Wits School of Mining Engineering
Dr Hudson Mtegha
Senior Lecturer
Resource Corridor
development
EXPERIENCES, ECONOMICS AND ENGAGEMENT
A TYPOLOGY OF SOME SUB-SAHARAN AFRICAN CORRIDORS
Content
• Introduction
• SDI Methodology
• Development Corridor Concept
• Why Development Corridor?
• Examples of Development Corridors
• Conclusion
Introduction
• In 1995 RSA conceived Spatial Development Initiative (SDI) programme
• The SDI is aimed is at
– Enhancing investment attractiveness through identification of opportunities
– Providing infrastructure
– Removing a range of policy, legislative and institutional bottlenecks
• Ultimately SDI should result in creation of localised jobs
• In 2000 Regional Spatial Development Initiative Programme (RSDIP) was
founded under DTI
• RSDIP was adopted by NEPAD
SDI Methodology
• The SDI methodology in Southern Africa provides the following:
– Opportunity of exploiting stranded natural resources
– Tool for identification, promotion and delivery of new infrastructure
underpinned by the resource-based anchor/s
– Focusing and directing state infrastructure spending through the
“densification” (collateral impact)
– Private Public Partnerships (PPP) cooperation in developing sustainable
industrial zones of high latent investment potential.
• SDI methodology synergizes with Development Corridor concept
Introduction
Development Corridor Concept
• DCs are generally trans-border economic activity (multilateral)
• The DC entails:
– Identifying anchor projects or source (generally resource-based)
– Linking the source with terminal point or sink (e.g. port)
– Concessioning out the link or the trunk (e.g. railway, road)
– Linking feeders cluster (e.g. agri-businesses) onto the truck
– Creating an environment for SMMEs participation at the source and
sink and along the trunk
SPATIAL DEVELOPMENT PROGRAMME
• The success of DC depends on:
– Appointment of a competent Project Manager
– Political commitment throughout the implementation process
– Installing an adequate technical in-country project management capacity
– Keeping stakeholders focused on the agreed conceptual business case
– Engaging in a targeted interaction with the private sector
– Effective institutional arrangements
SPATIAL DEVELOPMENT PROGRAMME
•
Africa has numerous mineral commodities
•
Over 90% of Africa is in the tropics
•
Africa has significant fossil, biomass and hydro resources
•
African aquaculture and mariculture are still nascent
•
Africa has enormous tourism potential (cultures, flora, fauna and landscape)
– Anchor projects and feeder clusters
– Good for agriculture
– Agriculture is labour absorptive (feeder clusters)
– Energy input or anchor projects
– Could benefit from harbour-based sinks
– Trunks can facilitate tourists mobility
Examples: Maputo DC
Context
Maputo Development Corridor
Natural Resources
Power & Gas
Infrastructure
Rail, road & pipe link btw RSA & Mozambique; Maputo port, telecom & electricity upgraded
Private Sector
Private sector investments ($5billion); Strong PPP
Business Case / Anchor Projects
SMME development (minimal); Strong industrial development (Duvha Power Station, Mozal Smelter,
Sasol-Pande gas pipeline)
Policy and Regulatory Environment
PPP encouraged and facilitated by both governments
Political Support
Supported by RSA & Mozambique (Heads of States & Transport Ministries)
Corridor Authority
Competent Project Managers appointed on both sides
Stakeholder Participation
Strong private sectors involvement; weak CBOs and NGOs input
Linkages
Strong industrial forward and side-stream linkages; Weak SMME support
Cross Border Arrangements
Unrestricted flow of people & goods across border; No visa requirements
Skills and Technical Capacity
Capacitated SOEs (Power Utilities, Finance Institutions and Transport Institutions)
The Maputo Development Corridor
Projects completed
Joburg-Maputo Highway
PPP- BOT completed
Port of Matola/Maputo
Upgrades, PPP
GAUTENG
Coal-based Power Station
2 transmission lines to Matola
completed
MAPUTO
Joburg to Maputo Railway
line: Upgrade
Liquid Fuels & Petrochemicals: Sasol
Pande-Secunda Gas line.
PPP Sasol completed
Al smelter 500ktpa
BHPB completed
Examples: Zambezi Valley DC
Context
Natural Resources
Zambezi Valley Development Corridor
Coking & Thermal coal
Infrastructure
Limited rail infrastructure (under construction)
Private Sector
Active involvement (e.g. Rio Tinto, Vale and host of Junior Australian and Indian
exploration companies)
Business Case / Anchor Projects
Quality of resources (coal) and others (iron ore, nepheline syenite and heavy
minerals) drives the business case
Policy and Regulatory Environment Incentivised FDI; PPP experience gained in MDC
Political Support
Currently corridor modality supports political and economic agenda
Corridor Authority
Not yet established
Stakeholder Participation
The programme not fully implemented
Linkages
No focus on the creation of local SMME – products and services largely from
South Africa
Cross Border Arrangements
Limited cross border activity Mozambique, Malawi and Zambia (mostly limited
in Mozambique)
Skills and Technical Capacity
The SDI unit is yet to be fully staffed
Examples: Zambezi Valley DC
Source: Punugwe, 2005
Examples: Mtwara DC
Context
Mtwara Development Corridor
Natural Resources
Coal, Iron ore, Gas & Fisheries
Infrastructure
Poor
Private Sector
Limited, with only recent agreement signed between NDC (Malawi) and China’s
Sichuan Hongda Group
Business Case / Anchor Projects
Poor; No attractive anchor project (Coal and iron ore projects have not move
forward)
Policy and Regulatory Environment
Preparation of new Integrated Industrial strategy (IIDS 2025) which links SDIs to
promoting growth in the country
Political Support
Political will appears to be weak between Tanzania, Malawi, Zambia and
Mozambique
Corridor Authority
Not active
Stakeholder Participation
Limited
Linkages
Still at scoping stage
Cross Border Arrangements
Still to be developed
Mozambique has the necessary experience and other countries seem to lacking
behind
Skills and Technical Capacity
Examples: Mtwara DC
Examples: Central DC
Context
Central Development Corridor
Natural Resources
Gold
Infrastructure
Rail is dysfunctional (With gold being the main anchor – road infrastructure can
suffice)
Private Sector
Limited – mainly gold focused therefore no need for major rail infrastructure
Business Case / Anchor Projects
Limited anchor projects in all sectors
Policy and Regulatory Environment
Preparation of Integrated Industrial strategy (IIDS 2025); Mining did not benefit
communities in the past; Recent calls for higher mining taxes
Political Support
Insufficient; Only Tanzania and Rwanda are signatories to the corridor; Burundi
and DRC are not active
Corridor Authority
Active authority under the NDC (insufficient though – need active participation
of all four countries)
Stakeholder Participation
Good in Tanzania and Rwanda only
Linkages
Government and mining companies place lower emphasis on linkages
Cross Border Arrangements
Limited to two countries
Skills and Technical Capacity
Donor support is critical in terms of skill and financial support to drive the
programme
GP
Examples: Central DC
Examples: Bas Congo DC
Context
Bas Congo Development Corridor
Natural Resources
Inga hydropower complex
Infrastructure
Dilapidated.
Private Sector
Poor; BHP Billiton has stopped its bauxite plant development.
Business Case / Anchor Projects
Poor / Hydropower
Policy and Regulatory Environment Poor
Political Support
No formal agreement between DRC, Republic of Congo and Angola (Corridor
activities focused in DRC)
Corridor Authority
Under Ministry of Industry. The ministry has set up a fledging SDI unit staffed
by a project manager. Supported by RSDIP.
Stakeholder Participation
Limited
Linkages
Poor
Cross Border Arrangements
Very limited
Skills and Technical Capacity
Weak
Examples: Bas Congo DC
LESSONS LEARNT
• DCs should be initiated and pursued based on inherent
economic and infrastructure potential
• The development of a corridor requires the participation
of all economic and infrastructure ministries
• The success of a DC depends upon the effectiveness of
the Project Manager(s)
• DC methodology requires careful scanning of sectoral
potential along the corridor
• Investment projects need to be properly packaged
Lessons Learnt
• Promotion and marketing of the corridor depends
upon the attractiveness of the packaged projects
• The DC anchor projects are large-scale, which would
require deliberate action to create opportunities for
SMMEs
• Cross-border DCs are initiated based on bilateral (or
multilateral) agreements
• There has to be a long-term commitment to the
success of a DC
Conclusion
• The Maputo DC has been the most successful initiative
• The role of government is seminal in facilitating
Development Corridor
• The role of competent project manager (and subordinate
managers) is pivotal
• Early involvement of SOEs, private sector, NGOs, CBOs in
DC is crucial for its success
• Perpetual ‘Political Will’ is paramount
Thank you!