The African Development Bank (AfDB) has greenlit a $40 million corporate loan to Mozambique's state-owned Mozambique Rail and Port Authority (CFM). The loan aims to help CFM finance the acquisition of new rolling stock, including locomotives, wagons, and tank containers, for its vital Ressano Garcia railway line.

This line is crucial, generating over 90% of the country's rail traffic and constituting 70% of CFM's total rail transport volume.

90% of these commodities are minerals from South African mines, with other goods coming from landlocked neighbors. South African miners are diverting cargo to Maputo due to Transnet's operational issues.

Consequently, the Port of Maputo is nearing its maximum capacity of 37 million tonnes. The MPDC aims to balance rail and road cargo to meet growing demand. The current concession to operate the port runs until 2033, with a 25-year extension agreed in principle.

The incompetence of Transnet was most dramatically illustrated by the train smash on the 16th of January, when two Transnet coal trains collided due to a lack of digitized train management. Transnet has been relying on signaling and phone communication, leading to a drop in freight volumes.

The Development Bank intends to secure an extra $30 million for the project from other potential lenders. The initiative includes acquiring 10 diesel-electric locomotives with 3000-3300 horsepower, 300 wagons, and 120 tank containers. The funding will also cover a three-year maintenance program for the purchased locomotives and training for CFM's maintenance staff.

The project's primary goal is to enhance logistics and reduce the cost of transporting goods and products along the corridor. By improving efficiency and benefiting from economies of scale, the project aims to boost the corridor's competitiveness and transform it into a more cost-effective logistics transport solution.

The loan is expected to have far-reaching impacts, including improving infrastructure access for households through rail transport services, reducing congestion and journey times, and shifting road traffic to rail, potentially reducing road fatalities. It also aims to increase the utilization of freight services and ports by private companies, reduce congestion and logistics costs, and enhance overall company competitiveness.

Furthermore, the project is expected to generate links with the local economy through local procurement and the demand for other non-tradable services. The project is also anticipated to have significant trade facilitation benefits, job creation, and skills transfer. It is projected to substantially increase foreign earnings and tax revenue for the government, contributing to the country's economic growth.

The initiative aligns with AfDB's goal to strengthen intra-African trade and regional integration. It will increase the capacity and volume of goods transported from neighboring countries, including South Africa, Eswatini, Malawi, Zimbabwe, and Zambia, providing them with a reliable port for exporting their products and importing goods.

Furthermore, the project is estimated to achieve net carbon savings of 744,511 kilotonnes of CO2 between 2023 and 2035. It will also improve access to markets for local communities, including women, allowing them to trade goods and services more effectively.

The country's three main corridors offer shorter transport routes over road and rail networks for transporting freight from neighboring countries, providing access to global markets for exports and imports. The goods transported include raw and processed materials, agricultural products, containerized freight, and bulk liquids.

Overall, the project is set to have transformative effects on Mozambique's rail infrastructure and regional trade, positioning the country as a key player in enhancing connectivity and economic growth in southern Africa. Port of Maputo increased product volumes by 16% in 2023, reaching a record 31.2 million tonnes.

The main bottleneck to Mozambican logistical performance is now the South African border, which is catastrophically inefficient and congested. Osório Lucas, chief executive officer at the Maputo Port Development Co. said that "South Africa will have to play ball."

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