President Joyce Banda has said as a landlocked country transportation costs constitute up to 60 per cent of the landed cost of goods in Malawi.
“If we are going to be competitive regionally and internationally, we need to bring those costs down,” said Banda Thursday at the inauguration of a US$ 1 billion railway project by the Brazilian firm, Vale SA, in the southern district of Neno.
Banda said Malawi can only realise benefits of its industries if it is well connected to our neighbours in Southern Africa, to the rest of the continent and to the world.
“We need to make it easier to import the goods Malawi needs and export those we wish to sell to global markets. And we need to make it easier for tourists, businessmen and investors to get to Malawi and travel within our great country,” she said.
Vale SA, which is involved in coal mining in Moatize in the Mozambican region of Tete, will construct a 138-kilometre railway line through the southern districts of Chikhwawa and Balaka and rehabilitate the existing railway line from Balaka to the Mozambican border, a distance of a further 98 kilometres.
Vale SA intends to export about 18 million metric tonnes of coal annually.
“Whilst the coal is being mined in Mozambique, the most efficient way to get it to the (Mozambican) port of Nacala is through Southern Malawi. And so we reached an agreement for the building of this railway,” said President Banda.
Banda said while the aim of the railway line was to help Vale to transport coal, her government has made sure that Malawians benefits from the project.
“The project is expected to employ about 4,500 workers at its peak, of which 70 per cent will be Malawians, that is over 3,000 new jobs. Once the railway is up and running, the Malawi Government will earn US$ 8m per year from concession fees,” she said.
President Banda said once the railway line was up and running there will be one daily passenger train and two daily cargo trains, thereby easing human transport problems and adding up to at least 5 million metric tonnes of cargo each year for exports and imports.
“It is expected that Malawi will be saving in excess of US$ 120m annually in transportation costs. This has the overall effect of reducing the transport costs of goods to and from Malawi by about 40 per cent,” she said.