NAIROBI: Recently, I attended the presidential roundtable convened in Dar es Salaam to discuss ways of speeding up the central corridor. During the engagements, that involved President Jakaya Kikwete, Rwanda’s Paul Kagame, Pierre Nkurunziza (Burundi) and presidential representatives from Democratic Republic of Congo and Kenya, plans were announced for the construction of a standard gauge railway line to replace the existing Central Line.
This initiative will lead to a Transport Corridor, a multi-modal trade and transport passage which links Tanzania’s main port of Dar es Salaam with the neighbouring landlocked countries.
Transport Minister Samuel Sitta said in that regard that the government, incollaboration with the World Economic Forum (WEF), had appointed American financial advisory group Rothschild as a transaction adviser for the 2,561 kilometres project, which will cost an estimated US$7.6 billion (14 trillion/-).
He said Rothschild would source for the funding of the construction through a syndicated loan facility from interested private companies.
Rothschild is one of the top financial advisory firms in the United States. The January 2014 World Economic Forum meeting in Davos prioritised the Central Corridor that links the city of Dar es Salaam to Isaka, Keza, Kigali, Gitega and Musongati in Rwanda.Already, one foreign investor has already committed US$500 million (900 billion/-) to the project that will by far be the largest since Tanzania’s independence.
But let’s first draw more insight on what a transport corridor is. A transport corridor is physically defined as a combination of routes that connect centers of economic activity across one or more adjoining countries, each route being composed of links over which transport services travels and nodes that interconnect the transport services.
The end points are gateways that connect the economic centers to the hinterland or to the global trade routes. Transport corridors are of significant developmental importance because they promote trade among cities and countries along the corridor, support regional economic growth and enhance regional integration.
From an economic perspective, their function is to promote internal and external trade by providing more efficient and effective transport and logistics services.As such they can be categorized into three categories: foreign trade corridors, which are used for imports and exports; domestic trade corridors that are used to distribute goods within the country; or transit trade corridors, which are used to transport cargo of other countries.
Because of their economic importance, which goes far beyond the mere impact of transport infrastructure, the development of transport corridors has been high in the priority of nations, with various development strategies ranging from working on interconnections and interoperability to increasing route capacity or market access.
The main contribution of transport corridors to economic growth is subsequent to the reduction of logistics costs and transportation time along supply chains, which eventually help improve trade competitiveness.