1

Wholesale and retail trade, 26.8

Transportation and storage, 0.3

Accommodation and food service,

0.4

Information and communication,

2.0

Financial and insurance

activities, 3.2

Real estate activities, 10.8

Professional, scientific, 0.4

Administrative and support, 1.5

Public administration and

defence, 3.4

Education, 13.2

Human health and social work, 2.1

Art, entertainment and recreation, 0.0

Other service, 1.1 Agriculture, forestry and fishing, 0.8


Manufacturing, 11.5



Construction, 14.4




4.3

Information and communication, 3.7

Financial and insurance activities,

5.9





defence, 4.0Education,

6.5

Human health and social work,

1.5


Other service, 0.3



Manufacturing, 11.5



Construction, 14.4




4.3



5.9





defence, 4.0Education,

6.5


1.5


Other service, 0.3



Manufacturing, 0.7



Construction, 8.9




0.3



activities, 3.9


Professional, scientific,

0.0



defence, 4.1

Education, 10.8


1.2

Art, entertainment and recreation, 0.0 Other service, 0.7



Manufacturing, 5.0



Construction, 8.4



Accommodation and food service, 2.9



1.5




Public administration and defence, 3.2

Education, 9.4



Other service, 0.5


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While the order is different, the top five industries in Central Province (“wholesale and retail

trade”, “agriculture, forestry and fishing”, “education”, “construction” and “real estate

activities”) are the same as those in Eastern Province. The share of “electricity generation” is

the largest in Southern Province (27.5%).

Central Province Muchinga Province

Northern Province


Figure 5.8 Industry Share to the Total GDP at Current Prices, 2015: Dar es Salaam Corridor

A distinctive feature in Muchinga Province on the Dar es Salaam Corridor compared to other

provinces is that “Public administration and defence” occupies the third largest share (17.1%).

In Northern Province, “wholesale and retail trade” occupies a more than 40% of share, which

is a prominent feature compared to other provinces.



Manufacturing, 0.7



Construction, 8.9




0.3



activities, 3.9



0.0



defence, 4.1

Education, 10.8


1.2



Mining and quarrying, 0.0 Manufacturing, 0.0



Construction, 18.0




Information and communication,

2.9


2.3

Real estate activities, 8.8Professional,

scientific, 0.0



Education, 9.5



Other service, 0.9



Manufacturing, 0.0



Construction, 8.6






0.0





Education, 12.0


1.3


Other service, 1.1


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Central Province Copperbelt Province


Figure 5.9 Industry Share to the Total GDP at Current Prices, 2015: Lobito Corridor

The share of “mining and quarrying” is the largest (25.6%), followed by “wholesale and retail

trade” (17.7%), and “manufacturing” (12.7%) in Copperbelt Province along the Lobito

Corridor.

Table 5.9 summarises the top three industries of each province that passes through major

corridors. “Wholesale and retail trade” occupies either first or second largest industry for all

provinces along major corridors. For the Nacala Corridor, “agriculture, forestry and fishing”

which is the second largest in Eastern Province and “manufacturing” which is the third largest

in Lusaka Province can be considered as its feature. The North-South Corridor has a similar

feature as the Nacala Corridor, but has “electricity generation” and “education” as additional

industries. For the Dar es Salaam Corridor, “agriculture, forestry and fishing” is the third

largest industry in Northern Province but it does not have “manufacturing” as in the case of

the Nacala Corridor. The Lobito Corridor has a distinctive feature that it passes through

Copperbelt Province with “mining and quarrying” and “manufacturing” as the first and third

largest industry.



Manufacturing, 0.7



Construction, 8.9




0.3



activities, 3.9



0.0



defence, 4.1

Education, 10.8


1.2




Manufacturing, 12.7



Construction, 5.9




0.3



4.4





Education, 5.3Human health and social work, 0.8


Other service, 0.2


5-35

Table 5.9 Top Three Industries of Each Province Passing through Major Corridors

Nacala Corridor North-South Corridor Dar es Salaam Corridor Lobito Corridor Eastern Province

1. Wholesale and retail trade 2. Agriculture, forestry and fishing 3. Construction

Lusaka Province

1. Wholesale and retail trade 2. Construction 3. Manufacturing

Southern Province

1. Electricity generation 2. Wholesale and retail trade 3. Education

Central Province

1. Wholesale and retail trade 2. Agriculture, forestry and fishing 3. Education

Muchinga Province

1. Wholesale and retail trade 2. Construction 3. Public administration and defence

Northern Province

1. Wholesale and retail trade 2. Education 3. Agriculture, forestry and fishing

Copperbelt Province

1. Mining and quarrying 2. Wholesale and retail trade 3. Manufacturing


(2) Malawi

The Nacala Corridor is one of the corridors among others (including the Dar es Salaam and

Beira Corridors) that Malawi utilises. On the other hand, unlike the situation in Zambia, the

Nacala Corridor, the major arterial road and rail, traverses the central part of the country –

through Lilongwe, the capital, and Blantyre, the central city of the country’s economic

activities. The activation of the Nacala Corridor is expected to facilitate border trade with

Zambia via its Eastern Province that physically connects the two countries.

In coming up with a development scenario in Malawi, a positive “external factor” has been

taken into account – the expected rehabilitation programme of the Nkaya-Mchinji rail route to

be undertaken by Vale Logistics and its partner Mitsui Corporation.

The benefits of Nacala Corridor Development for Malawi are: (i) it connects to a sea port with

the shortest distance compared with other corridors, (ii) the Port of Nacala is the deep sea port

which enables to handle giant container vessels and (iii) it can secure an alternative route for

the Beira Corridor / Port of Beira. The Nacala Corridor has both a road and rail network,

however, the Beira Corridor does not have rail. In addition, Beira Port is not a deep sea port

(thus, it is utilised as a feeder port) and needs periodic dredging due to its geographical

location.

On the other hand, the following issues have been pointed out: (i) the existing rail facilities

need to be rehabilitated (the Salima-Chipoka route has been washed away due to flooding) and

operation and maintenance of CEAR needs to be strengthened and (ii) the existing trunk road

needs to be upgraded and the development of rural roads / feeder roads needs to be realised.


5-36

5.4.2 Impact of Railway Upgrading on Transport Cost

(1) Current Situation of Transport Cost

Due to the land-locked geography and the location in the continent, international transport cost

is particularly critical for Malawi. The import-export of the country heavily relies on

neighbouring ports including Dar es Salaam, Nacala, Beira and Durban. The connection to the

ports and intermediate transfers in and of the country rely predominantly on road and rail

infrastructure. Of which the share of road transport (both domestic and international freight) as

of 2015 was 93% of the total freight demand. One of the major reasons of the high proportion

of road transport is due to the long distances covered by road haulers – from Durban Port to

Blantyre; from Beira Port through Tete to Blantyre and Dar es Salaam to Lilongwe – that

depend on trucks to transport most of Malawi’s exports and imports.

Table 5.10 Freight Demand by Mode in 2015 (1,000 ton)

Mode Volume %

Road 2,574.0 93 Rail 180.0 7 Waterway 2.0 0 Air 3.8 0 Total 2,759.8 100

Source: MNTMP

On the other hand, since rail transport is capable of transporting large volumes of goods at a

low price on time and using a shorter route as compared to other transport corridors in Malawi,

the functionality of the rail transport system is of vital importance to Malawi. Furthermore,

according to MNTMP, it is estimated that rail transport is approximately 5% (import) and 30%

(export) more cost-effective than road transport to Beira.

Table 5.11 Pure Transport Cost by Commodity in 2016

Import from Mode km Pure Transport Cost by Commodity in Malawi (2016)

USD/ton

Fuel Fertiliser Cement Wheat Beira Road 930 118 108 164 135

Nacala Rail 1,133 116 115 134 128 Dar es Salaam Road 1,811 154 - 137 -

Durban Road 2,431 - 173 - 144 Export from Mode km Tobacco Sugar Tea Cotton Food Crops Food Residues

Beira Road 930 138 71 103 83 90 87 Nacala Rail 1,133 61 49 88 68 73 -

Dar es Salaam Road 1,811 - - - - - 120 Durban Road 2,431 213 164 - 245 184 -

Source: MNTMP

Also, the analysis results of this study, as shown on the next page are similar to the results of

the MNTMP. At this moment, although the advantage is low in terms of transport time to

Nacala Port by rail, comparisons of advantage in transport costs show that Nacala enjoys a

high advantage when rail is used for Chipata, Lilongwe and Blantyre. However, as previously

noted, although the cost advantage is high, the challenge of having a limited market share still

remains.


5-37

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5-38

(2) Necessary Interventions and Impact

1) Necessary Interventions of Railway Sub-sector

The overall objective of rehabilitating and upgrading the rail transportation system is to

increase competition in the sector and open up Malawi to cheaper alternatives of transporting

bulky agricultural and manufactured goods both into (imports) and out (exports) of Malawi.

However, studies, including the hearing survey by the JICA Study Team, conclude that the rail

system in Malawi, in spite of providing the shortest exit route for Malawian commodities, was

unreliable and inefficient. The major constraints identified include, among other things:

Skill gaps and shortage of local expertise in significant areas of rail operation and

management

Lack of operational efficiency in the rail system

Lack of marketing and approach to customers

Inadequate rail coverage within the country (inadequate transport network system)

Lack of adequate cargo handling equipment (sidings and loading/discharge equipment)

Lack of operating locomotives

In order to address the constraints identified above, major interventions include:

i) Upgrading (axle load and speed up) of the section between Salima and Nkaya

ii) Construction of dry ports (Chipata, Lilongwe, Blantyre) for establishment of adequate

transport system

iii) Capacity building for operation, management and marketing of CEAR and the

Railways Directorate of the GOM

iv) Acquisition of new locomotives and wagons

Of which i) Upgrading (axle load and speed up) of the section between Salima (Chipata) and

Nkaya was already committed in August 2017 by Vale/Mitsui Group which is operating the

Nacala Railway.

2) Impact of Necessary Interventions

The following table shows the impact of proposed interventions to transport cost and transit

time. These interventions will reduce transportation costs and transit time by railway and

increase access to markets (both national and international)19.

Note: Consideration for improved efficiency of the other corridors as a result of the

development of each of these corridors is not taken account of due to the limitation of the time

of this study.

19 Capacity building of CEAR and Railways Directorate of the government is expected to contribute to reduction of transport time by improved operation and management of the railway and decline of transport cost through marketing that will increase cargo volume while reducing empty load. The assumption is that as a result of that, the transport cost will go down to the lowest level of railway transport in the region.


5-39

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5-40

5.4.3 Impact of Nacala Corridor Development on Fuels and Fertiliser

The impact of Nacala Corridor Development on the prices of fuel and fertiliser in Zambia and

Malawi is a main topic in this section, focusing on the transport cost reduction. Because fuel

and fertiliser account for a large portion of the imports to the two countries, the impact of the

corridor development on the transport costs of fuels and fertiliser could bring about substantial

impacts on the economies. At first, the impacts on fuel price are analysed followed by the

impacts on fertiliser prices in the countries.

(1) Transport Cost Reduction for Analysis of Impacts on Fuels and Fertiliser

In order to evaluate the impacts of Nacala Corridor Development on the prices of fuels and

fertiliser, the cost reduction rate of before and after the interventions and the share of the

transport cost against the other corridors are estimated below 20 . With the necessary

interventions described in the previous section, the transport cost of the Nacala Corridor will

be reduced by 14 to 17%. In the case of Zambia, the transport cost is estimated to decline by

32% on average, with the improvement of the rail. The transport cost of the Nacala Corridor

will be lowered to 69% in Chipata and 93% in Lusaka of the transport cost of Beira Port,

which is currently the lowest. Among the four cities, Lilongwe will benefit the most by the

interventions. The impact analysis in subsequent sections is conducted, based on the cost

reduction rate and comparison with the Nacala Corridor and the other corridors.

Table 5.14 Impacts of Nacala Corridor Development on Transport Time and Cost

Major City Main Port Mode km

Average Transport Time including Custom Clearance

at Entry Point (Days)

Average Transport Cost (USD)

(20' Dry)

Cost Reduction

Rate

Comparison with Nacala

(Nacala/ Corridor) Existing Future Existing Future

Lusaka

Beira Road 1,054 10 10 3,043 3,043 93%

Nacala Road 1,810 14 14 4,184 4,184 68%

Road+Rail 568+1,133 - 9 - 2,834 32% -

Dar es Salaam Road 1,985 14 14 4,842 4,842 *Comparison

with Nacala Road

59% Rail 2,039 14 14 3,555 3,555 80%

Durban Road 2,381 8 8 4,843 4,843 59% Rail 2,638 9 9 3,174 3,174 89%

Chipata

Beira Road 930 9 9 2,853 2,853 69%

Nacala Road 1,224 10 10 3,288 3,288 60% Rail 1,133 18 8 2,356 1,965 17% -

Dar es Salaam Road 1,811 16 16 4,576 4,576 43% Durban Road 2,431 12 12 4,919 4,919 40%

Lilongwe

Beira Road 1,096 9 9 2,877 2,877 64%

Nacala Road 1,080 9 9 2,836 2,836 65% Rail 989 15 7 2,176 1,835 16% 100%


Blantyre

Beira Road 812 9 9 2,467 2,467 67%

Nacala Road 930 10 10 2,608 2,608 64% Rail 799 13 7 1,940 1,664 14% -



20 Please refer to 5.4.2 (2) 1) Necessary Interventions of Railway Sub-sector (page 5-38) for the contents of the interventions.


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(2) Impact of Nacala Corridor Development on Fuel Price

1) Current Fuel Price and Transport Cost

Fuel is the most important commodity that becomes inputs not just for the energy sector but

for almost all sectors. It is the largest imported commodity in terms of the value in the two

countries. The fuel import accounts for 19% of the import to Zambia, while its share reaches

11% of the import in Malawi in 2015.

Being a landlocked nation, the prices of fuel in Zambia and Malawi are more expensive than

the countries with a seaport, such as Kenya and Tanzania. The price of petrol was the highest

in Zambia, followed by Zimbabwe and Malawi, while the highest price of diesel was recorded

in Zimbabwe, followed by Zambia and Malawi. Hence, if the improvement of the Nacala

Corridor can bring down the transport cost, the positive impact could be spread to all of the

economic sectors. As a result, the commodity prices may become more competitive to export

to regional and international markets.

Table 5.15 Regional Prices of Petrol and Diesel in US Dollars (USD/litre, as of 31st December 2016)

Zambia Malawi Kenya Namibia South Africa Tanzania Zimbabwe

Petrol 1.38 1.12 0.92 0.79 0.91 0.84 1.3 Diesel 1.15 1.11 0.85 0.78 0.79 0.8 1.19

Source: Zambia Energy Regulation Board. Statistical Bulletin 2016

The fuel price at the port and transport cost of fuel to Malawi by corridor are presented in

Table 5.16. Unfortunately, the data for Zambia is not available. The transport cost is the

lowest from Beira. Though the transport cost from Nacala Port is the second lowest cost

compared to Beira, there is nearly USD 37 difference between them. According to the data in

the Draft Final Report of the MNTMP, however, the transport cost from Nacala Port is the

lowest. The fuel price at Beira Port, another determinant factor that influences the choice of

the corridor, is much cheaper than Nacala, due to the competitions among the supplies.

Table 5.16 Fuel Price at Port and Transport Cost to Malawi by Corridor

Corridor Mode Price at Port (USD/ton)

Suppliers Transport Cost by Destination (USD)

Pure Transport Cost (USD/ton)*1 Petrol Diesel

Beira Road 58 55 6 Blantyre: 66.06 Lilongwe: 84.1

118

Dar es Salaam Road 56 43 6 Lilongwe: 115.57 154

Nacala Rail 126 118.99 1 Blantyre: 103.3 116

Source: Interviews with Malawi Energy Regulation Agency and Petroleum Importers. 2017 *1 Pure Transport Cost: Malawi MNTMP, Draft Final Report. July 2017.

2) Impact of Nacala Corridor Development on Fuel Prices

[Zambia]

For Zambia, because the data of transport cost for fuel import is not available, the data of the

transport cost of the Nacala Corridor is compared with the costs of the other corridors. With

the maximum interventions, the transport cost of the Nacala Corridor is the lowest among the


5-42

five corridors in Zambia. Compared with Beira, the cost of the Nacala Corridor to Lusaka is

7% lower and the transport time is one day shorter than those of Beira. Thus, this cost

reduction should be reflected in the price of the fuel. In particular, the price of petrol, which is

the highest among the neighbouring countries, is expected to decline with the interventions.

[Malawi]

The impact on the transport cost of fuel import to Malawi is summarised in Table 5.17.

Although the transport cost to Blantyre from Nacala Port is still higher than that of Beira even

with the interventions, the difference is narrowed from about USD 37 to USD 23. With the

carrying capacity of the Nacala Railway and shorter transport period of seven days, the fuel

import via Nacala Port has an advantage over the import from Beira. The reduction of truck

traffic on roads may lead to the mitigation of traffic congestion and decline of the road

maintenance needs. However, the other factors such as a number of suppliers and fuel price at

the port should be addressed, in order to take full advantage of the Nacala Corridor transport

in fuel import.

Table 5.17 Impact on Transport Cost in Malawi (Fuel)

Corridor Mode Destination Travel Time (Days)

Transport Cost (USD)

Transport Cost Reduction

Rate

Pure Transport Cost

(USD/ton)*1

Transport Cost Reduction Rate

Beira Road Blantyre 9 66.06

118

Lilongwe 9 84.1 Dar es Salaam Road Lilongwe 14 115.57 154

Nacala Rail Blantyre 13 103.3 116 Nacala with

Interventions Rail Blantyre 7 88.6 14.2.% 98.7* 14.9% (Average)

Source: Interviews with Malawi Energy Regulation Agency. 2017 Pure Transport Cost: Malawi MNTMP, Draft Final Report. July 2017. JICA Study Team. Note: * Destination is not specified.

(3) Impact of Nacala Corridor Development on Fertiliser Price

1) Current Fertiliser Price and Transport Cost

In general, fertiliser is expensive in landlocked countries due to the higher price of fuel and

spare parts21. Though fertiliser import was only 4.3% of the total imported value in Zambia, it

is the second largest, 10% in the total value in Malawi, reflecting the characteristics of an

agrarian nation. The higher price of fertiliser not only could raise the prices of agricultural

commodities that result in the loss of competitiveness of the products in international markets

but also lead to the reduction of inputs of fertiliser, which may affect the production, because

of the budget constraints of farmers.

The fertiliser prices in Zambia and Malawi are presented in Table 5.18, with the prices in

neighbouring countries with a seaport, Tanzania and Kenya and the Black Sea FOB price for

comparison purposes. The fertiliser price in Zambia was not very expensive in 2013, nearly

21 Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading In Zambia, Tanzania And Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015.


5-43

equal to the price in Tanzania, while, the fertiliser price was the highest in Malawi among the

four countries, exceeding USD 1,000 per tonne.

Transport costs in the region from ports to landlocked countries were as much as USD 253 per

tonne, which accounts for more than 30% of the price of fertiliser22. In Zambia, the transport

cost from Beira to Lusaka is the lowest of USD 120 per tonne, followed by the Dar es

Salaam-Lusaka and Durban-Lusaka Corridors, as shown in Table 5.19. The transport cost

varies within the country. It rises to USD 210 in Lundazi, Eastern Province, which is almost

double of the transport cost to Lusaka. The data of the transport cost of the Nacala Corridor to

Zambia is not available.

There are a number of factors to explain the decline of the fertiliser price in Zambia to the

price level of the countries with seaports, such as the tightened market competition due to the

entrance of ETG into the Zambian fertiliser market and the presence of foreign logistics firms

(especially from South Africa). Among those, one of the reasons is said that the low transport

cost of Beira affected the transport cost of the other corridors23. It means that if the

improvement of the Nacala Corridor offers lower transport cost for fertiliser import, then the

transport costs of fertiliser via the other corridors also drop and then the fertiliser price could

further decline.

In Malawi, the transport cost of the fertiliser is the lowest with the Beira Corridor, followed by

the Nacala Corridor (See Table 5.20). The transport cost to Karong is slightly higher than the

cost to Lilongwe, as presented in Table 5.21. The transport cost of fertiliser in Malawi is

estimated about USD 110 - 150/tonnes.

The higher price of fertiliser in Malawi is attributed to several factors. Lack of competition

among the supplies contributes to the higher price of fertiliser. Moreover, there might be

influence from the Road Transporters Association and the price of fertiliser in the

government’s subsidy programme24.

Table 5.18 Average Annual Fertiliser Price (Urea) (USD/ton)

Country 2010 2013

Zambia 635 816 Malawi 696 1014

Tanzania 516 810 Kenya 509 736

Average Black Sea FOB 296 340

Source: Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading in Zambia, Tanzania and Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015.

22 Ditto. 23 Ditto. 24 Roberts, Simon and Thando Vilakazi. Regulation and rivalry in transport and fertilizer supply in Malawi, Tanzania and Zambia. Centre for Competition, Regulation and Economic Development University of Johannesburg.


5-44

Table 5.19 Transport Cost of Fertiliser in Zambia

From To Km Cost (USD/ton) USD/ton/km

Durban Lusaka 2143 205-253 0.10-0.12 Durban Lubumbashi 2714 350 0.13

Dar es Salaam Lusaka 1951 140-220 0.07-0.11 Beira Lusaka 1048 120 0.11 Beira Lundazi - 210 -

Walvis Bay Lusaka 2074 350 0.17


Table 5.20 Pure Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton)

Corridor Mode Fertiliser

Dar es Salaam Road - Beira Road 108

Durban Road 173 Nacala Rail 115

Source: Malawi MNTMP, Draft Final Report. July 2017.

Table 5.21 Transport Cost of Fertiliser in Malawi

From To Km Cost (USD/ton) USD/ton/km Commodities

Dar es Salaam Lilongwe 1515 90-125 0.06-0.08 Fertiliser Beira Lilongwe 948 77 0.08 General Goods Beira Lilongwe 948 88* - Fertiliser Beira Karonga - 116* - Fertiliser

Source: Ncube, Phumzile, Simon Roberts and Thando Vilakazi. 2015. Study of Competition in the Road Freight Sector in the SADC Region - Case Study of Fertilizer Transport and Trading in Zambia, Tanzania and Malawi. Centre for Competition, Regulation and Economic Development University of Johannesburg. Working Paper 3/2015. *IFDC. Malawi Fertilizer Assessment 2013.

2) Impacts of Nacala Corridor Development on Fertiliser Prices

[Zambia]

Although the exact amount of the transport cost reduction for fertiliser import to Zambia is

unknown, the interventions would lower the transport cost of the Nacala Corridor until 93.1%

of the current transport cost of the Beira Corridor on average. As a result, the transport cost of

the fertiliser on the Nacala Corridor is estimated USD 111.8 per tonne, the lowest among the

three corridors. Though the fertiliser price in Zambia is not very expensive, the transport cost

reduction on fertiliser import via the Nacala Corridor could work as a pressure to lower the

fertiliser price even more, which benefits a large number of farmers in the country.


5-45

Table 5.22 Impact on Transport Cost of Fertiliser Import in Zambia

From To Km Travel Time

(Days) Cost (USD/ton)

Transport Cost of Nacala against Beira

Durban Lusaka 2143 14 205-253 Beira Lusaka 1048 10 120

Nacala with Interventions Lusaka 1701 9 111.8 93.1%


JICA Study Team.

[Malawi]

The impact of Nacala Corridor Development on the transport cost of fertiliser in Malawi is

estimated in Table 5.23. According to the estimation of the reduction of transport cost in

Table 5.23, 14.9% cost reduction is expected with the interventions on the Nacala Corridor on

average. Thus, the transport cost for fertiliser import through the Nacala Corridor is expected

to decline to USD 97.8, which is the lowest, USD 10.2 lower than the cost of Beira. Thus,

Nacala Corridor Development could lead to the decline of the high fertiliser price in Malawi

by lowering the transport cost of fertiliser import. Considering the agriculture sector as the

main industry of the country, it can bring about a significant impact on the industry and the

national economy by reducing the production costs and improving the competitiveness of

agricultural commodities.

Table 5.23 Impact on Transport Cost of Fertiliser by Major Corridor in Malawi, 2016 (USD/ton)

Corridor Mode Travel Time

(Days) Fertiliser (USD/ton)

Transport Cost Reduction Rate

Durban Road 12/ 14 173 Beira Road 9 108

Nacala Rail 13/14 115 Nacala with Intervention Rail 7 97.8 14.9% (Average)

Source: Malawi MNTMP, Draft Final Report. July 2017. JICA Study Team.

5.4.4 Economic Impact on the Nacala Corridor Region

Impact analysis was made based on the following perspectives – provided that the Nacala

Corridor is developed, which area/sector would benefit from the development, and what would

be the possible logic for this. Based on the impact analysis of (i) the Nacala Railway

transportation cost – impact of the Nkaya-Chipata Railway (CEAR) upgrading on transport

cost, in addition to already enhanced section between Moatize and Nkaya, and (ii) fuel and

fertiliser import cost as a result of the Nacala Railway improvement, impact analysis of major

economic sectors was carried out. At first the impact observed after the development of the

Nacala Railway from Moatize in Tete to Nacala Port is discussed. Then the anticipated impact

with the completion of planned interventions on the Nacala Corridor is examined. Due to the

limitation of relevant data, qualitative analysis was adopted.


5-46

(1) Impact of Development of the Nacala Railway from Moatize to Nacala Port

The Nacala Railway began commissioning in 2015 and commenced its full-scale operation in

2016 for the transport of coal from Moatize to Nacala Port. Though only about one year has

passed since the beginning of the full-scale operation of the railway, notable impacts are

observed in the industries in Malawi, responding to this improved transport means.

In Malawi, construction of the Nacala Railway from Moatize to Nacala Port made available to

Blantyre an efficient railway transit to the port via Nkaya and Liwonde. Blantyre is the largest

commercial centre of the country where various goods produced in Southern Region and

products imported are transported. It brought about a new opportunity to logistics firms, a

fertiliser company, and other industries by offering more cost-effective transport for import

and export from the port. For example, logistics firms located in Chrimba Industrial Area near

the Blantyre Airport started the export of sugar, tea, and pigeon peas via the Nacala Railway,

and have a plan to expand their shipping operation to take full advantage of the railway.

Moreover, Farmers World, a major fertiliser provider in Malawi, started import of the fertiliser

inputs from Nacala Port; transport of them to their factory and warehouse in Liwonde; and

export of agricultural products via Nacala Port. According to the interview, Farmers World

transported 40,000 tonnes for import and export via the Nacala Railway within four months

from May to July 2017. They are promoting the use of the Nacala Railway for other fertiliser

companies and are willing to expand the import and export via Nacala Port, though the lack of

sufficient warehouses in the port and Liwonde are identified as constraint to that plan.

The availability of the cost-effective railway transport is already taken into account by the

business persons of various industries in Malawi. For example, the mining firms working on

the two most promising mining projects, Mkango Resources and Globe Metals & Mining are

planning to use the Nacala Corridor for import of inputs necessary for processing of extracted

ores and export of the products of rare earth and niobium. China’s Gezhouba Group

Corporation plans to develop a 300 MW new coal fired power plant in Neno by importing coal

from Tete.

In short, the advantage of the Nacala Railway －competitive cost and capacity of bulk

shipment－ compared with road transport, has been recognised by the businesses and

industries in Malawi. The private sector already takes account of the use of the Nacala

Corridor, particularly the Nacala Railway, in their business plans. Thus, it might be looked

subtle from the surface; however, the impact of development of the Nacala Railway has

started spread to the business. The industries began to change their business calculations and

activities for improvement of competitiveness, taking such new business opportunities

emerged with the Nacala Railway.


5-47

(2) Zambia

1) Agriculture and Agri-business

Reduction of Production Cost

Reduced cost of fertiliser and fuel as a result of the railway upgrading (Nkaya-Chipata section)

will increase the availability of more affordable inputs for agricultural production as well as

improve productive efficiency. In Zambia, Eastern Province is the largest maize producing

province and has favourable soil and climate conditions for cotton, oil seed crops (soya,

sunflower and groundnut), and livestock (cattle, goats and sheep). Small-scale farmers are

mostly involved in the production and the outputs are largely sold in domestic markets. With

reduced fertiliser cost, they would be able to afford buying more agricultural inputs, which

will contribute to their increased productivity. Large private firms in Eastern Province/Chipata

include China Africa Cotton dealing with cotton, NWK Agri-Services and Cargill dealing with

maize and soya beans. They export raw materials to China, South Africa and USA,

respectively, for processing. These companies are likely to expand production as a result of

improved production efficiency.

According to local interview survey, there is an expectation of importing fertilisers and fuel

via Nacala, Chipata, Lusaka, and Mpika at a lower cost25. If this route turns out to be efficient,

there is a good chance that agricultural productivity in Northern Province will also improve.

Improvement of Market Access

Positive impacts on market access, including regional and external markets can be expected as

a result of reduced transportation cost and time. Reduction of risk of delay in delivery and

increased reliability can be expected as well. Maize, mainly produced by small scale farmers,

was previously transported to Lusaka for government purchase and storage; however, with a

lift of a maize export ban, it can be exported to Lilongwe and Nampula directly via Chipata

(without going through Lusaka), utilising the Nacala Railway. Currently, utilisation of

processing facilities are highly limited in Eastern Province and therefore, a large portion of

agricultural outputs including oil seed crops would be transported to Lusaka using the Great

East Road by truck to be processed and sold to domestic markets or to be exported. With

increased productivity and expected fall in the price of agricultural crops/products as a result

of reduced cost of fertiliser and fuel, domestic markets will be activated and opportunities for

exporting to regional and external markets will increase. For example, soya and processed

soya bean meal can be exported to Kenya and Ethiopia via Mozambique, utilising the Nacala

Railway.

Increase of investment

Nacala Corridor Development will contribute to increased investment in Zambia in the

medium to longer term. So far, investment in Eastern Province, both in terms of amount and

number is very limited (less than or around 1% of the entire country). Large private companies

such as above mentioned China Africa Cotton, NWK Agri-Services and Cargill export raw

25 Interview with AFGRI Corporation Ltd., Lusaka, Zambia on July 12, 2017.


5-48

materials to external markets for processing which leaves very little room for value addition in

the province (cotton operation is up to ginnery, and further processing is undertaken abroad).

However, with increased productivity and market access, positive impacts on investment will

gradually come out. These trends also conform with the government’s policy to promote

diversification and enhancement of value addition in agriculture and agri-business. In fact,

signs for future investment can be seen. For example, Saudi Arabia has recently shown interest

to investing in the livestock industry in Zambia – breeding sheep and goats and to export them

alive to the country. Although the plan is still under the conceptual phase, a MOU has been

concluded between the two countries and a taskforce was established in Zambia. There is a

plan to develop MFEZ in Chipata as well. Financial sources need to be secured before

concretising the plan; however, such an initiative symbolises Zambian government’s

willingness to attract investment to realise its development policy.

2) Mining

Limestone and Limestone Products (Quicklime, Hydrated Lime etc.)

The Nacala Railway upgrading (Nkaya-Chipata section) will contribute to improved market

access of limestone manufacturers. Demand of limestone and limestone products has been

increasing with the activation of construction industry, copper refining and processing of sugar.

Quick lime is utilised for copper refinery and a major demand centre is Copperbelt Province.

Hydrated lime is utilised for sugar processing, and the majority of hydrated lime is exported to

Malawi (major client is Illovo Sugar Ltd.), followed by Zimbabwe. According to a limestone

processing company in Ndola, hydrated lime is transported to Illovo via Kapiri Mposhi,

Lusaka, Chipata and Blantyre by truck. The company is eager to utilise the Nacala Railway

once the Nkaya-Chipata section has been upgraded and realises efficient transportation.

Furthermore, in the future, the company may consider utilising the railway in Zambia if

construction of the Chipata-Petauke-Serenje railway is realised and turns out to be a reliable

and efficient transportation means.

Copper

Impacts on copper and the copper industry may be expected in the long run provided that the

Chipata-Petauke-Serenje railway is realised and turns out to be reliable and efficient

transportation. While Copperbelt Province is the “hub” of the copper industry, a large portion

of copper ore is extracted in DRC. Processing has been carried out in Copperbelt Province

(Chingola, Ndola etc.) and exported via Dar es Salaam Port (by TAZARA Railway), Beira

Port or Durban Port by truck. If the Chipata-Petauke-Serenje railway is developed in the long

run, processed copper may be transported to Malawi via Ndola, Kapiri Mposhi, Serenje,

Petauke and Chipata, which would open up new markets and provide alternative routes for

export in addition to the Dar es Salaam and Beira Corridors. In addition, currently, a large

portion of necessary inputs (such as sulphur) for copper refining is imported from South

Africa; however, alternative import routes may be created (via the Nacala Corridor) if the

Chipata-Petauke-Serenje railway turns out to be usable.


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(3) Malawi

1) Agriculture and Agri-business


Reduced cost of fertiliser and fuel as a result of railway upgrading will increase the

availability of more affordable inputs for agricultural production to the farmers in the region,

who are mostly small scale farmers, and improve their production efficiency. In Malawi, oil

seed crops (sunflower, groundnut, and soya), cotton, rice and legumes (pigeon pea, cowpea

and chickpea) are mostly produced by small-scale farmers. With reduced fertiliser cost, they

would be able to afford buying more agricultural inputs, which will contribute to their

increased productivity. Sugar and sugar cane products, almost a monopolized market except

for a few small scale companies, are likely to expand production as a result of improved

production efficiency.

The planned and on-going initiatives including the SVIP, AGCOM and development of

Agro-Processing Special Economic Zone will also generate synergy effects with Nacala

Corridor Development. The ultimate goal of these initiatives is to diversify and deepen the

production base, and to transform the economy for further economic growth. In this regard,

the realisation of an increased production scale, while suppressing production cost as a result

of reduced fertiliser and fuel cost is highly critical in Malawi.


Positive impacts on market access, including regional and external markets can be expected as

a result of reduced transportation cost and time. Reduction of risk of delay in delivery and

increased reliability can be expected as well. Currently, traditional cash crops (including

tobacco, tea, sugar and cotton) which require mass transportation are mainly using the Beira

Corridor or the Dar es Salaam Corridor for export (to EU, USA, China, Egypt, Zimbabwe,

Kenya etc.). Taking into account the expected reduction of transportation cost/time as a result

of railway upgrading, some cargos have already shifted the transportation route and started

utilising the Nacala Corridor. The result of local interview surveys has also indicated that

exporters are willing to use the Nacala Corridor if transportation cost/time is lower/ shorter

and efficient compared to other corridors. With the increased utilisation of the Nacala Corridor,

other agriculture products (including oil seed products, rice and legumes) may also start

utilising the Nacala Corridor for export, targeting regional markets (to Zimbabwe, Botswana,

Zambia, South Africa etc.).

Increase of investment

Nacala Corridor Development will contribute to increase investment in Malawi. There is a

plan to develop Agro-Processing SEZ which prioritises three export-oriented clusters in line

with the NES – oil seed products (cooking oil, soaps, lubricants, fertiliser, snacks,

confectionery, etc.), sugar cane products (sugar, high value sugar through branding and sugar

confectionery), and manufacturers (beverages, dairy, processed maize, wheat, horticulture and


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pulse, plastics and packaging, assembly). Feasibility Studies to be carried out will identify

candidate location(s)26 and come up with operation strategies of SEZ (incentive framework,

regulatory framework, institutional framework, and physical development and management

structures). Synergy effect is expected with Nacala Corridor Development provided that close

coordination takes place, and conditions and incentive structures of SEZ are attractive for

private investors.

2) Mining


The mining sector is expected to have a positive impact from the reduced cost of inputs as a

result of the railway upgrading. Major investment projects under preparation are: (i) Songwe

Hill Rare Earth Project, owned by Mkango Resources Ltd., which is listed on Canada’s TSX

Venture Exchange and the AIM Market of the London Stock Exchange, and (ii) Kanyika

Niobium Project and Chiziro Graphite Project are run by the Australian-listed, metals and rare

earths company called Globe Metals & Mining Ltd. Songwe Hill Rare Earth Project is located

in Phalombe, which is about 2 km from the Mozambique border. Mkango Resources Ltd.

intends to utilise the Nacala Railway to import necessary inputs including sulphur. Kanyika

Niobium Project is located in Mzimba and Chiziro Graphite Project is implemented in

northeast of Lilongwe. Globe Metals & Mining also intends to utilise Nacala railway to import

production materials. As such, investors ardently expect the rail infrastructure to be upgraded

and efficiency to be improved, since the convenience and value of railway services will

directly affect production cost. To this end, Mkango Resources Ltd. considers the construction

of dry ports highly useful. Globe Metals & Mining Ltd. wishes to have a small-scale rail line

from Lilongwe to the project site.


By the same token, usability of the Nacala Railway will also have a significant impact on

market access of the mining sector in Malawi. As regards the Songwe Hill Rare Earth Project,

Mkango Resources is considering transporting rare earth outputs to Liwonde by truck and then

loading them on the Nacala Railway for exporting to Europe. Currently, the rare earth market

is dominated by China – 98% of world supply comes from China, however, this project will

create an alternative supply source other than China. Regarding the Kanyika Niobium Project,

Globe Metals & Mining also intends to utilise the Nacala Rail to transport Niobium via Nacala

Port. Currently, Brazil is dominating the Niobium market – about 90 to 92% of supply

(equivalent to 55,000 tonnes per year) comes from Brazil, followed by Canada (4,000 tonnes

per year). Once this project is realised, it will become third place in the world. To this end,

upgrading the rail infrastructure and efficiency is highly critical.

26 Several candidate locations are under consideration: Lilongwe (with 350ha of land in the vicinity of airport), Blantyre (with 38ha of land), Liwonde, Shire Valley, North Karonga, Salima etc.


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Chapter 6 Proposed Growth Scenarios of Zambia and Malawi Related to Nacala Corridor Development

6.1 Introduction

This chapter describes the proposed growth scenarios of Zambia and Malawi related to Nacala

Corridor Development. A growth scenario is proposed for Zambia and another growth

scenario is proposed for Malawi. These growth scenarios are formulated by considering the

following points:

How to promote development of economic sectors of Zambia and Malawi by utilising

the Nacala Corridor, which is composed of a sea port, railways and trunk roads,

connecting northern Mozambique, Malawi and Eastern Zambia

How to strengthen the Nacala Corridor so that economic sectors of Malawi and Zambia

could efficiently and effectively utilise the Nacala Corridor

This way of consideration for formulating growth scenarios is based on the following basic

understanding of the relationship between transport corridors and economic sector

development:

Since the development and maintenance of corridor infrastructure and services for

long-distant cargo transport are very costly, it is necessary to fully utilise existing and

prospective corridor infrastructure and services for promoting the development of

economic sectors.

It is necessary for transport corridor infrastructure and services to make a serious effort

at attracting traffic demand for developing and maintaining the infrastructure and

sustaining services. Otherwise, such infrastructure and services would not be further

developed and sustainable, leading to the decline of economic sectors.

It is necessary for economic sectors to make an effort at utilising transport corridor

infrastructure and services in order to sustain such infrastructure and services.

Otherwise, such infrastructure and services would not be sustainable, resulting in a

decline in the economic sectors.


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6.2 Advantages of the Nacala Corridor over Other Transport Corridors of Zambia and Malawi

6.2.1 Emergence of Nacala Corridor as an Important Alternative Transport Route

(1) Upgraded Railway Between Nacala and Moatize Through Malawi with the Nacala Corridor Railway

In the middle of 2016, a full-scale railway operation for coal transport started on the Nacala

Corridor, whose railway tracks are well rehabilitated and railway operation is strengthened.

On the other hand, since that time, general cargo, containers and other forms of cargo have

been transported between Nacala Port and Malawi’s Blantyre (Limbe and Chirimba Industrial

Park) and Lilongwe (Kanengo).

A railway line (not rehabilitated yet) connects between Nkaya and Mchinji by CEAR and

another short rail section connects between Mchinji and Chipata by ZRL. The railway is able

to operate cargo trains between Chipata and Nacala through Lilongwe, Nkaya and Liwonde. In

actuality, cargo security is not so good. Even under this situation, a certain impact on the

improvement is an advantage for the Nacala Corridor. This point is discussed in Section 6.2.2.

(2) Planned Upgrading of Railway Connection to Lilongwe and Chipata from Nacala

A private group composed of Vale (Brazil) and Mitsui (Japan) announced an upgrade plan of

the railway section between Nkaya and Mchinji of CEAR in order to connect this section with

the upgraded Nacala Corridor Railway (Moatize-Nkaya-Liwonde-Cuamba-Nampula-Nacala).

This planned upgrading of the railway section could bring a continually upgraded railway

between Chipata and Nacala through Lilongwe, Nkaya, Liwonde, Cuamba, and Nampula. The

planned upgrading could bring a significant improvement of rail transport up to Chipata in

Eastern Province, Zambia. Section 6.2.2 analyses the advantage of the Nacala Corridor.

(3) Additional Needs for Improvement for Upgraded Nacala Corridor Railway Infrastructure and Services

In order to improve the efficiency of cargo handling (to reduce monetary cost and time cost for

transport) and cargo security during transport (to reduce risks of losing cargo), the following

additional measures are required:

To establish multi-modal dry ports consisting of cargo railway stations, cargo handling

machines, container yards, warehouses and truck parking lots, as well as customs

offices and private forwarder offices

To mechanise the handling of cargo at railway stations, especially by establishing

multi-modal dry ports in inland countries and inland areas

To equip weigh bridges for the loading and off-loading cargos, especially at

multi-modal dry ports in inland countries and inland areas

To establish and operate “cargo tracking systems” during rail transport


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Multi-modal dry ports should be operated in collaboration between railway operators and

logistics companies managing warehouses and truck operation. This collaboration could

improve the operation of cargo rail transport because more involvement of the private sectors

would demand better services to railway operators.


Figure 6.1 Current Conditions of Development of Nacala Corridor

6.2.2 Advantages of Nacala Corridor over Other Transport Corridors for Zambia and Malawi

In this section, the results of impact analysis of two cases are shown in order to clarify

improved advantages of the two cases of upgrading of the transport functions of Nacala

Corridor. The first case is based on the present situation created by the past upgrading

(completed in the middle of 2016), and the other case is based on a planned upgrading

(financially committed by private firms).

(1) Advantages of the Nacala Corridor Without Additional Interventions over Other Transport Corridors (Present Situation of the Nacala Corridor)

The partially upgraded Nacala Corridor Railway between Nacala and Chipata through

Malawian territory by combining the upgraded Nacala Corridor Railway and other existing

rail lines mentioned in the earlier sections has a significantly good impact on the advantages of

the transport corridor in terms of transport costs and time between Nacala and the following

major cities.


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Corridor Comparison for Lusaka (Present Situation)

At present, no effective rail transport service together with truck transport services are

available in Lusaka. The transport cost and time of the Lusaka-Nacala Road Corridor (1,810

km) account for the following (see Table 5.12 for detailed comparison data):

138% of the transport cost of the Lusaka-Beira Port Road Corridor (1,054km)

4 days slower than the Lusaka-Beira Port Road Corridor (1,054km)

86% of the transport cost of the Lusaka-Dar es Salaam Port Road Corridor (1,985km)

As same days as the Lusaka- Dar es Salaam Port Road Corridor (1,985km)

118% of the transport cost of the Lusaka-Dar es Salaam Port Railway Corridor

(2,039km)

As same days as the Lusaka-Dar es Salaam Port Railway Corridor (2,039km)

86% of the transport cost of the Lusaka-Durban Port Road Corridor (2,381km)

6 days slower than the Lusaka-Durban Port Road Corridor (2,381km)

132% of the transport cost of the Lusaka-Durban Port Rail Corridor (2,638km)

5 days slower than the Lusaka-Durban Port Rail Corridor (2,638km)

In terms of transport cost, the Lusaka-Beira Road Corridor is very much advantageous over

other transport corridors. The transport cost of the Lusaka-Beira Road Corridor accounts for

63% of that of the Lusaka-Durban Road Corridor and 86% of the Lusaka-Dar es Salaam Rail

Corridor.

On the other hand, in terms of transport time, the Lusaka-Durban Road Corridor is very

much advantageous over other transport corridors. The transport time of the Lusaka-Durban

Road Corridor is two days faster than that of the Lusaka-Beira Road Corridor.

Corridor Comparison for Chipata (Present Situation)

The transport cost and time of the Chipata-Nacala Rail Corridor (1,133 km) account for the

following (see Table 5.12 for detailed comparison data):

83% of the transport cost of the Chipata-Beira Port Road Corridor (930 km)

9 days slower than the Chipata-Beira Port Road Corridor (930 km)

51% of the transport cost of the Chipata-Dar es Salaam Port Road Corridor (1,811 km)

2 days slower than the Chipata- Dar es Salaam Port Road Corridor (1,811 km)

48% of the transport cost of the Chipata-Durban Port Road Corridor (2,381 km)

6 days slower than the Chipata-Durban Port Road Corridor (2,381 km)

The Nacala Corridor is the only international corridor going through Chipata among the four

corridors. In terms of transport cost, the Chipata-Nacala Rail Corridor (the present situation)

is significantly advantageous over other transport corridors. However, in terms of transport


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time, the Chipata-Nacala Rail Corridor (the present situation) is very much disadvantageous

over other transport corridors.

Corridor Comparison for Lilongwe (Present Situation)

The transport cost and time of the Lilongwe-Nacala Rail Corridor (989 km) account for the


76% of the transport cost of the Lilongwe-Beira Port Road Corridor (1,096 km)

6 days slower than the Lilongwe-Beira Port Road Corridor (1,096 km)

50% of the transport cost of the Lilongwe-Dar es Salaam Port Road Corridor (1,667

km)

1 day slower than the Lilongwe-Dar es Salaam Port Road Corridor (1,667 km)

40% of the transport cost of the Lilongwe-Durban Port Road Corridor (2,650 km)

1 day slower than the Lilongwe-Durban Port Road Corridor (2,650 km)

In terms of transport cost, the Lilongwe-Nacala Rail Corridor is significantly advantageous

over other transport corridors. However, in terms of transport time, the Lilongwe-Nacala

Rail Corridor (the present situation) is disadvantageous over the Lilongwe-Beira Road

Corridor.

Corridor Comparison for Blantyre (Present Situation)

The transport cost and time of the Blantyre-Nacala Rail Corridor (799 km) account for the


79% of the transport cost of the Blantyre-Beira Port Road Corridor (812 km)

4 days slower than the Blantyre-Beira Port Road Corridor (812 km)

40% of the transport cost of the Blantyre-Dar es Salaam Port Road Corridor (1,978 km)

2 days faster than the Blantyre-Dar es Salaam Port Road Corridor (1,978 km)

39% of the transport cost of the Blantyre-Durban Port Road Corridor (2,340 km)

1 day slower than the Blantyre-Durban Port Road Corridor (2,340 km)

In terms of transport cost, the Blantyre-Nacala Rail Corridor is significantly advantageous

over other transport corridors. However, in terms of transport time, the Blantyre-Nacala Rail

Corridor (the present situation) is disadvantageous over the Blantyre-Beira Road Corridor.

(2) Advantages of the Nacala Corridor with Planned Interventions over Other Transport Corridors (to be Implemented by the Private Sector in Five to Seven Years)

Different transport corridors between major cities and various sea ports are compared in terms

of transport costs and time. In this section, the transport time and cost of the Nacala Corridor


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after implementation of the planned interventions are compared with those of the other

corridors1. As a result, general advantages of Nacala Corridor have been found.

Corridor Comparison for Lusaka (with Planned Interventions)

The transport cost and time of the Lusaka-Nacala Corridor (Combined Rail and Track

Transport, 1,701 km) account for the following (see Table 5.13 for detailed comparison data):

93% of the transport cost of the Lusaka-Beira Port Road Corridor (1,054 km)

1 day faster than the Lusaka-Beira Port Road Corridor (1,054 km)

59% of the transport cost of the Lusaka-Dar es Salaam Port Road Corridor (1,985 km)

5 days faster than the Lusaka-Dar es Salaam Port Road Corridor (1,985 km)

80% of the transport cost of the Lusaka-Dar es Salaam Port Railway Corridor (2,039

km)

5 days faster than the Lusaka-Dar es Salaam Port Railway Corridor (2,039 km)

59% of the transport cost of the Lusaka-Durban Port Road Corridor (2,381 km)

1 day slower than the Lusaka-Durban Port Road Corridor (2,381 km)

89% of the transport cost of the Lusaka-Durban Port Rail Corridor (2,638 km)

As same days as the Lusaka-Durban Port Rail Corridor (2,638 km)

Different transport corridors between Lusaka and various sea ports are compared, resulting in

a significant advantage of the Nacala Corridor (Combined Rail and Truck Transport) over the

Lusaka-Dar es Salaam Road Corridor, the Lusaka-Dar es Salaam Rail Corridor and the

Lusaka-Durban Road Corridor. The Nacala Corridor (Combined Rail and Truck Transport) is

advantageous over the Lusaka-Durban Port Rail Corridor in terms of cost. Regarding the

required time for the transportation from Lusaka to each port, the Lusaka-Durban Port Road

Corridor is more advantageous than the Lusaka-Nacala Port Railway-Road Corridor.

Corridor Comparison for Chipata (with Planned Interventions)

The transport cost and time of the Chipata-Nacala Corridor (Rail Transport, 1,133 km)

account for the following (see Table 5.13 for detailed comparison data):

69% of the transport cost of the Chipata-Beira Port Road Corridor (930 km)

1 day faster than the Chipata-Beira Port Road Corridor (930 km)

43% of the transport cost of the Chipata-Dar es Salaam Port Road Corridor (1,811 km)

8 days faster than the Chipata-Dar es Salaam Port Road Corridor (1,811 km)

40% of the transport cost of the Chipata-Durban Port Road Corridor (2,431 km)

4 days faster than the Chipata-Durban Port Road Corridor (2,431 km)

1 Planned interventions are listed in 5.4.2 (2), which include: i) Upgrading (axle load and speed up) of the section between Salima and Nkaya; ii) Construction of dry ports (Chipata, Lilongwe, Blantyre) for establishment of adequate transport system; iii) Capacity building for operational, management and marketing of CEAR and the Railways Directorate of the Government of Malawi; and iv) Acquisition of new locomotives and wagons.


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In terms of transport cost and time, the Chipata-Nacala Rail Corridor is advantageous over the

Chipata-Beira Road Corridor. In terms of transport cost and time, the Chipata-Nacala Rail

Corridor is significantly advantageous over the Chipata-Dar es Salaam Road Corridor and the

Chipata-Durban Road Corridor.

Corridor Comparison for Lilongwe (with Planned Interventions)

The transport cost and time of the Lilongwe-Nacala Corridor (Rail Transport, 989 km) account

for the following (see Table 5.13 for detailed comparison data):

64% of the transport cost of the Lilongwe-Beira Port Road Corridor (1,096 km)

2 days faster than the Lilongwe-Beira Port Road Corridor (1,096 km)

42% of the transport cost of the Lilongwe-Dar es Salaam Port Road Corridor (1,667 km)

7 days faster than the Lilongwe-Dar es Salaam Port Road Corridor (1,667 km)

34% of the transport cost of the Lilongwe-Durban Port Road Corridor (2,650 km)

7 days faster than the Chipata-Durban Port Road Corridor (2,650 km)

In terms of transport cost and time, the Lilongwe-Nacala Rail Corridor is significantly

advantageous over the other transport corridors.

Corridor Comparison for Blantyre (with Planned Interventions)

The transport cost and time of the Blantyre-Nacala Corridor (Rail Transport, 799 km) account

for the following (see Table 5.9 for detailed comparison data):

67% of the transport cost of the Blantyre-Beira Port Road Corridor (812 km)

2 days faster than the Blantyre-Beira Port Road Corridor (812 km)

35% of the transport cost of the Blantyre-Dar es Salaam Port Road Corridor (1,978 km)

8 days faster than the Blantyre-Dar es Salaam Port Road Corridor (1,978 km)

34% of the transport cost of the Blantyre-Durban Port Road Corridor (2,340 km)

5 days faster than the Blantyre-Durban Port Road Corridor (2,340 km)

In terms of transport cost and time, the Blantyre-Nacala Rail Corridor is significantly

advantageous over the other transport corridors.


6-8

Source: JICA Study Team based on the estimates shown in Table 5.8

Figure 6.2 Transport Cost: Comparison of Transport Corridors Related to Zambia and Malawi


6-9

Source: JICA Study Team based on the estimates shown in Table 5.8.

Figure 6.3 Transport Time: Comparison of Transport Corridors Related to Zambia and Malawi

6.2.3 Impact of Advantageous Nacala Corridor with Planned Interventions on Development of Economic Sectors

(1) Limited Emergence of New Exportable Products to Export Outside the Region due to Upgrading of the Nacala Corridor

It is considered that the upgrading of an international transport corridor does not simply enable

inland countries and inland areas to start producing new exportable products to overseas

(outside the region) in the short term (several years or so). Even though those involved are

taking advantage of the upgrading of the Nacala Corridor, it is not easy for economic sectors

to create new exportable products (exportable to outside the region). It is partly because it is

not so convenient yet for some economic sectors to utilise the upgraded railway of the Nacala

Corridor.


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(2) Emergence of the Users of the Railway of the Upgraded Nacala Corridor

Although it is difficult for the upgraded international transport corridor to help economic

sectors create new exportable products, the upgrading of such an international transport

corridor would enable inland countries to shift their export routes to regional and overseas

(outside the region) markets to the upgraded international transport corridor. In the case of

Malawi, the export of sugar, tobacco and tea started to utilise the upgraded Nacala Corridor

Railway from Blantyre to Nacala Port. It is partly because the export of sugar, tobacco and tea

is more sensitive to transport costs for export than other economic sectors. Moreover, newly

developing economic sectors, such as mineral exploitation of rare earth and rare metal in

Malawi, are eager to utilise the upgraded railway, in order to reduce their transport costs for

exporting extracted minerals and importing machinery and chemicals.

Additionally, in Malawi, importers of fertilisers and fuels have also responded to the

upgrading of the railway of Nacala Corridor, considering the utilisation of the corridor.

6.3 Proposed Vision for Nacala Corridor Development

6.3.1 Proposed Vision on Nacala Corridor Development for Zambia, Malawi and Mozambique

The Nacala Corridor runs through three countries namely, Mozambique, Malawi and Zambia,

from Nacala Port to Lusaka. Not only for developing the Nacala Corridor for the three

countries, but also for development of economic sectors related the Nacala Corridor, it is

necessary for the three countries to share a common vision for promoting Nacala Corridor

Development. The JICA Study Team proposes the following statement to express the common

vision:

As members of a region sharing one international transport corridor, the Nacala

Corridor, Zambia, Malawi and Mozambique are to mutually cooperate in development

and maintenance of transport corridor infrastructure (railways and roads), their

economic sectors are to compete each other targeting regional markets, and the three

countries are to maintain peace and order and socio-economically thrive and prosper

in the region.

6.3.2 Nacala Corridor Development Concept and Guiding Principles

(1) Nacala Corridor Development Concept

In order to achieve the proposed vision of Nacala Corridor Development, a concept of corridor

development is proposed as follows. Corridor development is composed of the development of

corridor transport infrastructure/services and development of economic sectors along the

transport corridor and in wider areas related to the corridor. The development of corridor

transport infrastructure and services would support the development of economic sectors. On

the other hand, the development of economic sectors would generate transport demand for the

transport corridor so that the transport corridor infrastructure and services could be developed

further and sustained. This kind of interactive relationship is critical to initiate and sustain


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corridor development. Moreover, regional economic integration provides a foundation to

support such interactive relationship between transport infrastructure development and

economic development. By promoting regional integration, it is possible to establish efficient

infrastructure development and services, to promote development of economic sectors, and to

promote nurturing an economic bloc of the corridor region crossing borders. Thus, taking

advantage of regional economic integration, corridor development aims to build a positive

cycle of corridor infrastructure development and economic sector development as presented in

Figure 6.4.

Figure 6.4 Concept of Corridor Development

(2) Guiding Principles for Nacala Corridor Development

Based on the concept presented above, the following guiding principles are proposed for

Nacala Corridor Development.

To promote sustainable development of the Nacala Corridor Region, by creating a

positive cycle between corridor transport and economic sectors within the regional

economy.

To promote the development of economic sectors by utilising corridor infrastructure and

services, while supporting the development of corridor infrastructure and services.

To support dynamic development of economic sectors so that such economic sectors

could generate traffic demand for corridor infrastructure and services.

To support sustainable development of corridor infrastructure and services so that

economic sectors could develop and be sustained by utilising those corridor

infrastructure and services.

To support inclusive development in the international corridor region by offering

development opportunities to many people and businesses

To support the participation of not only the government sector but also the private

sector in corridor development, in order to achieve the vision proposed above.


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To assist the transformation of the international corridor region to be a competitive,

physically and economically integrated region in Africa.

In line with the vision, the concept and guiding principles for Nacala Corridor Development,

the basic policies and strategies for development of the transport functions of Nacala Corridor

and economic sectors are discussed in the subsequent sections.

6.4 Basic Policies on the Utilisation of Nacala Corridor and Development of Nacala Corridor Transport Infrastructure and Services

6.4.1 Basic Policies on the Utilisation of Nacala Corridor

The Nacala Corridor is composed of railway and trunk roads, as well as a sea port. It depends

on the cargo types whether trunk roads, railways or both are utilised in the Nacala Corridor.

(1) Roles of Railways and Trucks in Freight Transport

In order to maximise efficiency in terms of transport costs and time, the principles described

below are followed:

The railway is more advantageous for long-distance freight transport more than 500 km.

The railway will be used as much as possible for long-distance freight transport more

than 500 km.

In the short and medium term, a multi-modal dry port is developed at the node between

road and railway, and a road is developed to access to the dry port. The operation of the

existing railway is improved and infrastructure development is implemented in the

medium term. A new railway line is developed to mutually connect the existing railway

corridors in the long term.

For freight transport less than 500 km, trucks are used as much as possible. The

environment of road transport crossing borders is improved, such as bypass roads to

ease traffic going through urban areas, road widening to facilitate passing urban and

settlement areas smoothly, and claiming lanes at the section of steep slopes, etc.

The Nacala Corridor can support importing of goods, in particular, the cost reduction of

importing of fuels and fertiliser. The impact on fuel import is significant since it affects all

sectors. The reduction on fertiliser price influences crop production, agro-processing and

livestock, the main industry in Zambia and Malawi. Thus, efforts should be made to increase

the import of fuels and fertiliser via the Nacala Corridor Railway. Malawi started the

importing of fuels and fertiliser, utilising Nacala Corridor Railway. Currently they are

transported to Blantyre. In the future, it is necessary to improve the railway operation of the

Nkaya-Lilongwe section, and to develop rolling stock and infrastructure.


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(2) Utilisation of Land Transport and Sea Transport to Have Access to Regional Markets

The access to regional markets can be made from Zambia and Malawi through land transport

and sea transport, since regional markets are to be expanded under the COMESA-EAC-SADC

Tripartite FTA. For example, the access from Zambia and Malawi to Kenyan market is

possible through the Nacala Corridor (by land) to the Nacala Port and then from Nacala Port to

Mombasa Port.

Freight transport to Nacala Port from southern Malawi started through the Nacala Corridor

Railway and has gradually increased. Transport from Malawi of bulky traditional export goods,

such as sugar, tobacco and tea, started utilising the Nacala Corridor Railway. However, there

are issues found on the railway, including limited demand for freight transport on the Nacala

Corridor Railway, and poor handling facilities at railway stations for freight transport. At first,

it is important to promote the utilisation of the Nacala Corridor Railway by transporting bulky

goods.

Source: JICA Study Team, based on the data of urban population 2013 from “World Urbanization Prospect. The 2014 Revision” (UN)

Figure 6.5 COMESA-EAC-SADC Tripartite FTA: Expanding Regional Market

－Urban Population 2030 of Major Cities in the Region


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Figure 6.6 Access to Regional Market via Nacala Port

6.4.2 Selection of Development Scenario of Nacala Corridor Transport Infrastructure and Services

When it comes to a wider network of railway corridors in Zambia and Malawi, the following

three scenarios of railway corridor development are formulated:

[Scenario A] In addition to the current section from Nacala Port to Moatize in Tete

Province for the coal transport, the transport infrastructure of the Nacala Corridor will be

developed in the Nkaya - Limbea section (the section for upgrading the existing CEAR),

the Nkaya - Lilongwe - Mchinji section (upgrading section of CEAR: there is a plan of

development of railway by Vale and Mitsui Corporation), the Mchinji - Chipata section for

upgrading the existent ZRL, and the Chipata - Petauke - Serenje section (new construction),

to connect all of TAZARA Railway, ZRL, CEAR Malawi, and the Nacala Corridor

Railway.


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Figure 6.7 Wide Railway Network in Zambia and Malawi: Scenario A

[Scenario B] Instead of the Chipata - Petauke - Serenje section (new construction) in

[Scenario A], the Chipata-Lusaka section (new construction) will be developed to connect

all of the TAZARA railway, ZRL, CEAR Malawi railway, and the Nacala Corridor

Railway.


Figure 6.8 Wide Railway Network in Zambia and Malawi: Scenario B

Chipata-Lusaka Railway


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[Scenario C] In [Scenario A], the Chipata - Petauke - Serenje section (new construction)

is not implemented due to a very small amount of the expected revenue and too much

construction cost, so that this section is connected by road.


Figure 6.9 Wide Railway Network in Zambia and Malawi: Scenario C (Selected)

The development of the Chipata-Lusaka section (new construction) is very expensive due to

the long distance between them. Though the construction cost of the Chipata – Petauke -

Serenje section is lower, the cost is still too expensive and the section is not easily materialised

in the short and medium term. Therefore, [Scenario C] is selected. In this scenario, a dry port

will be developed at Chipata to attract truck freight that comes from Lusaka to utilise the

Nacala Corridor Railway.

In [Scenario C], different alternatives can be proposed, depending on the locations of

multi-modal dry ports in Malawi to integrate truck transport and rail transport.

[Scenario C-1] Multi-Modal Dry Ports at Blantyre and Lilongwe

[Scenario C-2] Multi-Modal Dry Ports at Blantyre, Lilongwe and Liwonde

Since the Limbe (Blantyre)-Nkaya section has been rehabilitated, it is possible to expand the

capacity of the multi-modal dry port at Limbe Railway Station and/or in other industrial areas

in Blantyre. Since the upgrading of the Nkaya-Mchinji section is committed by a private group,

it is possible to establish a multi-modal dry port in Lilongwe in the short-term (probably in

five to seven years) for increasing the efficiency of rail-truck combined transport. In these

circumstances, a multi-modal dry port in Liwonde is not considered so necessary, because

Lilongwe multi-modal dry port and Blantyre multi-modal dry port could widely cover the

whole areas of Malawi. In consideration of these situations, [Scenario C-1] is selected.


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6.5 Basic Policies on Priority Economic Sectors and Target Markets in Nacala Corridor Development

6.5.1 Increasing Importance of Regional Markets

International transport corridor development for Africa has been considered mainly for the

efficient transport of goods between inland countries and sea ports. That is, overseas export

from inland countries and inland areas, as well as import to inland countries and inland areas

from overseas countries have been the major targets of international transport corridor

development. However, in the 2000s, African countries had experienced high economic

growth by largely increased earnings from the export of primary commodities (minerals and

agricultural products) and they increased purchasing power, resulting in the expansion of

regional markets within Africa. At the same time, many African countries have formed

regional economic communities, such as SADC, COMESA, EAC, UEMOA and ECOWAS,

within which intra-regional trades of goods of regional origins are not subject to customs

duties. Therefore, more attention should be paid to intra-regional trade and development of

economic sectors targeting regional markets, in addition to outside regional markets.

In fact, the amount of value of non-traditional export from Zambia to Sub-Saharan Africa has

increased at higher rates than that to high-income countries2. Zambia’s export to SADC and

COMESA has grown at a very high pace in the years of 2003-20133. Meanwhile, Malawi’s

second and third largest export destinations are Zimbabwe and Mozambique in recent years.

6.5.2 Basic Policies for Development of Economic Sectors in Relation to the Development of Nacala Corridor Transport Infrastructure

As described as a basic understanding in Chapter 6.1, it is necessary to consider the points

below for the development of economic sectors in relation to the development of the Nacala

Corridor.

i) Promote economic sectors which can grow or strengthen its competitiveness through the

utilisation of the benefits brought by the development of the transport infrastructure of the

Nacala Corridor, such as decreasing of the transport cost, increasing of the assuredness of

the transportation, decreasing of the price of fuel and fertilisers, etc.

ii) Prioritise the economic sectors which can make a positive circle like utilisation of the

transport corridor will be increased by the development of the economic sectors and it

makes further upgrading of the transport corridor.

iii) Promote the economic sectors which already have a certain amount of the production in

the Nacala Corridor Region or sure potential to develop sufficient production capacity.

The products need to target the regional markets, due to the fulfilment of domestic

demands, or no market in the country but existing outside the country.

2 Page xv, Diagnostic Trade Integration Study (DTIS), Main Report (June 2014), The World Bank Group 3 Pages 36-37, Zambia: Harnessing the Potential for Trade and Sustainable Growth in Zambia, 2016, UNCTAD


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Therefore, at first, it is necessary to promote the development of not only economic sectors

exporting to overseas markets (outside regional markets) but also economic sectors for

regional markets as mentioned above, by making full use of the potential and strengths of each

country. To that end, it is important to strengthen the implementation of regional economic

integration. It is also necessary to coordinate policies for export promotion of agricultural

products in each country. At the later stages, it might be possible to create exportable products

to international markets out of the products targeted regional markets.

In Malawi and Zambia, expansion of the transport demand for the Nacala Corridor (rail and

road) is indispensable for economic sector development. Therefore, measures considering the

supply chain are needed to increase the production of these economic products as well as to

construct collection and export systems of the products.

6.5.3 Priority Economic Sectors to be Promoted in Relation to Nacala Corridor Transport Infrastructure Development

Priority economic sectors identified in Zambia and Malawi targeting regional markets include

agriculture including livestock, and agricultural processing. In addition, Zambia has potential

economic sub-sectors, such as the production of clinker/cement and synthetic detergent, while

Malawi will be able to produce certain rare earth and rare metal. Coal from Mozambique and

Zambia are directed for export to regional markets.

Therefore, the target sectors to be prioritised for Nacala Corridor Development in Zambia and

Malawi from the analyses in previous Chapters are as follows:

Crop production,

Livestock production,

Agro-processing,

Manufacturing (Clinker/cement and synthetic detergent), and

Mining (Rare earth and rare metal).

The selected sectors are oriented toward export mainly to regional markets using the transport

infrastructure and facilities of the Nacala Corridor. Interventions for the development of the

priority sectors are required to improve the access to markets and finance, the availability of

inputs, provision of information and business services, and capacity building.

Particularly, since the agricultural production in Zambia and Malawi is mainly carried out by

small scale farmers, it is necessary to take proactive measures for the increase of transport

demand, such as organising small scale farmers for aggregating their agricultural products and

shipping collectively. Until now, a variety of efforts and projects for organising farmers’

associations and cooperatives have been attempted in the government programmes and

assistance projects of development partners. However, it cannot be said that they are very

successful. In this timing when the development of transport infrastructure (railway and road)

of the Nacala Corridor has progressed, further efforts are to be made at export targeting

regional markets of neighbouring countries.


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1) Crop production

Crop production is the dominant economic sector in Zambia and Malawi, which provides

employment for the majority. The sector interventions will be divided into two, targeting

commercial farming and/or large scale farmers who are directed to the production of export

oriented agricultural products and participate in the regional and international markets, and

small scale farmers who are indirectly connected to the market through links with

intermediaries and large traders. The export oriented clusters of selected agricultural products

with high values should be organised, involving the two groups of farmers.

The characteristic indicators related to the agriculture production in Zambia and Malawi

described in Chapter 3 and 4 are compared in the table below. The number of farmers in

Zambia is only about 60% of those in Malawi. But their total cultivated area is about 2.4 times

larger than that of Malawi and Zambia has potential to expand their cultivation areas in the

future. With these facts, the potential agriculture to be aimed should be different between

Zambia and Malawi.

Table 6.1 Comparison of Number of Farmers and Land in Zambia and Malawi

Indicators Zambia Malawi

National Area (ha) 75,261,400 ha 11,850,000 ha Number of Farmers’ Households 1,473,547 (Small scale)

56,000 (Middle scale) 2,000 - 3,000 (Large scale)

2,5732,218 (Small scale, less than 5 ha) 28,676 (Middle and large scale)

Possible Agriculture Land (Potential) 42,000,000 ha 5,900,000 ha Cultivated Area 6,000,000 ha 2,500,000 ha Share of Agriculture sector among labour population

67% 64.1%

Source: Zambia: 2nd national agriculture policy, Post Harvest survey 2014-2015 Malawi: National Agriculture Policy 2016, The Quiet Rise of Medium Scale Farms in Malawi, ward Anseeuw et al, Land 2016; doi: 10.3390/land 5030019 provided from World Bank 2013

In Zambia, there are still arable lands available to implement large scale agriculture and the

GOZ has been promoting such large scale commercial agriculture and agribusiness. Thus, it is

necessary to set up incentives for large scale farmers and private enterprises to participate in

Farm Block Programme; to strengthen the collaboration mechanism and system by which such

investors are encouraged to create a favourable relationship with small scale farmers without

adversely affecting them; and to protect the rights of small scale farmers and rural

communities. Moreover, in Zambia, the value chains of agriculture, agro-processing industry

and livestock industry have been developed. In order to mitigate the demerit of land-lock

countries, by utilising the Nacala Corridor, it is also important to develop value chains in the

country and also across borders.

Meanwhile, small scale farmers produce almost all crops in Malawi. Hence, while considering

policies such as the GBI promoting large scale commercial agriculture, it might be necessary

to improve the productivity of small scale farmers and strengthen their agricultural production

by improving market access. Also an approach should be developed for each crop, taking

account of the benefits of Nacala Corridor Development.


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Considering the characteristics and development directions of the agriculture sectors in

Zambia and Malawi described above, the criteria to select the potential economic sub sectors

were presented as follows.

Table 6.2 Selection Criteria of Potential Economic Sub Sectors

Zambia Malawi

Suitable for being included in Agricultural Clusters (Value Chains) (Distinguished criteria for Zambia)

Small scale farmers as beneficiaries (Distinguished criteria for in Malawi)

Larger production in the Nacala Corridor Region Export crops. Or their production meets mostly domestic demands High demand in the regional market and/or in the world market Future market growth can be expected (or strong market demand in foreign market） Larger benefits of using Nacala Corridor


2) Livestock

Livestock production including poultry, beef cattle, sheep and goats, has the high potential to

develop as export commodities with high added value. A livestock cluster needs to be

formulated, with the promotion of stock feed production within the country. In particular,

Zambian beef has hardly been exported, but traders from DRC come to buy beef raised,

according to the interview with the Ministry of Livestock and Fisheries and Zambeef, the

leading company of blended animal products as of July 2017. As described before, having

seen the potentiality of livestock production, Saudi Arabia has the intention to import sheep

and goats from Zambia. Following such attempts, the livestock sub-sector should be promoted

and supported further to increase the export of livestock, by expanding the production through

setting and managing pasture land, enhancing breeding, promoting veterinary service and

animal disease control, and improving market access, etc. The livestock in Malawi is also has

potential, but at this moment their products and supply system are not yet prepared to develop

for exporting, due to the difficulty of setting up pasture land to raise certain quantity of

animals.

3) Agro-processing

In addition to the expansion of agricultural production, the agro-processing industry is

promoted to add values to the agricultural products and to promote manufacturing industries in

the two countries. When the production volume of primary products increases, measures need

to be taken not only for exporting raw agricultural products but also for exporting products

with added value through domestic agricultural processing, etc. By increasing a profit per

transportation cost, the domestic market is able to earn more from the export. In particular, in

Zambia where commercial agriculture is promoted by the government, since a large quantity

of quality agricultural products is produced, there is a good opportunity to promote

agricultural processing industry using the products.


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6.6 Strategies and Four Stages for Development of Nacala Corridor Transport Infrastructure and Services

6.6.1 1st Stage (Present Situation) and 2nd Stage of Development of Nacala Corridor Transport Infrastructure and Services

The 1st Stage of development of the transport infrastructure of the Nacala Corridor is the

present situation. The 2nd Stage of development of the transport infrastructure of the corridor is

planned with a commitment of the private sector, Vale and Mitsui, which announced an

upgrading plan of the railway line in August 2017.

1st Stage (Present Situation) Development of the Nacala Corridor: Upgraded Railway

between Nacala and Moatize, together with Rehabilitated Railway Section between Limbe and

Nkaya, and Not Rehabilitated Railway Section between Nkaya and Chipata through Mchinji

2nd Stage Development of the Nacala Corridor: Upgraded Railway between Nacala and

Chipata, Combining of Upgraded Railway between Nacala and Moatize, Rehabilitated

Railway Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya

and Chipata through Mchinji

Because of this upgrading of the rail infrastructure and locomotives, as well as improved

operation, the Nacala Corridor would become significantly advantageous over the other

transport corridors for Chipata, Lilongwe and Blantyre in terms of transport cost and time. In

the case of Lusaka, the Nacala Corridor is not so advantageous over the Lusaka-Beira Road

Corridor because a multi-modal dry port has not been established yet at this stage of

development.

6.6.2 3rd Stage and 4th Stage of Development of Nacala Corridor Transport Infrastructure and Services

3rd Stage Development of the Nacala Corridor: Combined Rail Transport and Truck

Transport between Nacala and Lusaka through Chipata, based on Upgraded Railway between

Nacala and Chipata together with Establishment of Multi-Modal Dry Ports in Blantyre,

Lilongwe and Chipata, Combining of Truck Transport between Lusaka and Chipata, Upgraded

Railway between Nacala and Moatize, Rehabilitated Railway Section between Limbe and

Nkaya, and Upgraded Railway Section between Nkaya and Chipata through Mchinji

In order to achieve an efficient combined rail transport and truck transport between Lusaka

and Nacala on the Nacala Corridor, it is necessary to establish a multi-modal dry port at

Chipata Railway Station. The multi-modal dry port has the following facilities to integrate rail

transport and truck transport:

Cargo railway station Machine to handle cargo for loading and off-loading to cargo trains Warehouses Truck parking lots Customs office Freight forwarders offices


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By establishing and operating the multi-modal dry port, the combined rail and truck transport

on the Nacala Corridor could reduce the transport costs so that the Nacala Corridor could

compete with the Lusaka-Beira Road Corridor. It is estimated the transport cost for the

Lusaka-Nacala Rail Corridor is 91% of that for the Lusaka-Beira Road Corridor. This

competition between the Lusaka-Nacala Corridor combining rail and truck transport and the

Lusaka-Beira Road Corridor could reduce the transport costs for importing fuel and chemical

fertiliser.

For the purpose of securing the road connection between Lusaka and Chipata on the Nacala

Corridor, it is necessary to replace the Luangwa Bridge with a new bridge.

In addition, the establishment of a multi-modal dry port in Lusaka is also very effective to

improve the efficiency of integrating truck transport and rail transport.

4th Stage Development of the Nacala Corridor and Other Transport Corridors:

Revitalized Railway Utilization of Other Corridors, due to Emerging Competition with

Combined Railway Transport and Truck Transport between Nacala and Lusaka

It is considered that the use of the railway would be activated in other transport corridors

related to Zambia as a result of the competition among the corridors including the Nacala

Corridor (combined rail and truck transport). As a result, railways would be available in

several transport corridors in the medium to long terms. Furthermore, corridor transport cost

will be reduced for Zambia.

These activated rail corridors would bring benefits to the entire Zambian economy and

agricultural sector in the form of the reduction in import prices of fuel and chemical fertiliser.

Until now various products in Zambia are considered less competitive in export markets

except copper. However, it seems possible that Zambian economic sectors would have a

competitive edge in the export market (especially in the regional markets) due to the reduced

prices of fuel and chemical fertiliser.

Regarding exports from Zambia to regional markets, it is not always necessary to use railway

corridors since the truck transport is more efficient when the freight transport distance is less

than 500 km. Therefore, the Nacala Corridor and other railway corridors do not directly boost

the development of economic sectors. This impact is an indirect boost to the development of

economic sectors. On the other hand, within the regional market, the Lusaka-Dar es Salaam

Port Rail Corridor and the Lusaka-Durban Railway Corridor, which will be activated by the

development of the Lusaka-Nacala Rail-Truck combined transport corridor, would also

contribute to coastal countries and coastal areas that can be accessed via Nacala Port or Beira

Port.


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6.7 Zambia’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Development

6.7.1 Zambia’s Strategies for Promoting Development of Potential Economic Sectors by Taking Advantage of Upgraded Nacala Corridor

In accordance with the different development stages of transport infrastructure of the Nacala

Corridor, different strategies are proposed for promoting the development of potential

economic sectors in Zambia as follows:

1st Stage (Present Situation) of the Development of Nacala Corridor: Upgraded Railway

between Nacala and Moatize, together with Rehabilitated Railway Section between Limbe and

Nkaya, and Not Rehabilitated Railway Section between Nkaya and Chipata through Mchinji.

At this stage, the Nacala Corridor (combined rail and truck transport) between Lusaka and

Nacala is not advantageous at all in comparison with the Lusaka-Beira Road Corridor. The

Lusaka-Durban Road Corridor is very advantageous over the Lusaka-Nacala Road-Rail

Corridor in terms of transport time. Therefore, the present situation of the Nacala Corridor

cannot provide any significant impact on the Lusaka Area.

On the other hand, at this stage, the Chipata-Nacala Rail Corridor is advantageous over the

Chipata-Beira Road Corridor in terms of transport cost. However, in terms of transport time

and cargo security, the Chipata-Nacala Rail Corridor is not advantageous over the

Chipata-Beira Road Corridor at all. Therefore, it is not considered that the Chipata-Nacala

Rail Corridor have a good impact on Eastern Province’s economy.

Although the advantages of Nacala Corridor could not be enjoyed in Lusaka and Chipata in

this stage, it is important to initiate activities for economic sector development which will

serve as a stepping stone to development in the next stage. Those initiatives could include the

preparation of policies on trade and large scale commercial agricultural development with

special consideration for small scale farmers as well as actions for trade facilitation.

2nd Stage of the Development of Nacala Corridor: Upgraded Railway between Nacala and

Chipata, Combining Upgraded Railway between Nacala and Moatize, Rehabilitated Railway

Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and

Chipata through Mchinji.

Since a group of private firms (Vale and Mitsui) is to upgrade the Nkaya-Mchinji rail section,

the train operation and security management of cargoes is expected to be largelyimproved.

This upgrading of rail sections and improvement of cargo train on the Nacala Corridor

between Chipata and Nacala could create advantages for the Nacala Corridor. As a result, it is

possible for the economic sectors in Eastern Province to utilise the Nacala Rail Corridor

between Chipata and Nacala for importing chemical fertiliser and fuel. At the same time, it is

possible for economic sectors to utilise the Nacala Corridor Railway between Chipata and

Nacala in order to export their products not only to neighbouring countries, but also to Kenya

and Ethiopia through Nacala Port.


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However, at the moment, Eastern Province’s agricultural production tends to be mostly

conducted by small scale farmers and it is not so oriented to export to regional markets.

Therefore, necessary support should be provided to small scale farmers who are oriented

toward export for the expansion of their agricultural production.

3rd Stage of the Development of Nacala Corridor: Combined Rail Transport and Truck

Transport between Nacala and Lusaka through Chipata, based on the Upgraded Railway

between Nacala and Chipata together with Establishment of Multi-Modal Dry Ports in

Blantyre, Lilongwe and Chipata, Integrating Truck Transport between Lusaka and Chipata,

Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between

Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through

Mchinji.

At this stage, a multi-modal dry port is established in Chipata in order to improve the

efficiency of connecting rail transport and truck transport. The combined rail-truck transport

between Lusaka and Nacala would create some advantages for the Nacala Corridor over the

Lusaka-Beira Road Corridor. Because of this competitive relationship between the Nacala

Corridor (rail-truck combined transport) and the Beira Road Corridor, corridor transport cost

would be reduced for Lusaka and Chipata.

Because of the upgraded rail-truck combined transport, transport costs of importing of fuel and

chemical fertiliser would be reduced. This could have a good impact on the economy of

Eastern Province and Lusaka Area.

In Lusaka and its surrounding areas, and Eastern Province, it is important to strengthen export

oriented agriculture production system mainly focusing on small scale farmers in the region

and to attract more private investments, in order to expand the agriculture production for

exporting to regional markets, while paying attention to the protection of the rights of small

scale farmers and rural community.

On the other hand, at this stage, the Chipata-Nacala Rail Corridor is slightly advantageous

over the Chipata-Beira Road Corridor and other corridors. This situation could create a

positive impact on the development of economic sectors for exporting their products to

neighbouring countries and other regional markets. Because of the reduced prices of imported

fuel and chemical fertiliser and reduced cost for corridor rail transport, it is necessary to

support the small scale farmers of Eastern Province in making an effort at expanding their

production and their export to regional markets.

4th Stage of the Development of Nacala Corridor and Other Transport Corridors:

Revitalised Railway Utilisation of Other Corridors due to the Emerging Competition between

Combined Railway Transport and Truck Transport between Nacala and Lusaka and other

corridors.

At this stage, it is expected to increase the utilisation of railways in transport corridors. As a

result of this revitalised railway situation of transport corridors, corridor transport costs would

be reduced not only for the Nacala Corridor Railway, but also for the other rail corridors. This


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situation could create a positive impact on the whole economy of Zambia and the agriculture

sector in particular.

Because of the positive impact on the Zambian economy and agricultural sector, it is possible

and easier for the economic sectors to make an effort at expanding their production and export

to regional markets. The potential products or economic sub-sectors identified in the latter

sections should be targeted for export promotion to regional markets.

6.7.2 Zambia’s Potential Economic Sectors Related to Nacala Corridor Development

Based on the expected improvement of the situation of transport corridors in the medium to

long term, it is necessary to foster and promote the growth of economic sectors for the

regional markets from now on. The potential economic sub-sectors mentioned in 6.5.3 were

selected considering following points:

It has growth potential due to their targeting the growing regional markets.

The growth of those potential economic sub-sectors would be accelerated by prospective

price reduction of fuels and chemical fertilisers due to the impact of Nacala Corridor

Development.

They have already been produced in Zambia, the domestic market is almost satisfied, and

the products of which production was expanded have competitiveness in regional

markets.

The competitiveness of the products would be sustained in future by expansion of the

production, because of the growth of regional markets and the "free trade areas or

customs union within the region" towards implementation (difference tariff rate between

outside region and within the region is about 20%).

As described in Section 6.5.3, the potential economic sectors are crop production,

agro-processing, livestock and others in Zambia. Considering the characteristics of Zambia’s

agriculture also written in the same section, the potential economic sub-sectors in Zambia

were carefully selected from the aforementioned potential economic sectors in accordance

with the following criteria.

Table 6.3 Selection Criteria of Potential Economic Sub Sectors in Zambia

Suitable for being included in Agricultural Clusters (Value Chains) (Distinguished criterion for Zambia)

Larger production in the Nacala Corridor Region Export crops. Or their production meets domestic demands High demand in the regional market Future market growth can be expected (or strong market demand in foreign market） Larger benefits of using the Nacala Corridor



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With the criteria, the point of the each primary product is scored as shown in the table below.

The products with eight points and over in total score are selected as priority products.

Table 6.4 Selection of Priority Products in Zambia

Zambia Score

Larger production in Nacala Corridor Region

Export crop

Production meets

domestic demand

High demand in the regional

market

Future market growth can be expected (or strong market

demand in foreign

market）

Larger benefits of

using Nacala Corridor

Suitable for being

included in Agricultural

Clusters

Cotton 9 ○（2） ○（2） ‐ （1）（1） ○（2）（1）

Tobacco 7 ○（2） ○（2） ‐ （1） ×（0）（1）（1）

Sugar Cane（refining）

10 （1） ○（2） ‐ ○（2） ○（2） ○（2）（1）

Maize 11 ◎（3） ‐ （1）（1） ○（2）（1） ◎（3）

Sorghum 3 ×（0） ‐ ○（2） ×（0） ×（0） ×（0）（1）

Rice 7 ×（0） ‐ ×（0） ◎（3） ○（2）（1）（1）

Wheat 9 （1） ‐ ×（0） ◎（3） ○（2）（1） ○（2）

Sunflower 12 ○（2） ‐ ○（2） ○（2） ○（2） ○（2） ○（2）

Groundnuts 10 ○（2） ‐ ○（2） ○（2）（1）（1） ○（2）

Soya Bean 10 （1） ‐ ×（0） ○（2） ○（2） ○（2） ◎（3）

Pulse 3 ×（0） ‐ （1） ×（0）（1） ×（0）（1）

Sweet Potato 4 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ×（0）

Cassava 2 ×（0） ‐ ○（2） ×（0） ×（0） ×（0） ×（0）

Bovine Meat 8 ×（0） ‐ （1） ○（2） ○（2）（1） ○（2）

Swine Meat 7 ○（2） ‐ ×（0） ○（2） ○（2） ×（0）（1）

Small Ruminant 9 （1） ‐ ×（0） ○（2） ◎（3） ○（2）（1）

Poultry 9 ○（2） ‐ ×（0） ○（2） ○（2）（1） ○（2）

Fish 6 ×（0） ‐ ×（0） ○（2） ○（2）（1） ○（2）

◎：3 points, ○：2 points, ：1 point, ×：0 point


As a result, Zambia’s potential economic sub sectors and products in relation to Nacala

Corridor Development are identified as follows.

Table 6.5 Potential Economic Sub Sectors and Primary Products in Zambia

Sub Sector Primary Products

Crop production

Maize Soya Bean Wheat Cotton

Agro-processing Sugar Edible Oil（Soybean, Sunflower）

Livestock Bovine Meat Small Ruminant（Goat, Sheep） Chicken Farming

Others Soaps and synthetic preparations



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6.7.3 Description of Potential Economic Sectors of Zambia and Key Points for Promoting Development of Potential Economic Sectors of Zambia

(1) Maize

Zambia produces enough volume of maize to export after fulfilling domestic demands (annual

production was about 2.5 to 3.4 million tonnes between 2011 and 2014), if it is not a drought

year. Additionally it is expected that the production will expand and the export will be

stabilised in the future. The market of the products exists within the region. South Africa and

Zimbabwe, neighbouring countries of Zambia, and Libya import more than 500,000 tonnes of

maize annually and the quantities is expanding year by year. There are also some countries

who import several hundred thousand tonnes annually like Kenya, Botswana, Namibia, and

Mauritius, and the quantities of the export to these countries are also increasing, so that large

markets will exist in the region in the future.

The purchase price of maize might become lower than the current price, after an increase of

the production. Then, it seems that large scale farmers will shift their production from maize

to other highly profitable crops like soya beans or wheat more than ever. Therefore, the

government needs to promote the improvement of the production by small scale farmers in

order to expand the production of maize in the country.

In order to expand the production of small scale farmers, it is effective to improve the access

to inputs such as seeds and fertilisers. For that, it requires the improvement and strengthening

of the FISP’s system currently under review. It is also desirable to improve access to certified

seeds in rural areas and to accelerate organising farmers for strengthening the sales at the same

time.

Maize is the most informally traded crop in Southern African Region. It is exported informally

from Zambia to DRC, and also to Tanzania and Mozambique. In this context, it is necessary to

increase not only production but also formal sales channels of maize.

From the above, the government needs to take measures for simplification of the export

procedures, improvement of input access including FISP, and optimisation and extension of

the agriculture techniques and practices.

(2) Soya Bean

In Zambia, soya bean production was 120,000 tonnes in 2011. Then it showed a remarkable

growth to reach 260,000 tonnes and 210,000 tonnes in 2013 and 2014 respectively, which

makes it possible to export tens of thousands of tonnes of soya beans. Meanwhile, its demands

in the domestic market are still high as soya bean oil crude is still imported. Also, there are

markets in the regions, as Egypt imports an incomparable volume of soya beans, about 1.0 to

1.9 million tonnes annually and the neighbouring countries of Zambia, such as South Africa

and Zimbabwe, are expanding import. Moreover, Kenya, Botswana and Burundi also import it.

Even now, Zambia is expanding the export as a major soya bean producer in the region, and

increasing the production is expected in the future, targeting both domestic and regional

markets.


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Both large scale and small scale farmers produce soya beans (in Zambia, 210,000 tonnes of

soya beans was produced in 2010, of which 37,000 tonnes was produced by small scale

farmers.) In order to expand the production of soya bean by large scale farmers, it would be

effective to involve large scale producers in development of Farm Blocks which the

government is currently promoting. To that end, the government should develop infrastructure

in Farm Blocks to increase the participation of the operators in the programme. Meanwhile, at

the existing Farm Blocks, the expansion of agricultural production by irrigation requires

additional water resource development. In order to supply irrigation water to the Farm Blocks,

it is necessary to develop a method for water resource development by the government and

large scale farmers with a PPP-like arrangement.

For the increase of the production by small scale farmers, Out-Grower Scheme might be

applicable. Therefore, more studies on the introduction of Out-Grower Schemes involving

small scale farmers by private companies are necessary, in order to find the bottlenecks from

the current status of the Farm Block being promoted in the country and Out-Grower Schemes,

and to establish a win-win coordination framework and system including necessary measures

such as capacity building of small scale farmers4.

From the above, the government needs to reform and strengthen the collaboration mechanism

and the system between large scale commercial farms/private entities and small scale farmers,

to promote the simplification of export procedures, to support water resource development in

the existing Farm Blocks, to improve farming techniques to be more appropriate and suitable

for the local environment, and to conduct the training of seed multiplication farmers.

(3) Wheat

At present, wheat is the third most produced crop domestically after maize and soya beans

(from 2011 to 2014, annual production volume was from 200,000 to 270,000 tonnes).

However, the domestic demand has not been met yet so that the GOZ imported it in the low

production years. In order to protect the domestic wheat producers, the GOZ has implemented

measures to ban the import of wheat from 2015 during the domestic wheat harvesting season.

At present, wheat is produced with irrigation by large scale farmers. Issues of wheat export

from Zambia are price together with expansion of production volume. The expansion of

production and price reduction are important toward the export by applying soya bean-wheat

rotation mechanised agriculture by large scale farmers.

Demand for wheat in the regional markets is high and many countries import it. However, in

order to ensure that Zambian wheat has price competitiveness against the imported wheat from

outside the region, it is necessary to increase the number of middle and large scale commercial

farmers producing wheat through the promotion of the Farm Block Programme, etc., the 4 In general, a large scale farmer produces agricultural products with hired labourers, and their relationship with the surrounding small scale farmers is weak. For example, large scale farmers producing soya beans by irrigation might have little advantage in managing the Out-Grower Schemes involving small scale farmers who produce soya bean in rain-fed production, from the perspectives of shipment time and quality. Therefore, it is considered difficult to expect that the existing large scale farmers will make efforts to develop the Out-Grower Schemes. The Scheme should be designed with the assumption on the implementation in cooperation between private enterprises and small scale farmers.


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development of the agricultural cluster or value chain with consideration on the utilisation of

wheat bran, etc., and also the improvement of variety. Moreover, development of transport

infrastructure is also required to decrease both the production expenses and transportation

cost.

(4) Cotton

Cotton is produced by small scale farmers, and most of them cultivate under Out-Grower

schemes in which farmers use seeds and loans provided by private companies. Thus, the

amount of the cotton production is determined by the private enterprises. Cotton production in

Zambia has been relatively stable in recent years, around 40,000 tonnes. It is exported to South

Africa and Asian countries such as Singapore. The cotton markets in the region include South

Africa and Egypt, though they are not so large. Hence, it may be possible to expand

production toward the Asian market outside the region by using the Nacala Corridor. For that,

it is necessary to expand production by private companies or to attract new private investors

by the government.

(5) Edible Oil Production

Soya bean oil is produced domestically (1,400 to 3,600 tonnes annually from 2011 to 2014).

However, most of the oil is imported (10,000 to 26,000 tonnes annually from 2011 to 2014)

and it is rarely exported. In the region, Egypt imports tens of thousands of tonnes, and there

are other countries which have demands such as Angola, Zimbabwe, Mozambique, Mauritius

and Madagascar. However, edible oil produced in Zambia shall meet domestic demands first.

Sunflower oil is produced domestically (1,300 to 7,000 tonnes annually from 2011 to 2014)

and despite annual fluctuations of the production, a similar amount is exported every year (300

to 93,000 tonnes annually from 2011 to 2014). Meanwhile, its imports are steadily increasing

(increased from 800 to 2,000 tonnes annually from 2011 to 2014). Currently, most of the

export is to DRC, and there are other relatively large markets such as South Africa, Zimbabwe

and Botswana in the region. Egypt, the largest importer in the region, and Namibia are

potential markets for the export from Zambia. In addition, Mozambique, DRC and Tanzania

import the sunflower oil, even though in a limited and unstable volume. However, as the

demand for edible-oils expands with the growth of the economy in general, the demand will

expand in the region according to development of the neighbouring countries.

In order to increase the edible oil production for both the domestic and the regional markets

and to expand its export, it requires the promotion of investment in the manufacturing industry

of soya bean oil and sunflower oil. also in soya bean production. Therefore, the government

needs to promote investment in edible oil production and new Farm Block development.

(6) Sugar

The production of sugar cane and raw sugar is increasing steadily (sugar cane: from 380,000

to 460,000 tonnes annually from 2011 to 2014 and raw sugar: from 210,000 to 260,000 tonnes

annually). The raw sugar is exported mainly to the countries in the region such as Mauritius,


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DRC, South Africa, Kenya, Burundi, Rwanda, etc. On the other hand, refined sugar was

produced about 120,000 to 130,000 tonnes annually, and is exported mostly to DRC.

Currently, foreign direct investment has been coming into this sector. Refined sugar has high

demand in neighbouring countries such as South Africa, Tanzania and Zimbabwe and also

Kenya and Uganda, where its market is expanding. Thus, there is a chance for Zambia to

expand sugar production as well as its export to the markets.

The government also needs to attract investments to resolve the current oligopoly situation of

raw sugar production and encourage sound competition. Bagasse generated by processing

sugar cane can be used as a feed by mixing with oil cake that comes out after aforementioned

edible oil extraction. Hence, sugar cane production and raw sugar production can also be

promoted in combination with livestock production.

The government needs to promote investment to establish sugar cane plantations and sugar

mills and also to support the improvement of basic infrastructure (water, electricity, etc.) for

promoting investment in sugar factories.

(7) Bovine Meat Production

The number of cattle heads is increasing year by year (from 2.5 million to 4.0 million heads

annually from 2011 to 2014), and meat production is also increasing (from 150,000 to 230,000

tonnes annually from 2011 to 2014). Due to the large domestic demand for bovine meat, it is

hardly exported except to DRC. However, there are large markets in the region such as South

Africa or Angola, and then Egypt and Libya also import the large volumes. In addition,

Mozambique and Mauritius are expanding the import of meat even in small quantities. Due to

the demand for meats which expands with economic growth, the market will continue to

expand in the region.

Value addition to agricultural products is indispensable in Zambia as a land locked country.

The government has and should take an opportunity to promote agriculture-livestock industry

clusters by increasing the production of maize and soya bean, processing them domestically,

and utilising the residuals as feed for promoting domestic livestock production. Currently,

meat companies purchase two or three years aged feeder calf from small scale farmers and sell

the meat after fattening them. Reproduction and breeding of calves until being sold to the

company is carried out by small scale farmers 5 . Because of the weak animal health

management in the extensive breeding by small scale farmers, it is difficult to expand the meat

production. Therefore, it is necessary to foster the large scale breeding farmers, to strengthen

animal health management and to improve animal quarantine system.

Therefore, as government’s intervention, it is required to conduct setting and management of

pasture land, to foster the large scale breeding farmers through capacity building, to establish

an animal quarantine system, to expand the animal health management, and to increase the

number of extension workers.

5 Calf breeding after reproduction requires labour costs due to labour-intensive and time-consuming work, so purchasing them from small scale farmers is more cost-effective.


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(8) Small Ruminants Production (Goat and Sheep)

The population of goats is very large (from 2.3 million to 2.6 million heads annually from

2011 to 2014), but the number of sheep is limited in Zambia (from 230,000 to 240,000 heads

annually from 2011 to 2014). The production is not enough to fulfil the domestic demand.

Goats are imported alive and sheep are imported both as meat and as living livestock.

Regarding the demands in the region markets, while imports are decreasing in South Africa,

the largest importer, other countries like Mauritius and Egypt have a demand, and the import

is growing in Angola, DRC and Tanzania, as same as other meats. Therefore, if Zambia has

surplus production, there is an opportunity to sell it to the regional market6.

Since these small ruminants are bred mainly by small scale farmers, for increasing the

production, it is necessary to strengthen the animal quarantine system and to expand sales

channels through establishing public slaughterhouses. Moreover, adding premier on the sales

price might be expected if a special slaughterhouse with Halal certification and cold chain can

be established in future for export to the Islamic regions like the Middle East through the

Nacala Corridor.

Therefore, as the government’s interventions, setting and management of pasture land,

development of the large scale breeding farmers, establishing an animal quarantine system,

dissemination of animal health management, and increase the number of extension workers

are required.

(9) Poultry

The number of poultry has increased year by year (from 36 million to 38 million heads

annually from 2011 to 2014), and meat production too (from 43,000 to 48,470 tonnes annually

from 2011 to 2014). A small volume of meat of poultry has been exported to DRC over the

years, and also some of live poultry has been exported to Zimbabwe, Botswana, Malawi and

Mozambique, etc. However, the domestic demand is not fulfilled and the imported volume

exceeds the exported amount (with regards the total of meat and live of the poultry, 4,489

tonnes was imported and only 30 tonnes were exported in 2014). Due to this situation, the

domestic market will be prioritised, and then it will be exported to the surrounding countries

such as Tanzania, Mozambique and Zimbabwe where the import of chicken is increasing. The

increase in meat demand accompanying economic growth begins with chicken meat.

Therefore, the demand will increase continuously for a while in these countries even though

they will also increase domestic production in the future.

In Zambia, the materials for poultry feed are relatively abundant such as wheat bran, maize

husk and oil cakes, etc. Their amounts available in the country will be increased if the

production of cereal crops with soya beans is increased and its value chain is developed.

Therefore, there is an opportunity that the poultry industry is actively utilising these resources

to increase the productivity as they expand their production, targeting the neighbouring

6 Indeed, it is expected to promote the production of goats since Saudi Arabia and Zambia have agreed on the export of goats in recent years.


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countries’ markets. There are several poultry companies and chicken supply groups in the

country. It is important to foster such companies as well as to establish a cold chain network

and to improve the efficiency of customs clearance on land transportation for the

transportation of the frozen meat.

Therefore, as necessary government interventions, it is required to extend techniques and

facilities for feed production, to increase the number of extension workers and their capacity,

to strengthen sanitation management in rural areas by establishing extension offices in the

areas, and to spread vaccines and strengthen animal quarantine (Avian influenza can occur

anywhere. It is impossible to export it for two years if affected).

(10) Soap and Detergents

Soap and detergent exports from Zambia are expanding year by year to Zimbabwe, DRC,

Malawi, Mozambique, etc. (from 13,000 to 28,000 tonnes annually from 2011 to 2014).

Among the neighbouring countries, Tanzania, Ethiopia and Botswana are expanding their

imports, and they should be considered as the markets in the future.

In order to support this trend, the government needs to strengthen the implementation of a

regional customs union.

6.8 Malawi’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Transport Development

6.8.1 Malawi’s Strategies for Promoting Development of Potential Economic Sectors in Relation to Nacala Corridor Transport Development

In accordance with different development stages of the transport infrastructure of the Nacala

Corridor, different strategies are proposed for promoting the development of potential

economic sectors in Malawi as follows:

1st Stage of the Development of Nacala Corridor: Upgraded Railway between Nacala and

Moatize, together with Rehabilitated Railway Section between Limbe and Nkaya, and Not

Rehabilitated Railway Section between Nkaya and Chipata through Mchinji.

At this stage, the transport cost of the Lilongwe-Nacala Rail Corridor is 77% of that of the

Lilongwe-Beira Road Corridor. The transport time of the Lilongwe-Nacala Rail Corridor is

the same as that of the Lilongwe-Beira Road Corridor.

On the other hand, the transport cost of the Blantyre-Nacala Rail Corridor is 75% of that of the

Blantyre-Beira Road. The transport time of the Blantyre-Nacala Rail Corridor is four days

more than that of the Blantyre-Beira Road.

As seen in these comparisons between the Nacala Rail Corridor and the Beira Road Corridor,

development of the Nacala Corridor has a substantial impact on the economy of Malawi as a

whole, especially on southern Malawi and in terms of the transport cost. In fact, materials for

chemical fertiliser are imported by using the Nacala Rail Corridor. Sugar, tobacco and tea are


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exported by using the Nacala Rail Corridor. In this way, bulky cargo has started to use the

Nacala Rail Corridor. Meanwhile, it is necessary to encourage small scale farmers to expand

their production and export to neighbouring markets.

At the same time, since the cargo demand for the railway is still limited, it is necessary to

promote the utilisation of the Nacala Rail Corridor, as well as Nacala Port by conducting sales

activities to the private sector in Malawi.

2nd Stage of the Development of Nacala Corridor: Upgraded Railway between Nacala and

Chipata, Combining Upgraded Railway between Nacala and Moatize, Rehabilitated Railway

Section between Limbe and Nkaya, and Upgraded Railway Section between Nkaya and

Chipata through Mchinji.

With the upgraded railway between Nkaya and Mchinji, large areas of Malawi are to be

covered by the cargo railway services of the Nacala Corridor. Such wide service areas of the

railway become possible with the establishment of multi-modal dry ports in Lilongwe and

Blantyre. This combined rail and truck transport systems could increase growth opportunities

for potential economic sectors targeting regional markets, as well as outside regional markets.

Thus, it is necessary to support small scale farmers in order to improve productivity, branding

for marketing and gaining access to better prices in the domestic and regional markets.

3rd Stage of the Development of Nacala Corridor: Combined Rail Transport and Truck

Transport between Nacala and Lusaka through Chipata, based on the Upgraded Railway

between Nacala and Chipata together with the Establishment of Multi-Modal Dry Ports in

Blantyre, Lilongwe and Chipata, Combining Truck Transport between Lusaka and Chipata,

Upgraded Railway between Nacala and Moatize, Rehabilitated Railway Section between

Limbe and Nkaya, and Upgraded Railway Section between Nkaya and Chipata through

Mchinji.

At this stage, the combined rail and truck transport of the Nacala Corridor between Lusaka and

Nacala through Chipata could help Malawi open up its trade routes to Zambia and further to

DRC. It is necessary for Malawi to promote the development of economic sectors targeting

regional markets.

6.8.2 Malawi’s Potential Economic Sectors Related to Nacala Corridor Development

As in Zambia, the potential economic sectors in Malawi are crop production, agro processing,

livestock and others. Considering the characteristics of agriculture in Malawi written in

Section 6.5.3, the potential economic sub sectors in Malawi were selected based on the

following criteria.


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Table 6.6 Selection Criteria of Potential Economic Sub Sectors in Malawi

Small scale farmers as beneficiaries (Distinguished criterion for Malawi)

Larger production in the Nacala Corridor Region Export crops. Or its production meets mostly domestic demand High demand in the regional market and/or in the world market Future market growth can be expected (or strong demand in foreign market） Larger benefits of using the Nacala Corridor


With the criteria, the point of the each primary product is scored as shown in the table below.

The products with eight points and over in total score are selected as priority products.

Table 6.7 Selection of Priority Products in Malawi

Malawi Score

Larger production in Nacala Corridor Region

Export crop

Production meets

domestic demand

High demand in the regional

market

Future market growth can be expected (or strong market

demand in foreign market）

Larger benefits of

using Nacala Corridor

Small scale farmers as

beneficiaries

Cotton 8 （1）（1） ‐ （1）（1） ○（2） ○（2） Sunflower 9 （1） ‐ ×（0） ○（2） ○（2） ○（2） ○（2） Soya Bean 10 ○（2） ‐ ×（0） ○（2） ○（2） ○（2） ○（2） Groundnuts 12 ◎（3） ‐ ○（2） ○（2） ○（2）（1） ○（2）

Tobacco 9 （1） ○（2） ‐ （1）（1） ○（2） ○（2） Tea 8 ○（2） ○（2） ‐ （1）（1）（1）（1）

Maize 10 ◎（3） ‐ （1）（1） ○（2）（1） ○（2） Sorghum 6 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ○（2） Rice 10 （1） ‐ （1） ◎（3） ○（2）（1） ○（2） Wheat 6 ×（0） ‐ ×（0） ◎（3） ○（2）（1） ×（0） Legumes 10 ○（2） ‐ （1）（1） ○（2） ○（2） ○（2） Sweet Potato 6 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ○（2） Cassava 6 ○（2） ‐ ○（2） ×（0） ×（0） ×（0） ○（2） Sugar Cane (refining)

11 ○（2） ○（2） ‐ ○（2） ○（2） ○（2）（1）

Bovine Meat 7 ×（0） ‐ ×（0） ○（2） ○（2）（1） ○（2） Swine Meat 7 （1） ‐ ×（0） ○（2） ○（2） ×（0） ○（2） Small Ruminant 7 （1） ‐ ×（0） ○（2） ○（2） ×（0） ○（2） Poultry 7 ×（0） ‐ ×（0） ○（2） ○（2）（1） ○（2） Fish 7 （1） ‐ ×（0） ○（2） ○（2） ×（0） ○（2）

◎：3 points, ○：2 points, ：1 point, ×：0 point


As a result, Malawi’s potential economic sub sectors in relation to Nacala Corridor

Development are identified as follows.


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Table 6.8 Potential Economic Sub Sectors and Primary Products for Malawi

Sub-Sector Primary Products

Crop production

Groundnut Rice Legumes Tea Tobacco

Agro-processing Sugar Edible Oil（Soya bean, Sunflower）

Livestock None

Others Rare earth Niobium


6.8.3 Description of Potential Economic Sectors of Malawi and Key Points for Promoting Development of Potential Economic Sectors in Malawi

(1) Rice

Currently, most of the rice produced in Malawi (from 110,000 to 120,000 tonnes per annum

from 2011 to 2014) is consumed in the domestic market, with only a little exported, and the

imported amount is also low. The GOM has already formulated a national irrigation master

plan and selected 30 priority projects in it. Among them, 14 projects are already being funded

and the total area of their schemes is 35,000 ha. After the completion of the 30 priority

projects, additional 120,000 to 200,000 tonnes of rice can be produced annually within 78,000

ha to be gained from the irrigation schemes in total. As a result, the products will be able to be

allocated for the exports.

If rice production is increased, there are markets to sell with high demand in neighbouring

countries such as South Africa, Mozambique and Zimbabwe. In addition, Kenya, Angola,

Madagascar, Ethiopia, Libya, Uganda, Djibouti, etc., also import hundreds of thousands of

tonnes of rice annually in the region. It means that the demand on rice is very high in the

region.

However, at present, many farmers producing rice leave its sales to vendors so that there are

little benefits to farmers, and efforts to improve productivity and to secure its brand are

stagnant. Therefore, it is necessary to improve cooperative shipping by small scale rice

farmers, and in particular, their market access by utilising AHCX etc. developing in Malawi.

The government needs to make interventions to establish a rice seed (brand varieties)

production system and its distribution route.

(2) Groundnuts

Until 2013, the production of groundnuts in Malawi was expanded steadily (380,000 tonnes in

2013) and Malawi became one of the largest exporters in the region. However, because the EU

and South Africa started strict tests on Aflatoxin, exports of groundnuts from Malawi were

decreased to 47,000 tonnes in 2014 and 9,000 tonnes in 2015. This has happened to many


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African groundnuts exporters. Nevertheless, there is a demand for groundnuts in the region, so

that the groundnuts in Malawi are currently exported to countries where restrictions on

Aflatoxin are not strict, such as Kenya, Tanzania, DRC, Zimbabwe and so on.

Since the export cost is reduced by the development of the Nacala Corridor, it is a large loss

for Malawi if they cannot use the potential of the groundnuts export. Therefore, the

government should take countermeasures against Aflatoxin through various donor supports、as

described in 4.1.6, as soon as possible, such as the improvement of the production

environment, development of post-harvest processing, technology development for

conservatorship, improvement of extension service (capacity enhancement and increase in the

number of extension workers), distribution facilities, market development, etc. These

measures against Aflatoxin are urgently necessary because Aflatoxin can occur on maize and

feeds, and influences animal husbandry and human health.

(3) Legumes

Chickpea, pigeon pea and other legumes produced in Malawi (chickpea: 70,000 tonnes per

annum from 2011 to 2014 and pigeon pea: 210,000 to 340,000 tonnes per annum from 2011 to

2014) are sold in the domestic market and also are exported to India and the UAE where

50,000 tonnes were exported in 2015. The demand for chickpeas is high in Egypt. Angola also

had a high demand for that, but the demand has declined in recent years. Kenya and

Zimbabwe import the pigeon pea but it is small quantity. Therefore, India and the Middle East

will continue to be major export destinations in the future. In the region, Tanzania exports a lot

of peas. Because pigeon peas are produced mainly by small scale farmers, it is necessary to

strengthen the extension service for increasing the production. Moreover, the market for

pigeon pea other than domestic consumption is India; therefore, the Government should strive

to conclude an MOU with the Indian government urgently in order to eliminate 10% import

duties (The Government of Tanzania has already concluded a MOU with the Government of

India).

Moreover, the government needs to consider the measures for improvement and dissemination

of the pigeon pea breed, cultivation technology improvement, etc. (There is a possibility of an

increase in yield due to the current extensive cultivation practices).

(4) Cotton

As in the same situation as Zambia, cotton is produced by small scale farmers under

Out-Grower Scheme using seeds and loans provided by private companies. Hence, the

increase of the production will depend on the private companies. The cotton production in

Malawi had been steadily maintained below 20,000 tonnes per annum until 2009, but in recent

years the production has doubled to nearly 50,000 tonnes per annum. On the other hand,

exports have remained unchanged at around 10,000 tonnes per annum, and export destinations

fluctuate from year to year. As for a cotton market, there are South Africa and Egypt in the

region. However, it is possible to expand production toward the Asian market outside the

region by taking advantage of the transportation cost reduction by the development of the


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Nacala Corridor. Thus, an export regime is required to be established in parallel with increase

of the production.

(5) Tea

The tea production in Malawi has been stable in recent years from 42,000 to 47,000 tonnes per

annum from 2011 to 2014. The majority of the products are exported to South Africa and the

UK. On average from 2011 to 2015, about 15,000 tonnes and 11,000 tonnes were exported to

South Africa and UK respectively. In the region, the trend of import in each country is

decreasing in general, but only Kenya, a large exporter in the region, is increasing. If the

transportation cost to Kenya is reduced due to the development of the Nacala Corridor, Kenya

might be considered as a market other than the current export destinations. Though the import

is also on a downward trend, Egypt still import about 100,000 tonnes annually, three times

larger than the import volume of South Africa. Other countries such as Libya, Angola,

Botswana, Namibia, etc. also import a certain amount of tea. Therefore, these countries can be

considered as the markets for Malawian tea in the future.

Because the reduction of transportation costs for export by utilising the Nacala Corridor is

expected, the government should support improvement of the productivity through the

“Malawi Tea 2020 program” currently being developed by an industry association (Tea

Association of Malawi) and donors in combination with improvement of varieties of tea trees,

introducing quality varieties, improving processing technology, and determining quality

standards.

(6) Tobacco

Because tobacco production in Malawi is on a downward trend, it is a bit difficult to say that

tobacco is a growth industry. But it is an industry that can use the advantage of the cost

reduction by the development of the Nacala Corridor.

Tobacco is an export product. The production in Malawi is gathered with a part of the

products of Zambia and Mozambique, and exported mainly to Europe. Tobacco production in

Malawi has declined from 200,000 tonnes at the peak in 2009 to 126,000 tonnes in 2014. But

its export is expected to be maintained steadily (USD 571 million in 2011, USD 496 million in

2015). If the transport infrastructure (combined transportation of railway and truck) of the

Nacala Corridor is further developed and then the transport cost for export is reduced, the

export volume to Asia may increase in addition to the current destinations in Europe. In the

region, Egypt is expanding imports of tobacco, and Kenya, Tanzania, Ethiopia and others

import it stably even though in a small volume. Thus, there is a possibility to expand the

exports to these countries.

(7) Sugar

In Malawi, the production of sugar cane and raw sugar has been gradually increasing in recent

years (from 2011 to 2014, the production of sugar cane and raw sugar increased from 2.5

million tonnes to 2.8 million tonnes and from 290,000 to 300,000 tonnes respectively). The


6-38

productivity of sugar cane in Malawi is high. The raw sugar is exported mainly to European

countries. Since the EU’s quota was abolished in October 2017, its main markets in the future

will be neighbouring countries including Zambia. Export of refined sugar is still very low, and

the domestic market is the main target for a while. However, there is a high demand for sugar

in Kenya and Uganda including neighbouring countries such as South Africa, Tanzania and

Zimbabwe, etc. Therefore, the production for export to the regional markets will be able to be

expanded.

(8) Edible Oil

Although soya bean production has increased in recent years (from 76,000 tonnes to 120,000

tonnes from 2011 to 2014), soya bean is exported as agricultural products and domestic oil

though crushing has not been produced. Although domestic production of sunflower oil has

been growing in recent years (from 1,700 tonnes to 3,000 tonnes in 2011 to 2014), a similar

amount of the oil is still imported. Therefore, even if the production of sunflower oil is

increased, its main market will be the domestic one for a while. However, relatively large

markets are also in the neighbouring countries such as South Africa, Zimbabwe and Botswana.

Moreover, Egypt and Namibia, which are the largest edible oil importing countries in the

region. Besides, Mozambique, DRC and Tanzania import it even though the volume is still

small and not yet stable. Since the market for edible oil will expand with the GDP growth, the

demand will grow in the future in line with the development of these neighbouring countries.

Thus, it can be said that edible oil has a large market in the region.

Currently, sunflower is mainly produced by small scale producers; therefore, the government

shall strengthen the extension service by using donor’s support, etc., and also promote

investments through the GBI or others to organise vertical development of sunflower oil

industry from production of sunflower to extraction of its essential oil.

(9) Rare Earth

A rare earth project has been implemented by a Canadian mining firm, to outcrop rare earth

elements mineralisation from the northern slope of Songwe Hill, Phalombe District, which is

located about 2 km from the Mozambique border. The mine is expected to produce

approximately 2,840 tonnes of REO by processing 500,000 tonnes per year of ore over

eighteen years7. The total mine deposit is estimated 32 million tonnes8.

The rare earth ore will be refined in an integrated processing plant to be constructed on the

project site, and the product is planned to be transported to Liwonde by truck and then to

Nacala Port by the Nacala Corridor Railway for exporting to Europe. Inputs necessary for

processing such as sulphur will be imported via the Nacala Corridor Railway.

The rare earth demand is assumed to grow with the expansion of demand for batteries for the

world-wide trend to shift to electric vehicles. Currently, China dominates the rare earth market, 7 http://www.mkango.ca/s/songwe.asp 8 Mkang Resources. Raw Materials and Technology for the CleanTech Revolution. Rare Earth Future Innovation. July 2017.


6-39

supplying 98% of the production. Despite the small production amount, the project will offer

an alternative source of supply other than China.

(10) Niobium

A Niobium Project is undergoing to extract niobium ore from Kanyika mine located in

Mzimba District, by an Australian mining development company. Niobium annual production

is expected to be 3,000 tonnes for twenty years for the initial exploitation. In addition, 200

tonnes of tantalum will be produced per year and the mine also contains uranium.

Niobium is used for steel production such as special steel which is a material for electronics,

rocket engine and parts, gas pipelines, nuclear industries, etc.9 Its market has been expanding

and a long-term demand is expected to grow at 8-10 % per annum10. The estimated world

reserves of niobium are 484 million tonnes. The annual production is 60,000 tonnes, of which

90 to 92% or 55,000 tonnes per year of supply comes from Brazil, followed by Canada with

the production of 4,000 tonnes per year. The production from the Kanyika mine will become

third place in the world.

It is planned to utilise the Nacala Rail to import production materials as well as to transport

niobium via Nacala Port.

Source: Study Team

Figure 6.10 Railway Network (Scenario C: Selected) with Areas of Potential Economic Sectors

9 Mining Review, Issue No. 31. November 2015. 10 http://www.globemm.com/Commodities/Niobium.aspx#.WcRWXtFx3b1


7-1

Chapter 7 Priority Projects Proposed for Promoting Nacala Corridor Development

7.1 A Long List of Projects

A variety of development projects are identified by the Study Team, in relation to the

development of the Nacala Corridor (development of both transport infrastructure and

economic sectors) by considering the following aspects:

Necessity: Projects which are essential for promoting development of the Nacala

Corridor Region

Urgency: Projects which should be implemented urgently to solve existing/emerging

problems in the region or to promote the development of Nacala Corridor

Contribution to regional development: Projects which are important for the

development of the Nacala Corridor Region by utilising the opportunities created by

development of the transport functions of the Nacala Corridor

Over 100 projects are identified and shown in Table 7.1. Some of these projects are selected

from projects recommended by existing master plans of the governments, and some projects

are newly proposed by the Study Team. These projects in the long list have a wider range of

project features than those projects which are to be designed and implemented to directly

promote the selected scenario.

Adequate timing of implementation of the projects is important to archive the selected

scenario and to create synergies among the projects. For this purpose, preferable

implementation periods of each of the projects are considered. The periods are set according to

the stages of the scenario described in Chapter 6 as the figure below.

- 1st Period (2017-2019): The period from now till the 2nd stage means by the completion

of the upgrading of the railway between Nkaya and Chipata through Mchinji.

- 2nd Period (2020-2022): The period between the 2nd stage to the 3rd stage means before

the construction of multi-modal dry ports in Blantyre, Lilongwe and Chipata.

- 3rd Period (2023-2029): The period between the 3rd and 4th stages, which is in simple

words, after the completion of transport infrastructure of the Nacala Corridor. The

projects in the period are targeting to boost the utilisation of the corridor.


7-2


Figure 7.1 Development Stages and Implementation Periods


7-3

Table 7.1 Long List of Projects for Promoting Nacala Corridor Development

No Project Outline Province/ District/ Region

Executing Agency

Period

Remarks on Proposal of

Projects, Owner of

Projects and Funding for

Projects

Zambia

Road Sub-Sector

Z1 Replacement of Luangwa Bridge

This project aims to replace Luangwa Bridge, which has a weight limit, with a new bridge. The Great East Road is the only trunk road (T4) that runs from Lusaka to Eastern Province and lies within the “Nacala Corridor”. Although T4 currently possesses features of a major transportation trunk road in Zambia, due to the improvement of rail functions in Malawi and hub functions in Chipata, the road functions are expected to shift accordingly with the rail into an international transportation trunk road. It is therefore important that this road can provide high-level mobility and safety.

Eastern RDA 1st Proposed by MTC

Z2

Construction of Lusaka Flyover on the Great East Road (T4)

This project is to construct Lusaka Flyover on T4. The project will lead to the reduction of congestion at capacity bottlenecks and to improve road safety. Also, this project is vital for improvement of T4 as a transportation trunk road connecting Lusaka to Eastern Province.

Lusaka RDA 1st

70% of the project cost is to be financed

by Export- Import Bank of India, and the rest is to be financed by

GOZ.

Z3

Road Widening with Foot Path & Cycle Lane on Nacala Corridor (T4 between Lusaka and Chipata)

Road widening and NMT facilities are installed in the areas of high demand. Dedicated walking and cycling infrastructure should be provided and related facilities should be installed, to guide the mobility of users and improve safety.

Lusaka/ Eastern RDA 2nd

Proposed by JICA Study

Team

Z4

Installation of Overtaking Lane at Proper Sections on Nacala Corridor (T4 between Lusaka and Chipata)

Climbing lanes are introduced on steep inclines to allow large vehicles to travel at a slower speed than the prevailing traffic without posing obstruction.

Eastern RDA 2nd Proposed by JICA Study

Team

Z5 Construction of Lusaka Outer Ring Road

This project is to construct Outer Ring Road as a completely new road to be part of development of the Nacala Corridor, connecting the newly developed areas. In addition, this road demarcates urban growth areas between Urbanization Promotion Area and Urban Growth Control Area. Although improvement of the western side bypassing the North-South Corridor has been proposed, the north eastern side connecting T2 (N-S corridor) and T4 (Nacala Corridor) is passing by an international airport, and requires improvement from the viewpoint of the flow of commodities.

Eastern RDA 3rd

Recommended by Lusaka MP supported by

JICA. However,

improvements on the western section are set

to be conducted

under a loan by the Export

Import Bank of India

Z6 New Construction of Chipata Bypass

Chipata bypass will be built parallel to the expected Chipata-Serenje Railway. The function of the bypass is to scatter freight traffic passing the residential

Eastern RDA 2nd RDA


7-4


Executing Agency

Period


Projects, Owner of


Projects

areas and the city centre. In addition, in Chipata, as there is a plan or Dry Port development near the Chipata station, connection to this dry port is also important. With the dry ports, Chipata can function as a logistics base integrating road and the rail.

Z7 Rehabilitation of Katete-Chanida Road (T6)

This project intends to rehabilitateT6, one of the access roads from Nacala Corridor to Mozambique. Although the area along T6 has a great agricultural potential, the existing road is in poor condition and should therefore be rehabilitated.

Eastern RDA 3rd Proposed by JICA Study

Team

Z8 Rehabilitation of T4-Petauke Road

The access road to T4 in Petauke will be rehabilitated. Petauke has a high potential for agriculture and mining. In addition, after completion of the Chipata-Serenje Railway, Petauke will be a transport hub. However the existing road connecting T4 and Petauke is in poor condition.

Eastern RDA 3rd Proposed by JICA Study

Team

Z9

Upgrading of Provincial Tourism Access Roads

The project will upgrade8 tourism roads in Eastern Province whose improvement has been proposed in ZNTMP.(Nsefu- Lundazi via Mwanya, Mambwe – Petauke via Malama, Masumba – Katete Via Msoro, Mambwe – Chipata Via Nyokatoli, Nyimba – Mwape, Nyimba – Mnyamadzi, Nyimba – Kazumba, Nyimba – Mbizi)

Eastern MTA 3rd Recommended by ZNTMP

Z10 Establishment of High-Tech Weigh Bridge System

Truck overloading, by axle or combinations of axles, is rampant. Installation of this system will lead to a decrease in road maintenance costs.

Whole Country RDA 2nd RDA

Z11

Toll Gate Construction on Nacala Corridor (T4 between Lusaka and Chipata)

Related laws, guidelines, etc. have already been established. The toll gate will contribute to securing gross revenue from road tolls for rural road improvement.

Eastern ZNRF 2nd Requested by ZNRF

Rail Sub-Sector

Z12

Construction of Serenje-Chipata Greenfield Railway

This railway line links the Chipata–Mchinji line through Petauke District to the Port of Nacala in Mozambique. This project has also been identified as key in Zambia’s NTMP.

Central/ Eastern MOCTI 3rd

Recommended by ZNTMP. Finance is

under negotiation

between MOCTI and

China

Z13

Greenfield Freight Railway Construction (Expansion of Copper Transportation)

Kafue – Lion’s Den Extension Extension of main line to border at Chirundu (104 km) Chingola – Jimba Phase I: Chingola - Solwezi (178 km) This project has been identified as essential in Zambia’s NTMP.

Copperbelt /North-Western

ZRL 3rd Recommended by ZNTMP

Z14 Development of Mainline Signalling

This project is to develop mainline safety systems such as crossing gates and lights. Phase I is currently underway although the time frame for improvement of the other 60 units is uncertain.

Whole Country ZRL 1st to 3rd ZRL’s on-going project

Z15

Capacity Building: Operational and Management Training for ZRL and ZRA

Because there are some skills gaps and significant areas where there is shortage of local expertise, ZRL relies heavily on expert support from outside of Zambia. It is, therefore, recommended that senior skills training programmes be instituted to enhance

Whole Country ZRL 1st Proposed by JICA Study

Team


7-5


Executing Agency

Period


Projects, Owner of


Projects

the technical capacity of both organisations. To reduce costs and to increase cooperative working, it is recommended that this programme be instituted jointly. Also, strengthening of ZRA after the planned separation of the organization is necessary.

Logistics Sector

Z16

Construction of Chipata Multi-Modal Dry Port

Dry ports can work as extensions of seaports or inland hubs to facilitate the movement of cargo between seaports and the hinterland. Chipata has the potential to become a logistical hub on the Zambian side after the rail functions have been improved on the Malawian side. Therefore, the construction of a Dry Port in Chipata is important for efficiency improvement of the transportation network on the Zambian side. This importance will be even greater also, when the Chipata – Serenje Railway is realised. However, this is not included in the Intermodal Hubs proposed by ZNTMP.

Eastern ZRA/ MOCTI 2nd

ZRL conducted a pre-FS.

EU is considering assisting the

implementation of this project.

Z17

Construction of Intermodal Hub in Lusaka (Lusaka Dry Port)

A dry port will be constructed in the Lusaka South Multi-Facility Economic Zone (LS-MFEZ). It is included in the Intermodal Hubs proposed in the ZNTMP.

Lusaka MOCTI/ Private

3rd Recommended

by ZNTMP Ongoing (PPP)

Z18 Improvement of OSBP (Mwami/ Mchinji)

The project will construct the OSBP facilities at Mwami/Mchinji Eastern RDA/MOCTI 1st

AfDB’s support is ongoing.

Construction project is under

preparation.

Z19

Capacity building of OSBP Operation at Mwami/Mchinji

The project includes components of installation of computer hardware and software etc. and various activities (supervision, technical assistance, training, financial and technical audit etc.)

Eastern ZRA/MOCTI 1st Proposed by JICA Study

Team

Z20 Improvement of OSBP (Chanida Border)

This project aims to construct an OSBP at Chanida border Eastern RDA/MOCTI 2nd


Team

Z21

Capacity Building of OSBP Operation at Chanida Border

The project includes components of installation of computer hardware and software, etc. and various activities (supervision, technical assistance, training, financial and technical audit etc.)

Eastern ZRA/MOCTI 2nd Proposed by JICA Study

Team

Z22 Trade Policy Reform and Implementation

This project is to conduct review of the Control of Goods Act and capacity building for the competition and consumer protection tribunal.

Whole Country ZRA/MOCTI 1st Requested by

MOCTI

Z23

Improvement of ICT Connectivity to Enhance Interface at OSBP

This project aims to improve ICT connectivity for enhancement of interface and to support Monitoring and Evaluation Activities on the establishment of OSBP.

Whole Country ZRA/MOCTI 2nd

Requested by MOCTI

(Partially under way with

support by the WB)

Z24

Development of OSBPs of Transport Corridors from Zambia (ICT (National Single Window), Physical Facilities,

In order to promote regional trade facilitation, it is important to establish and operate OSBPs on various road corridors related to Zambia. It is necessary to promote both physical development of OSBP facilities and capacity development of OSBP personnel. While waiting for the completion of physical facility development for OSBP, it is necessary to start training of personnel directly operating OSBPs.

Zambia ZRA/RDA/

MOCTI 1st Proposed by JICA Study

Team


7-6


Executing Agency

Period


Projects, Owner of


Projects

Capacity Development and Institutional Building)

Those OSBPs not listed in this long list include those on the following borders: Tunduma/Nakonde (Tanzania/ Zambia) of Dar es

Salaam Corridor (TradeMark East Africa are providing support).

Kasumbalesa (Zambia/ DRC) (Negotiation with WB is on-going)

Z25

Installation of Luangwa Stopover (Rest Area Development Programme)

Distance from Lusaka to Malawi border is approximately 600km. Drivers are forced to endure long-distance driving because of no stopovers. It is therefore essential that rest spaces for drivers are provided for road safety. Luangwa River crossing on the Nacala Corridor is located at 250km from Lusaka. Although location has not yet been identified, installation of rest facilities has been proposed also in the ZNTMP from the viewpoint of safety.

Eastern RDA/Private 2nd Proposed by JICA Study

Team

Z26

Study on Development of Zambia as a Transport and Logistics Hub in Southern Africa

This is to conduct a study to develop Zambia as a transport and logistics hub in Southern Africa by clarifying functions and development strategies of the international transport corridors in Zambia

Whole Country MOCTI 2nd Proposed by JICA Study

Team

Agriculture Sector

Z27

Function Strengthening on Logistics and Management of Agricultural Commodities Value Chain

This project aims to strengthen logistic infrastructures such as rural tracks, warehouses, facilities for loading, packing and processing in adequate locations to the Nacala Corridor, and to conduct. capacity building for all parties, such as agricultural producers, cooperatives and farmers’ group, and rural traders and logistics operators.

Lusaka/ Eastern

(Petauke)

MTC/MOA and private 2nd

MOAi and IFAD support SME for value

chain development

Z28

Development of Animal Feed Production and Distribution

The project is to construct and operate feed processing factories and distribute the end products to the livestock zone by utilising crops residues from farms and industrial factories as cotton oil cake, bagasse of sugar cane etc., in order to encourage domestic animal production and export. Main market of the products can be Central, Southern and Eastern Provinces.

Lusaka/ Nyimba/, Petauke/ Chipata

MFL and private 3rd


Team

Z29

Agricultural Productivity Enhancement Project through Technical Support for R&D

In the project, support will be provided to develop higher yielding seeds and production techniques appropriate for the Zambian climate: Target: Maize Soybeans and Sunflower

Whole Country MOA 1st

Proposed by JICA Study Team based

on NAP

Z30

Promotion of Large & Medium Scale Agribusiness Cluster Development

The project aims to promote large-medium scale agricultural cluster development by attracting the private sector operators for export-oriented agriculture, collaborating with other projects; Target will be: Maize, Soybeans, Sunflower and Sugar cane, Cooking oil and Sugar, Cattel, Goat and Sheep, Animal and Fish feed, etc. At the same time, it is necessary to pay attention to the protection of rights of small scale farmers and rural communities.

Whole Country ZDA/MOA/

MOCTI 3rd


Team

Z31

Programme on Export-Oriented Agriculture Promotion and

The objective is to improve crop production by small scale farmers in Eastern Province for export, to strengthen cooperation among those farmers, markets, trade and agro-processing industry

Eastern MOA 2nd Proposed by JICA Study

Team


7-7


Executing Agency

Period


Projects, Owner of


Projects

Livestock Development targeting Small Scale Farmers in Eastern Province

operators, and to promote the development of agribusiness in this region. The necessary capacity building of the relevant public agencies shall be carried out.

Z32

Study on Farm Block Development Models with Consideration for Small Scale Farmers

This aims to clarify measures to promote the Farm Block development through the study on current challenges to the Farm Block Program that is slow in implementation due to delayed infrastructure development, and impact on small scale farmers. At the same time, the development model will be improved by paying attention to small scale farmers and developing a collaborative production method. A master plan on specific Farm Block will be prepared.

Whole Country ZDA/MOA 1st Proposed by JICA Study

Team

Z33

Study on Nacala Agricultural Growth Corridor (Zambia)

A study will be conducted on agricultural growth corridor development utilising the Nacala Corridor in Zambia to export agricultural products to DRC and Zimbabwe

Central/ Lusaka/ Eastern

MOA 1st Proposed by JICA Study

Team

Z34

Development of Market Oriented Livestock Production

Animal production, such as cattle, goat and sheep will be promoted through introduction of disease control and fattening for regional markets at the present and for overseas in the futures.

Whole Country, esp. Eastern

MFL 2nd


Team aligned with Livestock Policy and

Eastern Province Dev.

Plan

Z35 Out Grower Scheme Improvement

This project is to promote collaboration between small scale farmers and large-medium scale farmer/firms and necessary institutional measures to produce development synergy both for rural and national economic growth.


(pilot site) MOA 3rd

Eastern Province Dev.

Plan

Z36

Capacity Development of Small-scale Farmers

Capacity building of small scale farmers in agriculture production and farm management will be conducted, which is required for them to become partners of large and medium scale farmers or agribusiness entities


(pilot site) MOA 3rd

National Agricultural

Policy, Livestock

policy, and Eastern

Province Dev. Plan

Investment Promotion

Z37 District Industrial Centre Development

This project aims to provide technical and financial assistance for construction and enhancement industrial yards in districts.

Eastern/ Central/ Lusaka/

Copperbelt/ Muchinga

CEEC/ MOCTI 2nd


Team

Z38 Entrepreneurship Development Project

Financing access and training opportunities (including preparation of business plans and financial statements) will be provided to companies owned by entrepreneurs in major cities.

Major cities in the country MOCTI 3rd


Team

Trade Sector

Z39 Export Strategy Formulation Study for Zambia

Country wide export strategies for promotion of export will be formulated. Zambia MOCTI 1st


Team

Z40 Development of Inter-Country

This is to develop an inter-country trade centre as ’Michi-no-Eki ’at the Chipata-Mchinji border Eastern MOCTI 3rd Proposed by

JICA Study


7-8


Executing Agency

Period


Projects, Owner of


Projects

Trade Centre (ICTC)

Team

Industry Sector

Z41

Development of Multi- Facility Economic Zone (MFEZ) in Chipata

MFEZ will be constructed in Chipata to attract domestic and foreign direct investment and to promote export-oriented and import-related industries and services.

Eastern ZDA 3rd Planned by ZDA

Z42

Promotion of Mining Development in Eastern Province

A study will be conducted to prepare a mining development plan in Eastern Province for investment promotion in the mining sector, especially in non-traditional mining, increase value-addition and support small-scale mining development.

Eastern

Ministry of Mines and Minerals

Development

1st Proposed by JICA Study

Team

Power and Energy Sector

Z43 Development of Thermal Power plant

The project is to construct a thermal power plan at Chipata using coal from Tete in Mozambique. Eastern MOE/Private 2nd

F/S is on-going and completed

by 2019

Z44 Rural Electrification Project

This aims to develope off-grid power supply systems (such as small hydropower or solar system) in rural areas.

Eastern MOE 3rd Proposed by JICA Study

Team

Human Resource Development

Z45 Establishment of a University in Eastern Province

This project aims to establish a university, which provides agriculture courses in Chipata.

Eastern/ Muchinga

Ministry of Labour 3rd


Team

Environmental and Social Management

Z46

Study on Comprehensive Environmental and Social Management in Eastern and Muchinga Provinces

Impact analysis will be undertaken on natural and social environment to come up with possible mitigation measures on Nacala Corridor development (road, rail, development of Chipata, Petauke etc.)

Eastern/ Muchinga

Zambia Environment

al Management

Agency


Team

Urban and Regional Development

Z47

Chipata/Petauke Small-scale Urban Development MP

This small scale urban MP should be developed with the participation of both national and district level officials. It should first prioritise improvement of infrastructure to ensure sustainable urban growth at new transport hub cities. Chipata industrial park should be also included.

Eastern

Ministry of Local

Government & Housing/

2nd Proposed by JICA Study

Team

Z48

Preparation of Eastern Province Reginal Development Plan

The project is to prepare a regional development plan for Eastern Province, including development of Chipata City and Petauke, agriculture and agri-business promotion, tourism, and mining development.

Eastern Eastern 1st Proposed by JICA Study

Team

Z49

M/P Study to Formulate Economic Development Strategies by Using Transport Corridors in Zambia

Economic development strategies will be formulated, focusing on not only the Nacala Corridor but also all existing and planned transport corridors in Zambia.

Zambia

Ministry of National

Planning and Development/ MOCTI/ all stakeholders


Team


7-9


Executing Agency

Period


Projects, Owner of


Projects

Malawi

Road Sub-Sector

M1

Road Widening with Foot Paths & Cycle Lanes on Nacala Corridor between Mchinji and Chiponde Consisting of M12, M1, M8 and M3

Road widening and NMT facilities will be installed in areas of high demand. Dedicated walking and cycling infrastructure should be provided as well as related instruments designed to guide the mobility of these users and improve their safety.

Central/ Southern RA 1st


Team

M2

Installation of Overtaking Lanes at Proper sections on Nacala Corridor between Mchinji and Chiponde Consisting of M12, M1, M8 and M3

Climbing lanes are introduced on steep inclines to allow large vehicles to travel at a slower speed than the prevailing traffic without posing obstruction. Especially, M3 (mountain road between Mangochi and Chiponde), and M8 across the entire length are in poor condition from narrow road widths and damaged pavements, which require urgent refurbishment.

Central/ Southern RA 1st

Proposed by ICA Study

Team

M3 Expansion of Lilongwe North Western Bypass

This connects M12, a part of the undeveloped trunk road, to M1 in the northern part of Kanengo. Development of roads connecting the northern section of Lilongwe’s Western bypass, the Kanengo area which is a base for the logistics of Lilongwe and other urban areas as well as the Kamuzu International Airport, will improve the smoothness of the road traffic on the corridor.

Central RA 2nd Recommended by MNTMP

M4 Blantyre City Road Improvement

Mthandizi-Mpingwe (Limbe By pass), linking the M2 and M3 (3.6 km). Ndirande-Nkolokoti linking Makata to Nkolokoti Road in Blantyre (3 km). Misesa-Soche Hill–Manja in south Blantyre (4 km). Blantyre-Limbe Elevated Expressway: (8 km). This elevated road would run above the Chipembere Highway in Blantyre between Limbe at the M2/M3 junction and Mbayani on the M1.

Southern RA 1st Recommended by MNTMP

M5 Construction of Blantyre Inner Bypass Road

This project aims to construct a new 10 km 2-lane road from M1 along Chileka Road, Chirimba Industrial Area, north-east of Ndirande to M3 in Limbe, in order to reduce through traffic in Blantyre City, and to consequently reduce travel times and transport costs for public transport users and private vehicles.

Southern RA 2nd Recommended by MNTMP

M6

New Road Construction between Liwonde and Cuamba (Bypass)

Liwonde-Cuamba Bypass is planned parallel to the Nacala Railway and directly connects Liwonde (Malawi) and Cuamba (Mozambique). This bypass will attract road users because it shortens the distance from Malawi to Nacala Port and is in a relatively flat area, enhancing comfortable movement.

Malawi/ Mozambique

RA/ ANE 2nd Proposed by JICA Study

Team

M7

Reinforcement of Roads & Widening Bridges on M5 between Salima and Balakas

M5 is another important route on the Nacala Corridor, However, some bridges have only one traffic lane, and several sections of the road are vulnerable when heavy rain hit the road. Reinforcement of the vulnerable sections of the road by providing culverts and roadside drainages is therefore necessary.

Central/ Northern RA 2nd


Team


7-10


Executing Agency

Period


Projects, Owner of


Projects

M8 Establishment of High-tech Weigh Bridge System

Truck overloading by axle or combinations of axles, is rampant. Installation of this system will lead to decrease in road maintenance costs.

Whole Country RA 2nd Proposed by JICA Study

Team

M9

Toll Gate Construction on Nacala Corridor between Mchinji and Chiponde consisting of M12, M1, M8 and M3

The study for related laws, guidelines, etc. is ongoing. Toll gates will contribute to securing gross revenue from road tolls to rural road improvement.

Central/ Southern MNRF 2nd


Team

Rail Sub-Sector

M10

Rehabilitation and Acquisition of Rolling Stock Assets

There is necessity for expansion and development of locomotives, wagons and containers which presently do not meet the demand.

Whole Country CEAR 1st CEAR

M11 Capacity Building: Freight Marketing

In this project, it is intended to work with ZRL to understand and agree with what can be done to improve the railway service short of increasing the axle load. Additionally, they should agree on a list of target customers to sell this new service; in particular, whether it is worth approaching any of the mining operations in Zambia. In addition, this project aims to establish a formal rail freight users group including both Malawi and international rail users will be necessary.

Whole Country CEAR 1st Recommended by MNTMP

M12

Capacity building: Operational and Management Training for CEAR and the Railways Directorate of the Government of Malawi

There are skill gaps and shortage of local expertise in significant areas of the rail operation and management. It is essential to develop local skilled resources that are capable of managing their own asset. The institutional framework in the ministry is not strong, since it is supported by only two professional staff. Thus, it affects the resource and limits the capability of fulfilling the roll of the institution, efficient data management and maintaining working relationship with CEAR.

Whole Country MOTPW/

CEAR 1st

Recommended as a Strategic

Option by MNTMP.

(Investment by Vale/Mitsui is set to include

capacity reinforcement

for CEAR).

M13

Investment in Freight Facilities (Sidings and Loading/ Discharge Equipment) at Blantyre

Insufficient capacity of the existing terminals, aging of the loading and unloading facilities and insufficient maintenance of the existing sidings are prominent. Upgrading of the existing facilities and improvement of the sidings is therefore necessary.

Southern CEAR 1st


Option by MNTMP

M14

Connecting of Nkaya-Moatize Line and Tete-Beira Line

Southern Malawi does not have direct rail connection to Beira Port, because the Sena Line connecting Limbe and Beira is not operational due to the loss of the bridge crossing Shire River. The project is to connect the Nkaya-Moatize Line with the Tete-Beira/ Macuse Line, by constructing a new section, for the purpose of connecting southern Malawi and Beira Port.

Southern MOTPW/

CEAR 2nd MOTPW

M15

Construction of New Railway Line from Kanengo/ Salima to North of Malawi

Extension of a rail line to north from Kanengo or Salima is recommended, because the potential benefits can be enjoyed by more of Malawi.

Northern MOTPW/

CEAR 3rd


Option by MNTMP

M16 Establishment of a Coordination

The project aims at establishment of a mechanism for coordination and promotion of the implementation of

Nacala Region (Three

MOTPW/ MOITT/ 1st Proposed by

JICA Study


7-11


Executing Agency

Period


Projects, Owner of


Projects

Mechanism for Operating an Integrated Railway System

an integrated railway system for Nacala Corridor Region

countries) CEAR Team

Logistics Sector

M17

Construction of Multi-Modal Dry Ports in Blantyre (Limbe and Others) and Lilongwe (Kanengo)

Insufficient capacity of the existing terminals, aging of the loading and unloading facilities and insufficient maintenance of the existing sidings are prominent in Blantyre (Limbe and Chirimba Industrial Park) and Lilongwe (Kanengo). Upgrading of the existing facilities and improvement of the sidings are therefore necessary. Also, shifting the customs clearance functions currently at Mchinji to Kanengo and developing a Dry Port at Kanengo improve the efficiency.

Central CEAR/ MOITT 1st


Team Recommended

by MNTMP

M18

Capacity Development of Government Officers for OSBP Operation

This is to provide training for government officers (customs, migration and health), related to OSBPs for smooth operation of OSBPs in Malawi.

Whole country MRA/ MOITT 1st Proposed by JICA Study

Team

M19 Installation of OSBP (Mwami/ Mchinji)

OSBP facilities at Mwami/Mchinji will be constructed Central MOTPW/ MOITT 1st

Ongoing Supported by

AfDB

M20

Capacity Development for OSBP Operation at Mwami/Mchinji

This project aims at capacity development for OSBP operation by installation of computer hardware and software etc., with various supports (supervision, technical assistance, training, financial and technical audit etc.)

Central MRA/MOITT 1st Ongoing

Supported by AfDB

M21 Installation of OSBP (Chiponde Border)

This project will construct the OSBP facilities at Chiponde Border with consideration for introduction of OSBP for railway freights.

Southern MOTPW/ MOITT 2nd


Team

M22

Capacity Development of OSBP Operation at Chiponde Border

This project aims at capacity development for OSBP operation by installation of computer hardware and software etc., with various supports (supervision, technical assistance, training, financial and technical audit etc.)

Southern MRA/MOITT 2nd


Team

M23 Trade Policy Reform and Implementation

This project is to conduct review of the Control of Goods Act and capacity building for the competition and consumer protection tribunal.

Whole Country MRA/MOITT 1st WB’s support is going on.

M24

Improvement of ICT Connectivity to Enhance Interface at OSBPs

This project aims to improve ICT connectivity for enhancement of interface and to support Monitoring and Evaluation Activities on the establishment of OSBP.

Whole Country MRA/MOITT 2nd Proposed by JICA Study

Team

Waterway Sub-Sector

M25

Upgrading, Rehabilitation & Construction of Ports for Waterways

To decrease the costs of transportation, it is necessary to develop a transportation system that utilises the waters of Lake Malawi. To that end, redevelopment of Nkhata Bay and Chipoka Port as well as development of River Port in Liwonde is necessary.

Whole Country MOTPW 1st Recommended

by MNTMP

Agriculture Sector

M26 Enhancing of Capacity of Managing

This is to enhance capacity of farmers and board members of agricultural cooperatives and other farmers groups in terms of management and to

Whole Country MOAIWD/

private trading

2nd NAP


7-12


Executing Agency

Period


Projects, Owner of


Projects

Agricultural Cooperatives

encourage small-scale farmers to do collective selling of their products by utilising existing trade platforms, such as commodity exchange. It also provides support to set up local warehouses.

companies

M27

Groundnuts Production Revitalization with Special Attention to Aflatoxin Control

The project intends to promote control system of aflatoxin in groundnuts production and value chain in order to meet very strict food testing procedures for aflatoxin by developed countries. Malawi has developed MAPAC, Malawi Programme for Aflatoxin Control, and taken steps forwards reducing aflatoxin levels in groundnuts through the promotion of improved planting, handling and marketing techniques1. However, the success of the initiative will rely on development of low-aflatoxin supply chain. Therefore, based on the review of improved methods developed by various supports, efficient integration of the stakeholders’ interests in this supply chain shall be studied.

Central MOAIWD/MOITT 1st NAP

M28 Rice Production Enhancement Project

The project is to support the enhancement of rice production in irrigation schemes which is one of Malawi’s agricultural priorities in line with Malawi’s participation in CARD Initiative (Coalition for African Rice Development) and assist to introduce modern rice mills. Most of surrounding countries of Malawi including Zambia, Zimbabwe and Mozambique import rice. If Malawi increases its rice production, there is a chance for export to regional markets. At the same time, Malawi’s irrigation schemes are to be developed in short and middle terms, according to Malawi’s National Irrigation Master Plan.

Central/ Southern

MOAIWD/ Privates 1st

14 areas have financial

agreement out of 30 schemes

(MOAIWD)

M29

Improvement of Market Access for Small-Scale Rice Farmers

The linkage between farmers’ groups of small-scale farmers or cooperatives and Commodity Exchange will be fostered in order to archive the improvement of market access and increase profits for small-scale farmers. Through the activity, a positive cycle on rice production for farmers in the irrigation schemes is promoted. This project is necessary because the areas of irrigation schemes and rice production are expected to increase in the short and middle terms in Malawi, according to Malawi’s National Irrigation Master Plan. Therefore, the linkage between small-scale farmers and markets becomes more important for both increasing or securing farmers’ benefits and promoting rice export in the near future.

Whole Country MOAIWD 2nd Proposed by JICA Study

Team

M30 Technical Transfer of Tea Industry

Technical transfer will be conducted to improve tea production capacity, to conduct technical transfer of green tea production, and to accelerate climate change adoption for the promotion of the tea industry in Malawi.

Thyolo/ Mulanje

MOAIWD/ Tea

Association of Malawi


Team

M31

Promotion of Medium-scale Agribusiness Development

Malawi’s agricultural sector is dominated by small-scale agriculture. However, due to the presence of growing regional markets for agricultural and agro-processed products and improved Nacala Corridor, development and export potentials of

Whole Country

MOITT/ MITC/

MOAIWD/ GBI

3rd Proposed by JICA Study

Team

1 IFPRI, MASSP POLICY Note 21, April 2015


7-13


Executing Agency

Period


Projects, Owner of


Projects

agricultural and agro-processing sectors are expected to increase. Therefore, it is also possible to promote medium-scale agriculture and agro-processing by attracting private investment to Malawi. This project will be implemented for export of agricultural and agro-processed products and to enhance value addition (including rice, groundnuts, pigeon peas, soya beans, sugarcane, cooking oil) in cooperation with Green Belt Initiative (GBI).

M32 Local Agribusiness Promotion Project

Local entrepreneurs and farmers organizations will be supported to access to market and to develop agribusiness with large and medium-scale farmers and investors though capacity development.

Whole Country MITT 2nd NAP

Trade Sector

M33

Capacity Building Project for Malawi Bureau of Standards (MBS)

Lack of quality control and standardization impedes the expansion of the distribution channels of products to chain stores and large scale retailers, and promotion of export. This project is to provide support to enhance the capacity of MBS officers, to establish a monitoring and evaluation system and to install laboratories and equipment that contribute to the improvement of quality control and standardization of products for export of commodities

Lilongwe MBS 1st Proposed by JICA Study

Team

Industrial Development

M34

Infrastructure Development for Sustainable and Pro-Poor Mining Development

Two large scale mining projects that will bring about significant impacts on regional development are currently under development. However, some social issues and conflicts have emerged in the local community due to the anticipation of the negative impacts of the development. This project will develop infrastructure in service towns for large scale mining projects to promote sustainable mining development that contributes to the reduction of poverty in the regions, while mitigating negative impacts of the mining development on the community and environment.

Phalombe/ Mzimba

MOTPW/ Water

Development/ Energy and

Mines


Team

Investment Promotion

M35 Special Economic Zones Development

Special economic zones (SEZs) will be developed for attracting investment to economic sectors for export with special emphasis on those targeting regional markets. Possible locations include Blantyre, Lilongwe and Liwonde.

All Regions MOITT 3rd World Bank is interested in

F/S.

M36

Capacity Building Project for Malawi Investment and Trade Centre (MITC)

This project will provides MITC with support to provide quality services for investors and to enhance capacity of MITC for promoting FDI with special emphasis on economic sectors targeting regional markets

Lilongwe MITC 1st Proposed by JICA Study

Team

Power and Energy

M37

Energy Sector Improvement Zambia-Malawi Interconnection

The project is to develop a 330kV line connecting Chipata in Zambia to Nkhoma in Malawi. Whole Country

Min. of Natural

Resources, Energy &

Mines

2nd Ministry of Energy and

Mines


7-14


Executing Agency

Period


Projects, Owner of


Projects

M38 Electrification Project

This project aims at providing support to increase the reliability and quality of electricity supply in the major load centres and to promote rural electrification

Whole Country

Min. of Natural Resources, Energy & Mines


Team

M39

Improvement of Electricity Supply for Industrial Areas in Lilongwe and Blantyre

The electricity supply to industrial areas in Malawi will be stabilised by rehabilitation and construction of substations which supply electricity to Kanengo and Limbe/Chirimba area

Lilongwe/ Blantyre ESCOM 1st


Team

Disaster Prevention

M40 Flood Control Project

Salima area is prone to flooding and a railway bridge of CEAR has experiences of being washed away by flooding. This project aims to mitigate floods in Salima District by installing flood control measures (including those for river bank protection, bridge pillar protection or protecting bridge pillars from flooded rivers) for the railway. DoDMA is responsible for district disaster risk reduction management. Measures for protecting bridges are to be done by MOTPW. River bank protection is related to MOAIWD.

Salima MOTPW/ MOAIWD

1st


Team

Human Resource Development

M41 Improvement of Vocational Training

Quality of vocational training will be improved by supporting construction of National Teachers Training College (NTTC), and training faculties of national teachers training college, national colleges and community colleges

All Regions Min. of Labour 2nd


Team

Zambia and Malawi

Tourism Sector

ZM1 Zambia-Malawi Tourism Promotion Project

The project is to promote a tourism route from Eastern Province of Zambia to Malawi jointly, connecting South Luangwa National Park and other national parks with the Lake Malawi

Eastern (Zambia)/ All

Regions (Malawi)

Ministry of Tourism and Arts, Zambia

and Department of Tourism,

Malawi


Team

Urban and Regional Development

ZM2

The Study for Nacala Corridor Economic Development Strategies (Integrated Master Plan)

A study will be conducted to prepare the Nacala Corridor Integrated Masterplan in Zambia and Malawi aiming at diversified Economic Sectors Development based on a Region-Wide Corridor Network.

Nacala Region (Zambia/ Malawi)

To be Determined


Team

Malawi and Mozambique

Road Sub-Sector

MM1

New Road Construction between Liwonde and Cuamba (Bypass)

Liwonde-Cuamba Bypass is planned parallel to the Nacala Railway and directly connects Liwonde (Malawi) and Cuamba (Mozambique). This bypass will attract road users because it shortens the distance from Malawi to Nacala Port and is in a relatively flat area, enhancing comfortable movement.

Malawi/ Mozambique

RA/ANE 2nd Proposed by JICA Study

Team


7-15


Executing Agency

Period


Projects, Owner of


Projects

Mozambique

Port Sector

MB1 Expansion and Capacity Building of Nacala Port

The operation capacity of Nacala Port will be improved through the expansion of the Port’s container terminal and improvement on the workers’ skills.

Nacala CFM/ Private 1st

Conducted by JICA once.

Further implementation is proposed by

JICA Study Team

MB2 Expansion of Depository in Nacala Port

This project is to improve user convenience around the Nacala Port through expansion of logistic facilities such as harbour warehousing. In terms of management, PPP or complete private management are expected.

Nacala APIEX/ Private 3rd


Team

MB3 New Construction of Nacala Port Access Road

Port Access Road will be constructed, directly connecting National Road 12 and Nacala Port. The road is 13.5 km in length, of which 700 m along on the coastline will be a bridge. The Port Access Road will contribute to area improvement along the road and investment promotion through enhancement of road network.

Nacala ANE 1st

Feasibility study

supported by JICA is

ongoing.

MB4 Port Sales for Promotion of Nacala Port

Trade using Nacala Port will be promoted by conducting public relations activities. Nacala

APIEX/ Private 1st, 2nd

Recommended by PEDEC-

Nacala Development

Strategies

Zambia, Malawi and Mozambique

Rail Sub- Sector

ZMM1

Establishment of Coordination in the Provision of Freight Forwarding Services for the Rail Sub-sector

This project is for coordination and promotion of the implementation of an integrated railway system for the Nacala Corridor Region. It aims to establish a Railway Regulatory body covering Zambia, Malawi and Mozambique.


countries)

A permanent committee is

to be established

1st

Recommended by

PEDEC-Nacala Development Strategies/ Support by SADC and

JICA is proposed by JICA Study

Team

Logistics Sector

ZMM2 Promotion of Utilisation of Nacala Corridor

Nacala Corridor utilisation will be promoted by disseminating information on infrastructure conditions and available services and organizing study tours.

Malawi, Zambia

To be Determined 1st


Team

Tourism Sector

ZMM3

Tourism Development and Promotion Project along Nacala Corridor

The project aims to develop Tourism Infrastructure and to promote Tourism along the Nacala Corridor (integration of Malawi Lake and National Parks in Malawi and Zambia)

Malawi, Zambia

MOITT (Malawi)/ Ministry of

Tourism and Arts

(Zambia)

2nd Proposed by JICA Study

Team

Institution/Organization

ZMM4

Establishment and Strengthening of a Coordination

A coordination mechanism involving Zambia, Malawi and Mozambique will be established and strengthened for coordination and promotion of the implementation of an integrated development for the


countries)

All stakeholders


Team


7-16


Executing Agency

Period


Projects, Owner of


Projects

Mechanism for Nacala Corridor Development involving the Three Countries

Nacala Corridor Region.

COMESA/ SADC

Trade Sector

CS1

Programme for Intra-Regional Trade Facilitation of Zambia, Malawi and Mozambique through Nacala Corridor

This programme aims to promote intra-regional trade and to dispatch JICA experts to COMESA for supporting regional economic integration

Nacala Region COMESA/

SADC 1st Proposed by JICA Study

Team

CS2

Establishment and Operation of International Railway Coordinating Committee for Nacala Corridor Railway

An international railway coordinating committee will be established for the provision of safe, efficient, effective integrated railway operation and capacity development for the coordinating committee.

Nacala Region

Special Committee

for Implementati

on to be Established

1st

Originally the necessity for this project is recommended

by PEDEC-Nacala Development Strategies/ the involvement of

SADC and JICA is

proposed by JICA Study

Team.

7.2 List of Priority Projects Recommended for Promoting Nacala Corridor Development

In order to initiate and achieve the proposed growth scenario described in Chapter 6, the basic

policy to select the priority projects is proposed below.

Table 7.2 Basic Policy on the Selection of the Priority Projects


The projects to improve infrastructure in order to effectively utilise the Nacala Railway being renovated by a private group and to efficiently demonstrate and maximise the transport functions of the Nacala Corridor in the short term.

Promotion of Economic Sectors along Nacala Corridor

The projects that can contribute to promotion of the economic sectors of which development potential is already recognised in the existing plans and/or actual performance in the past, or support the expansion of export to regional markets


As a result, the following fourteen projects are identified and recommended for

implementation by the JICA Study Team.


7-17

Table 7.3 shows a list of the priority projects recommended for promoting Nacala Corridor

Development.

Table 7.3 Priority Projects Recommended for Promoting Nacala Corridor Development

Project Sector Period


Zambia

Z1 Replacement of Luangwa Bridge Road 1st

Z24 Development of OSBP of Transport Corridors from Zambia (ICT (National Single Window), Physical Facilities, Capacity Development and Institutional Building)

Road 1st

Z6 New Construction of Chipata Bypass Road 2nd

Z16 Construction of Chipata Multi-Modal Dry Port Logistics 2nd

Malawi

M3 Expansion of Lilongwe North Western Bypass Road 2nd

M4 Blantyre City Road Improvement Road 1st

M5 Construction of Blantyre Inner Relief Road Road 2nd

M17 Construction of Multi-Modal Dry Ports in Blantyre (Limbe or Others) and Lilongwe (Kanengo) Logistics 1st

M18 Capacity Development of Government Officers for OSBP Operation Logistics 1st

M39 Improvement of Electricity Supply to Industrial Areas in Lilongwe and Blantyre Energy 1st

Promotion of Economic Sectors along Nacala Corridor

Zambia

Z31 Promotion of Export-Oriented Agriculture and Livestock Development Targeting Small Scale Farmers in Eastern Province

Agriculture 2nd

Z32 Study on Farm Block Development Models with Special Consideration for Small Scale Farmers

Agriculture 1st

Z39 Export Strategy Formulation Study for Zambia Trade 1st

Malawi

M27 Groundnuts Production Revitalization with special attention to Aflatoxin Control Agriculture 2nd

M29 Improvement of Market Access for Small-Scale Rice Farmers Agriculture 2nd


7.3 Brief Profiles of Priority Projects Recommended for Promoting Nacala Corridor Development

This section provides brief profiles of the priority projects recommended for promoting Nacala

Corridor Development.

7.3.1 Development of Transport Infrastructure of Nacala Corridor

The proposed scenario has two major development strategies. The one is to strengthen

transport infrastructure of the Nacala Corridor so that economic sectors could more actively

utilise the upgraded rail and road functions and services of the Nacala Corridor. The other is

related to development of economic sectors taking advantage of the enhanced transport

infrastructure and services of the Nacala Corridor so that economic sectors could generate

more traffic demand for the Nacala Corridor.


7-18

The priority projects explained in this section are those of the first categories mentioned above.

Those priority projects are selected because they are effective for the following aspects:

Promoting regional trade facilitation by physical development and capacity

development for OSBPs on road corridors

Expanding the service areas of the combined rail and truck transport of the Nacala

Corridor by physical development of multi-modal dry ports to combine rail transport

and truck transport

Improvement of the accessibility to multi-modal dry ports by road development

(1) Zambia

1) Z1: Replacement of Luangwa Bridge

(a) Background of the Project

The Great East Road (T4) is the only trunk road that runs from Lusaka to Eastern Province

and lies within the “Nacala Corridor”. Although T4 currently possesses the features of a major

transportation trunk road in Zambia, due to the improvement of rail functions in Malawi and

hub functions in Chipata, the road functions are expected to shift accordingly with the rail into

an international transportation trunk road.

(b) Objectives of the Project

For access to Chipata, it is important that T4 can provide high mobility and safety. However,

the Luangwa Bridge located at 250 km from Lusaka towards Chipata has been in use for

decades and is severely deteriorated. Limitation for vehicle weight is currently in place and

passage is only allowed for one vehicle at a time. Therefore, during heavy traffic, long lines of

vehicles awaiting passage are formed at both sides of this bridge, creating a bottleneck on the

T4 Road.

Therefore, replacement with a new bridge is planned in order to secure high mobility and

safety for the Nacala Corridor.

(c) Description of the Project

In addition to the current bridge, a new bridge is to be built nearby and, from the viewpoint of

safety, improvement of the road alignment in the surrounding mountain roads is to be

conducted at the same time.


7-19

Source : JICA Study Team

Figure 7.2 Location of Luangwa Bridge

2) Z24: Development of OSBP of Transport Corridors from Zambia (ICT (National Single Window), Physical Facilities, Capacity Development and Institutional Building)

(a) Background and Rationale of the Project

In Zambia, among two OSBPs on the North-South Corridor, the one at Chirundu of the

Zambia-Zimbabwe border has been established and operational and the other one at

Kazungula of the Botswana-Zambia border is under construction. The Zambian government

has a plan to establish and operate more OSBPs at the other borders including the following

borders:

Dar es Salaam Corridor: Tunduma-Nakonde (Tanzania-Zambia border)

Lobito Corridor: Kasumbalesa (DRC-Zambia border)

Beira Corridor: Chanida (Mozambique-Zambia border)

Nacala Corridor: Mwami-Mchinji (Malawi-Zambia border)

North-South Corridor: Beitbridge (South Africa-Zambia border)

Development partners have considered providing financial and technical support to some of

these OSBPs. However, some OSBPs have not yet been considered by development partners.

Because the emergence of the upgraded rail infrastructure and services of the Nacala Corridor

could raise the development potential of the economic sectors targeting regional markets, the

function of OSBPs on international road corridors crossing national borders is considered to

be important for facilitating regional trade.

The upgraded and combined rail and truck transport of the Nacala Corridor is expected to

bring a significant positive impact to Chipata by 2020 and further to Lusaka hopefully by 2022,

according to the proposed growth scenario. Thus, it is becoming increasingly important to

develop a smooth transport function and border crossing of road corridors, in order to promote

development of the economic sectors targeting regional markets.


To promote trade facilitation, especially regional trade facilitation between neighbouring

countries and Zambia


7-20

To promote establishment and operation of One Stop Border Posts (OSBPs) for the

purpose of regional trade facilitation


To promote development of physical facilities of OSBPs on various corridors related to

Zambia

To promote capacity development of personnel who manage and operate OSBPs on

various corridors related to Zambia

Before the completion of physical facility development of OSBPs, which are to be assisted by

development partners, it is necessary to start training of personnel directly operating OSBPs,

as well as those who are to manage OSBPs.

3) Z6: New Construction of Chipata Bypass


Chipata is the capital city and economic centre of Eastern Province of Zambia. Recently

Chipata officially obtained a city status. In addition, the section between Chipata and the

Luangwa Bridge of T4 was upgraded so as to largely reduce travel time between Chipata and

Lusaka.

In Chipata, the construction of a new industrial park is planned, and development of a

coal-fired thermal power plant is also planned.

In addition, an upgraded railway will be realised between Chipata and Nacala Port since the

rail section between Nkaya and Mchinji of CEAR is to be renovated by a private sector group

within two years from 2018. In response to this improved railway connection between Chipata

and Nacala Port, the development potential of economic sectors could emerge in Chipata and

Eastern Province.

Furthermore, it is necessary to develop a multi-modal dry port in Chipata, near Chipata

Railway Station, in order to extend the service areas of the combined rail and truck transport

of the Nacala Corridor beyond Chipata to Lusaka.

Because of these initiatives for urban development and economic development, Chipata would

require a bypass road not only to disperse concentrated traffic from the city centre and

residential areas, but also to provide good accessibility to a newly planned Chipata

Multi-Modal Dry Port.


To construct a Chipata bypass for scattering freight traffic passing residential areas and

the city centre of Chipata.

To provide a good access road to Trunk Road T4 and Chipata Multi-Modal Dry Port,

creating an effective logistics network.


7-21


The Project is to construct a Chipata

Bypass (8-9 km), which is planned to run

in parallel to the newly planned

Chipata-Petauke-Serenje Railway and

provide access to the Chipata

Multi-Modal Dry Port.

4) Z16: Construction of Chipata Multi-Modal Dry Port


Dry ports can work as extensions of seaports or inland hubs to facilitate the movement of

cargos between seaports and the hinterland. Chipata has development potential to become a

logistics centre in the Zambian side after the rail tracks and operation have been improved in

the Malawian side. Therefore, the construction and operation of a multi-modal dry port in

Chipata is important for the efficiency improvement of the transportation network in the

Zambian side.

More directly, the multi-modal dry port at Chipata is intended to combine rail and truck

transport of the Nacala Corridor in order to increase services areas of the Nacala rail transport.

The development of a multi-modal dry port is one of the key instruments to implement the

proposed growth scenario for the Nacala Corridor.


A multi-modal dry port will be established at Chipata Railway Station for the following three

purposes:

To efficiently do on-loading and off-loading for the connected rail transport and truck

transport

To speed up customs clearance procedures

To locate freight forwarder businesses for connecting economic sectors and transport

businesses (rail transport and truck transport)


At Chipata Railway Station, a multi-modal dry port will be established with the following

functions:

Off-loading and on-loading functions for railway station

Truck parking lots

Warehouses for private companies

Customs office

Freight forwarders’ offices

Source：JICA Study Team

Figure 7.3 Chipata Bypass


7-22

(2) Malawi

1) M3 : Expansion of Lilongwe North Western Bypass (18 km)


Lilongwe trunk road has been developed between M1 to M12 in the southern part of the

Lilongwe urban area. There are remaining sections to complete the outer ring road of

Lilongwe City as a bypass road.

The completion of the western part of the outer ring road could provide convenient access to

Kanengo Industrial Area and a future railway station or multi-modal dry port. The North

Western Bypass enables shippers from outside Lilongwe to easily bring their cargos by truck

to Kanengo’s multi-modal dry port for the purpose of utilising railway because the bypass can

provide an alternative route without going through the city centre.

This road development project is essential for making the proposed Multi-Modal Dry Port in

Kanengo efficiently operational. The multi-modal dry port is an important instrument for

economic sectors to conveniently utilise the Nacala Corridor Railway. These priority projects

are important for realising the proposed growth scenario for Nacala Corridor Development.

The cost of this project is estimated at USD 40 million in MNTMP.


To improve the smoothness of the corridor’s road traffic by development of the roads

connecting the northern part of Lilongwe’s Western Bypass, Kanengo area, a base for the

logistics of Lilongwe, and other urban areas as well as Kamuzu International Airport.


The Project of North Western Bypass of

Lilongwe refers to the construction of a part of

the undeveloped section of Lilongwe trunk

roads, connecting from the existing M12 in the

Western Bypass to M1 in the northern part of

Kanengo(The figure below shows the

North-West Bypass.) The length of this road is

approximately 18 km and will connect

Kanengo area, which is the most important

logistics base for Lilongwe, National Road

No.12 (M12), and Kamuzu International

Airport. Kanengo located in northern

Lilongwe is an industrial area with road and

railway connections. This road may be tolled

in order to provide a revenue stream to finance

maintenance and part of the capital cost.

Source：JICA Study Team

Figure 7.4 Lilongwe North-West Bypass


7-23

2) M4: Blantyre City Road Improvement (3 sub-projects = 13.6 km)


Blantyre is Malawi’s centre of finance and commerce, and thes second largest city. Additional

highway capacity in the city to remove through traffic from the main centres of activities is

required. MNTMP recommends the construction and improvement of the road sections

included in this project.

These sub-projects of road development are intended to reduce traffic congestion, leading to

provision of better accessibility to multi-modal dry ports to be located within Blantyre

(possible locations: Limbe and/or Chirimba Industrial Park). The multi-modal dry port is an

essential instrument to achieve the implementation of growth scenario. The establishment of

multi-modal dry ports makes economic sectors feel convenient in utilising the railway of the

Nacala Corridor for the purpose of getting access to regional markets.

The costs of the projects were estimated in the MNTMP as follows;

Mthandizi-Mpingwe (Limbe Bypass, 3.6 km): USD 8 million

Ndirande-Nkolokoti (3 km): USD 7 million

Misesa-Soche Hill-Manja (4 km) : USD 9 million


To diffuse traffic congestion around Limbe Station, a logistics centre for Blantyre City, as

well as the surrounding roads, thus making logistics transportation faster and more

punctual.

By implementing the three sub-projects for road improvement, this project can improve

the accessibility to future locations of multi-modal dry ports (Limbe and Chirimba

Industrial Area), leading to a more efficient logistics network.


The Project will be conducted in the

following road sections to ease traffic

congestion around Limbe area and the

trunk roads, as well as provide bypass

functions for the crowded roads:

Mthandizi-Mpingwe (Limbe Bypass),

linking the M2 and M3 (3.6 km).

Ndirande-Nkolokoti linking Makata

to Nkolokoti Road in Blantyre (3

km).

Misesa-Soche Hill-Manja in south

Blantyre (4 km).


Figure 7.5 Location of Blantyre City Road Improvement Project


7-24

3) M5: Construction of Blantyre Inner Relief Road (14 km)

(a) Background of the Project

Blantyre is the centre of finance and commerce in Malawi, and its second largest city of about

1 million in 2015. MNTMP recommends implementation of this road project for reducing

traffic congestion in Blantyre. The cost of this project is estimated at USD 100 million in

MNTMP.


To reduce through traffic in Blantyre City, and to consequently reduce travel times and

transport costs for public transport users and private vehicles

To provide better accessibility to Chirimba Industrial Area and a multi-modal dry port to

be developed in Chirimba area from Limbe area


The Project is to construct a new 10km two-lane

road from M1 along Chileka Road, Chirimba

Industrial Area, north-east of Ndirande to M3 in

Limbe.

4) M17: Construction of Multi-Modal Dry Ports in Blantyre (Limbe or Others) and Lilongwe (Kanengo)


As part of the Nacala Corridor, the rail sections between Nacala and Nkaya and between

Nkaya and Limbe have been improved. In addition, upgrading from Nkaya to Mchinji through

Lilongwe is also committed by a private group.

The existing railway stations have insufficient capacity for loading and unloading of cargos. In

Blantyre, there are some private facilities of railway cargo handling for private companies. In

Lilongwe, Kanengo Industrial Area has extended rail lines connecting factories. However,

there are no public facilities of railway cargo handling in Blantyre and Lilongwe.

In order to attract more cargos to the railway of the Nacala Corridor, it is necessary to

integrate truck transport and rail transport. By doing so, it is possible to extend service areas of

the railway of the Nacala Corridor. For achieving these purposes, it is necessary to establish

public multi-modal dry ports in the areas where economic activities are concentrated, like


Figure 7.6 Blantyre Inner Relief Road


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Blantyre, the economic centre of Southern Region and Lilongwe, the national capital and

economic centre of Central Region. Also in response to increasing traffic demand for the

Nacala Corridor Railway, it is necessary for Blantyre and Lilongwe to establish multi-modal

dry ports for combining rail transport and truck transport.

Establishment and operation of multi-modal dry ports are one of key elements for

implementing the proposed growth scenario for promoting Nacala Corridor Development. It

enables more economic sectors to conveniently utilise rail transport services in Malawi in

relatively lower transport costs than road transport. As a result, Malawi’s economic sectors

would generate more traffic demand for the combined rail and truck transport so as to sustain

the operation of the long-distance rail transport of the Nacala Corridor.


Multi-modal dry ports will be established and operated for the following three purposes:

To efficiently do on-loading and off-loading for connecting rail transport and truck

transport

To speed up customs clearance procedures

To locate freight forwarder businesses for connecting economic sectors and transport

businesses (rail transport and truck transport)


In Blantyre and Lilongwe, the Project is to establish multi-modal dry ports with the following

functions:

Off-loading and on-loading functions for railway stations

Truck parking lots

Warehouses for private companies

Customs office

Freight forwarders’ offices

5) M18: Capacity Development of Government Officers for OSBP Operation


At present, there are no OSBPs operating in Malawi, while Zambia has already experienced

development and operation of OSBPs with Zimbabwe and Botswana. The establishment of

OSBPs is planned at several national borders in Malawi in cooperation with development

partners, such as WB and AfDB. These existing projects for establishment of OSBPs include

physical development and preparation of regulatory and institutional frameworks in which

OSBPs are operational.

To operate the OSBPs, coordination among authorities in two countries is required. It is also

necessary to train custom officers for the smooth operation of OSBPs.

The establishment and operation of OSBPs on road corridors is required for trade facilitation,

especially regional trade facilitation in the proposed growth scenario for promoting Nacala


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Corridor Development. Although rail transport of the Nacala Corridor is very effective in

promoting the development of the economic sectors targeting regional markets, truck transport

on road corridors is also very important to get access to regional markets less than 500 km

away.


To conduct capacity development for government officers (customs, immigration and

quarantine) related to OSBPs for smooth establishment and operation of OSBPs in

Malawi


Capacity development will be conducted for related institutions (customs, immigration and

health) to install the OSBPs as follows:

To enhance capacity of customs officers including the basic understanding of objectives

of developing and operation of OSBPs, by emphasising the importance of the operation

of a customs union

To enhance capacity of immigration officers and health officers for the efficiency of the

border crossing of goods and people

The Project is to train a wide range of government officers related to OSBPs, not only from

operating officers but also managers and directors. The Project is to also emphasise the

changes of mind set of government officers related to OSBPs by visiting operational OSBPs in

Zambia.

6) M42: Improvement of Electricity Supply for Industrial Areas in Lilongwe and Blantyre


The upgraded railway and roads of the Nacala Corridor will create a better business

environment not only to agricultural sector but also to agro-processing industries, due to

reduced long-distance transport costs and time, as well as to reduced prices of fertiliser and

fuel. According to the proposed growth scenario for promoting Nacala Corridor Development,

this enhanced business environment would create development potential for the economic

sectors targeting regional markets.

In order to take advantage of this enhanced business environment, it is necessary to improve

other economic infrastructures rather than transport infrastructures. One of the priority

economic infrastructures is electricity supply in urban areas, especially for industrial areas.

This effort at economic sector development would, in turn, generate traffic demand to sustain

the upgraded transport infrastructure of Nacala Corridor.


To stabilise electricity supply to industrial areas in Malawi by rehabilitation and

construction of substations


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In order to improve the electricity supply in Lilongwe and Blantyre, construction of new

substations and rehabilitation of existing substations in the industrial areas of Lilongwe and

Blantyre are to be implemented.

To conduct rehabilitation and upgrading the existing substations which supply electricity

to Kanengo in Lilongwe

To construct new substations, and to rehabilitate and upgrade the existing substations

which supply electricity to Limbe/Chirimba areas in Blantyre

7.3.2 Promotion of Economic Sectors Along Nacala Corridor

(1) Zambia

1) Z31 : Promotion of Export Oriented Agriculture and Livestock Development Targeting Small Scale Farmers in Eastern Province


By improvement of the Nacala Corridor (combined railway and road), the price of fertiliser is

expected to be lower than now. There is also a possibility to reduce transportation costs to

Malawi, Mozambique, and other countries in the regional markets such as Kenya and Ethiopia

through Nacala Port.

Eastern Province holds the largest number of small-scale farmers in the country. This province

is an agricultural production area. But its growth is stagnant due to the decrease of the tobacco

industry, etc. Therefore, development of the Nacala Corridor is an opportunity to redevelop

agriculture in this region.


To improve the crop production for export by small scale farmers who are the majority in

Eastern Province, to strengthen cooperation among those agricultural producers, markets,

traders and processing industry operators, and to promote agribusiness development

targeting small scale farmers in this region. The necessary capacity building of the

relevant public agencies shall be carried out.


In order to expand the production and marketing of maize and soya bean by small farmers,

the following three measures are examined.

‐ Introduce the Zambia Commodity Exchange (ZAMACE) to small scale farmers’

cooperatives in order to strengthen the organisations through co-marketing with

them.

‐ Collaborate with existing cotton and tobacco companies, in order to establish

assembling systems of maize and soya bean produced by the out-growers. The

products will be purchased by the companies, other market platforms such as

ZAMACE and milling/processing plants.


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‐ Cooperate with the support activities for small scale farmer by COMACO and CEEC

for example. It aims to promote improvement of production by their activities and to

make a co-shipment system of agricultural products through this network. It also

promotes collaboration with market platforms such as ZAMACE or processing

companies.

To promote collaboration between agricultural producers/cooperatives and oil companies

located in Eastern Province or Lusaka, poultry producers, and warehouse traders through

interventions of the public institutions.

To promote the raising of poultry or small ruminants as self-savings of farmers who find

it difficult to access finances, and to formulate their market in Eastern Province through

the introduction of qualified varieties and guidance of a breeding regime.

2) Z32: Study on Farm Block Development Models with Special Consideration for Small Scale Farmers

(a) Background and Rationale of Project

The GOZ has a policy and programme for setting up Farm Blocks all over the country to

archive economic diversification and growth, national food security and poverty reduction

through promoting commercial agriculture production by the private sector. However, its

implementation has not progressed as planned at this moment, as a result of delayed

infrastructure development by the government. In particular, Farm Blocks in remote areas

have not been developed because they are less attractive for private operators to invest and

have no incentive to proceed infrastructure development.

The development of Farm Blocks should bring benefits not only to the core investors and

migrants from outside who will work in the Farm Blocks, but also the small scale farmers who

live in and around Farm Blocks. Moreover, it must prevent the occurrence of any negative

impacts on the local communities and inhabitants by the investment and operation of the

business. Necessary actions to maintain such principals for the investment should be included

in the programme of Farm Block development.

The existing Farm Block plans have accommodated operators and large-scale farmers whose

large-scale farming operations are expected to have a good impact on local economies and

agriculture. However, in many cases, such large scale farmers have weak linkage with the

surrounding small-scale farmers in commodity trading and procurement of chemical inputs, as

well as in out-grower relationships. In addition, the out-grower model implemented by various

kinds of agribusiness company with small scale farmers is currently still under development.

Therefore, an appropriate working model for collaboration between operators and small scale

farmers in the out-grower scheme or other relationships is required for sound development of

Farm Blocks.

The proposed growth scenario for promoting Nacala Corridor Development emphasised the

possibility and importance of exporting agricultural products to regional markets by taking

advantage of the upgraded transport infrastructure of the Nacala Corridor and also by

revitalising the railway utilisation of other corridors. In this sense, in Zambia, it needs to


7-29

expand the production for export targeting regional markets. The expansion of the production

and export through the promotion of large-scale agriculture would depend on the progress of

Farm Blocks. Therefore, it is important to improve the model of Farm Block development

which pays attention to the small scale farmers in the region, and processes by involving them

in the production activities.


To improve the Farm Block development model by conducting a study covering various

issues faced by the Farm Block Programme that is slow in implementation because of

delayed infrastructure development, and by attracting private investment for promoting

export to regional markets

To improve the Farm Block development model by clarifying necessary considerations

for small scale farmers and collaboration with them in production activities.

To prepare a Master Plan on a specific Farm Block, including the division of roles among

the government, operators and other stakeholders related to the Farm Block


To achieve the first objective mentioned above, the project will conduct a study on the

improvement of Farm Block development covering the following points.

Clarification of role sharing between the government and private sector in infrastructure

development, and review of the feasibility of the project

Examination of the relationship between the private sectors’ burden and incentive to

promote the investment

Examination of implementation principles and guidelines including required

environmental and social considerations and explanation to local small scale farmers for

example, which are necessary during the implementation of the programme

Consideration on a potential managing structure to implement the principles and

guidelines above

Study on a cooperation method between large scale farms and small scale farmers, which

can be incorporated into Farm Block development

Consideration of market access of the crops produced by large-scale farms located in the

Farm Block and by surrounding small-scale farmers (survey on convenience of export

procedures),

Proposition of a new model (improved model) of Farm Block development from a

comprehensive point of view

Examination of methods for revitalising existing Farm Blocks

To achieve the second objective, based on the improved model of Farm Block development, a

master plan for Farm Block development in a particular area will be formulated for a pilot

project. However, if a core operator is not yet decided on the specific Farm Block, it is

difficult to decide cultivated crops and the Master Plan would become at the outline design

level.


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3) Z39: Export Strategy Formulation Study for Zambia


The 7NDP emphasised the importance of export-oriented industries, such as export-oriented

agriculture and mining. However, there is no clear strategy or direction to promote export.

There are conflicting policies and practices that work as barriers to export promotion such as

restrictive policies on the export of maize, wheat, sugar, cement, etc.

Zambia is a member of SADC, COMESA, and COMESA-EAC-SADC Tripartite Agreement

which aim to promote regional trade for regional economic integration. The majority of

non-traditional exports from Zambia, such as non-copper mining products, and maize and

other agricultural products, are destined to the member states of SADC and COMESA.

Promoting trade with the member states of SADC and COMESA will contribute to

diversification of the economy by expanding non-traditional export. Thus, this project aims to

formulate a country-wide export strategy for export promotion paying attention to both of

regional markets and outside regional markets (overseas markets).

The proposed growth scenario for Zambia identified the following potential products and

economic sectors which could target regional market:

Maize

Soya bean

Wheat

Cotton

Edible oil

Sugar

Bovine Meat

Small Ruminants (Goat/ Sheep)

Poultry

Soaps and synthetic preparations

The upgrading of combined rail and truck transport of the Nacala Corridor can encourage

Zambia’s economic sectors to make an important shift to the expansion of production and

export targeting regional markets (both inland neighbouring countries and coastal countries).

The upgraded transport functions of the Nacala Corridor could reduce the prices of fertiliser

and fuel in Zambia, so that Zambia’s economic sectors could receive benefits from the

development of the Nacala Corridor for expanding the production and export.


The objective of the Project is to formulate an export strategy for Zambia for the following

purposes:

To identify export-oriented commodities and products,

To develop country-wide export strategies,

To remove various export barriers, and

To establish consistent and integrated institutional frameworks for promotion of export.


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The Project is to conduct a study covering the following four points:

To identify and develop export-oriented products and commodities

‐ To identify potential export-oriented products and commodities in agricultural,

agri-business, mining, and manufacturing sectors with targeted markets of each of

the commodities and products, by examining the competitiveness of those goods and

advantages in proximity and transport cost, and other factors. The export-oriented

products and commodities include both currently available and unavailable goods in

Zambia, but with a potential to be produced in the country. The targeted markets of

the goods could be different in the short-term and long-term.

‐ To review restrictive tariff and non-tariff barriers working against exports such as

export bans and licensing requirements for export, measures to protect domestic

markets that result in the distortion of prices, border management, customs procedure,

etc., in Zambia and export targeted countries. Especially, several restrictive measures

taken on export of agriculture and agri-processing products from the perspective of

national food security are reviewed and an alternative mechanism will be examined.

To develop country-wide export strategies for promotion of export

‐ To develop export strategies for export promotion of the identified products in the

short-term and long-term.

To develop an action plan to be taken to implement the export strategies, including

projects and programmes

‐ To develop an action plan consisting of projects and programmes to be implemented.

The projects and programmes may cover standardisation and quality control,

improvement of business and investment environment, border management and

export procedures, infrastructure development, capacity building, law and legal

framework, etc.

To propose an integrated institutional framework for export promotion

‐ To propose a streamlined, integrated institutional framework for export promotion by

modifying conflicting and restrictive rules and regulations for the implementation of

the export strategies and action plan. This institutional framework should also work

for regional economic integration.

(2) Malawi

1) M27: Groundnut Production Revitalisation with Special Attention to Aflatoxin Control


In 2012, the GOM conducted a study to understand the sanitary and phytosanitary (SPS)

issues which become causes of limiting export opportunities for the country, with support of

USAID. Improvement of aflatoxin mitigation, management and control for groundnuts was


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identified as one of the top four issues that the country needed to address for the export

growth2.

Malawi used to be one of the largest exporters of groundnuts in SADC and COMESA.

However, due to the aflatoxin contamination, Malawi is not allowed to export to strictly

regulated countries regarding aflatoxin, such as the EU and South Africa. At present,

groundnuts produced in Malawi are exported to countries with lax regulation on aflatoxin. Due

to the aflatoxin problems, low purchasing prices of groundnuts are prevalent, resulting in the

decrease of groundnut production.

Moreover, in Malawi, it is said that the 60% of groundnuts sold in shops and supermarkets

were found to have aflatoxin levels exceeding those considered safe for human consumption3.

In the future, along with growing consciousness of food quality and people’s health, it may be

highly probable that the strict regulation would be applied to both export and domestic

markets.

Although Malawi does not have an exact policy for aflatoxin control, in 2013, the MAPAC

was proposed for further consultations with relevant actors/stakeholders. The MAPAC

suggested the road map as follows.

i) Immediate Steps

Component 1 – Mainstreaming (Integration) good practices and technologies into

the key value chain

1.1 Assessment and Research

1.2 Strengthening supply-chain coordination for mainstreaming practices/

technologies

Component 2 – Testing, accreditation and policies

Component 3 – Public awareness, advocacy and consumer education

Based on the MAPAC, the government and development partners in Malawi are actively

engaging with groundnut farmers to reduce aflatoxin throughout the value chain. Interventions

has been carried out, including farmers’ training on soil management, planting, applying of

biological control4, post-harvest processing and consumer awareness campaigns to increase

the demand for low-aflatoxin groundnuts5.

At this moment, since transport infrastructure of the Nacala Corridor has been upgraded and

export opportunities are increasing, there would be a larger chance for the export expansion of

the crops with advantages in their production in Malawi. Groundnuts have a large potential to

be produced and exported if aflatoxin is properly controlled. Therefore, in order to establish

2 Malawi Programme for Aflatoxin Control (MAPAC), September 2013 3 IFPRI MASSP Policy Note 21, April 2015 4 https://www.times.mw/saving-malawis-maize-groundnuts-from-aflatoxins/ 5 IFPRI MASSP Policy Note 21, April 2015


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the supply-chain of groundnuts for export, a strategy should be prepared based on the facts

confirmed and technologies developed in the previous activities.


The strengthening of a supply chain for the production and export of groundnuts with aflatoxin

control is essential. The Project aims to propose a strategy to build the supply chain from

production, storage, distribution of groundnuts, until export. In order to establish the supply

chain and recover the production of groundnuts by small scale farmers, interests of all

stakeholders in the chain should be considered and also aligned.


The Project is to start with the formulation of a proper implementation structure as follows:

Conducting stakeholder analysis regards to the aflatoxin control and export promotion

with related ministries, research institutes, development partners, NGOs, business entities

and other stakeholders in accordance with its cross-cutting characteristics.

‐ Examine supply chain models for aflatoxin control for export of groundnuts

‐ Review improved practices for aflatoxin control in every stage of the supply chain,

such as production, storage in the field, distribution, storage in warehouse, testing

and shipping.

‐ Compare the practices from viewpoints of quality, confidence, cost-effective, risk

etc.

‐ Prepare a draft model to establish the supply chain with aflatoxin control and to be

tested in the next stage

Conducting trial shipping by applying the recommended practices

‐ Production of groundnuts

Organise farmers’ groups or cooperatives to participate in the trial for production

and collective shipping of groundnuts.

Disseminate the improved cultivation methods of groundnuts for aflatoxin

control.

Discuss and negotiate with traders how to handle the low-aflatoxin products

including negotiation about price premier.

‐ Distribution of groundnuts

Conduct the trial for the improved methods of collection and storage of

groundnuts with considering aflatoxin control and applying a traceable

mechanism for export

Discuss about the improved methods with the stakeholders in the trade and

distribution sector for groundnuts, including verification of the export promotion

incentives to expand the export to the countries with the strict regulations on

groundnut import.

‐ Enhancement of testing/accreditation for groundnuts

Compare the current testing and improved methods


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Diffuse the simple method developed in the Project

Preparing a guideline for export of groundnuts with consideration on aflatoxin control

Conducting awareness campaigns

Implementation of campaigns for consumers, producers, trader and distributors

2) M30: Improvement of Market Access for Small-Scale Rice Farmers


As described in 6.8, rice has a high potential for Malawi as an export crop due to high

demands in the surrounding counties. Moreover, according to the National Irrigation Master

Plan in Malawi, new irrigation schemes are planned to develop about 40,000 - 70,000 ha, and

financial commitments on the irrigation schemes are progressing well. As a result, the rice

production in Malawi shall be increased.

At present, a license is required for rice export, which means the restriction on rice export by

the government. However, if the domestic rice production will increase, rice export can be

promoted, especially to regional markets by taking advantage of the upgraded transport

infrastructure of the Nacala Corridor.

On the other hand, a rice value chain is not yet established in Malawi. Currently, rice is

produced by small scale farmers, most of whom do not have access to potential viable markets.

Therefore, they rely on seasonal vendors. The farmers neither have the price bargaining power

nor storage capacity, and as a result, they have no choice but to sell it at a cheap price. Also,

such small-scale sales result in high cost of distribution, which in turn leads to decline of price

competitiveness of Malawi’s rice.

Therefore, it is extremely important as an activity towards export of rice in Malawi, to

establish a rice value chain and an efficient rice distribution system together with increase in

rice production in Malawi. In addition, it is also necessary to establish a production system of

brand rice with high market demand. By distributing more profits to the farmers through such

activities, incentives for improving productivity of small scale farmers should be created

together with rice export promotion.


Provide information to rice-producing farmers to improve market access in nationwide

irrigation schemes for rice production. Through strengthening linkages between farmers

and distribution systems, establishing a sustainable rice value chain will be encouraged.

Disseminate information and opportunities as fairly as possible to the groups participating

in all the irrigation schemes operating in Malawi and support the growth of the potential

organisations by using the private sector’s vitality.


The Project is to cover the following tasks:


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To improve access to markets for small-scale rice farmers (realise co-shipment)

To introduce the use of Commodity Exchange such as ACE or AHCX (also

introducing transportation services, production assistance and storage scheme

provided by AHCX in cooperation with NASFAM) as a possible measure for

co-shipment among cooperatives or small groups of farmers in existing or new

irrigation schemes for rice production.

As a pilot activity, under cooperation with private enterprises (principally a trading

or processing company), to conduct several training sessions for producers’

organizations, such as corporate training (basic capacity development such as

accounting, management, etc., especially for young people), lending and contract

system. This outcome is compiled in a manual.

To do branding for promotion of rice exports from Malawi

To strengthen the production system of brand seeds.

To disseminate the method on cultivation and storage at the field level for

establishing the brand.

To support creation of a value chain of the brand varieties through consultation with

vendors/distributors.

To improve the production of rice under the irrigation scheme as pilot activity

To introduce the improved practices for rice production in the scheme.

To rehabilitate irrigation scheme in order to increase the functionality of the scheme

for effective water management (or may develop a new scheme).

To prepare an extension kit for rice production and distribute it for irrigation scheme

managers and extension workers.


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Appendix for Chapter 7: Points to be Considered for Farming Plan

(1) Case 1- Export-Oriented Agriculture for Small Scale Farmers in Eastern Province,

Zambia

1) Location of Markets and Production Capacity

Maize, soya beans and poultry farming are recommended in this project due to the possibility of

expansion of regional markets. Thus, it is indispensable to estimate the capacity of production

thoroughly and decide the quantity and season to be shipped for each product.

2) Identification of Production/Processing Sites

Those recommended products can be grown in Eastern Province due to ecological conditions,

but it is necessary to check all natural conditions such as temperature, land form, water capacity

etc., specifically, and to choose suitable land and location for cultivation

3) Technical Aspects

According to the requirements of targeted markets, varieties of inputs, appropriate time and

techniques for production should be well examined and applied. Technical assistance regardless

from public or private organisations must be checked and utilised to improve productivity,

especially for small scale farmers.

4) Agricultural Support System on Agriculture Production and Agribusiness

It is possible to involve or collaborate with governmental support such as FISP, FARM BLOCK,

etc. and other extension services by a farmers’ union, NGOs or other projects.

5) Social- Environmental Issues

It is indispensable to consider environmental friendly development both of agriculture

production and agribusiness since Eastern Province has national parks, forest reserves and game

management areas where wild species are living. The conservation agriculture should be

practised near such reserves.

6) Protection of Rights of Small Scale Farmers and Rural Communities

In order to prevent the programme from adversely affecting small scale farmers, it is necessary

to develop and appropriately enforce a measure to protect the rights of small scale farmers and

rural communities, and to raise awareness of the farmers and enterprises on those rights.

7) Other Risks

Other risks such as climate change, bankruptcy of traders, processing companies and financial

institutions, vacancy of public extension officers which small scale farmers rely on should also

be considered.


7-37

(2) Case 2- Rice Production in Irrigated Land in Malawi

1) Location of Markets and Production Capacity

It is indispensable to estimate the market capacity for rice thoroughly and decide the quantity of

the production and season to ship rice and other products which can be combined with rice. The

production season should be adjusted to marketability if water control can be done.

2) Identification of Production/Processing Sites

Rice is probably grown in the irrigation schemes due to the ecological condition, but it is

necessary to check all natural conditions such as temperature, land form, water capacity etc.

specifically, and to choose suitable land and location for production for selected seed varieties,

cropping season and techniques and technology to be applied (see below)

3) Technical Aspects

According to the requirements of targeted markets, varieties of inputs, appropriate time and

techniques for production should be well examined and applied. Technical assistance regardless

of public or private organisations must be checked and utilised to improve productivity

especially for small scale farmers.

4) Agricultural Supporting Systems on Agriculture Production and Agribusiness

It is possible to involve or to collaborate with governmental support such as FISP, extension

offices etc. and other extension services by FUN, NASFAM, NGOs or other projects.

5) Social-Environmental Issues

Social and environmental issues should be considered when irrigation schemes are developed.

After starting rice production in the developed schemes, these issues need to be kept under

consideration because new issues can emerge such as conflict between beneficiaries and

non-beneficiaries, degradation soil and effect to environment nearby etc.

6) Other Risks

Other risks such as climate change, bankruptcy of traders, processing companies, financial

institutions, vacancy of public extension officers which small scale farmers rely on should also

be considered.

ANNEX : Records of the Seminars

A-1

1． Summary of the Seminars

（1） Seminar in Johannesburg

Date and time : On 27 November 2017, PM 1 :00 to PM3:00

Place : Meeting room in JETRO Johannesburg

Number of Participants : 37 in total (mainly from Japanese Entities in Johannesburg）

Agenda:

① Opening remarks by JICA South Africa Office

② Presentation on Development Potential, Scenarios, and Necessary Actions for Development of

Nacala Corridor and Region

③ Questions and Answers

④ Wrap up

（2） Seminar in Lusaka

Date and time : 1st of December 2017, AM 9:00 to PM 4:00

Place : Southern Sun Ridgeway Hotel（Lusaka）

Number of Participants : 63 in total（mainly from Governmental Officials of Zambia and Malawi,

development partners）

Agenda ;

① Opening remarks by MOTC of Zambia

② Presentation on Development Potential, Scenarios, and Necessary Actions for Development of

Nacala Corridor and Region

③ Presentation of the APIEX of Mozambique

④ Questions and Answers

⑤ Group Discussion

i. Is the proposed growth scenario appropriate?

The advantage of the Nacala Corridor is the upgraded railway and its improved operation.

In the results, the economic sectors could benefit from the reduced costs of the transport,

and the reduced price of fertilizers and fuels.

ii. How can economic sectors utilize advantages or good impacts of Nacala Transport Corridor?

iii. Are the proposed priority projects for economic sectors and the same related to transport

enough?

iv. Are there any good ways to collaborate among three countries for the Nacala Corridor

Development?

⑥ Closing Remarks by MOTC of Zambia

⑦ Closing Remarks by Representative of MOTPW of Malawi

A-2

2． Record of the Johannesburg Seminar

2.1 Participants of the Johannesburg Seminar

No. Company Name (English) Position Participant Name

1 Citibank N.A. South Africa Branch Japan Desk Head for Sub-Saharan Africa (SSA) ISHII, Hideyo

2 The Bank of Tokyo-Mitsubishi UFJ. Ltd. Managing Director CHIKAOKA, Yuichi 3 DBSA TICAD Advisor TOKUORI, Tomomi 4 DBSA Business Analysist WILLEMSE, Tobie 5 DBSA Water Engineer Manuel 6 DBSA Manager PAREKH, D 7 DBSA Program Manager TUNHUMA, Farai 8 FUJIFILM South Africa (Pty) Ltd. Managing Director HATA, Takeo 9 Hazama Ando Corporation Africa office Admin.&Finance Mgr GOPAUL, Julian 10 Hazama Ando Corporation Africa Office KOMORI, Yoshio 11 Marubeni Corporation UNZAI, Shin

12 Mitsubishi Corporation

Executive Assistant to Deputy Regional CEO, Europe & Africa (Africa) General Manager- Regional Strategy & Business Development Johannesburg Branch

YOSHIDA, Tetsuhiro

13 Mitsubishi Electric Europe B.V. South Africa Branch (African Representative Office) Deputy General Manager AOKI, Daisuke

14 Mitsubishi Electric Europe B.V. South Africa Branch (African Representative Office) NISHIYAMA, Hidetoshi

15 Mitsui & Co. Europe Plc, Johannesburg Branch MINAMI, Katsunori 16 Mitsui & Co. Europe Plc, Johannesburg Branch NARISAWA, Yuri 17 Mizuho Bank Chief Representative OIKAWA, Ryohei 18 Mizuho Bank Vergus 19 NEC Africa Pty Ltd KOIDE, Yosuke

20 NEPAD Infrastructure Advisor, Regional Integration & Trade Division

TACHIBANA, Eisuke

21 NEPAD Business Foundation CEO CHEN, Lynette 22 Nippon Yusen Kabushiki Kaisha YAMAMOTO, Yuji 23 SMEC Business Development Manager BHAGA, Dinesh 24 SMEC Regional Manager, Gauteng South MCKUNE, Andrew

25 SMEC General Manager Urban and Social Development, Africa Division DUKE, Dave

26 Sompo Japan Nipponkoa Insurance Inc. Johannesburg Representative Office Europe & South America Regional Headquarters

WASHIBE, Hidenori

27 Sumitomo Corporation Africa KAWABATA, Tatetoshi

28 Sumitomo Corporation Africa Risk Executive, Risk Management, Legal, Corporate Planning & Business Development Division

SCHLOSSER, Anne-Marie

29 Tokio Marine & Nichido Fire Insurance Co Ltd, Johannesburg office NOMURA, Yujin

30 Toshiba Africa SHIMADA, Iwasuke

31 JETRO (Japan External Trade Organization) Johannesburg Director TAKAHASHI, Fumitoi

32 JETRO (Japan External Trade Organization) Johannesburg Executive Director NEMOTO

33 JICA South Africa Office Senior Representative OHIMA, Kensuke 34 Survey Team Team Leader SASAKI Hidekyuki 35 Survey Team member MUZUNO Satoshi 36 Survey Team member KOBAYASHI Hisako 37 Survey Team member HIROSHIGE Hideki

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2.2 Records of the Questions and Answers in the Johannesburg Seminar

Questions Answers

（1）Assumptions of the Utilization of Nacala Corridor

① Is it expected to use the Nacala Corridor for transportation

of the copper, which is major export commodity of Zambia?

The Nacala Corridor will be used for exporting the copper in

future. However, unlike high-grade coal in Tete Province, the

copper in Zambia does not have enough economic power to

build a rail line by itself due to its limited production volume.

② Is the estimated transport cost for each corridor for inbound

cargo or outbound?

It is average transport cost for outbound. The transport costs of

the corridors shown are average cost because the cost is varies

in the seasons. It was estimated with considering the data in the

National Transport Master Plans in Zambia and Malawi.

③ Are they matched that the future cargo demand forecasts

used for the Nacala Port development and the future cargo

demand assumed in this survey?

They are not compared at this moment. It might be need to

review in the future.

(2) Priority Projects

① Did you decide order of priority among priority projects? The order of priority on the priority projects was not examined. It

is expected that the corridor development will be initiated by the

implementation of the priority projects as much as possible.

② Did you study about building value chain across countries

for promotion of the economic sectors target to the regional

markets?

The study of the value chain needs to be left to further study.

The opportunity of the manufacturing industries is in Zambia,

and as a result of the development of the Nacala transportation

corridor, it is conceivable that processing of raw materials

transported from neighbouring countries shall be promoted in

Zambia.

(3) OSBP

① Why the priority projects regard the OSBP in Zambia and

same in Malawi is difference?

The OSBP is required for road corridors to improve the access

to the regional markets. In Zambia, OSBP has been operating by

support of the development partners. Therefore, the priority

project aims to increase the number of OSBPs for operation. On

the other hand, there is no OSBP actually working in Malawi,

though the preparation of its installation is undertaken by the

development partner. Therefore, the proposed project aims to

train the government officials regarding mechanism, purpose

and is operation of the OSBP in general.

② What is current status of support for the OSBP at

Chiponde-Mandimba border by the development partners?

We are told that AfDB and JICA do not commit development of

the OSBP.

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3． Record of the Lusaka Seminar

3.1 Participants List of the Lusaka Seminar

1. Zambia Partners

No. Acc. No.

Organization Position Name

1 1 Ministry of Commerce, Trade and Industry

Acting Principal Planner Humfrey Kaunda

2 2 Ministry of Energy Energy Economist Jeff Chanda 3 3 Energy Officer Misheck M Mubuyaeta 4 4 Principal Economist Joseph Chanda 5 5 Ministry of Finance Senior Economist Oscar Shitima

6 6 Ministry of Housing and Infrastructure Development

Senior Planner Kambaila Munkoni

7 7 Ministry of Mines (GSD) Geologist Chellah Muswilwa 8 8 Ministry of National Development Planner Alick Mulao Mushe 9 9 Ministry of Tourism Planner Lucas Zulu

10 10 Ministry of Transport and Communications

Senior Planner Sydney Tembo 11 11 Chief Planner Irene B.M Tembo 12 12 Director Peter Simwanza 13 13 Deputy Director Barry R kaambwa 14 14 Human Resource Manager Mutswani Silombe 15 15 Director of Transport Nicholas Chikwenya 16 16 Secretary Mercy Tembo 17 17 Secretary Lenny M Shachele 18 18 Road Development Agency Technical Assistant Pangany Fredy 19 19 Assistant Manager - Planning Nonde Musawa 20 20 Road Transport and Safety Agency

(RTSA) Legal Officer Prosecutions Peter Mulyata

21 21 Anthony Chewe 22 22 ICT Security Officer Lwindi Simunka 23 23 Zambia Railway Acting Regional Manager Kingfred Chanda 24 24 Zambia Revenue Authority Senior Collector Mukuka M Sichula

25 25 Zambia Institute for Policy Analysis and Research (ZIPAR)

Research Fellow Nakubyana Mungomba

2. Malawi Partners No. No. Organization Position Name

1 26 Ministry of Transport and Public Works

Director of Railway Services MAGWEDE Geoffrey Francis

2 27 Director of Road MPHONDA Kelvin Ngwali 3 28 Economist ZGAMBO Atusaye 4 29 Economist CHIMUNTHU-BANDA Takondwa

5 30 Ministry of Agriculture, Irrigation and Water Development

Director of DAPs NAMAONA Alex Austin Yasini

6 31 Chief Irrigation Officer MWALABU Charles Gundani

7 32 Ministry of Industry, Trade and Tourism

Dept. of Trade Deputy Director of Trade

MUSONZO Charity Priscilla

8 33 Dept. of Industry

Chief Industrial Development Officer CHIMPOKOSERA GladysThamandani

9 34 Malawi Investment & Trade Center (MITC)

Planning and Research Manager NAMARIKA Bisa

10 35 Malawi Confederation of Chambers of Commerce and Industry (MCCCI)

President (Chairperson) CHOKOTHO Kumbutso Karl

11 36 CEAR Managing Director CHIMWAZA Hendry Kurtz Andrew 12 37 Marketing & Commercial Manager Kennedy Kweran 13 38 Road Authority Director of Construction KADANGWE Samuel

14 39 Clearing and Forwarding Agents Association of Malawi (CAFAAM)

Chairperson BANDAWE Everson Dee

15 40 Malawi Revenue Authority Station Manager in Mchinji Border PIKANI Steven 3. Mozambique Partners No. No. Organization Position Name

1 41 APIEX (Agency for Investment and Export Promotion)

Director General Lourenço Sebastião Sambo 2 42 Dinis Caetano Lissave

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4. Development Partners No. No. Organization Position Name

1 43 Africa Development Bank The Country Representative Richerd Malinga 2 44 World Bank The Country Director Justin Runji

5. Japanese Embassy and JICA No. No. Organization Position Name

1 45 Embassy of Japan First Secretary Masahide Suzuki 2 46 JICA Zambia Office Resident Representative Junichi HANAI 3 47 JICA Zambia Office Assistant Resident Representative Takashi HANSAKI 4 48 JICA Zambia Office Mwape Kapumpa 5 49 JICA Zambia Office Project Formulation Advisor Mami Katsuya 6 50 JICA Malawi Office Reiko MATSUI 7 51 JICA Malawi Office Godfrey KAPALAMULA 8 52 JICA Mozambique Office Yuichi MATSUSHITA 9 53 JICA Zambia Office Assistant Resident Representative Yoji MATUI

10 54 JICA Expert Advisor to Ministry of Agriculture Yusuke HANEISHI 6. Press No. No. Organization Position Name

1 55 Daily Nation (Press) Journalist Mailesi Banda 7. Survey Team No. No. Organization Position Name

1 56 JICA Survey Team Team Leader / Integrated Regional Development Planning 1

MHideyuki SASAKI

2 57

JICA Survey Team Deputy Team Leader / Integrated Regional Development Planning 2 / Agriculture and Agribusiness Planning 2

Kyoko OGAWA

3 58 JICA Survey Team Regional Development (Industrial Development)

Hisako KOBAYASHI

4 59 JICA Survey Team Transport / Logistics Satoshi MIZUNO

5 60 JICA Survey Team Regional Development (Rural Development)

Hideki HIROSHIGE

6 61 JICA Survey Team Assistant Engineer in Malawi N’Goma Dean 7 62 JICA Survey Team Secretary Natasha 8 63 JICA Survey Team Assistant Engineer in Zambia Janems Banda

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3.2 Records of the Questions and Answers in the Lusaka Seminar

(1) Questions and Answers

The summary of the questions and answers after the presentations regards Development Potential, Scenarios, and

Necessary Actions for Development of Nacala Corridor and Region by the JICA Study Team and also the

presentation of the APIEX of Mozambique in the Lusaka seminar on 1st December 2017 is as follows. The

answers are given not only from the presenters but also the participants of the seminar mutually.

Questions Answers

1． Framework of the Nacala Corridor Development

① When considering cargo quantity and cargo transport, it is

necessary to consider seasonal fluctuation and peak of

transport volume. When transporting agricultural crops, the

transportation is concentrated after the post-harvest

season, so it is necessary to arrange it well. Are there any

agreements in the three countries regarding the operation

of railways for the viewpoint?

“The Nacala Corridor development agreement” has been signed

between Mozambique and Malawi in 2000, and Zambia joined in

2003, then it became a trilateral agreement. Apart from this, “the

Nacala Corridor Railway Operation Agreement” also exists as a

sectoral agreement among three countries.

② Regarding the development of this corridor, the economic

development cannot be separated with political stabilities.

How is the security on the region considered in the three

countries?

Before implement the development of the Moatize / Tete railway

by the private enterprises, the Government of both Malawi and

Mozambique committed to ensure the safety of this corridor for

50 years.

2． Development strategies and Trade Facilitation

① In addition to strategies on development of the

infrastructure and economic sectors, a strategy of “Trade

Facilitation” is necessary. The trade facilitation also affects

the other two strategies. It needs less cost than the

infrastructure and is easy to cooperate involving other

institutions.

It is agreed that Trade Facilitation is necessary as our strategy.

In order to proceed with the trade facilitation, it might be

necessary to strengthen the production first, so that that

development of the infrastructure and economic sectors will be

necessary first. It is necessary to think about balances among

the strategies rather than just implement the trade facilitation.

② The “Non-tariff barrios” may be mitigated by promotion of

the Trade Facilitation. Since the laws and regulations differ

in the three countries, it is necessary to organize them and

to unify them. This leads to the promotion of trade

facilitation, resulting in saving of time and cost.

It will be explained additionally in the report that the Nacala

Corridor development will contribute to regional economic

integration such as COMESA - EAC - SADC 'Tripartite Free

Trade Area' through the development of transportation

infrastructure.

Normally, the corridor development and the regional economic

integration are not discussed in same context, but it would be

better that the regional institutions will consider to integrate both.

3． Transport Infrastructures

① What kinds of renovations are carried out in the Nacala Port

now, and which scale facilities are eventually become?

With the JICA’s grant aid, renovation of pavement of containers’

yards and loading facilities, etc. were conducted. After that, with

an ODA yen-loan, it will be carried out within three years that

300m expansion of the berth, dredging, expansion of the

containers’ yard, etc.

② If modern roads such as T4 (Great East Road from Lusaka

to Chipata) were developed, even if Nacala railways were

Improvement of operation as well as upgrading of railways will

be conducted then the railway operation with intensive

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renovated, road transport would be the main stream. Is not

it necessary to modernize the ageing railway system?

business-mind will be carried out at the Nacala Corridor Railway.

If the road and the railway are used well together, customer

service shall be improved. It will be a cause of the competition

among the corridors.

4． OSBP

① Reduction of the transportation time is also very important

in addition to equalizing the cost from the viewpoint of the

competitiveness of the corridor toward export. The OSBP is

important for the reducing transportation time. So what are

the current states of the OSBPs development?

The OSBP at the Mwami / Mchinji border is in the stage of the

design preparation. Its bidding is expected in the first quarter of

2018, and construction of the OSBP is planned within 24

months.

② Is the OSBP - Chirundu model fully functioning now,

because it is observed that the OSBP is not functioning well

so much? Shall the model be applied to other places as

well?

No Answer

③ Although the discussion of OSBP is mainly related to the

road transportations, there is also similar problem in railway

that procedures are complicated and time-consuming for

border crossing. What is the efficient operation of border

facilities such as OSBP applicable to railways?

No Answer

5． Economic Sectors

① Malawi is an agriculture based country and aiming for the

diversification of agriculture production. Therefore, it might

need to target not only rice and groundnuts in the priority

projects but also others. Firstly, it should consider the

agricultural products, like cotton, livestock and others in

general.

There might be ideas to include other crops than rice and

groundnuts which are the subject of priority projects. Your

comments is highly appreciated in the group work or later.

② In Malawi, aflatoxin control programme has been conducted

under the AU and the Ministry of Industry, Trade and

Tourism is its secretariat. The priority project should

coordinate with this program.

Malawi is advancing aflatoxin countermeasures, and the priority

project will consistent with this.

（2）Comments and Information Sharing

1) Cooperation among three countries toward the success of the Nacala Corridor Development

① The competitiveness will be key for success of the Nacala corridors. In order to strengthen the

competitiveness, it is necessary for the three countries to supplement and cooperate rather than compete.

② In considering the Nacala Corridor development, it is also necessary to study what other corridors are carrying

out.

The secretariat is necessary to actively carry out the Nacala Corridor Development Agreement.

We need a governance mechanism for the development of legal systems and the trade facilitation, and we

would like to ask for support in the sector from the development partners.

2) Transportation Corridor

① In economic terms, in order for commodity prices to be competitive in the global market, the both inbound

and outbound costs should be reduced.

② It is necessary to increase the amount of cargo handled at the Nacala Corridor, including operation volume in

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the Nacala Port. If there is sufficient economic activity and then enough cargoes will run towards Nacala Port,

and the number of vessels calling at Nacala Port will also increase.

③ Upgrading the railway is planned as step-wise development, when the Nacala Corridor Region is developed

and the railway transportation increased, the whole railway sections from Nacala Port to Chipata will be

upgraded for 20.5 tonnes axils standard. The modernization of the railway operation is also carried out, the

signalling system has been improved and the tracking system which identifies the position of the train is also

introduced by the operators.

④ Various corridor developments are necessary as Zambia, and it is necessary to promote corridor development

not only on the Nacala Corridor, but also others like the Walvis Bay corridor besides the North-South

Corridor.

fin.

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3.3 Result of the Group Discussions in Lusaka Seminar

Questions Results of Discussions

（1）Question １：

• What are advantages

of Nacala Transport

Corridor?

• Is the proposed growth

scenario appropriate?

The scenario is acceptable.

Other advantages are also expected such as :

1．Reduced transit time

2．Regional economic growth

-SADC, COMESA

-Tri-partite (Malawi, Mozambique & Zambia)

3．Competitive advantage of exports

4．Socio-Cultural & Political integration

5. Improved access to the sea-port

-local and international market access

6. promotion of value chains development along the corridor

（2）Question 2：

• How can economic

sectors utilize

advantages or good

impacts of Nacala

Transport Corridor?

The group identified advantages or good impacts as follows;

• Wider market for the farmer due to improved transportation services.

• Efficiency which will reduce the cost of doing business

• Reduced transport costs, which lowers the cost of doing business.

• Job creation through wider market for the farmer.

• The corridor will give support to the mining sector by providing efficient and improved

transportation of minerals.

• Industrialization

• Fuel transportation cost will reduce due to improved transport.

• Increased border trading

• It will promote tourism along the corridor.

• Improved affluence of the community and more disposable income for the settlers along the

line of rail.

• Mushrooming of the Financial Institutions.

• Improved connectivity.

（3） Question 3：

• Are the proposed

priority projects for

economic sectors

enough?

• Are the priority projects

related to transport

enough?

1. Economic Sector

1) Zambia

• Promotion of export oriented minerals from Eastern Province and Copperbelt

2) Malawi

• M30 (Improvement of market access for small-scale rice farmer) to be expanded for others

like, add cotton, livestock etc.

• Promotion of export oriented minerals from Central and Eastern Regions of Malawi

3) For both countries

• Promotion of tourism oriented transport and activities

• Facilitation of the transportation of imported motor vehicles

2. Infrastructure Sector

1) Zambia

• Prioritize Chipata - Serenje via Petauke railway project

• Construction of Inter-Country Trading Centres at border crossings

e.g. Mwami/Mchinji as pilot

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• Construction of weigh bridges (incl. for rail)

e.g. Chongwe (road), Chipata (road/rail), etc.

2) Malawi

• Limbe-Marka railway rehabilitation

• One Stop Border Post at Mwami

How will rail be incorporated?

Integration of ICT systems

• Establishment of One Stop Border Post at Nayuchi and Entre-Lagos

• Lusaka-Lilongwe broadband interconnector

Zambia has already gotten connection to the border

3) Mozambique

• Establishment of One Stop Border Posts at Nayuchi and Entre-Lagos

• Chanida to the Indian Ocean broadband interconnector

• Construction of Warehousing

• Construction of Port access road

• Marketing and promotion of Nacala Port

（4） Question 4：

• Are there any good

ways to collaborate

among three countries

for the Nacala Corridor

Development?

1．Trade facilitation

Installation of OSBP facilities at borders. Clearing should be done in one place which has a

representative from each nation.

Harmonized legal frame work and standard operating procedures.

Standardization of technology.

One pay point principle, paying for services from one country should be legal in the other.

2.Coordination Mechanism

Implementation of the Nacala Development Corridor Agreement by all the committees

Revive the trilateral and improvise Nacala Corridor secretariat from the three countries.