21st September 2021
The official opening of the Kazungula road and rail Bridge to traffic on 10th May 2021 marked the accomplishment of an ambitious goal for Zambia and Botswana, and Southern Africa more generally. It demonstrated the region’s ability to cooperate in infrastructure development so as to facilitate trade, deepen regional integration within the SADC, and realise the desired socioeconomic development.
At an estimated cost of US$259.3 million and a length of 923 metres; the Bridge is certainly an economic necessity and a marvel, with its curved shape. While the commissioning of the Bridge has generally been met with many accolades, there has also been some concerns from industry and trade actors over the perceived high toll fees.
The Bridge replaces the erstwhile Kazungula Pontoon in transporting trucks, goods and persons across the Zambezi River. The pontoon services were highly inefficient and caused significant border delays. Via the Bridge, transit time is expected to reduce from about eight days to less than half a day (African Development Bank, 2018). The Bridge, coupled with one-stop border posts (OSBPs) on either side, offers immediate benefits for trade such as improved connectivity of the North-South transport corridor, and lower trade costs resulting from reduced transit and border clearance time. In turn, reduced trade costs could significantly increase Southern Arica’s trade competitiveness and participation in both regional, continental and global trade. Civilians and tourists will also see reduced travel time and thus reduced costs.
Without doubt, such trade facilitation projects are imperative. As evidenced in years past, the liberalisation of tariffs has not significantly boosted intra-regional trade within SADC and COMESA. Intra-regional trade remains low in SADC and COMESA estimated at 19 percent and 12 percent respectively, in 2020. Other factors such as cumbersome customs and border procedures and inadequate road and border infrastructure have been found to increase transaction and transport costs at-the-border, behind-the-border and beyond-the-border. Consequently, these high trade costs act as limiting factors to increased intra-African trade and the benefits thereof (Cross-Border Road Transport Agency, 2021).
Notwithstanding the benefits to be realised, the toll fees to be levied at Kazungula Bridge have come under intense scrutiny – purported to be exorbitant and expected to impede formal trade. The toll fees range from US$6 for motorcycles, US$15 for a passenger car, US$25 for light trucks, US$35 for minibuses (26 seater), US$65 for trucks with carrying capacity of 10 tonnes or more, to as high as US$100 for a Horse with 2 interlink trailers. At face value, indeed, these fees are seemingly high. But to add perspective to this debate, the fees do not compare badly to the toll fees levied at the Beitbridge in Zimbabwe – the alternative and traditional border bridge used to link the port of Durban in South Africa to the DRC through Zimbabwe and Zambia.
At Beitbridge, a motorcycle attracts a toll fee of US$4 whilst a light motor vehicle attracts US$9 (Government of Zimbabwe, 2019). Granted, this is US$2 and US$6 respectively, lower than the fees charged for similar vehicles at Kazungula. However, it must be acknowledged that over time, the infrastructure at Beitbridge Border Post and the associated road network has become dilapidated, resulting in border delays of two to three days and consequently increasing trade costs (African
Business, 2021). This is largely a result of insufficient investments in maintaining and upgrading the infrastructure. In fact, in a bid to raise resources required to rehabilitate and modernise the Beitbridge Border Post and the Beitbridge-Harare-Chirundu highway; Zimbabwe revised upwards some of the toll fees in 2020. A goods vehicle with a carrying capacity of more than 10 tonnes is now levied US$175, more than double the toll fee for a similar vehicle at Kazungula. A minibus with a seating capacity of 24 passengers now attracts US$35, the same toll fee for a similar vehicle at Kazungula.
There are two important takeaways we must highlight. First, there is need for appropriate cost recovery systems such as toll fees to raise sufficient resources for maintenance and safeguarding of infrastructure investments from becoming dilapidated. Second, the Bridge is largely debt-financed (89 percent) funded by the African Development Bank (US$81.6 million) and the Japanese International Cooperation Agency (US$ 149.2 million). The remainder constitutes of capital investments by the Zambian (US$ 13.5 million) and Botswanan (US$10.3 million) governments and a grant from the EU-Africa Infrastructure Trust Fund (US$ 4.8 million). The two Governments will need to recoup their investments in addition to servicing and paying back the project debt. Further to the investment costs, the bridge also has a colossal operating and maintenance cost, about US$250,000 over its 30-year economic life, that must be financed (African Development Fund 2011).
For Zambia with limited national infrastructure funding and a nascent public-private partnership framework; financing road infrastructure investment, maintenance and rehabilitation through debt and tolling is innovative. This is in line with the Tolls Act No. 14 of 2011 that authorises the National Road Fund Agency to establish and operate toll points on any road, border post, bridge, pontoon or other place for the construction, maintenance, and rehabilitation of roads. The Act in principle ring-fences the toll fees from the Kazungula Bridge to be used for the aforementioned purposes only. However, there is an inherent fungibility and fiduciary risk that the toll fees can be applied to any infrastructure other than the Kazungula Bridge, and/or may not actually be applied towards maintenance. At regional level, tolling is also consistent with the SADC protocol on Transport, Communications and Meteorology that requires member states to identify adequate, sustainable and appropriate sources of infrastructure financing such as user charges that will ensure full maintenance and improvement.
As to whether the toll fees are fair or exorbitant, the recent increment by Zimbabwe suggests that the Kazungula tolls fees may not be too outrageous. In any case, the time-savings and efficiency created from crossing Kazungula, could in principle, offset the higher charges. Notwithstanding, it may be worth heeding the calls to review the charges to ensure sustainability and fairness. Moreover, under the SADC framework, member states are supposed to implement harmonised cross-border charges which should address concerns of fairness.
By: Mwanda Phiri and Zali Chikuba
The authors are researchers at the Zambia Institute for Policy Analysis and Research (ZIPAR). For details contact: The Executive Director, ZIPAR, MNDP Complex, Cnr John Mbita & Nationalist Roads, P.O. Box 50782, Lusaka. Telephone: +260 211 252559. Email: info@zipar.org.zm