Linking rail logistics chains with the Southern African Development Community
Linking rail logistics chains with the
Southern African Development Community
Cresco has noted a significant increase in commissioned feasibility studies over the past 18 months. Increasing mining expansion projects in the Democratic Republic of Congo (DRC) and the new Copperbelt in Zambia has renewed interest in “understanding” the North South Corridor (from Kolwezi in the DRC to South Africa) logistics constraints. Although a plethora of potential project interventions or mini projects within the Corridor have been identified, the funding for these projects is more difficult to implement as risks are generally allocated across the corridor.
An example of these risk factors is potential transit or loading projects at strategic points at the northern end of the Corridor in Zambia/DRC but risk relating to long-term operations is linked to the overall efficient operations of the entire Corridor, across the four countries, from pit to port. Balancing injecting new project sector funding – either directly to rail operators or through concessioning type structures – with the existing debt obligations of the underlying government entities is proving to be difficult and is thus a key barrier to financing new incremental infrastructure projects.
Due to the poor credit worthiness of current operators – hindering debt support – the involvement of mining or commodity companies in the offtake/guarantee of minimum volumes is key to developing the corridor. There is limited private sector support and private sector funding into the market and the infrastructure, both on maintenance and ongoing upgrades to improve volumes.
Ongoing World Bank funding has been mobilised for ongoing feasibility studies to address the shortcomings identified above outside of technical/financial interventions, but the alignment of the operators across the countries is a critical path item. Robert Futter, an executive director at Cresco, notes that “As with many opportunities, a number of viable projects do exist but institutional framework issues could prevent the implementation within a reasonable time period.”
Cresco recently completed work for a Development agency during 2019 on rail corridors focusing on identifying the institutional challenges and possible solutions. Cresco’s core mission is to enable growth in Africa. We are thus keenly involved in the developmental landscape of the continent and our vast portfolio of projects throughout Sub-Saharan Africa speaks to this undertaking.
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