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The Tanzania-Zambia Railway: the Chinese Loan and the Pre-Investment Analysis Revisited

Published online by Cambridge University Press:  11 November 2008

Ngila Mwase
Affiliation:
Senior Research Fellow, Economic Research Bureau, University of Dar es Salaam

Extract

The idea of a railway from the Zambian Copperbelt to the Indian Ocean via Tanzania had long been considered. But although the first serious report was published in 1952 by a consultant from the British Colonial Office, it was not until 1964, the year of independence, that further studies were commissioned, all of which eventually found such a railway uneconomic. The World Bank mission erred in tying the cost estimates to the trans-shipment of goods (due to gauge differences), and ignoring the option (actually taken) of constructing a direct line to Dar es Salaam. The U.N. team argued that the reasons for the project were too speculative, that the existing railways had spare capacity, and that the likely development benefits were invalid, unless an iron and steel complex emerged. In 1965 the authors of the Brookings Institution study felt that the project was an unnecessary duplication of existing facilities, and that transport matters in the region should be depoliticised, an idealistic proposal since there are external benefits and costs involved in the operation of railways.

Type
Africana
Copyright
Copyright © Cambridge University Press 1983

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References

page 535 note 1 United Kingdom, Colonial Office, Report on Central African Railway Link Development Survey (London, 1952), Vols. 1 and 2.Google Scholar

page 535 note 2 World Bank, Report on the North East Rail Link. Summary and Conclusions (Lusaka, 1964).Google Scholar

page 535 note 3 Report of the UN/ECA/FAO Economic survey Mission on the Economic Development of Zambia (Ndola, 1964), led by Dudley Seers.Google Scholar

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page 535 note 5 Stanford Research Institute, Tanzania-Zambia Highway Study (Menlo Park, California, 1966).Google Scholar

page 535 note 6 The Tanzania-Zambia Railway must have appeared as a threat to the World Bank because of its heavy investment in the East African Railways, and the attached conditions that barred loans for alternative lines, particularly in the direction of Zambia.

page 536 note 2 Maxwell Stamp Associates, ‘A British-Canadian Report on an Engineering and Economic Feasibility Study for a Proposed Zambia-East Africa Rail Link’, Vols. 1 and 2, London, 1966.Google Scholar

page 536 note 3 See Yu, George, ‘Working on the Railroad: China and the Tanzania-Zambia Railway’ in Asian Survey, 1971 (Hong Kong), pp. 1101–17;Google ScholarElliott, Charles (ed.), Constraints on the Economic Development of Zambia (Nairobi and London, 1971);Google ScholarHall, Richard and Peyman, Richard, The Great Uhuru Railway: china's showpiece in Africa (London, 1976);Google Scholar and Mutukwa, Kasuka S., Politics of the Tanzania-Zambia Rail Project: a study of Tanzania-China-Zambia relations (Washington, D.C., 1977).Google Scholar

page 537 note 2 One of Maxwell stamp's consultants has argued that even if political considerations were set aside, the Tanzania-Zambia project could offer an alternative to double tracking the single line on the Rhodesia Railways (of which Zambia was a joint owner), since the costs were comparable. See Harrison, E., ‘Reorientation of Transportation Patterns from Zambia after Rhodesian UDI’, Ph.D. dissertation, Coloumbia University, New York, 1972.Google Scholar

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page 539 note 2 Some I.D.A. loans to Tanzania road project, for example, have been free of interest, payable over 50 years after a 10-year grace period, except for a commitment charge of ¾%. Countries giving such ‘soft loans’ include Canada, Sweden, the Netherlands, and the United Kingdom, and their Governments have sometimes agreed to ‘write off’ these debts. See Speech by the Minister for Finance, Introducing the Estimates of Public Revenues and Expenditure to the National Assembly (Dar en Salaam, 1972), para. 86.Google Scholar

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page 539 note 4 The problem is exacerbated by the fact that the Chinese priced their inputs into the Tanzania-Zambia railway in bulk–e.g. one shipload. Even the railway's actual cost was only settled after the project had been completed. Thus, more trust was required of Tanzania and Zambia than was needed with most western bilateral or international aid agencies.

page 540 note 2 The increase in imports from China was related more to the railway project than to the diversification of trade, as may be seen from the fact that the value of Tanzania's imports from China dropped to 7.4 per cent in 1976. Exports to China have been static, rising from 3.3 per cent of total exports in 1964 to a peak of 4.4 per cent in 1973, and stabilising at 3 per cent in 1976.

page 540 note 3 The adverse impact on East African trade should not be exaggerated. The change in the level of potential trade within the Common Market on account of products imported from China, but also produced in East Africa in 1970–1, for example, was no more than Shs. 18.2 million. However, although these ‘barter arrangements’ were not in the spirit of the Common Market, the terms of alternative supplies from Kenya were not particularly advantageous. See Common Market and Economic Affairs Secretariat, ‘A Report of the Working Party on Possibilities for Closer Harmonization of Monetary/Fiscal and Payments Policies within the East African Community’, Arusha, 1973.

page 540 note 4 Yu, loc. cit.

page 540 note 5 Makoni, R., ‘The Economic Appraisal of the Tanzania-Zambia Railway’, in The African Review (Dar es Salaam), 2, 4, 06 1972, pp. 596616.Google Scholar

page 542 note 1 The Tanzanian Shilling was devalued by 10 per cent in 1982, and by a further 20 per cent in June 1983, in accordance with the demands of the International Monetary Fund.