{UAH} FW: East African Infrastructure Development, Part I: The Central Corridor

 

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From: mail@response.stratfor.com
To: ronlumu@hotmail.com
Date: Wed, 13 Nov 2013 06:10:14 -0500
Subject: East African Infrastructure Development, Part I: The Central Corridor

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East African Infrastructure Development, Part I: The Central Corridor Summary Editor's Note: This is a four-part series on the development of transport infrastructure in East Africa. The region is looking to expand its economy and increase international trade as it becomes a seemingly attractive destination for low-end manufacturing. Part 1 examines the factors behind the drive to improve and expand the region's transport infrastructure and the possibilities and limitations in the Central Corridor. East Africa's existing transport infrastructure is limited in its capacity and efficiency. If the countries in East Africa are to expand their commercial operations and attract new activity, particularly manufacturing, more reliable transportation networks will be needed. The Central Corridor transport route is crucial to the movement of exports (especially mining exports) from inland areas to the Tanzanian port of Dar es Salaam. However, the railroads in the Central Corridor need to be upgraded, if not replaced outright. Countries with interests in the region, including China and Japan, have offered to invest in development projects, and Tanzania is planning several railway expansions. But other constraints, including a lack of capacity at Dar es Salaam, will remain. Analysis Most of East Africa's infrastructure development focuses on the region surrounding Lake Victoria and extends into the Great Lakes region. Kenya, Tanzania, Uganda, Rwanda and Burundi are all located in the fertile and mineral-rich area that wraps around the lakes. The main purpose for establishing reliable transport infrastructure in the region is to strengthen the connection between the inland states, located west of Lake Victoria, to the ports on the East African coast. Two routes have emerged to achieve this goal: the Central Corridor, which runs south of the lake through Tanzania, and the Northern Corridor, which runs north of the lake through Kenya. While these routes do not necessarily compete for internal traffic, they do compete for external investment. There is also a Southern Corridor that runs south from Tanzania, but this corridor caters more to what comes in and out of Central Africa's mining regions. Existing and Proposed Transport Arteries of East Africa These arteries of surface transport, which connect to smaller, local nodes, are essential to the development of the regional economy and are driven by national interests. The region's economic activity, and the population supporting it, is concentrated along Lake Victoria and farther inland in the Great Lakes basin. These local economies are driven mostly by primary industries -- the extraction and production of raw materials, agriculture, mining and potentially oil and natural gas. However, the East African region, particularly Ethiopia, Kenya, Tanzania and Uganda, shows potential for developing a low-end manufacturing base. Initial investments across several sectors, such as textile manufacturing, have already been noted in these countries. The transport routes are focused mostly on regional trade and international exports. These exports mostly consist of coffee, tea and mining products. The corridors are not just essential for moving these goods into international markets; they are also critical for the provisioning of agricultural and mining projects and emerging sectors. However, the existing surface transport network -- consisting of roads and railways -- faces constraints in capacity and efficiency that limit the region's ability to attract investment in complementary industrial and utility sectors. The existing network is also insufficient to scale up mining activity (although increased mining activity, especially in the adjoining eastern Democratic Republic of the Congo, would also require more political and security stability). Central Corridor: Constraints and Development The Central Corridor connects the port of Dar es Salaam to the inland regions of Tanzania and to Burundi, Rwanda and the Democratic Republic of the Congo's Kivu provinces. This corridor comprises a network of roads and railways passing Lake Victoria to the south. Along this route, it also taps into East Africa's most established mining region: the greenstone belts of Tanzania. Its farthest extension into the Democratic Republic of the Congo also taps into the limited mining activity in the Great Lakes region. The minerals extracted here are exported through Africa's eastern ports because geographic constraints and a lack of infrastructure make transport westward through the Democratic Republic of the Congo impossible. The main focus of the Central Corridor, however, continues to be Tanzania's economy due to the limited amount of goods going in and out of Rwanda, Burundi and the Democratic Republic of the Congo. Surface Transport Infrastructure in the Central Corridor Along the Central Corridor, roads still carry the bulk of traded goods; railways transport only about 10 percent of total goods, mainly because Tanzania's railroads need to be upgraded. The backbone of the Central Corridor is the Central Rail Line that runs between Dar es Salaam and Kigoma in western Tanzania. While this railway was designed to handle 5 million metric tons of cargo per year, it currently only carries less than 10 percent of its capacity. Projects are underway to overhaul this railroad. Countries such as China and Japan have offered support and funding to refurbish the railroads and purchase new locomotives and carriages, although much of the money required to completely renovate the existing railway network -- an estimated $1 billion -- has not been secured yet. In the short term, transport along the Central Corridor could benefit from upgrades to the railroad, while in the medium term it could benefit most from the use of more trains. In the long term, however, Tanzania may be required to convert its current meter gauge (1,000 millimeters) railways to the standard gauge (1,435 millimeters), which could handle a larger capacity. Such a conversion, which would require the construction of a completely new railroad, cannot be completed in the short term because Tanzania cannot suspend railway operations and because the country's existing railroad bridges cannot accommodate the wider gauge. Although Tanzania's railroads currently operate well below their potential capacity, transport along this route could quickly increase if refurbishment makes it a more efficient and reliable mode of transportation. While roads currently carry the bulk of goods along the Central Corridor, it can take trucks four days to travel down the Central Corridor while it takes a train only two. Moreover, by shifting heavy transport from the roads onto the railway, Tanzania can lessen the deterioration of its roads. Besides a shift in transport from roads to rails, emerging industries and prospective mining projects could also increase the volume of goods transported by rail, requiring a higher-capacity railway network. These mining projects include gold, nickel, copper and uranium projects in Tanzania, as well as other projects farther inland in Burundi, Rwanda or possibly Uganda. Just one of these projects, the Mkuju River project, would raise Tanzania's need for a reliable transport corridor -- it is expected to make Tanzania the world's second-largest producer of uranium. Mantra Resources is expecting to mine 140,000 tons of uranium per year at the site. This is a classic case of a foreign mining operator needing a reliable rail line to export its commodity, and disruptions to these export plans could occur because the local government's capacity to engineer or otherwise complete the rail requirements is lacking. Apart from improving existing railroads, Tanzania also plans several notable expansions of its railroad network that will either extend into new areas or relieve pressure on the Central Railway Line. One of these projects would extend the Central Corridor's railways into Musongati, Burundi, which would also create a better connection with the Democratic Republic of the Congo's Kivu provinces. Another section of railroad is planned to facilitate transport between Tanga, Arusha and Musoma in Tanzania, along a line running parallel to the border with Kenya. From Musoma on the banks of Lake Victoria, existing ferry connections would offer a direct link with Kampala in Uganda. This latter line would exist separately from the Central Corridor, but its existence would be able to lighten the load on some parts of the Central Corridor infrastructure. Shortcomings at Dar es Salaam One of the Central Corridor's main constraints regarding capacity is the port of Dar es Salaam. Delays at the port, which is operating near its capacity, can last an average of three or four days. Other constraints along the corridor, such as customs checks at border posts, can easily delay travel times by three quarters of an hour -- or in some places, such as Kabanga along the Tanzanian-Burundian border, by an entire day -- but these are still well below the average delays noted in Dar es Salaam. Lags in development and in construction of new facilities limit the port's ability to keep up with traffic. The lack of deep-water berths is one of the results of this underdevelopment. Another berth is being constructed at the port, but the area around it is very congested because it is located near the central business district. The unavailability of land behind the berths severely limits the port's future expansion. Other plans have been proposed, such as the development of the port of Maruhubi on the island of Zanzibar as a dedicated container terminal, which would relieve a considerable amount of pressure currently on Dar es Salaam. The Chinese are also breaking ground on the Bagamoyo port project located north of Dar es Salaam that could become a world-class port facility and involve road and rail connections to the Central Corridor. While most of the Central Corridor operates well below its intended capacity, extensive refurbishing projects are needed to improve performance. Increasing the capacity of the port of Dar es Salaam -- the main bottleneck in the Central Corridor infrastructure -- will also be necessary. Several solutions to these challenges are available, but funding is often difficult to secure and this casts doubt on the feasibility of these projects. However, growing economic activity, both in the primary sectors and in low-end manufacturing in different countries around Lake Victoria, could make these projects along the Central Corridor more important. Subscribe to read the entire series plus much more! Access thousands of in-depth reports on the most significant geopolitical events – complete analyses, forecasts and hundreds of videos, graphs and charts. Subscribe today for a 1-year subscription for just $129 (reg. price $349), plus get a complimentary copy of Oxford's Essential World Atlas. *This offer is only valid for new Stratfor subscribers. These prices cannot be applied to the extension or renewal of Stratfor accounts. 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