n south corridor

8/12/2019 N South Corridor

1/45

A View of the North South

Corridor

Peter Copley Pr Eng


2/45

My requested talk: Developing East and Southern

Africa through physical interconnectivity The North

South Corridor

Reviewing customs requirements of member

countries and moving towards integration

Consideration in decreasing border transit times-

computer hardware and software issues

Creating free trade areas in Africa for better

economic integration

Importance of new models of financing projects -public-private partnerships

Integrating corridors for larger port reach span

I am taking the liberty of moving these around a little bit


3/45


4/45


5/45


6/45

Creating free trade areas in Africa for

better economic integration

Why?

Colonial powers cut Africa up during the

scramble for Africa in a time of limited

transport and logistics technology and the AU

has, wisely, said that there will be no deviation

from those boundaries

But individual African states are too small to

compete on a World Stage..as were the

original states of the United States of America


7/45

Creating free trade areas in Africa for

better economic integration

Why? Perhaps each individual AU member

state should continue on its own?

But it is fundamental that there are natural

competitive advantages and fundamental that

size does matter when competing on a World

stage

Why compete with each other when there are

advantages of using logistics technology to

harmonise genuine natural competitive

advantage to best mutual benefit?


8/45

Costs of transport in Southern

Africa Some are surprised to learn

that transport costs in SouthAfrica are approximatelyequal to the Worldsaverage transport costs

But once crossing borderscome into the question,costs go up by a factor ofbetween 4 and 8 (Source: Dr GaelRaballands doctoral thesis under the auspicesof the World Bank)

Why? Possibly because,despite expressions to thecontrary, we dont think as aregion.


9/45

Integrating corridors for larger port

reach span

Cost of moving by road: US cents 8 per tonne km

Cost of moving by rail: US cents 4 per tonne km,

idealised, but 8 US cents per tonne km in practice

Cost of moving by water: US cents 2 per tonne

km

The fundamental aim should be to reduce

distances necessary to be covered, with minimumdouble handling and border crossing


10/45

In essence the system of movement of freight

looked like this, in the SADC Intra Regional

Integration Study in 1996


11/45

The rail networks of sub-Saharan Africa are capable of carrying 23 million

tonnes per annum. They currently carry between 3,5 to 6,5 million tonnes.

Must mention the joint JICA/IFC initiative to develop PPPs in rail.


12/45

Road Network Links: Current Quality and Potential Significance

(West - Southern Africa Link Enlarged): Source Sub Saharan

African Transport Programme (SSATP)


13/45

R i i i f


14/45

Reviewing customs requirements of

member countries and moving towards

integration

Indisputably, having the longest established

customs union in the World has been of

considerable benefit to SACU.

Indisputably, having good universal

documentation has been of benefit to both

COMESA and to ECOWAS.

So bring Zimbabwe and Mozambique into

SACU and utilise COMESA documentation?

R i i t i t f


15/45

Reviewing customs requirements of

member countries and moving towards

integration

Were that it were that easy!

Countries with limited alternative Revenue

sources such as companies-, income-, value

added- or carbon taxes will naturally place

high priority on customs revenue

Equally border posts DO create useful points

of control for money laundering, drug and

human trafficking and naturally monitoring of

the movement of animal parts, weapons and

guns


16/45


17/45


18/45

I t f d l f


19/45

Importance of new models of

financing projects - public-private

partnerships The same applies to Zimrail and to ESKOM as

well as the north south corridor roads

Lets watch Nigeria and hope we get it right

If we dont it will be business as usual until

Australia and South America continue to pass

us by

PPPs require political will and medium term

stability.do we have it?


20/45

PPPs current reality

African countries need to invest about $93bn a year on power, water, transport and social infrastructure. But

though funding is scarce, alternative means of finance, such as PPPs, are not used as frequently as they could be.

In South Africa, the renewable energy independent power producer programme is a notable example of the

successful use of private capital for building public infrastructure.The programme has been celebrated not just

within the government, but by financiers and builders too.

But abandoned prison PPPs and stalled hospital projects are recent disappointments that have made investors

wary.

A few years ago, construction companies spent millions of rand compiling tenders for the construction of privateprisons. But the bids expired and the government abandoned the idea. Policy inconsistency has been a recurring

problem.

Ms Galloway says problems with implementation have also hampered success. She cites examples where project

officers were appointed to manage large projects single-handedly, without being adequately briefed or supported

with resources.

And she says a high turnover of staff with no succession planning has created disjointed management and a lack

of continuity. This increases risk, which ultimately drives up prices.

Ms Galloway says project officers have not been shown financial models. And penalties for contract breaches are

not imposed because state employees are unable to calculate them. This kind of environment allows companies

to get away with overcharging government.

However, South Africa is way ahead of its neighbours. The head of power and infrastructure in Standard Banks

corporate and investment division, Ntlai Mosiah, says numerous funding options exist, but other African countries

have not developed a supportive regulatory framework. Without laws and guidelines governing the relationship

between governments and the private sector, leveraging private capital is hard.


21/45

The Regional Economic Commissions

(RECs) of the AU (African Union)


22/45

The actual countries


23/45

Conclusion

I have appeared somewhat negative

The North South Corridor, together with its

Free Trade Agreement, is a wonderful concept

Do we have the political vision and will to

make it work?

Do we have the courage to form new Customs

Unions and to let these perform on a Regional

basis?


24/45

Conclusion (continued)

Do we have the vision and will to follow a

rational regional course of letting competitive

advantage dictate where development should

occur in the best interests of the market, so

leading to the further development of coastal

shipping between already established

regionally sensible ports, avoiding territorialduplication?


25/45

Conclusion (continued)

South Africa held back the natural

development of Walvis Bay, as well as the Port

of Maputo. Look at them both now.

Should we not twin Dar es Salaam and

Mombasa in total operation? This would

mean an East African Ports Authority, not

separate entities as we see at present Should we not let all ports compete on a free

and fair footing?


26/45


27/45

Recommendation

Economic studies for the component parts of

the North South Corridor(s) should always

include the coastal shipping alternative,

particularly in considering carbon emissions ofthe alternative modes, as well as customs

duties levied.

While the evolution of Africas transportsystems naturally followed the resources, we

should strive for a balance both on and

offshore.


28/45


29/45

Current Seminal Documents for

Africa Infrastructure to 2030: (ISBN 978-92-64-02398-7 OECD

Publishing, May 2006)

The African Infrastructure Country Diagnostic

(Study):"Africas Infrastructure: A Time for Transformation:

The World Bank, released in 2009

http://www.infrastructureafrica.org/aicd

Amongst many other publications and studies both local and

regional, especially regional integration (e g

SADC_EAC_COMESA)and the recently entered into FreeTrade Agreement which underpins regional co-operation and

growth

The Modules of effective
http://www.infrastructureafrica.org/aicdhttp://www.infrastructureafrica.org/aicd


30/45

The Modules of effectivedevelopment, followed by the OECDs

17 policies, in brief

Environmental

EconomicInstitutional

Social

Financial

Technical


31/45

1. Innovative approaches to

finance (Financial Module)

1. Encourage public-private partnerships (PPPs) as a meansof raising additional financing for infrastructure investmentand diversifying business models.

2. Encourage the investment of pension funds and otherlarge institutional investors in infrastructures.

3. Make greater use of user charges for fundinginfrastructures. They should be designed to signal prices,

reflect real costs and contribute to demand management. 4. Diversify and expand traditional revenue-raising sources.

5. Explore the funding possibilities offered by land valuecapture.

2 Improv ng t e regu atory an


32/45

2. Improv ng t e regu atory aninstitutional framework conditions

(Institutional Module) 6. Examine the legal and regulatory framework conditions with a view to

encouraging the emergence of fresh sources of capital and new businessmodels for the construction, maintenance and operation of

infrastructures. 7. Encourage the emergence of new players and new business models

through the creation and promotion of frameworks that stimulate thedevelopment of effective competition either in or for the market.

8. Place greater emphasis on the issue of reliability of infrastructurefunctioning.

9. Strengthen the framework for standards, as a tool both for encouragingnew operational models and for improving interoperability.

10. Explore the potential for new institutional arrangements that mayprovide more effective and efficient financing, funding and/or delivery ofinfrastructure.


33/45


34/45


35/45

Asia leads the way in food

productivityWith South America beginning to

start after they removed the

generals

Can Africa learn from thoseexperiences?


36/45

Lastly..(and where is the

environment?)

4. Developing and integrating

technology (Technical

Module)

16. Support the use of

technologies both to

improve efficiency in

infrastructure and to

enhance demand

management (including use

of hydropower to drive

trains?)

5. Expanding and improving

the toolkit (Social Module)

17. Strengthen publiccapacity to inform decision

making, improve analysis,

monitor performance, and

develop the requisiteinterdisciplinary skills to

address infrastructure

issues (particularly effective

regional CBA)

With these caveats and the resultant


37/45

With these caveats and the resultantperceived and quantifiable risks,

where do we look? Maputo Corridor, watching Richards Bay

Southern Angola and Walvis Bay

LAPSSET Corridor and Lamu Port

Northern Angola and the Bas Congo, including Pointe Noir

Nigeria and Ghana

Durban and the North South Corridor up to the Zambesi

Dar es Salaam, the North South Corridor down to the Zambesi, together with theCentral Corridor

Benguela to the Copperbelt, Lusaka to Nacala

Malawi, Beira and Lake Tanganyika With security reinforcement of all of the coast lines, particularly east, the Indian

Ocean islands, Angola to Ghana and on the Great Lakes esp Victoria

And Blue IQs very good logistics hubs surrounding Gauteng..not forgettingBulawayo, Santa Clara, Lubumbashi, Kinshasa and Tete


38/45

Some best practices emerging from the region.

Direct charging, towards influencing use.eg road tolling Good logistic systems, utilising modern ICT and a clear,

annually reviewed logistics strategy

Bus Rapid Transit

One stop border at Chirundu Effective corridor development provided that there is

universal political support for those corridors and providedthe concepts of public private partnerships are followed

Commercialised airports and road delivery systems and a

gradual move towards free African Skies Port concessions, whether whole or partial, under Port

Authorities influenced by Port Regulators


39/45

South Africas logistic competitors:(Source: PWC Germany New spokes, new hubs)

China Logistics Performance Index 3.49 (#27) South Africa Logistics Performance Index 3.46

(#28)

Turkey Logistics Performance Index 3.22 (#39)

Brazil Logistics Performance Index 3.20 (#41)

India Logistics Performance Index 3.12 (#47)

Mexico Logistics Performance Index 3.05 (#50)

Russia Logistics Performance Index 2.61 (#94)

South Africas World Competitiveness Ranking (#54)


40/45


41/45

Conclusions and reflecting on


42/45

Conclusions and reflecting onthese things (1)

The SADC member states are small by Worldstandards

To compete and to survive on a global stage we

HAVE to think regionally in an international

market for energy, commodities and for food

The World financial sources, particularly from

the private side of Public Private Partnerships,

thinks in terms of logistic chains.not in termsof sovereign ownership or operation of discrete

facilities

Conclusions and reflecting on


43/45

Conclusions and reflecting onthese things (2)

Without supporting programmed investmentsand processes along the entire length of the

corridors it is unlikely that the World financial

markets will invest in those proposals.

Thus putting far greater pressure on currentlystrained ports and logistic processes.

To the overall detriment of the Region and

ultimately each member state

C l i K i d h ll f i l


44/45

Conclusion: Key issues and challenges of regional

relevance in the SADC Infrastructure Sector in

general and Transport Sector in particular

What strikes me more than anything else is the need for ongoing

institutional capacity, answerable to a permanent commission, to

ensure that we keep on going forwards to build on the good work

of the past.

This requires committed funding on the part of all member statesand naturally a recognition that the individual states are not big by

World standards but as a region, we are.

The massive economic returns from sound infrastructure need

continually to be advertised as well as the benefits of Public Private

Partnerships, to meet the massive infrastructure need and itsassociated cost.

Conclusion: A very short comment on


45/45

Conclusion: A very short comment on

the current tripartite arrangement

pursued by SADC-COMESA-EAC

For Transport, the Protocol and the method of its developmentshowed the way.

Perhaps we need to review that original towards an ongoingTransport and Logistics Protocol for southern Africa?

NOT just the North South Corridor, which is in reality likely tobe two sections, one from the south to the Zambezi/Kafue andone from the north and east to the Zambezi/Kafue

Thank you for listening and I look forward to discussion.