Merits and demerits of the proposed Liwonde Dry Port

The Malawi Government has compiled a comprehensive compendium of bankable projects in six broad thematic areas. It is a directory that markets keyinvestment priority sectors in Malawi. This effort needs to be commended after many years of uncoordinated investment marketing efforts.

Liwonde: Where Mota-Engil will be building a new port soon

Liwonde: Where Mota-Engil will be building a new port soon

It is evident that a lot of ground work took place in coming up with the list of priority projects. However a few “interesting” projects prompt some re-reading. Does Malawi need foreign investments to construct bus terminals, hostels and truck parks? Are these not projects which can be done by the local city and district assemblies? Certainly Malawi has other meaningful value addition projects in agriculture, mining and manufacturing that can be promoted.

This article seeks to review the Liwonde Dry Port project estimated at $150 million that will supposedly offer a one stop cargo handling facility at Liwonde as opposed to receiving and shipping from the ports.

For starters, a dry port is an intermodal terminal situated inland with road and rail connectivity to the sea ports. It is an inland transshipment facility with connection to inland destinations complete with warehousing facilities and container terminals. It is a centre of cargo consolidation, customs clearances and freight forwarding. A dry port should provide clear cost savings and other incentives to importers and exporters.

A recent media report in Malawi suggests that the project has already attracted a serious investor who is set to start construction of the project. Apart from the touted benefits to the shippers,it is obvious that a number of Malawians will benefit from jobs in the initial construction phase but also in the implementation. It would be of interest to Malawians to know what incentives have been given to the investor, for example tax breaks. Historically the Malawi Government has been a bad negotiator when it comes to such issues.

It is well documented that cost of inland haulage, non-tariff barriers, inefficient and costly logistic solutions impacts negatively on Malawi’s imports and exports. The dry port project seeks to take advantage of the rehabilitation of the rail line to Nacala and the concessions agreed with Vale Logistics.

Up to 80% of Malawi’sexports are containerized and the balance is usually moved break-bulk (loose) for containerization in Beira, Nacala or Durban. Currently all export procedures are basically doneat door (premises) and loaded straight to the port of loading by road or rail. This operation hugely benefits from trucks that offload imports and are readily available to pick up cargo from within the same area.

With regard to Liwonde Dry Port, the proposition is to move cargofrom Blantyre or Lilongwe to Liwonde where fumigation, consolidations, repackaging or containerization and customs clearances will be done before onward movement to Nacala. The loading, discharge and re-loading operation means double handling and a prospect for eventual delays. Lost time in shipping and indeed in all enterprises directly translates into lost revenues. In this regard Liwonde Dry port does not become attractive.

The facilitycould however be viable for fertilizer and fuel imports. Fertilizers are usually broken into bulk at the ports of discharge to achieve maximum tonnage moved by truck by taking away the weight of the container. Liwonde could then become a groupage point and a distribution centre for the various fertilizer programmes being implemented by Government.

In this regard, government will save a lot by eliminating unnecessary handling and wastage through transit losses. This could also be practical for fuel importers. However, it is worth noting that fertilizer imports are seasonal and fuel imports are not that huge. Here is adanger of constructing an impressive project with seasonal business opportunities, turning into a white elephant. Maybe some good lessons can be drawn from the idle fuel tanks at Malawi Cargo Centre in Dar es Salaam and Mbeya.

There is also a need to critically look at the capabilities of Nacala Portby virtue of being the gateway of the Liwonde Dry Port project. Otherwise there is a risk of having an efficient logistic backend with a chaotic front end. Nacala in itself requires some heavy investments, in order to complete a seamless supply chain. Nacala Port has no gantry cranes for efficient loading and offloading of cargoes. Vessels offloading in Nacala uses ship’s gear which is a tedious operation. The rail operator has inadequate wagons which lead to excessive delays.

Sometimes the need to find cargo (import or export) to facilitate repositioningof wagons to the port or inlanddestinations is a challenge considering Malawi’s seasonal exports and intermittent imports. These issues should be a serious cause of concern and by extension will affect marketability of the Liwonde Dry Port.

Any attempt to ease trade logistics and cost of doing business is welcome but should be a result of a comprehensive feasibility study.

  • Frank G. Chirwa is National Imports Manager working for Mediterranean Shipping Co but writes in his personal capacity.
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18 thoughts on “Merits and demerits of the proposed Liwonde Dry Port”

  1. James C Katunga FCILT says:

    Indeed, just to echo what others have said, this is indeed a good learning or educating contribution. We need quite a few on the same.

    Let me comment on a few issues raised here in.

    Does Malawi need foreign aid to construct bus terminals …. car parks – I think the answer to this depend on the orientation one has. For starters, I think and perhaps it is a fact that Malawi has many pressing needs at the moment against very few financial resources. Besides, the payback on these project, looking at it politically, are rather long term than five years any government has. So if foreigners help in construction of such big projects which might not bring immediate gains, then perhaps ‘Malawi’ may be justified to used foreign resources on such projects. This point cares less whether that aid will be administered by local city assemblies or not.

    On the benefits of the Liwonde dry port, perhaps we need to know what will be the main source of transport on that corridor. If it is rail, then perhaps there is merit in having the port in Liwonde as a state of the art railway line is within the same trading centre. The benefits of having big haulage will out way the cost of intermediary activities like repackaging, double handling etc. For example, one haulage of fuel by train can make what can be covered by more than 50 trucks by road.

    Am sure this is indeed an interesting topic for discussion!

    Cherio!

  2. nick says:

    Some very good articles coming from the pen of Frank Chirwa!
    Everybody knew that Nsanje Port was an ego-trip for Bingu that had NO chance of realization. A good land-route to the Indian Ocean ports, either by rail or road, is the only way forward for Malawi. Foreign donors, and Malawian flatterers, should not allow presidents to feel that they are gods who can do anything they like and defy the laws of nature (a shallow river estuary) and international politics (Mozambique’s sovereignty and commercial interests).

  3. uyu nde ndi fodya guys…..

  4. Sawasawa says:

    A poor plan, if effectively implemented is better that a good plan not effectively implemented. I fully support the project.

  5. makwinjaishmael says:

    Can i be enlightened.Whats the difference between this Liwonde inland port and Nsanje one.Why cant you first strive to finish up that project left by the late Iron bar. You were with him in his Government. why cant you copy his style of Leadership?.

  6. John says:

    we need people who are forward looking and not those who are stuck with status quo!

  7. straight Talk says:

    Alas my poor land locked country. Good projects keep on coming but lacks continuity with the next government. Too much politicising developmental projects kuti a ziti ndiyawoyawo as a result money are drained and being idle instead of being productive. Why can’t u formalise National Development Council totally independent for the good of the Malawia development. Take the advice seriously. See how some of projects were paralysed in funding if a new party is in gvt. A wise person learn from others. Otherwise these are the projects we need in our country. Gud show the writer mwatichotsa umbuli.

  8. Shadreck says:

    oooh, oooh!

  9. Se says:

    Shire,zambezi waterway2.

  10. Ambele says:

    This project if it can materialize the road also need to be improved Liwonde -Zomba and Liwonde -Lilongwe. The volumes of Malawi goods howeve,r cannot support business turn-over profit to investors. To plan business depending Zambia’s imports is like buying clothes
    for a woman you met on a street hoping to marry one day. Malawi is landlocked , so it has
    to first improve or upgrade its road networks (at least to heady duty dual carriage) and highways .

  11. George Lihoma. says:

    Still dreaming in black and white,still watching films played in VHS and BetaMax,still listening to Billy Ocean in LP and tape recorders. These Demerits lack vision.

  12. Sapitwa says:

    We need this type of port indeed and we MUST start now!

  13. Chinyengo says:

    Nothing wrong with dreaming!!

  14. manunkha says:

    I should thank the writer for his article which is a very crucial piece of writting as we debate our economy. Much as I agree with most of his points, I still believe that Malawi should always look to the future. Look at how Dubai developed from a desert to a mega city. Its bcoz of taking risks. Let me give an example. Here is a newly wed couple living in a one bedroom house. So they decided to expand the house and build three more rooms. Then the mother in law just like the writer of this article says the other bedrooms are a waste of resources for they will not b used. What mother in law has forgoten is that this family is going to grow. Its not going to remain stagnant. So a visionary couple shall build for the future. I think our writer knows that there are a lot of development opportunities in Malawi ranging from mining to agriculture. Once these have been fully developed, they will need facilities like the Liwonde Dry Port. So an unwise couple will start extending their house when they have six children who have nowhere to sleep. Is this what our writer wants? For Malawi to attract direct foreign investments, it needs to put up infrastructure such as the Liwonde Dry Port. I support this project 100% and this article has failed to convince me on the demerits

  15. Bibo says:

    I might not be an expert in import and export issues which fall under freight services,but simple logic gives anticipation of a future industrialized Malawi and some hinterlands close to it, in this case Zambia which would also use the dry port for its imports and exports from Nacala.This means more revenue for the Malawian government as Zambia will be compelled to pay handling services.

    A project of any magnitude,requires a feasibility study to understand its viability,but for a country that aspires to develop and modernize,positive thinking has to outweigh detriments.Nacala needs refurbishing as well as modernizing its port facilities to accommodate a larger volume of cargo anticipated.This requires a concerted
    effort from all stakeholders including Malawi,Mozambique,Zambia,SADC, and donors.Any project is associated with risks, but as a landlocked country,the Malawi has to embark on all projects that will give ease of transportation of its goods to ports along the ocean coast.This project Will be of beneficial effect in the long term.The Shire-Zambezi waterway,the Mtwara corridor,and access to Quelimane port are other good alternatives for the country.

    Having said so,with the prospective mining boom approaching,it makes sense to have dry ports before shipping Malawian exports to the outside world.As Malawians we need to be progressive and think outside the box.However,The country needs more rail transportation to reach areas of production which means construction of more railway lines to most parts of the country is a must.A country with a good rail network develops faster apart from roads.

  16. Kanchacha says:

    We also need a oil pipe line from Nacala to Liwonde. I dont know where is the progress of tarmac road from Nacala Cuama and Chiponde this can also help us import cars through Nacala and bring it back in Malawi by road. Mozambique and Malawi Governments need to improve the handling facilies of this port the greatest advantage is that is very deep.

  17. kjc says:

    Where were you from 1980-early 90s, you should be doing enough research before you put pen to paper,you don’t have much information.

  18. Mccarthy says:

    Keep on dreaming until 2060!!!

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