The African Development Bank is supporting the $5 billion Nacala corridor rail and port project with a $300 million loan from its Private Sector Window.

After years of financial structuring a signing ceremony in Maputo marked the formal signing of the project deal which is expected to open new markets for farm produce, boost regional integration.

The project will provide a 912 kilometres rail line from the Tete province in western Mozambique to the Nacala port on the eastern coast of the country, through Malawi.  The Project also includes the construction of a deep sea port and associated terminal infrastructure at Nacala.

Opening up markets

“This project supports two of the High 5s that guide the Bank’s contribution to the Sustainable Development Goals in Africa,” explains Pietro Toigo, the African Development Bank’s Country Manager for Mozambique.

“By providing a rail link across Mozambique and Malawi with a possible extension to Zambia, the project will help integrate Africa and by opening up markets for agricultural commodities it will help feed Africa. This dual use infrastructure development shows that Mozambique can put its natural resources at the service of its citizens,” he adds.

When the rail segment comes into full operation, coal exports are expected to increase by 40% in 2018 and generate crucial foreign earnings for the Mozambique economy at a time the country is witnessing a cyclical downturn.

The project anticipates 4 million tons a year of freight capacity for non-coal commodities, and opening up regional agricultural producers to world markets.

A regional gateway

The African Development Bank is also investing $1 million in grants to assist SMEs and developing agribusiness along the corridor in Malawi and Mozambique.  This support aims to ensure that small businesses benefit from the potential of the port and the rail link potential.

“This project can provide wider benefits to Mozambique, Malawi and Zambia, and allow Mozambique to fulfil its ambition to be a regional gateway to world markets,” concludes Carlos Mesquita, Mozambican Minister of Transport.