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African Development Bank lends $40 million to Mozambique’s Railway and Port Authority to buy rolling stock for Ressano Garcia railway line
On 31st January, the African Development Bank approved a $40 million loan to Empresa Pública Portos e Caminhos de Ferro de Moçambique EP (CFM), Mozambique’s railway and port authority. This financing supports CFM’s strategic plan for the period 2021-2024, with the possibility of mobilising an additional $30 million from other lenders.
The main objective is to enable CFM to finance the acquisition of rolling stock (locomotives, wagons and tank containers) for its main corridor, the Ressano Garcia railway line. This corridor represents more than 90% of the rail traffic volume and 70% of CFM’s total rail transport volume.
The project includes the acquisition of 10 diesel-electric locomotives of 3000/3300 horsepower, 300 wagons and 120 tank containers. The funding will also cover a three-year maintenance programme for the acquired locomotives and training of CFM maintenance personnel.
The implementation of the project will improve logistics and reduce the cost of transporting goods and products by efficient and cost-effective means, benefiting from economies of scale. This is expected to lead to an improvement in the competitiveness of the corridor and make it a cost-effective logistics transport solution.
The project will improve household access to infrastructure through rail transport services, potentially reducing congestion and road travel times. It is also expected to increase the use of freight transport and port services by private companies, which will contribute to the overall competitiveness of businesses and generate linkages to the local economy through local hiring and demand for other non-tradable services.
The project will also strengthen intra-African trade and regional integration by increasing the capacity and volume of goods transported from neighbouring countries along the most efficient route, with Mozambique serving as a port for exporting goods and importing goods to neighbouring countries such as South Africa, Eswatini, Malawi, Zimbabwe and Zambia.
In addition to the economic benefits, the project will also achieve significant net carbon savings, with a projected reduction of 744,511 kilotonnes of CO2 over the period 2023-2035.
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