ONE-STOP BORDER: PROJECT BETWEEN MOZAMBIQUE AND S.

UNCLAS SECTION 01 OF 02 MAPUTO 000896

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EIND EINV EINT PGOV ETRD MZ SF
SUBJECT: ONE-STOP BORDER: PROJECT BETWEEN MOZAMBIQUE AND S.
AFRICA DELAYED

This cable is a collaboration between Embassy Maputo and
Embassy Pretoria and is part of a series of reporting on
regional transport infrastructure developments.


1. (SBU) Summary: Econoff met with officials at the
Government of Mozambique (GRM) on May 28 and the South
African Revenue Service on July 2 to discuss the status of a
joint one-stop border project between Mozambique and South
Africa. Plans to create a 24-hour, one-stop border were
signed in 2007, but construction has been delayed due to the
global economic downturn and changes in the leadership in the
South African Government (SAG). Stakeholders from both
governments met on July 10 to reiterate their commitment to
the project, but their respective economic and political
priorities differ greatly. End Summary.

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Genesis of Project
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2. (SBU) Discussions to create a 24-hour, one-stop border at
Ressano Garcia between Mozambique and South Africa to handle
increasing trade and tourism flows started in 1997. A Heads
of State Agreement outlining a construction deadline of March
2010 was signed in September 2007. The original intent was
for the project to be completed well in advance of the June
2010 FIFA World Cup, which is expected to boost trade and
tourism activities in the region. The South African
Government (SAG) originally earmarked R600 million ($74
million) to fund the project. The Government of Mozambique
(GRM) could not offer much financial support, but has pledged
land and facilities for the initiative.

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Project Expected to Reduce Congestion
--------------


3. (SBU) Barbara Mommen, CEO of the public-private Maputo
Corridor Logistics Initiative, told the South African press
that the existing border post was not designed to handle the
current load and the new project would "go a long way towards
addressing both the infrastructure, processing, and
congestion constraints." In 2005, the two countries
eliminated visa requirements and passenger flows have
increased 80 percent since then. The current infrastructure
is inadequate to handle this dramatic increase. Passenger
flows also tend to rise dramatically during the Easter and
Christmas holiday seasons and are expected to do so during
the 2010 World Cup. During the Christmas holidays, over
500,000 passengers crossed the border.


4. (SBU) The new one-stop border post will include three
separate facilities to process tourists/passengers, rail
cargo, and commercial cargo. It will be built to ensure that
there is enough space for the movement of both passengers and
freight trucks, which will improve the current situation
where freight trucks block the roads through the border,
leading to long passenger and freight delays. Cargo traffic
will be processed at a site four kilometers inside the
Mozambican border known as KM4. The relevant border
authorities from South Africa and Mozambique will manage this
site to ensure that documentation processing is efficient and
user-friendly. Documentation processing by the two
countries' respective customs and immigration departments is
currently inconsistent, repetitive and adds to congestion.

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Economic Downturn Threatens Progress
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5. (SBU) The new SAG leadership decided to reduce its
financial contributions for the one-stop border project after
the South African national elections in April 2009. SAG
leadership cited the economic recession and escalating costs
for required domestic World Cup preparations (stadium
construction and public transport upgrades) as the cause for
this decision. SAG officials are now calling for a phased
approach for the one-stop border project. SAG can currently
contribute only R366 million ($45 million),which means that
both countries will have to raise the rest of the funds from
private investors and donors. SARS officials also indicated
that project costs would be much higher than the original
estimates since construction did not begin as expected in May

2008.

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Disagreements over Project Design

MAPUTO 00000896 002 OF 002


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6. (SBU) Progress on the project was also stalled because SAG
wanted to develop the passenger facility first in time for
the World Cup and to place the commercial cargo facility on
South African soil instead of the original plans for all
three facilities to be located on shared land. However, the
GRM would like to simultaneously develop all of the
facilities. The SAG is focused on tourism growth and
facilitation because of the World Cup, but the GRM is more
economically dependent on cargo trade. Incoming SAG
leadership was also skeptical about the GRM's buy-in for the
project given its lack of financial contribution.


7. (SBU) The GRM is getting more involved with the project to
address SAG concerns and is re-examining its budget and
alternative funds to see whether it can raise the money
required to have more influence on the construction phases.
The GRM has approached donors such as the World Bank to see
whether they could provide financing for some of the
infrastructure. GRM officials still hope that the first
phase will be completed by March 2010. However, a meeting of
GRM and SAG stakeholders scheduled for June was delayed to
July 10 by the South African side. GRM officials expressed
frustration that timelines for the other two phases have not
been established yet.

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Stakeholders Reiterate Commitment
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8. (SBU) Stakeholders from the GRM, SAG, and private sector
toured the sites for the one-stop border project on July 10
and reiterated their support for implementation despite the
economic downturn and escalating costs. Cost estimates for
the original plan design have reportedly reached R2 billion
($250 million). Stakeholders committed to retaining the
objectives of the original design, but agreed to examine more
cost-effective approaches. Technical teams from both
governments have been tasked to develop cost-saving
strategies to be submitted to their respective governments
within 30 days.

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COMMENT
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9. (SBU) Both sides remain committed to the development of
the one-stop border project, but their respective economic
and political priorities differ greatly. The GRM would like
to see greater progress on the development of the second and
third phases since its economic growth and plans to increase
capacity at the Port of Maputo depend heavily on the
facilitation of cargo movements between the two countries.
The incoming SAG also faces its own set of economic and
political constraints. The incoming Zuma administration
campaigned on a platform to focus increasingly on domestic
economic growth and service delivery, but faces the first
major economic recession since the end of the apartheid era.
In addition, costs for infrastructure investments for 2010
World Cup-related projects have been rising. The Zuma
administration has begun reprioritizing SAG investments to
focus on the mandatory domestic projects first.
CHAPMAN