Central Corridor

TANZANIA TARGETING PROGRESS

Africa’s Central Corridor, utilising Dar Es Salaam as its gateway port, is concluding a phase one upgrade introducing new rail capacity. AJ Keyes investigates the progress made and what is next

The Central Corridor in Tanzania connects the Port of Dar es Salaam by road, rail and inland waterways to Burundi, Rwanda, Uganda and the Eastern part of the Democratic Republic of the Congo, plus all of central and northern-western Tanzania.

Along with the Northern Corridor (which was reviewed in the June 2021 edition of Port Strategy), the Central Corridor is part of the Central Corridor Transit Transport Facilitation Agency Agreement (CCTTFA) concluded in 2006, by the five Governments of the Republic of Burundi, the Democratic Republic of the Congo (DRC), the Republic of Rwanda, the United Republic of Tanzania and the Republic of Uganda.

The purpose of the Agreement is a simple one, to provide the most efficient and effective route for the transportation of goods by surface and lake transport between the countries.

Figure 1 provides an overview of the cargo routing from the Port of Dar Es Salaam and the onward reach into the hinterland of Tanzania, before connecting with other locations in neighbouring landlocked and other countries.

In terms of demographics and potential demand to support the Central Corridor project, these factors are certainly positive.

The countries involved with the Central Corridor (and Northern Corridor) possess a substantial population, currently around 277 million people, according to the World Bank/UNCTAD, which represents an increase of three per cent over 2018, with projections that the figures will continue to increase moving forward. With this population and an estimated surface area of nearly 4.8 million km2 (according to Tanzania’s Central Corridor Transit Transport Facilitation Agency), there is a massive potential market for trade activity.

There continues to be growing cargo volumes through the port facilities at Dar Es Salaam – this is important as it represents the starting point for international cargo arriving (and to a lesser extent departing) Tanzania and the Central Corridor initiative.

Table 1 provides a summary ofDar Es Salaam throughput to final destination between 2016 and 2019, according to the Central Corridor Transit Transport Facilitation Agency and Northern Corridor Transit and Transport Coordination Authority.

Total volumes across the regional countries served have increased from over 12.9 million tonnes in 2016 to almost 15.4 million tonnes by the end of 2019. Tanzania is by far the largest contributor to these volumes, with just under 9.5 million tonnes in 2019, followed by DR Congo with over 1.9 million tonnes and Rwanda with 1.2 million tonnes.

The other key factor here is the breakdown to local areas (of Tanzania) which is classified as transit goods, therefore moving beyond the country borders of Tanzania.

Here, there is a clear growth in cargo volumes moving to transit markets, with the 2016 total for imports of 3.9 million tonnes rising to over 4.8 million tonnes by the end of 2019. Of course, these volumes are still the smaller component of overall activity, with the local tonnages much larger – for example, localised imports were 8.1 million tonnes.

8 Figure 1

Nevertheless, there has been a change in shares in recent years. For example, in 2016 the share of transit imported tonnes passing through Dar Es Salaam represented 30 per cent and by 2019 had risen to 32 per cent. At the same time, the transit export volume share has risen over the same timeframe from four per cent to seven per cent.

These increases have occurred at the expense of localised cargo activity, with the imported share falling from 56 per cent in 2016 to 53 per cent for 2019, with the proportion of exports also falling slightly over the period, from 10 per cent to nine per cent.

Data from the Central Corridor Transit Transport Facilitation Agency and Northern Corridor Transit and Transport Coordination Authority also confirms that the total import route costs from Dar Es Saleem to Kampala via Mwanza and Port Bell can be achieved at US$1,460 per 20ft and US$2,730 per 40ft for the 1,780km journey.

So, there is multi-national buy-in for the network system, plus a substantial population to be served and cargo volumes needing to be moved, with transport costs known. All the major factors needed to support a trade corridor, but it just means that the infrastructure has to be able to available, accessible and efficient.

There are five phases to the overall Central Corridor rail system development with the total phased construction covering 1315km. With the East Corridor component, the network runs to around 2560km, with the Northern Corridor from Mombasa adding additional coverage too.

In 2017, the contract for Phase 1 rail system development connecting Dar es Salaam to Morogoro, plus capital city Dodoma, was signed, with construction subsequently commencing in Q2 of that year.

‘000 Tonnes

2016 2017 2018 2019

Tanzania 8,461 7,807 9,452 9,489

DR Congo 1,153 1,177 1,780 1,914

Rwanda 863 1,061 912 1,239

Burundi 320 416 380 453

Uganda 166 272 189 141

Other 1,963 2,382 1,914 2,125

Total Traffic 12,926 13,115 14,627 15,361

Transit: In (Imps) 3,903 4,654 4,252 4,841

Transit: Out (Exps) 562 654 921 1,031

Local: In (Imps) 7,190 6,704 8,307 8,147

Local: Out (Exps) 1,271 1,103 1,144 1,342

Transit: In (Imps) – Share % 30% 35% 29% 32%

Transit: Out (Exps) – Share % 4% 5% 6% 7%

Local: In (Imps) – Share % 56% 51% 57% 53%

Local: Out (Exps) – Share % 10% 8% 8% 9% 8 Table 1: Cargo

Volumes Using Dar Es Salaam – Transit and Local (Tanzania), 2016-2019

This first phase between Dar Es Salaam ad Morogoro via rail represents a journey time of 1.5 hours, compared to around 4.5 hours by road. At the same time, the new freight trains operate at 120kph, whereas the older diesel locomotives had a top speed of just 40kph. Clearly, the new routing will be a quicker and more environmentally-friendly option.

Funding for the first two phases involved the government of Tanzania reportedly securing a US$1.46 billion loan from Standard Chartered Bank, although Exim bank of China has also confirmed provision of US$7.6 billion of funding for the overall project.

By November 2020, Phase 1 was reported to be 90 per cent complete. Testing has been undertaken in July 2021 and the full commercial service is scheduled to be in operation before the end of 2021.

Most recently, in July 2021, the Tanzania Railways Corporation (TRC) confirmed it had awarded the contract for manufacturing and supplying the rolling stock to South Korean firm Hyundai Rotem.

The order is made up of 17 electric locomotives costing US$105 million and 80 electric multiple units (EMU) in a deal worth US$190 million. All equipment is a combination of electric and energy efficient models, with deliveries due in 2024.

By November 2021 a batch of 42 locomotives are expected to arrive at the Port of Dar Es Salaam, with an investment of US$50 million in rolling stock from South Korea placed during 2020 too.

However, the process to complete the 202km of rail tracks and six train stations at Dar es Salaam, Pugu, Soga, Ruvu, Ngerengere and Morogoro has taken almost four years. This could mean that to finish the remaining phases of development is easily going to potentially take many more years – a time window that needs to be reduced.

CHALLENGES

One of the biggest challenges to the entire project is that historical demand for rail use has been declining as the road network expands. This is despite the advantage of rail over road in covering longer distances more quickly and lower fuel costs.

Furthermore, in Tanzania there are two other (ongoing) factors generating challenges for rail to overcome.

First, unless a rail station is at the final destination or the original origin of what is being shipped, rail is inevitably multimodal and requires goods to go through a modal shift (usually roads, or, as was the case in Mwanza, ferries).

Second, road transport traditionally allows for considerably more flexible scheduling of the beginning of a shipment, and for better information on the progress of the shipment.

There is also a need for better harmonisation of regulations throughout the wider regions, with interaction between different countries brining regulatory and policy inconsistencies that stifle cross border trade - implementation of a Single Customs Territory and one stop border points are good examples of the current challenges still being faced.

At a port level, the Dar Es Salaam Maritime Gateway project is targeted for a 2024 completion and will reportedly see capacity at the port increase to 25 million tons per annum.