Freight Transport & Shipping SWOT

Transport Industry

Overview

With its borders to four landlocked countries (Eswatini, Malawi, Zimbabwe and Zambia), Mozambique shares the distinction with Russia as being the country which borders more landlocked countries than any other.

This means that its transport infrastructure is not just of national importance - it’s of regional importance. It’s no exaggeration to say that the prosperity of an entire region depends on Mozambique’s transport and logistics industry.

Mozambique is divided into three corridors which link its ports to its inland territories and neighbours. These are: the Maputo Corridor in the south, which connects the country to South Africa and Eswatini; the Beira Corridor in the centre, which links the country to Zimbabwe, and the Nacala Corridor in the north, which connects Mozambique to Malawi and Zambia. Each corridor is served by its own port and road infrastructure of varying quality.

Air Transport

In air transport, Mozambique’s national airline, Linhas Aéreas de Moçambique (LAM), held a monopoly on domestic air transport until 2017. As soon as the monopoly was lifted, new airlines, including FastJet began operations on internal routes. International airlines such as TAAG (Angola), TAP (Portugal), Ethiopian Airlines (Ethiopia), Turkish Airlines (Turkey) and others now all have daily schedules in and out of Maputo.

Construction is also about 60% complete on a new airport in the southern province of Gaza. Chongoene Airport is being fully funded by the Chinese government to the tune of $75 million and when complete, will cover approximately 9,000m2 and include a runway of 1.8km. Its arrival will also mark a significant milestone in the government’s ambitions to open up a new economic corridor - the Chongoene corridor.

Rail Transport

In rail transport and logistics, significant strides have been made and more are expected in the years ahead. There are three major corridors in Mozambique’s rail network, which essentially reflect the south, north and central axes outlined above. Until recently, the emphasis of the rail network has been on the transport of goods (particularly minerals), but transport of people and services via rail is gaining momentum.

Huge investments in the sector are already underway. Mozambique’s port and railway company, Portos e Caminhos-de-Ferro de

“In the first half of 2020, a US-based rail developer, Railnet International outlined its vision of an $11 billion railway”

“Recent investments in the country’s road infrastructure include a $780 million investment by South Africa’s Capital Projects to link the south of Mozambique with South Africa”

Moçambique (CFM), announced in 2018 that it had earmarked $200 million by the end of 2021. In the first half of 2020, a US-based rail developer, Railnet International outlined its vision of an $11 billion railway line linking Zambia, Zimbabwe and Mozambique to begin construction in 2021. If realized, it could be a game changer.

Road Transport

All of these developments will undoubtedly have a positive impact, but it is of the utmost importance that they’re complemented by improvements in Mozambique’s road network. Low road coverage will continue to hinder Mozambique if not adequately addressed. In its 2018-2022 strategy paper for Mozambique, the African Development Bank estimated that less than 33% of the population lived within 2km of an all season road.

Recent investments in the country’s road infrastructure include a $780 million investment by South Africa’s Capital Projects to link the south of Mozambique with South Africa, a $110 million grant from the World Bank to develop rural roads, and the opening of a tender for investment in a highway connecting Zimbabwe and Mozambique. Their arrival should, in turn, hasten investment across all other areas of transport infrastructure.

The upshot of all this investment is that Mozambique has more intermodality in transport and logistics than ever before. When shipping to Mozambique, importers can now rely on intermediaries to provide a reasonably seamless delivery service whereby shipping companies interact directly with rail and road, where necessary. This is another area where Blockchain will make a huge difference, allowing cargo to be transferred securely and without breaches.

In 2018, Beira played host to the 19th Intermodal Africa conference, which discussed this very topic. It featured a range of presentations and workshops on themes such as regional trade in the Nacala Corridor and best practices in Mozambique based on logistics company Bollore’s experience. What emerged from the conference is that Mozambique now has a range of options in this area that didn’t exist before, but that continued investment is required - particularly in warehousing to continue its progress.

12https://www.privacyshield.gov/article?id=Mozambique-Transport 13https://www.forumchinaplp.org.mo/mozambique-trying-to-re-start-work-on-chinese-funded-airport/ 14https://furtherafrica.com/2020/08/11/mrg-progresses-talks-for-mozambiques-chongoene-corridor/ 15https://www.railwaypro.com/wp/mozambique-plans-modernisation-of-rail-network/ 16https://www.afdb.org/fileadmin/uploads/afdb/Documents/Boards-Documents/MOZAMBIQUE_-_CSP_2018-2022__Final_.pdf 17http://www.chinagoabroad.com/en/article/south-africa-s-capital-projects-to-invest-780-million-for-road-construction-in-mozambique 18https://www.worldbank.org/en/news/press-release/2019/09/30/mozambique-receives-110-million-grant-in-additional-financing-for-ruralroads 19https://allafrica.com/stories/202008110373.html

Freight, Transport & Shipping SWOT

STRENGTHS WEAKNESSES

Massive investment underpinned by 2012 gas finds New infrastructure currently being built (or proposed) in rail, road, seaports and airports Lower cost of doing business Arrivals of international companies (e.g. GAC in 2008, Rangel in 2012, and Tschudi in 2019.) creates a stronger culture of freight, transport and shipping in the country Import duties and customs are among the lowest in Africa New institutions (such as the AMT) are already creating a more corporate culture in Mozambique

OPPORTUNITIES

Become a transport and logistics hub for sub-Saharan Africa PPP-financed infrastructure to develop transport infrastructure outside of Maputo Piggyback on increased logistics ability to develop e-commerce in the region Provide concessions to logistics firms for ports, railway lines, highways, etc. Encourage government to set up SEZ (special economic zones) which have worked well in other developing countries Build an industry-wide training program to upskill local population (government increasingly stipulates local employment in big contracts)

High levels of bureaucracy and corruption -

albeit moved up 12 places on CPI in 2020 Over-dependence on commodity prices

(formerly coal and ore, now gas)

Mostly unskilled workforce

THREATS

Climate change is a significant threat because of Mozambique’s location

Political and religious tensions scare away international investors

Falling energy prices (particularly in gas) undermine many government plans

Another political/economic scandal such as the 2016 ‘hidden debt’ crisis would be devastating