African leaders support feasibility study for $5bn project

The governments of Malawi, Zambia and Mozambique have inked an agreement to study the feasibility of reopening the Shire-Zambezi Waterway to commercial navigation, part of an effort to reduce the cost of freight transport for the three southeast African countries, two of which are landlocked.

Malawi, Zambia and Mozambique will study the potential of creating a $5 billion water transportation corridor to provide the three southeast African countries with an alternative to expensive ground transport.  

Representatives of the three countries signed a memorandum of understanding (MoU) with the Zambezi River Transport Company (ZRTC) to conduct a feasibility study for the Shire-Zambezi Waterway project: a 238-kilometer waterway along the Shire and Zambezi rivers from the port of Chinde in Mozambique to the port of Nsanje in Malawi.

The ZRTC was the winning bidder in a request for proposals to undertake the feasibility study. The request, issued in April 2008, involves hydrographic and hydrological surveys and subsequently economic feasibility studies on the development of the Shire Zambezi Waterway. 

The Common Market for Eastern and Southern Africa (COMESA) and SADC, the Southern African Development Community, are the procuring agencies for the study, which is being funded by the European Union.

The Shire-Zambezi Waterway project seeks to give landlocked Malawi a cheaper route for its imports. The seeks to extend the benefits of those cost savings to neighbouring Zambia, which is also landlocked, via rail connection. The total cost of the project is estimated to be between $4 billion and $5 billion.

Shire-Zambezi Waterway: on the way to completion
Source: Infrastructure Investor magazine

High ground transport costs are a big problem for the two landlocked costs. COMESA has previously estimated that Malawi’s transportation costs take up 60 percent of the value of its exports – a level which makes the country’s agricultural products less competitive on the world market.

As a result, Malawi President Bingu Wa Mutharika, who completed a three-day state visit to Mozambique shortly before the signing of the MoU on 15 August, has made the project a priority for his administration. He has promised to deliver the project before the end of his current term in office in 2014.

COMESA Secretary General Sindiso Ngwenya said in a COMESA newsletter that the signing of the MOU marks a major milestone in the implementation of the project. The feasibility study will enable the two countries to make “important and informed” decisions on the sustainable development of the waterway, the newsletter said.

The MoU follows two other significant project milestones. In May 2009, construction began on the inland Port of Nsanje, the first phase of the project, under a 30-year concession agreement awarded to Portuguese engineering and construction firm Mota-Engil. And in 2007, the countries signed their first MoU to cooperate on making the project a reality.