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         Northern transport corridor project

The Implementation Completion Report (ICR) on the Malawi Northern Transport Corridor project (Credit 1879-MAI, approved in FY87) was prepared by the Africa Regional Office and reviewed by the Operations Evaluation Department (OED). The credit, in the amount of $13.4 million equivalent, was approved on March 3, 1987, and closed on June 30, 1994, as originally scheduled. An undisbursed balance of about US$1 million was canceled. The Netherlands, the United Kingdom, the European Development Fund, Germany, and the United States cofinanced the project in the amount of US$119 million equivalent. The latter three provided comments on the ICR. The Borrower did not provide any comments.

The project's main objective was to provide a more cost effective route to the sea for Malawian imports and exports at a time when most Malawian trade was carried by road via South Africa because the shorter routes via Mozambique were closed and appeared unlikely to reopen in the foreseeable future. The project's objective was to be achieved by improving the Northern Transport Corridor (NTC) leading from Southern Malawi to the port of Dar es Salaam in Tanzania. Project components included infrastructure and equipment for use on the NTC route, as follows: (i) construction of storage and transshipment facilities at two ports on Lake Malawi, and dredging of these ports; (ii) improvement of two roads in Malawi (one South and one North of the shipping services) and a connecting road in Tanzania; (iii) construction of storage and transshipment facilities in Tanzania; (iv) provision of rail wagons for the Tanzania-Zambia Railway Authority; (v) construction of a border post on the Malawi-Tanzania border; and (vi) technical assistance for the project’s implementing agencies.

The project was unable to meet its main objective because some components financed by bilateral agencies are not yet operational. In particular, while physical investments on the NTC were completed, dredging at the two ports on Lake Malawi was inadequate and prevented operation of new freight services on the lake. On the institutional side, the entity comprising private and public shareholders, created to manage, promote and market the new NTC facilities is working well, and has been instrumental in facilitating the flow of freight through the NTC network. Only a small part of the training envisaged was carried out. Construction of the facilities in Tanzania required the resettlement of some 3,000 people. They received adequate compensation payments, but only part of the infrastructure improvements for the new resettlement area, to be carried out under the project, were implemented.

Benefits were less than expected because of (i) delays in implementing various components of the NTC, and (ii) transport demand on the NTC route has subsequently dropped and remained below projections. At the same time, investment costs were higher than estimated. Thus, the reestimated return on the investments is seven percent, compared to sixteen percent foreseen at appraisal.

OED rates the outcome as unsatisfactory, in line with the ICR rating. It rates the institutional development impact as moderate (compared to negligible in the ICR), because the project succeeded in creating a competent agency to manage the NTC, which, by 1992, was handling some 30 percent of Malawi’s foreign trade. OED rates sustainability as uncertain (compared to likely in the ICR) because the newly re-opened transit via Mozambique could divert traffic and reduce NTC’s revenue base. In accord with the ICR, OED rates Bank performance as satisfactory, although project supervision was deficient.

The main lesson is that given that the Mozambique routes were expected to reopen eventually, the project design and implementation should have minimized both its cost and gestation time. Yet its design which involved many components, executing agencies and co-donors rendered implementation overly complex, costly and protracted and made it impossible to drop early on the components which turned out to be less than essential and behind schedule.

The ICR is of satisfactory quality; however, it was issued two years after project completion.

No audit is planned.

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