A Chinese consortium will construct a $650 million toll road in the Zambian Copperbelt province, after several years of delay amidst the Covid-19 pandemic.
The proposed 327-kilometre-long roadway joins the Zambian capital, Lusaka, with the country’s third most populous city, Ndola.
Once complete, the dual carriageway toll road will form a reliable trade route between Lusaka, Ndolo and the neighbouring Democratic Republic of Congo.
It will facilitate almost all road-bound mineral exports from the mineral-rich Copperbelt through Tanzania, to the port city of Dar es Salaam.
The Macro Ocean Investment Consortium, made up of the Zhenjiang Communications Construction Group, AVIC International Project Engineering and China Railway Seventh Group, secured the contract under a public-private-partnership (PPP) model, according to March 10 report made by the Hong Kong news site, South China Morning Post.
Landlocked Zambia has predominantly relied on the southern trade corridors it operates with South Africa, Namibia and Tanzania on its southern, western and eastern flanks.
Every year, top Zambian exports such as copper wire ($11.4 million), soybean meal ($6.61 million) and maize ($12.5 million) make their way to Tanzania in exchange for oil, fuel, machinery and other finished international imports from one its oldest trade allies in the region.
Signed in February 2023, the agreement granted the Chinese firms a 25-year concession period consisting of a three-year construction window and 22 years for operation and maintenance.
The deal is structured more favourably towards an embattled Zambian economy than previous proposals and will lessen its debt burden.
According to Zambian law, any PPP concession must guarantee that more than 20% of the work is given to domestic contractors.
Research fellow at the University of Stellenbosch’s Centre for International and Comparative Politics, Tim Zajontz, told SCMP that Zambia had previously signed a $1.25 billion agreement with China Jiangxi Corporation, but the make-up of the arrangement was widely controversial.
Zajontz, who has studied Zambia-Sino relations in the sector, said a newly-elected Zambian government cancelled the deal last year.
The Zambian government would neither spend money nor provide any sovereign guarantee for the infrastructure deal, said Finance and Planning Minister, Situmbeko Musokotwane.
Lusaka would not pay for maintenance of the carriageway until the end of the concession period, but would profit from revenues generated by the tolls and other applicable taxes, said Musokotwane.
PPP project financing has gained popularity amongst cash-strapped governments, as construction costs are carried by investors upfront, with compensation for the project accrued over time.
Another PPP-financed roadworks project, the 27-kilometre Nairobi Expressway, is being financed by the China Road and Bridge Building Corporation for an estimated $668 million over a 30-year concession period.