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.
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.