Trade and Industry Correspondent

THE Zambezi Valley spatial development initiative in central Mozambique will reach a turning point next month when the government of that country starts assessing proposals from four short-listed bidders to rehabilitate the Sena railway line.

"The rehabilitation of the line will break a deadlock that has strangled multimillion-dollar investments in the Zambezi Valley," says Paulo Zucula, head of spatial development initiatives at the Development Bank of Southern Africa in SA.

The railway line, which was damaged beyond use in the Mozambican civil war, is believed to be the key to unlocking the valley's investment potential because it can provide affordable transport for goods.

A proposed multibillion-dollar anchor project in the valley could also be advanced during a visit by Brazilian President Luis Inacio Lula da Silva next week.

The development of the wartorn region, which is rich in minerals, fertile soil and water, is of economic importance not only to Mozambique but also to Africa, Zucula says.

"It has potential to reinvigorate the heart of central Africa," says John Mare, a consultant who has worked on the development of the valley. "It also has the potential to make Beira port one of the most important import/export gateways in the region."

Several projects in mining, agriculture and tourism have been identified for the region and are being presented to investors.

The fertile land around the Zambezi River provides for rapidly expanding sugar and cotton production. The area is also home to the Cahora Bassa hydroelectric power project, which provides electricity to the region .

Incentives offered to investors include "substantially reduced" corporate tax and certain exemptions from import duties.

The Mozambican government has pledged $2bn to $3bn to improve infrastructure. The backbone of infrastructure in the valley is the Sena railway line, which runs 550km inland from Beira. It runs through Moatize, where Zucula believes a coalmine or coalfired power station could be established.

The area contains the largest undeveloped coalfield in the southern hemisphere, says Mare.

Iscor and Brazilian resources company CVRD have submitted a proposal for the development of the Moatize project to the Mozambican government. The value of the projects proposed is estimated at about R20bn.

The bid for this work forms part of a bigger bid to upgrade another railway line from Beira to Mutare.

"I'm just hoping that whoever gets Beira-Mutare line contract will take up right to rehabilitate Sena and, therefore, make Moatize viable," says Mare.

He believes plans for the development of Moatize could be advanced during the visit by the Brazilian president, who is bringing a business delegation, including CVRD, with him.

South African group New Limpopo Bridge Projects Investments, whose shareholders include Nedcor, Old Mutual and Sanlam, is one of four short-listed bidders for the Sena and Beira railway line projects. Other bidders include Chinese, Indian and African groups.

Zucula says the Mozambican government could select the winning bid by the end of the year.

The spatial development initiative is funded by the South African and Mozambican governments. SA renders mainly technical assistance, and the country's expenditure on the project totals about R8m .

Zucula says conditions are now ripe for investment in Mozambique.

He believes that with the correct investment regulations and incentive schemes in place, and with the key infrastructure problems being addressed, the Zambezi Valley is set for its muchneeded development.

Oct 29 2003 07:00:08:000AM Carli Lourens Business Day 1st Edition