Mozambique major roads and bridges construction set to boost its economy

 Mozambique major roads and bridges construction set to boost its economy

Mozambique’s major roads and bridges construction set to boost it’s economy.

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Mozambique’s roads and bridges development project sets an overall aim to stimulate the country’s economic growth and also play a part in poverty reduction through better sector policies, upgraded road infrastructure and also through improved roads sector management.

The aim of the program’s second phase operation is to improve the access to all season roads for the population through maintenance, rehabilitation and improving the classified road network.

The Integrated Feeder Roads Project (IFRDP) which is being financed by the World Bank, has the main objective of rehabilitating and maintaining the country’s tertiary roads hence why a large percentage of the investments target construction and repair of bridges and culverts which will improve accessibility especially in flooding or rainy seasons.

The IFRDP allocated $185million to the rehabilitation and upgrade of existing roads in key provinces which include Manica, Zambezia, Tete and Sofala.

The Bank Group’s intervention strategy in the transport sector was consistent with the proposed project as stated in the Mozambique Country Strategy Paper (CSP) 2006-2010 that also emphasized the Montepuez-Lichinga Road to be a priority intervention for the Bank in the Transport Sector.

Reason to the creation of the CSP was to fit in as support for the Action Plan for Reduction of Absolute Poverty (PARPA, 2006-2010) which focused on infrastructure and governance as pillars to assist the government’s development policy and to meet the banks operational objectives.

In the ROADS-3 programme the Montepuez-Lichinga Road, a vital link in the corridor, was considered to be of high priority hence being a necessary investment in Cabo Delgado and Niassa Provinces.

It was expected that the road will boost tourism in Cabo Delgado and Niassa, will provide communities access to socio-economic services, to and markets in major towns of Montepuez, Balama, Marrupa and Lichinga hence complementing the Pemba Montepuez and the Litunde-Marrupa links.

As a way to help achieve these objectives, the Lichinga-Litunde road link which was financed by the Supplementary Loan was made a priority.

The project’s goals were to rehabilitate the Litunde-Lichinga road and construction of five bridges between Marrupa and Litunde and the expected outputs were efficiently delivered on 30 November 2018.

Expected outcomes include better integration of rural areas in the project region, improved transportation linkage between markets and areas of production in Niassa and Cabo Delgado, improved transport services and better road safety on major corridors.

 

 

Estimations/Assumptions

No Description At Appraisal

2010

At Completion

2019

1. Construction Period 3 years(2010-2013) Feb 2012-Nov 2018
2. Discount Rate 12% 12%
3. Analysis Period 20 years 20 years
4. Salvage Value 20% 20%
5. Final IRI after improvement 2.0 2.0
6. Standard Conversion Factor (SCF) 0.78 0.78
7. Exchange Rate 1 USD=MZN 30.3 1 USD=MZN 61.3
8. Total project Cost Financial Cost-52.40

Economic Cost-40.87

Financial Cost-44.75

Economic Cost-34.90

9. Economic Cost per Km USD 619,242.42 USD 528,787.88

Source: Africa Development Fund (ADF)

 

The Economic Analysis for the Litunde-Lichinga Road and construction of 5 bridges between Marrupa and Litunde was done in 2010 and the EIRR was 22.1%. The table above shows assumptions that were made in reconstructing the HDM-4 workspace for the project.

Completion of the post project economic re-evaluation showed a reduced EIRR of 15.3% as compared to 22.1% probably due to the reason that the assumptions made may differ from the actual parameters used in the initial analysis.

The Road Sector budget for 2019 was US$275.6 million of which US$43 million was for maintenance. As time passed by analysis of funding to the sector over the last couple of years revealed that expenditure on maintenance operations increased from MZN202 million in 2013, of which it was only 4% of total sector expenditure, to a new amount of MZN6.0 billion in 2018 which was 38% of total sector expenditure.

Mozambique has faced many challenges for the past five years which include cyclones and the Islamic insurgency which has delayed completion of other projects.

Chen Williams

A young Energetic communication expert with an unrivaled ability to understand how to pitch stories objectively for financial publications and the Arts. Passionate about business, the youth in agriculture, video editing, photography, and music production.

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