Central Corridor member states are finding it difficult to attract private investors to finance prioritised infrastructure projects because of the huge financial outlay and the delayed return on investment involved.
This puts the governments under pressure to either finance the projects from their budgets, or mobilise donors to fund the activities.
These financing issues were raised last week during the 4th Central Corridor Transit Transport Facilitation Agency (CCTTFA) regional task force meeting to review the Presidential Round Table (PRT) resolutions and finalisation of an implementation plan.
“What private investors want is to put money in projects that make quick returns, but projects like railways are long term and this is partly why the private sector is shunning these projects,” said George Rukara, Assistant Commissioner of Water and Rail Transport Regulation in Uganda’s Ministry of Works and Transport.
The five Central Corridor member states are Rwanda, Uganda, Tanzania, Burundi and the Democratic Republic of Congo.
Unlike Tanzania, the other Central Corridor members are landlocked and any efforts to access to the sea would facilitate trade.
Drawing funds from their coffers would strain regional governments given that some have a tight budget for domestic expenditure and the Central Corridor projects have not been included in this year’s fiscal budget.
Member states have the huge task of securing funds to finance more than 10 new joint development projects that have been prioritised and will be jointly owned and funded. The projects are to enhance intra-regional trade by lowering the cost of doing business between member states.
More than 60 per cent of Rwanda’s imports and exports go through this corridor, while the eastern Democratic Republic of Congo depends heavily on this route as well.
The projects are in the energy, railway, road, aviation, ICT, trade facilitation and maritime sectors, and are estimated to cost millions of dollars.
Mr Rukara said the burden of putting the infrastructure in place lies with the government, and that private investors can only come in if governments privatise the services.
In the aviation sector, for example, the countries want the existing Bilateral Air Services Agreements amended to comply with the Yamoussoukro Decision. The amendment of transport laws would enable free movement of people.
Although visa fees within EAC member states have been removed, Central Corridor members are still subject to visa requirements by the DRC.
However, some technocrats say the projects are still in the initial stages and the financing should not be an issue at the moment.
“We don’t want to be pessimistic at this early stage, because the member countries will go back and mobilise individually. If they can’t, that is when joint mobilisation of resources will be done,” said chairman of the Central Corridor stakeholders consultative meeting Nathan Gashayija.
The Isaka railway project under the public private partnership is still looking for investors to help start the project.