Multinational-Building Infrastructure for Regional Integration-AfDB Approves US$ 181 Million for Nacala Road Corridor Project

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Tunis, 24 June 2009 – As part of the strategy to boost infrastructure development and regional economic integration in Africa, the Board of Directors of the African Development Bank (AfDB) Group on Wednesday in Tunis, approved two loans amounting to US$ 181 million, (117.04 million Units of Account UA*) to Mozambique and Malawi to finance the construction of the first phase of the Nacala Road Corridor, which links the two countries and Zambia.

The African Development Fund’s (ADF) concessionary UA 102.72 million loan to Mozambique and UA 14.320 million loan to Malawi will be used to finance a segment of the road, designed to  provide Malawi, Zambia and the interior of Mozambique with an improved road transport linkage to the port of Nacala and improve transport services, accessibility of the communities in the area to markets and social services, thereby contributing to poverty reduction.

The ultimate objective of the project is to support economic growth in the Southern Africa Development Community (SADC) region and foster regional integration through reliable, efficient and seamless transport infrastructure to improve the competitiveness of the region.

The Nacala Road Corridor project comprises 1033km of road works and two one-stop border posts between Mozambique and Malawi and the other between Malawi and Zambia. Phase one comprises 361 km or 35% of the road works in Mozambique and Malawi. Phase II comprises 360 km or 34.9% of the road works in Zambia while Phase III of 312 km or 30.1% of the road works in Mozambique and Malawi and two one-stop border posts between Mozambique and Malawi and Malawi and Zambia. All the phases include design review, pre-contract services and supervision of the civil works, road safety, HIV/AIDS prevention and awareness, compensation and resettlement and audit.

The Nacala Corridor road is one of the priority projects of the SADC Region. It is consistent with the New Partnership for Africa’s Development (NEPAD) and Bank strategy for Regional Economic Communities (RECs) on multinational infrastructure projects that remove barriers and obstacles to the movement of persons, goods and support regional co-operation and integration.

When the corridor is completed, the target population will comprise beneficiaries from the three countries that will use the corridor. Outcomes will be improved transport services, reduced travel time and transport costs, shorter turnaround time for international cargo, protection of pavement from premature damage and improved access to markets and services.  

The financing requirements for the first phase of the project are estimated at UA195.94 million. The project components are to be financed with ADF loans. The Japan International Cooperation Agency (JICA) and Eximbank of Korea are to jointly finance the Mozambican component with UA40.89 million and UA13.63 million, respectively.

Infrastructure development is a top priority of the Bank’s four key areas of intervention, receiving over US$ 2 billion or 44.5 percent of all loans and grants approved by the institution in 2008. Most of the investments were in private sector and multinational projects and programmes designed to enhance regional economic integration.

* 1 UA = 1.54805 US$ = 41.1781 MZN = 217.662 MWK = 8435.10 ZMK on 24/06/2009