Subscribe for Updates

Read Endeavour Magazine

Business Profiles

Maputo Corridor Logistics Initiative – Facilitating growth and development

Thanks to its first-rate infrastructure network, skilled workforce, and standing as the continent’s leading finance, technology, and commodities production hub, South Africa has long been regarded by economists and the world’s advanced nations as the region’s great economic hope. However, if the country is to unlock its immense potential and develop into a recognised power by international standards, there is still much work to do.

It is no secret that the economies of Africa’s big-hitting regional powers have seen better days – sadly, South Africa is no exception in this respect. The half decade just gone has proved especially challenging at times for the country’s business community, but recent data has painted an altogether more promising picture of what lies ahead. Efforts to shore up and strengthen economic growth are starting to bear fruit, chief amongst them being the establishment of a growing number of development corridors across the Southern African region.

Designed to support and encourage economic integration through the opening up of markets, the emergence of development corridors across the Southern African Development Community (SADC) has proven to be one of the region’s major economic success stories of late. Trade and investment has increased markedly in their catchment areas, thanks to infrastructure upgrades and the increased cargo volumes this has facilitated, while partnerships and goodwill has been fostered between business communities in neighbouring areas. Barriers to trade have fallen and improved efficiencies achieved. Suffice to say the effect has been transformational.

There are few better examples of the economic opportunity that the development corridor model can foster than the Maputo Development Corridor – a 600km trade route stretching from the South African economic powerhouse of Gauteng and Johannesburg to the Indian Ocean port of Maputo, and from Swaziland to Maputo. Since it was established in 2004 with the goal of promoting and rehabilitating what was once one of Africa’s most lucrative strategic transport corridors, the Maputo Corridor Logistics Initiative – a private sector initiated non-profit company, comprised of stakeholders from the surrounding regions’ business communities, and the regional and national governments of its connecting countries – has succeeded in breathing life back into the Maputo Development Corridor and restoring it as one of Southern Africa’s economic hotspots.

MCLI’s key objectives are to improve the efficiency and competitiveness of the Maputo Corridor for its supply chain stakeholders. This is done through facilitation of meetings with various stakeholders, communication, marketing of the Maputo Corridor, integration of the various initiatives on the corridor and to make policy recommendations to the various organs dealing with transport corridors, both nationally and continentally. Consequently, a large part of its work involves lobbying and advocacy, with the mandate coming from its members who represent a range of sectors, including transport, clearing and forwarding, cargo owners, service providers, and shipping lines, amongst others.

“MCLI is a non-profit membership organisation which performs the functions of a corridor management institution, providing a critical interface between government and private sector users of the corridor to retain open lines of communication and resolve issues on the corridor,” explained Barbara Mommen, MCLI’s CEO of five years.

She continued: “As our focus is on the transport corridor connecting South Africa, Swaziland, and Mozambique, ending at the port of Maputo, we are concerned with the key transport nodes i.e. the road, the rail, and the port and its terminals. We have a broad range of sectors represented within our membership and have structured our public/private dialogue carefully so that there is a level of accountability and reporting, via our various communication channels. Through this we can provide all of our stakeholders with information which will add value to their operations.”

In addition to stakeholder support and information, this value has also come from utilising the MDC’s geographical advantages. In terms of overland distance, Port of Maputo is far closer to Johannesburg and the industrial north then the country’s other maritime gateways, meaning that use of the corridor achieves transit cargo efficiencies with regards to time and cost – indeed, this is its key selling point for prospective stakeholders today, much as it was historically.

The MDC’s route follows that of a trail which was trodden for many decades by both workers seeking employment and businesses transporting their goods and services up until the early 1990s. During its 1970s peak, up to 40% of South Africa’s exports reached the world’s sea lanes via the MDC. However times have changed, and the MDC now shares the market with the ports of Durban, Richards Bay, and Port Elizabeth, as well as the Coega Industrial Development Zone – all of which act as key cargo transportation hubs through which South African exports reach the open ocean. Barbara elaborated, saying:

“From a corridor perspective, the Maputo Corridor competes with the corridors ending the ports of Richards Bay and Durban.  The greatest challenges are the costs of services in Mozambique which are dollar based. These can be mitigated if the efficiencies of services are improved, and this is where much of MCLI’s attention is focused.  The most important elements of a supply chain are predictability, reliability and efficiency, and transporting goods across borders means that these three elements must be in play.” 

While the MDC is unlikely to fully recapture its former market share, there is little doubt that it is slowly growing to rival its competitors. Which is much as you’d expect – utilising its geographical advantages makes good commercial sense for the businesses which operate within its sphere of influence. And yet, in terms of its future benefits and opportunities, the MDC has the potential to become so much more. Should the MCLI succeed in achieving its longer-term aim, the MCLI’s role will evolve from serving a support and corridor management function for what is presently a trade transport route into an integrated development corridor including economic catalysts such as special economic zones – an area where business and trade laws differ from that of their home countries, having been developed to optimise business activity and wealth generation.

This will take time of course, and no little amount of negotiation between the MCLI and its public-private sector partners in order to achieve. However, as Barbara mentioned, plans are afoot to table a proposal which could expand MCLI’s capabilities significantly, and thereby lay the foundations for a future expansion of the MDC’s remit:

“MCLI is currently working on a project funded by the World Bank’s Africa Transport Policy Program which has two elements.  The first is to revise the current Memorandum of Understanding which applies to South Africa and Mozambique to include the Kingdom of Swaziland, and to propose a formal working partnership between the three countries and MCLI so that the organisation can fully support the development of the Maputo Corridor in an institutional framework which will give its capacity to resource the organisation more effectively to carry outs its work. 

The second is to draft a strategy for the organization to 2021 which provides the structure and impetus for improving the operational, research and analytical capacity of MCLI. Both these elements will enable MCLI to improve its lobbying and advocacy activities.”

With the support of its funding partners, Portos e Caminhos de Ferro de Moçambique (CFM), Swaziland Railway, Transnet Freight Rail, the Department of Transport in South Africa, and Kudumba Investments, along with the support of general members like Lebombo Border Dry Port, Sasol, Rohligh Grindrod, MACS Maritime, Mearsk, Manica Freight and Naval Servicos, MCLI is in safe hands over the years to come.

Thus far, the Maputo Development Corridor has grown and thrived even in spite of mining sector downturns and a challenging economy – should South Africa finally turn a corner as many hope, who knows what it could achieve for its stakeholders and the South African people? One thing is for certain, the future of MCLI and the MDC look bright indeed.