The Zambian government’s Road Development Agency and the National Road Fund Agency (NRFA) embarked on a road infrastructure project, which encompasses the rehabilitation and upgrading of eight existing roads across the country, which will open trade corridors. The DBSA participated as a principal lender of record for the whole programme, estimated at USD352 million. However, only five roads had the requisite feasibility studies and indicated significant linkage with the national and international corridors.
Three of the roads (Senanga–Sesheke, Kabombo–Chavuma and Kalulushi–Lufwanyama) form part of the Trans-African Highways programme route stretching from Cape Town to the DRC’s Katanga Province and onwards to Kinshasa. These roads link up as part of the Western Corridor in Zambia connecting the new western Copperbelt area with the DRC, Namibia, Angola and Botswana. The rehabilitation of the Western Corridor will fit into the wider corridor network programme for the SADC region.
The DBSA focused on the following priority roads:
Senanga–Sesheke
This road forms part of a strategically important regional link as a shorter route (Western Corridor) from the copper producing region of Zambia around Kitwe up to the DRC in the north, Botswana and Namibia to the south and Angola to the west.
Kabombo–Chavuma
The road connects Zambia to the Angolan border and from there to the city of Luanda, forming part of the Luanda to Nacala Development Corridor.
Kalulushi–Lufwanyama
This road links the Copperbelt and the north-western provincesto the Western Corridor of Zambia. This route will ensure the efficient transportation of copper and other bulk commodities to and from the Walvis Bay Corridor.
Chipata–Lundazi
This road lies within the Nacala Development Corridor (Great East Road) and is part of the internal Zambian link between the Mtwara and Nacala Development Corridors. The road is an essential element of infrastructure required to exploit the area’s agricultural, mining, commercial and tourism activities. It also forms an extension link to the current Lusaka–Chipata corridor road.
Mumbwa–Landless Corner
This national road serves as a bypass road for Lusaka, easing congestion traffic from western to northern Zambia and shortening the travel distance by 108 km. Along the road corridor there are a number of agricultural developments, including 26 large-scale commercial farming activities, over 3 500 emergent farmers, and 30 000 small-scale farmers. Tourism, mining, fisheries and forestry also contribute significantly to the local economy.
The transaction structure involves the NRFA as the borrower and the Ministry of Finance as the guarantor. The proposed loan to the NRFA is a sovereign risk loan as through the annual national budgetary allocations, the government has provided specific funds for the road programme’s debt service and the road maintenance budget. A debt service account (DSA) shall be prefunded with a minimum amount equal to twice the debt service. The loan is for 20 years and remains the largest loan to an obligor outside of South Africa.
The road rehabilitation programme falls within the scope of the DBSA’s mandate and policy guidelines relating to transportation infrastructure. The Bank is also a key participant in leveraging transport infrastructure to link the regional transport corridors for easy accessibility and economic development.
Development impact
- Improvement of internal accessibility of established areas of economic activity and connection of Zambia to the SADC development corridors, which will open up regional markets
- Promotion of Zambian contractors
- Reduction of environmental and health risks
- Job creation and poverty alleviation
- Private sector economic development enabler in agriculture, mining, tourism, education and health
- Increased government tax revenues
- Linkage to regional transport corridors, hence the opening up of local and regional markets.
SADC’s rail network system
The Southern African Railways Association’s (SARA) strategic plan 2018–2022 outlines the SADC railway industry’s commitment to increasing the railway market share of surface freight transportation to at least 40% by 2022 from the current 15%.
The DBSA has partnered with SARA to undertake the identification, preparation, financing and implementation of railway infrastructure and rolling stock projects within the SADC region, as well as the sharing of information, skills, knowledge, expertise and systems. SARA and the DBSA have identified capacity building, financing and the development of an integrated regional railway masterplan as critical to integrating the region.
Sub-Saharan Africa is constrained by underdeveloped and inadequate transport infrastructure, which has a direct impact on social and economic growth and trade facilitation. This hinders regional integration, which is key for shared prosperity. One of the focus areas within the transport sector is the transformation of the regional rail industry by improving and stabilising the movement of in-country and cross-border freight and bulk rail traffic through efficient and effective ports and locomotive networks.
Over the past five years, we have invested in over 500 km of rail infrastructure across the SADC region, supported by our experience and expertise in developing, delivering and managing integrated infrastructure development and rolling stock solutions which includes:
- Project planning, such as the development of regional masterplans;
- Identification and preparation of projects for lending;
- Financing opportunities, which include debt, mezzanine finance and limited non-resource lending;
- Capacity building by financing the training requirements of SARA members in railway skills;
- Building through managing the design and construction of the project; and
- Maintenance and support of infrastructure projects.