losure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 84067 CONGO 40°E Kinshasa Co ngo 5°S Lake 5°S DEM. REP. OF CONGO Cabinda Tanganika Dodoma Mbanza Ka Kwa Congo sa i TANZANIA ngo Dar es Salaam Uige Lucapa Caxito Luanda Malange Lake Mweru Saurimo 10°S Karonga Kasama 10°S Ngunza Mansa eze Mzuzu Luena mb Lubumbashi Za Ruvum a Benguela Kuito Lake Huambo Malawi ANGOLA Ndola MALAWI Lichinga Pemba Lilongwe Kafue 15°S Menongue ZAMBIA Nacala Namibe Lubango Mongu Lusaka Lumbo Zomba Ilha de 15°S Zambezi Nampula Moçambique Kariba Blantyre Cu Lake Tete Shir ban MOZAMBIQUE Za e go m be Onjiva zi Harare Livingstone Quelimane ZIMBABWE Beira 20°S Bulawayo 20°S Masvingo BOTSWANA Limp Windhoek op o NAMIBIA INDIAN Gaborone Inhambane OCEAN 25°S Pretoria Xai-Xai 25°S Maputo Mbabane SWAZILAND ATLANTIC OCEAN Main Roads Maseru LESOTHO Main Railroads 30°S SOUTH AFRICA Durban Main Rivers Main Ports 30°S Airports and Airfields Cities and Towns GSDPM Map Design Unit National Capitals Cape Town This map was produced by the Map Design Unit of The World Bank. International Boundaries The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. IBRD 40429 10°E 15°E 20°E 25°E 30°E 35°E 40°E OCTOBER 2013 Disclaimer: This volume is a product of the staff of the World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Table of Contents Acknowledgements . ......................................................................................................................... iv Abbreviations and Acronyms . ...................................................................................v Foreword . ........................................................................................................................ vi I. Introduction..................................................................................................................... 1 Objective .................................................................................................................................................. 1 Context...................................................................................................................................................... 1 Growth Poles . .......................................................................................................................................... 4 Regional Integration................................................................................................................................ 5 II. Revealing Growth Poles...............................................................................................11 .................................................................................................................................................... 11 Criteria. Map II.1 Potential Regional Growth Poles.......................................................................................... 12 Map II.2 Agribusiness............................................................................................................................ 14 Map II.3 Mining.................................................................................................................................... 16 Map II.4 Tourism................................................................................................................................... 18 Maps II.5 Marketsheds ......................................................................................................................... 20 III. Observations ................................................................................................................27 Areas of Interest .................................................................................................................................... 27 Cross Border Pairs.................................................................................................................................32 Map III.1. Tete-Blantyre.......................................................................................................................34 Map III.2. Livingstone – Victoria Falls................................................................................................39 Map III.3. Harare-Beira Corridor........................................................................................................44 IV. Conclusions and Next Steps .......................................................................................49 Annexes Annex 1: Competitiveness Indicators .........................................................................................................51 Annex 2: Regional Maps of Productive Factors ........................................................................................53 Annex 3: Spatial Analysis Method............................................................................................................... 95 References...........................................................................................................................105 Further Reading ................................................................................................................107 Growth Without Borders | i the World Bank List of Tables Table III.1: Key Attributes of Growth Pole Areas................................................................................... 29 Table III.2: Tete Province (Mozambique) – Blantyre (Malawi)............................................................ 34 Table III.3: Livingstone (Zambia) – Victoria Falls (Zimbabwe)........................................................... 39 ....................................................................... 43 Table III.4: Harare (Zimbabwe) – Beira (Mozambique). Table 1.1: Factors Affecting Foreign Investor Attractiveness.............................................................. 47 Table 1.2: Factors Affecting Trade Across Borders.............................................................................. 47 Table 1.3: Factors Affecting Competitiveness of SMEs....................................................................... 48 Table 1.4: Effectiveness of the Public Sector . ...................................................................................... 48 Table 3.1 Growth Pole Identification Criteria ................................................................................... 97 List of Maps Map II.1: Potential Regional Growth Poles . ...................................................................................... 12 Map II.2: Agribusiness Growth Pole Potential ................................................................................... 14 Map II.3: Mining Growth Pole Potential . ........................................................................................... 16 Map II.4: Tourism Growth Pole Potential ........................................................................................... 18 Map II.5a: Marketsheds of Cities Larger than 500,000 people (Closed Borders) .......................... 20 Map II.5b: Marketsheds of Cities Larger than 500,000 people (1 Day Border Delay)..................... 22 Map II.5c: Marketsheds of Cities Larger than 500,000 people (No Border Delay).......................... 24 Map III.1: Tete – Blantyre ....................................................................................................................... 30 Map III.2: Livingstone – Victoria Falls . ................................................................................................ 35 Map III.3: Harare – Beira . ..................................................................................................................... 40 Map 2.1 Population Densities (2010) . ............................................................................................... 50 Map 2.2 Staple Crop Productions (2000) .......................................................................................... 52 Map 2.3 Agricultural Investment (since 2005) ................................................................................. 54 Map 2.4 Mines by Commodity (2012) . ............................................................................................. 56 Map 2.5 Mining Investment (2003–2013) . ....................................................................................... 58 Map 2.6 Hotels and Tourist Attractions . ........................................................................................... 60 Map 2.7 Tourism Investment (2003–2013) ....................................................................................... 62 ii | Growth Without Borders Map 2.8 Investment in Services, Infrastructure or Construction (since 2003) ............................ 64 Map 2.9 Districts Categorized by Electrical Grid Access (2006) ................................................... 66 Map 2.10 Regional Trade Corridors .................................................................................................... 68 Map 2.11 Market Access: Estimated Time to Market . ....................................................................... 70 Map 2.12 Non-Tariff Barriers to Trade (2013) . .................................................................................. 72 Map 2.13 World Bank Financed Projects (as of 2011) . .................................................................... 74 Map 2.14 Angola Export Volume (2012) . ........................................................................................... 76 Map 2.15 Malawi Export Volume (2012) ............................................................................................ 78 Map 2.16 Mozambique Export Volume (2012) . ................................................................................. 80 Map 2.17 Zambia Export Volume (2012) ............................................................................................ 82 Map 2.18 Zimbabwe Export Volume (2012) ....................................................................................... 84 Map 2.19 Estimate of Density of GDP (2008) ................................................................................... 86 List of Figures Figure I.1 Zambia Export Comparison (2012) . .................................................................................... 6 Figure I.2 FDI by Country ...................................................................................................................... 7 Figure I.3 Combined FDI . ...................................................................................................................... 8 Figure 2.1: GDP Growth Rate of Selected Countries .......................................................................... 92 Figure 2.2: FDI by Sector: Angola . ......................................................................................................... 92 Figure 2.3: FDI by Sector: Malawi ......................................................................................................... 92 Figure 2.4: FDI by Sector: Mozambique ................................................................................................ 92 Figure 2.5: FDI by Sector: Zambia . ....................................................................................................... 93 Figure 2.6: FDI by Sector: Zimbabwe . ................................................................................................... 93 Figure 2.7: Expected Job Creation by Sector ........................................................................................ 93 List of Boxes Box 1 World Bank Support to Growth Pole Projects in Africa . ................................................. 3 Box 2 Spatial Development Initiatives in the Region .................................................................. 5 Box 3 Regional Integration in Southern Africa ............................................................................ 7 Box 4 Signs of Success in Asian Growth Triangle ......................................................................... 9 Growth Without Borders | iii Acknowledgements This work was carried out by the Finance and Private Sector Development Department, Africa Region of the World Bank, at the request of the World Bank Country Management Units for Angola and Mozambique (AFCS2) and Malawi, Zambia, and Zimbabwe (AFCS3). This report was prepared by a team led by Susan Hume (Senior Operations Officer, AFTFE) and John Speakman (Lead Private Sector Development Specialist, AFTFW), comprising Keith Garrett (Private Sector Development Specialist, AFTFE), Akshay Regmi (Consultant), and Alexandre Laure (Jr. Professional Officer, AFTFW). The team is grateful for the comments and suggestions of the peer reviewers: Gokhan Akinci, Michael Engman, and Vincent Palmade and other colleagues including: Alvaro Federico Barra, Mazen Bouri, Paul Brenton, Efrem Chilima, Richard Damania, Wim Douw, Eneida Fernandes, Benjamin Gericke, Ian Gillson, Tugba Gurcanlar, Nagaraja Rao Harshadeep, Mombert Hoppe, Martin Humphreys, Michael Jarvis, Kaushal Jhalla, Sindy Karberg, Austin Kilroy, Marjo Koivisto, Bryan Land, Alice Lin, Rosario Marapusse, Crispen Mawadza, Gary McMahon, Robin Mearns, Hannah Messerli, Brian Mtonya, Megha Mukim, Hrishi Patel, Nadia Pifaretti, Vijay Pillai, Pierre Pozzo di Borgo, Ganesh Rasagam, Andrew Roberts, Julien Szabla, and Bradley Weiss. In addition, the team is grateful for overall guidance from Irina Astrakhan, Sector Manager (AFTFE) and administrative support from Irene Nnomo Ayinda-Mah (AFTFW). Finally, the team gratefully acknowledges the contributions of TradeMark Southern Africa. iv | Growth Without Borders Abbreviations and Acronyms AICD Africa Infrastructure Country Diagnostic APEI Accelerated Program for Economic Integration COMESA Common Market for Eastern and Southern Africa CPI Centro de Promoção de Investimentos (Mozambique Investment Promotion Center) DANIDA Danish International Development Agency DFID UK Development Fund for International Development DRC Democratic Republic of Congo EAC East African Community FDI Foreign direct investment GDP Gross domestic product GIS Geographic information systems GIZ German Technical Assistance Cooperation ICT Information and communications technology IMF International Monetary Fund Km Kilometer Kph Kilometer per hour MDGs Millennium Development Goals MICE Meetings, incentives, conventions, events NEPAD New Partnership for Africa’s Development NTBs Non-tariff barriers OECD Organization for Economic Cooperation and Development PPPs Public-private partnerships SADC Southern Africa Development Community SMEs Small-medium enterprises TMSA TradeMark Southern Africa UN United Nations UNDP United Nations Development Program UNESCO United Nations Educational, Scientific and Cultural Organization UNWTO United Nations World Tourism Organization WB World Bank Growth Without Borders | v Foreword This economic sector work is a geospatial analysis of the and multi-sector geodatabase and related maps. These maps endowments of Angola, Malawi, Mozambique, Zambia, highlight areas of interest to a given sector, estimate relative and Zimbabwe. In the process of preparing this report travel times to the nearest market, and show the distribution several unexpected benefits were realized. Foremost, this of GDP as well as the distribution and sequencing of foreign initiative proposed a quantitative and transparent method for direct investment and non-tariff barriers (NTBs) to trade in identifying potential growth poles, a concept often requiring the five-country study area. repeated explanation. Geographic information systems (GIS) enable visual explanations that reduce this burden. Because The World Bank team also established a strong information the method for selection is transparent, it can and should sharing relationship with TradeMark Southern Africa be further refined and improved with additional inputs (TMSA, a DFID funded regional organization) to coordinate from subject matter experts. In fact, the report authors hope spatial data efforts. TMSA provided un-located data on that this will be the real value added of the analysis and NTBs which the report team then geolocated. This enabled that this new spatial approach will benefit future growth TMSA’s online GIS tool to show the distribution, frequency, pole initiatives. Going forward, newer and better data will classification, status, and location of trade related complaints. strengthen the fi dings and yield even more insights. The (www.tripartitegis.org) NTB reporting is now on the map advantage that a spatial approach provides is that justification and linked to individual complaints that any internet user can for prioritizing one area over another is transparent, the read. Stakeholders—private sector, citizens, policy makers— method of selection is explicit, and the output is visual. all now have the ability to put those complaints about trade restrictions in a broader context: How many other people Additionally, this effort resulted in an impressive compilation reported the same or different problems in the same area or of a great deal of data from over 20 sources. Given that spatial on the same route in different jurisdictions? How many NTBs data for the Southern Africa region is often poor and not might they face along a single multinational route? How will comparable for one reason or another, this collection should the situation change over time? Are the interventions targeted prove valuable for other analytical efforts that overlap the to this area effective? Which areas should be prioritized? This geographic focus area. Those interested can now benefit from is how GIS helps policy and people by providing the medium the sharing and gradual improvement of a multinational for this conversation. vi | Growth Without Borders the World Bank I. Introduction connectivity, revenue sources, and other input factors and then selected from that list those areas which might Objective benefit from regional cooperation. This report provides background information, elaborates the concepts, details the Several countries in Southern Africa have enormous spatial analysis framework, selects specific areas for a rapid potential to expand trade and mutually benefit from regional assessment, summarizes findings, and outlines future work. integration, and thus truly achieve ‘Growth Without Borders’. The overarching purpose is not to explain or quantify the At the same time, several African countries are adopting links between identified factors, but rather to find spatial growth pole strategies in order to deepen the economic correlation between factors in order to begin a discussion linkages around the development of their natural resources about defining a data driven way of finding suitable regional and improve their competitiveness and connectivity to growth poles. domestic and international markets. This report stems Context from economic sector work whose purpose was to identify potential growth poles across Angola, Malawi, Mozambique, The United Nations (UN) estimates that the global Zambia, and Zimbabwe in three industries—agribusiness, population will reach 9.6 billion people in 2050, an increase mining, and tourism—that might benefit from improved of approximately 37 percent from 2010. This population regional integration. growth will not happen uniformly across the Earth. Angola, Malawi, Mozambique, Zambia, and Zimbabwe each expect The objective was to visualize relevant spatial data, spanning their populations to at least double over that time; while activities across borders in order to see beyond nationally population growth in developed countries will be relatively defi ed silos. This required going beyond simply displaying modest (the United States expects 27 percent, for example). the geospatial data; a framework was constructed to identify [1] Therefore, while it is true that all countries face political, potential places suitable for a growth pole strategy. This economic, demographic, environmental, fiscal,public health, report, therefore, aims to address such initial questions as: and many other challenges, it is also true that these obstacles What is the spatial definition of a growth pole? Where are are not distributed uniformly. these potential agricultural, mining, and tourism regional growth poles across Angola, Malawi, Mozambique, Zambia, Similarly, natural resource and other endowments are not and Zimbabwe? The answers will form the basis for the next uniformly distributed. Zambia, for instance, holds large mineral phase of inquiry: How can these geographic areas benefit deposits and Angola and Mozambique are in the process from regional integration policies and growth pole strategies? of developing or exploiting natural gas deposits, and the extraction of huge coal reserves is underway in Mozambique. This report used geographic information systems (GIS) In the past, the spillovers of the mining industries boom to identify potential growth poles based on the spatial have, unfortunately, remained limited. Long term resource distribution of foreign direct investment (FDI), market exploitation can make an economy less competitive. In Growth Without Borders | 1 the World Bank the developing world, foreign firms outperform domestic leasing or ownership of industrial land, availability of land producers on several indicators, but have fewer linkages with information, and legal protection of foreign investments. the local economy and offer less supplier assistance, resulting in offsetting effects on the spillover potential. [2] The trade logistics of each country also needs significant improvement, as indicated by their rankings in the Logistics Malawi’s population is two million more than Zambia’s, Performance Index. (See Annex 1) It is widely known despite being only one-sixth of its size. [3] However, Malawi that tariff and non-tariff barriers (NTBs), aggravated by is well located geographically between the two resource rich inadequate infrastructure, impede the growth of trade in areas of Zambia and Mozambique and access to the global primary goods and value added goods, as well as hinder market via the Indian Ocean. All five countries contain regional economic integration. These challenges compound national parks and the area is home to seven UNESCO World the negative effects of distance and market access for local Heritage Sites, which are attracting increasing interest from businesses. Proximity, therefore, is all the more important tourists. Zambia and Zimbabwe share one of the world’s most when considering the comparative advantages of an anchor renowned natural tourist attractions: Victoria Falls. Coast investment’s localized activities and the potential for cross to coast, agriculture is the main employer with significant border linkages to that anchor. Hence, part of the challenge land area as seen in staple crop production. Therefore, each to increasing a country’s competitiveness is spatial in country has some level of specific natural endowment that nature. can be sustainably exploited. Despite these challenges, four out of the five-country set Despite this, private investment in the region is not a certainty. enjoyed GDP growth rates of over 5 percent in 2012. Angola Agricultural investment since 2005, for instance, has been grew at 6.8 percent, Mozambique at 7.4 percent, Zambia at uneven across the five countries, with greatest investments 7.3 percent, and Zimbabwe at 5 percent. Malawi’s growth in Zambia and Mozambique. Therefore, each country could was at 1.9 percent, fueled by foreign exchange shortages and benefit from an improved business environment. With the devaluation of the local currency. Notwithstanding high exception of Angola and Zimbabwe, the fundamentals for growth rates and increasing FDI inflows for Angola and establishing foreign businesses in the countries are generally Mozambique, poverty reduction has stagnated. These countries strong. In Malawi, Mozambique, and Zambia, foreign seek a development path that is environmentally, socially, and companies are allowed 100 percent equity ownership in politically sustainable and takes these contextual challenges mining, agriculture, and tourism industries. (See Annex 1) and comparative advantages into account. (See Annex 2 for Zambia and Mozambique have made significant progress in regional maps of productive factors) regulations related to doing business in the last few years, but Angola and Zimbabwe are especially difficult places for Trade is one obvious path to economic growth, but has not foreign investors and the domestic private sector to operate. always worked in the past and creates other challenges. Trade All five countries could improve regulations that affect in natural resources can boost GDP in the short term, but 2 | Growth Without Borders Box 1 World Bank Support to Growth Pole Projects in Africa Ghana Gateway Project (1999–2009, US$50 million): the originally planned mineral port (financed as a public- This project used an economic cluster approach by creating pivate partnership between Rio Tinto and the Madagascar a transport hub and industrial center integrated into local government) into a multipurpose port. Today large cruise value chains and the national economy in general. This led ships stop in Fort Dauphin to unload hundreds of tourists to a reduction in the cost of manufacturing, transportation, at a time to visit the lemur park and century old French and administration through facilities, infrastructure ICT experimental farm in the area, boosting tourism activity. improvements, service enhancements for exporters, and the The Bank also supported a series of investments in roads, establishment of transport and supply chain linkages with power, water, and vocational training to create an attractive suppliers and exporters beyond the territory of the zone investment environment. The number of hotel rooms in the itself. The results included approximately 3,214 projects vicinity has since more than doubled. valued at US$12.6 billion registered between 1999 and Burkina Faso Growth Pole (2011–2017, US$115 million): 2009, with a FDI component of US$12 billion. Integrated The objective is to increase economic activity in the project investment and trade promotion resulted in 305,874 jobs for area, increase private investment, generate employment, Ghanaians and 10,994 for non-Ghanaians. and expand agricultural production. There are three Madagascar Integrated Growth Poles Project (2004– components to the project: improvement of institutional 2012, US$100 million): This project supported the creation capacity for better zone management and investment of a tourism pole around Port Dauphin and of a light climate in the project area; the development of critical manufacturing pole around Antananarivo. The approach infrastructure; and the development of critical services and was to support the marginal investment necessary to turn direct support to smallholders and SMEs. may undermine long term development goals if exploitation A growth pole development strategy seeks to mitigate these of these resources does not assist in the diversification of the risks by creating deep economic linkages around these local economy, create local input-output linkages, or boost resources to foster economic diversification and promote opportunity for local inhabitants. Many in the development local labor employment and the local sourcing of inputs to community argue that countries should leave their assets production. Regional integration polices can reinforce the unexploited until such time as local groups are in a position effectiveness of growth pole strategies by reducing trade to use the endowment to improve public health, education, burdens, making it easier to achieve economies of scale and and economic opportunity. Indeed, when governments fail to agglomeration in areas more proximate to a neighboring promote a fair distribution of the benefits, they risk political, country’s source of inputs than domestic sources. [5] In some economic, and social instability. [4] circumstances, agglomeration economies in one part of a Growth Without Borders | 3 country can also reduce congestion economies in the capital that it provides present stakeholders reason to buy-in to the or other primary cities. [6] [7] [8] [9] [10] reform process. [11] As indicated in the IMF/World Bank 2013 Global Monitoring Growth Poles Report, a spatially aware approach supports efforts to reduce Growth poles are geographic areas with the potential to poverty. Successful growth poles draw in FDI and create a increase investments, jobs, and income growth. It is a place virtuous circle. The increased investment encourages the where productive economic activities rapidly expand due formation of new firms and local industry. In certain types to the presence of economies of scale and agglomeration, of labor intensive work, increased investment results in competition and cooperation, innovation, and backward/ more jobs. This creates local wealth and increases the tax forward linkages. The critical component is a localized base for governments, which can use this revenue to expand inherent revenue producer with significant economic access to critical services, such as health care, clean water, potential. Mineral deposits, tourist attractions, underexploited and education. For the purposes of this report, growth poles agricultural lands, large labor pools, or other geographic are locations with productive factors (raw materials, labor, advantage could each serve as the foundation for localized electricity), above average investment, and relative market growth. Growth poles also require the presence of a basic accessibility. infrastructure platform (roads, railroads, river transport, and electricity). And, particularly in Africa, proximity to markets Growth poles are not, however, a panacea. They do not help or trade corridors to establish economic linkages with the everyone, everywhere, all at once. Growth poles do not wider economy. address rural education gaps, for instance. To some extent, they can bias government investment into urban or other While one aspect of a growth pole approach involves areas where the expected efficiency of investment is greater. improving the “hard” infrastructure (e.g., roads and ports), Yet they hold the potential to improve a country’s economic infrastructure is not by itself sufficient to make an economy circumstances to a point at which they would have the competitive. The “soft” infrastructure, the regulations and internally generated resources to address policy challenges policies that enhance or inhibit business formation and less directly spatial in nature. competitiveness, also require consideration. A growth pole strategy takes both the hard and soft actors into account Another concern is that growth poles amount to “picking through a spatially aware, proactive, multi-stakeholder winners”. While a single company may provide the anchor for approach. It looks to enhance local competitiveness and the growth pole concept, it could just as easily be composed economic opportunity through strategic interventions such of several firms in the same industry, as the concept as capital infusion, public-private partnerships (PPPs) to centers on making the industry and related suppliers and build and upgrade infrastructure, and/or policy reforms that buyers more integrated and competitive. It aims to remove have the potential to attract further investment in such a way constraints to an existing independent investment driven 4 | Growth Without Borders Box 2 Other Spatial Development Initiatives in the Region process. [11] It might be more accurate to characterize growth poles as “picking ripe fruit”. the new Partnership for africa’s development (nePad) Spatial development Initiative provides for The World Bank has supported nationally focused spatially clearly defined trade and investment corridors across the targeted projects in Ghana, Madagascar, Mozambique, the region. These corridors support transport infrastructure Democratic Republic of Congo (DRC), and Burkina Faso. In development with emphasis on interconnectivity, addition, the Bank Group conducted in-depth spatial analysis building a reliable cost effective network, and facilitating using GIS on private sector development along regional the development of legal frameworks for regional transport corridors, such as the North – South Corridor, and infrastructure programs and projects. These corridors span on crop production and road connectivity in Sub-Saharan multiple countries and they link markets and resources Africa. [12] [13] This list is not comprehensive, but merely throughout the region with international markets and each illustrates that this is not a new concept and that it is one that other. The regional strategy seeks to tap the full range is gaining support among client governments. of development tools to enhance competitiveness and employment at specific nodes along these corridors. the Zambia-Malawi-Mozambique Growth triangle was Regional Integration an initiative of the United Nations Development Program National economic development does not occur in a (UNDP) in the early 2000's modeled on the East Asian vacuum; it evolves in a regional and global context. The Growth Triangle. This regional integration effort received domestic markets of Malawi, Mozambique, Zambia, high level interest from the national governments and Zimbabwe, and Angola are relatively small and have both development partners including the World Bank Group. A weak investment climates and high transportation costs coordinating secretariat was established, conferences (tariff and non-tariff ). With globalization, these factors and were held, and public statements made. However, others combined to limit past investment and left these interest in the initiative faded and the project did not countries to trade in primary goods consumed by value attract investment, public or private, suffering from a lack chains outside Africa. This created a curious situation in of resources and long term buy-in from national and local which the bulk of each country’s trade goes outside Africa stakeholders. As the World Bank noted at the time, to the rest of the world, as opposed to their neighbors. For proponents could have more clearly defined the example, Zambia’s exports to South Korea are nearly double economic case. In the wake of new mining investment, its exports to its neighbor Malawi, and even its exports to members revived the initiative in 2012. Perhaps, with a the nearest regional powerhouse, South Africa are only 16 more clearly defined economic case built around a percent of its exports to China. [14] spatially aware, industry based approach and renewed political committment, this forum will accelerate local Elsewhere in the world, governments find that regional integration and attract further FDI to the Growth Triangle. integration, the mutual reduction of barriers to trade, and the Growth Without Borders | 5 creation of institutional coordination and dispute settlement harmonizing administrative and trade policy across the entire mechanisms, improved growth beyond levels that any one economy. This would involve, amongst others, simplifying government could achieve on its own. Reduced burdens from border procedures, reducing non-tariff trade barriers, customs procedures, expanded sourcing of production inputs, harmonizing regulatory and immigration policies around improved access to markets (particularly for landlocked cross border business linkages, and tackling transport and countries), and increased investor confidence improves value other infrastructure bottlenecks. chain integration and trade. [15] [16] [17] Such strategies should, to the extent possible, build Deeper trading relationships improve the likelihood of cross upon existing agreements. While Malawi, Zambia, and border value chain integration, fostering national export Zimbabwe are members of the Common Market for East diversification. Through a variety of means, a diverse export and Southern Africa (COMESA), these three plus Angola base lowers the uncertainty in export earnings and increases and Mozambique are all members of the Southern Africa the added value of national exports. This leads to increased Development Community (SADC). Indeed, SADC member employment, GDP growth, and access to foreign exchange. countries already trade in more sophisticated products The benefits of export diversification help governments to than they do with the rest of the world. Additionally, in mitigate risk of political, financial, and social instability. SADC both regional and global exporters are larger, have Overall, a broader export base helps make for a more stable, higher labor productivity, and pay higher wages compared more predictable economy. [18] While it is not directly comparable to the five-country study FIGURE I.1 Zambia Export Comparison (2012) area, the European Union example suggests that successful 3,000 integration involves piloting narrow projects through 2,444 functional economic industries, such as coal and steel, to 2,500 manage them separately from the larger economy with 2,000 Millions (US$) generally positive results for participants. [16] Similarly, the Cambodia-Laos-Vietnam Development Triangle Area example 1,500 suggests that defining a geographic space across multiple 1,000 sectors of cooperation can also improve outcomes. [19] 500 404 306 127 3 Unlike trading blocs and other higher levels of institutional 0 arrangements that require fundamental changes across an entire economy, identifying a more defined geographic China, P.R.: Mainland South Africa South Korea Malawi Angola area can reduce political and economic risks. A more focused approach may also reduce the initial high cost of Source: IMF Direction of Trade Statistics. 6 | Growth Without Borders Box 3 Regional Integration in Southern Africa FIGURE I.2 FDI by Country According to the World Economic Forum’s competitiveness 14 indicators, Zambia, Zimbabwe, Malawi, and Mozambique 12 all made progress in reducing the burdens of customs procedures over the last five years. 10 Billions (US$) In June 2011, the heads of state of the member countries 8 of COMESA, SADC, and the East African Community (EAC), 6 signed a declaration for a COMESA-EAC-SADC Free Trade 4 Area. The COMESA-EAC-SADC free trade area comprises 2 26 countries, with a total population of 600 million and 0 combined GDP of over US$1 trillion. The objective is 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 the economic integration and regional coordination of the countries of eastern and southern Africa through Zimbabwe Zambia Mozambique Malawi Angola harmonization of trade, customs, and infrastructure Source: Financial Times fDI Markets. development. Eager to push ahead, Malawi, Mozambique, Zambia, Madagascar, Mauritius, and the Seychelles go beyond Regional integration does involve tradeoffs; some firms will the COMESA-EAC-SADC tripartite arrangements to fast- gain and others will lose. Recent trade analysis from the track regional economic integration through trade policy Organization for Economic Cooperation and Development harmonization through the Accelerated Program for (OECD) suggests that a fully integrated SADC-wide market Economic Integration (APEI). Past spatial development would be a neutral proposition for Malawi in total exports, initiatives and regional integration efforts are discussed in but involve significant shifts on which products it trades, more detail in Section II. implying that some Malawi firms and industries may resist complete SADC-wide integration. Successful regional integration always entails cooperation between stakeholders along multiple dimensions to tackle these challenges collectively. Developing a regional growth pole strategy to domestic firms. With the exception of Zimbabwe, the through coordination of infrastructure and policy labor intensiveness of the products traded regionally by the interventions creates an opportunity to bring policymakers five countries examined in this report is higher than in the and stakeholders on two sides of a border together around a products traded externally. [20] This implies that greater specific set of issues and industries. A locally targeted (but regional integration between these countries could directly also international) synchronized agenda of interventions and and positively affect employment and poverty alleviation. investments may yield significant cost reductions and reduce uncertainty for producers and Growth Without Borders | 7 FIGURE I.3 Combined FDI competitiveness indicators indicate that customs procedures (Angola, Malawi, Mozambique, Zambia, Zimbabwe) have become less burdensome over the past five years in every country except Angola (for which no data was available). [22] Additionally, average levels of FDI in the region are on the 18 rise. While levels in the region peaked in 2008 and fell in 2009, 16 they are still higher than the five years preceding 2008 and 14 this trend is set to continue in 2013. Furthermore, a growing 12 body of evidence points to the growth potential in the African Billions (US$) 10 agricultural, mining, and tourism sectors. Regional integration 8 and agglomeration economies can no doubt have a key role in 6 4 unlocking that potential. 2 0 For example, Zambia has 10.4 million hectares of suitable 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 land for maize within six hours of a market town, less than half of which is cultivated and those areas that are cultivated Total Combined 4 Year Moving Average produce less than 40 percent of their potential. [23] The Source: Financial Times fDI Markets. recent report Growing Africa: Unlocking the Potential of Agribusiness identified regional integration and transport infrastructure as key factors limiting Zambia farmers’ access to inputs and markets and thus holding Zambia back from fully exploiting this potential. [24] consumers on either side of the border. For instance, an integrated multimodal transport infrastructure combined Just because a policy innovation works well in one part of with border policy that allows producers on one side of the the world, however, does not mean it will work for another. border to access a second mode of transport already available Context matters. Can Angola, Malawi, Mozambique, Zambia, on the other side could enhance the efficiency of investment and Zimbabwe also create such ‘Growth Without Borders’? in regional transport infrastructure. This is the essence of a Put more specifically: Do these countries have both the regional growth pole strategy. means and motivation to develop regionally integrated growth poles? The circumstances in Angola, Malawi, Mozambique, Zambia, and Zimbabwe appear ripe for this kind of innovation. The Identifying potential locations for regional growth poles is Accelerated Program for Economic Integration (APEI) shows only the first step. There are several related questions: What is increased political momentum toward regional integration the potential for economic complementarity in these places? between these countries. [21] The World Economic Forum’s If the potential exists, what is stopping it from developing 8 | Growth Without Borders Box 4 Signs of Success in Asian Growth Triangle The Cambodia Laos Vietnam Development Triangle Area projects in Laos worth a combined registered capital of US$1.65 billion. According to the partner governments, Royal Cambodian Prime Minister Hun Sen raised the idea the Development Triangle Area averaged 10 percent of a Development Triangle Area at a meeting of the three growth in 2011, compared to 6 percent for Vietnam as a Prime Ministers of Cambodia, Laos, and Vietnam in 1999. whole, 7 percent for Cambodia, and 8 percent for Laos. [3] They agreed and in a 2002 meeting in Ho Chi Minh City The Development Triangle Area served to increase trade pledged to prioritize the implementation of cooperation integration and improve national infrastructure. Total in the Development Triangle Area in transportation, trade between Vietnam and Cambodia increased 17 trade, electricity, tourism, human resource training, and percent in 2012, reaching US$3.3 billion and appears to public health. At the 10th ASEAN Summit in Vientiane be on track to beat those gains in 2013, according to the (November, 2004), the three Prime Ministers approved Vietnamese Trade Office in Cambodia. At the end of 2012, the socio-economic development master plan for the Laos integrated the hydroelectric power plant Sekaman Development Triangle Area. 3 (250 MW) into the Laos National electric grid, a direct Located around a border junction encompassing 13 result of licensed Vietnamese enterprises operating in provinces, four provinces in eastern Cambodia; four in Laos. Vietnam also invested US$26 million in a 70 km southern Laos; and five in the Central Highlands of road in Cambodia. This cooperation extends beyond Vietnam, the Triangle Area attracted significant, if infrastructure. Vietnam received around 50 Lao students somewhat lopsided investment. Laos and Cambodia to study in the Development Triangle Area and is investing invested in seven projects in Vietnam with a total in the construction of student dormitories at the University investment capital of nearly US$200 million, while of Highlands for more Lao and Cambodian students. While Vietnamese businesses invested in 25 projects worth much work remains, the partner countries continue to reap US$1.4 billion in the four Cambodian provinces and 50 gains from this spatial approach to regional integration. or why has it not already developed? What is the political phase of this effort, discussed in Section IV. But this is not economy of the major actors in local industry? What steps an academic exercise. This work will inform an are required of whom to achieve the potential gains? What engagement strategy resulting in client led development can the World Bank Group and other development partners strategies that are spatially focused, broad in perspective, do to support such efforts? These questions outline the next cooperatively designed, yet specific, realistic, and results oriented. Growth Without Borders | 9 II. Revealing Growth Poles of available data (spatially enabled or not) from several sources. The result revealed growth poles by creating a large Criteria geodatabase, managed and analyzed in GIS, and visualized through maps presented in this report. These maps show Identifying potential growth poles that would benefit multiple dimensions and the place based relationships from regional cooperation is not easy. While experts and between those dimensions. policymakers quite familiar with the region could probably readily name such growth poles, their observations are likely To identify the specific location of potential growth poles to be anecdotal. To them the answers may be obvious, even if across the given set of countries and then to identify those they do not have comprehensive data to support their choices. that might be interesting from a regional integration The task of this report is to identify potential regional growth perspective, the available information was sorted along four poles in a clear, data driven, and repeatable manner, whose themes: results are accessible to a wide non-expert audience, visually and thereby intuitively. • Productive factors: raw materials, labor, electricity • Investments: value and in number of sectors As the core of this report’s analysis is spatial, and the • Market access: estimated transit time to market underpinning for this and future work is quantitative, the • Regional integration potential: presence of trade activity team used GIS to analyze available data and arrive at a set of or border proximity (evaluated after the initial growth pole areas of interest. (Details on methodology, data constraints, identification) and sources used are noted in Annex 3 and the reference section) In particular, the GIS methodology involved These criteria were applied to the five-country study area for mapping 790 districts in the five-country study area which three sectors: agriculture, mining, tourism. The analysis have economic links to the agriculture, mining, and highlighted seventeen clusters of districts with growth pole tourism industries, and thus were growth poles candidates. potential, several being directly adjacent to another country’s This required specifying which aspects of these sector cluster. (See Map II.1) The GIS analysis also shows the activities manifest themselves spatially in the districts, growth pole potential for agriculture (Map II.2), mining based on desk research, a review of relevant literature, and (Map II.3), and tourism (Map II.4). the gathering Growth Without Borders | 11 the World Bank M ap II .1 po t entia l regiona l Gr o wth p o le s 12 | Growth Without Borders Map II .1 The areas highlighted in Map II.1 are those which satisfied (See Annex 3 discussion on methodological challenges) the selection criteria of a growth pole in one of the identified Therefore, it is important to read these maps as a guide industries. It is worth emphasizing that there are limitations for targeting more detailed analysis over a much narrower in the underlying data, the availability of data, its variation geographic area. between countries, and the scale and unit of analysis. Growth Without Borders | 13 M ap II .2 ag ribus ines s Grow th p o le p o te n ti al 14 | Growth Without Borders Map II .2 Map II.2 illustrates the spatial distribution of agribusiness perspective this makes the Eastern Province of Zambia, based on the four criteria applied: productive factors, Central and Southern Provinces in Malawi, and Tete province investments, market access, and regional integration in Mozambique, and the road connecting Harare to Beira potential. Those areas with the lowest potential are in light all interesting. It is also worth noting that while outside yellow and those with high potential are in dark green the five-country focus area, Katanga province in DRC and (of which those with the highest potential are outlined in the adjacent Copperbelt province of Zambia also merit orange). Central and Eastern Provinces of Zambia, Southern further study. Generally, the governments are aware of the Province of Malawi, western Mozambique around Tete and agribusiness potential. The Zambia government, for instance, Chimoio, and southern Mozambique around Maputo, as intends to promote agribusiness through its Farm Block well as northeastern Zimbabwe all contain multiple districts initiative, although not apparent on the map since farm that show high potential. From a regional integration blocks are not yet operational. Growth Without Borders | 15 M ap ii.3 min ing grow th p ol e p o te n ti al 16 | Growth Without Borders Map II .3 Map II.3 illustrates the potential of mining activities. The Copperbelt, Northwestern, and Central Provinces in This pattern’s distribution is much less uniform than for Zambia show a high level of mining activity as a result of agribusiness. This results from the more localized nature of copper, gold, and zinc mining. Tete and Manica provinces in economic activities surrounding mining and from the subset Mozambique also reveal high activity thanks to coal mining. of mining activities that require signifi ant infrastructure. While other clusters exist because other mines exist, the Gold and diamond mines hold less potential as growth poles results discussed above (those with the most factors present) because mining of these minerals tends to require less local benefit from greater investment, access to electricity, labor, infrastructure and related transportation is less costly. and/or estimated access to markets. Growth Without Borders | 17 M ap II .4 t o uris m grow th p ole p o te n ti al 18 | Growth Without Borders Map II .4 Map II.4 shows the distribution of tourism activities and – Lilongwe – Blantyre corridor (given its proximity to the potential. The Zambia – Zimbabwe border, as well as areas Mozambique border), and the Northwestern and Copperbelt within each of these countries, and the border between Provinces of Zambia all warrant closer examination Zambia – Malawi, reveal high potential. Hotel presence regarding the tourism sector, due to their proximity to air improves the potential of the capital cities, while parks, and ground transportation networks, tourist attractions, and nature reserves, and UNESCO World Heritage Sites boost the availability of hotels. The southern coast of Mozambique the potential of the outlying districts. Unfortunately, the received significant tourism investment since 2003, but the uneven nature of available data severely biases the results. map does not highlight this area due to uneven accessibility, City level data in Africa is difficult to obtain. (See Annex 3) lack of specified tourist attractions and border crossings, and Nevertheless, the Livingstone – Victoria Falls area, Chipata a dearth of known hotels. Growth Without Borders | 19 Map 11.5a Marketsheds of Cities Larger than 500,000 people (Closed Borders) 20 | Growth without Borders MAP 11.5a Scenarios of Nearest Regional Market Larger Than 500,000 People In considering which sectors in which places warrant further As travel time can be a useful proxy for sourcing costs to investigation, policymakers may choose to look for where production, such as fertilizer, then border delays may show they can make gains quickly. These ‘marketshed’ maps may where producers source fertilizer from. When those are help in selecting from a long list of priorities. These compare locations are more distant locations within the country, rather local trade scenarios based on travel time, given that roads do than across the border, we can see visually where trade policy may be imposing higher costs to farmers. Note the two main not change between scenarios, but the amount of delay at the differences between the map 11.5a on page 20 and the map border does change. These next three maps demonstrate that 11.5b shown on page 22 (for comparative trade scenarios). relatively minor changes in trade policy might have a greater Then compare the second scenario with the last scenario, positive effect toward reducing trade costs, than long term map 11.5c on page 24. In the first two cases, Luanda is the expensive infrastructure projects could achieve on their own. closest market for the most of Angola. Such a stark At least for certain parts of a country. relationship between Luanda and the rest of the country likely leads to congestion economies in the captial. It also If each of these large cities were thought of as the drain in a suggests that modest improvements in border delays would bathroom sink, then the colored areas are analogous the bowl have little effect for Angola. Whereas the in the third map, or basin from which water flow (in this case, instead of water, which asssumes no border dealy, Angola's trade picture the flow is of goods, labor and other inputs to production or completely. where producers might seek to sell their goods). This first map estimates the nearest regional city with a metro area Malawi is the other interesting comparison. Lilongwe and population greater than 500,000 and no ability to cross a Blantyre both have severely constrained marketsheds and border or each location on the map. It considers road types producers in northern Mozambique now must pay much and obstacles, such as rivers and bodies of water to determine higher transport costs to source inputs from as far afield as which city a trader (in any given location) would choose to Biera. This illustrates who and how much trade policy affects travel in the least amount of time. producers in a given area. Continued improvement in the implementation or regional integration agreements and While essentially product neutral—it estimates a generic further agreements would substantially improve options for traveler, as opposed to a direct estimate of how long it takes and competitiveness of producers and consumers in Malawi, to move a particular commodity (such as, maize) from one Mozambique and Zambia. place in country A to a city in country B—these maps nevertheless reveals some interesting relationships between places that warrant further investigation and should give trade readers something to think about. Growth without Borders | 21 Map 11.5b Marketsheds of Cities Larger than 500,000 people (1-day Delay at Borders) 22 | Growth without Borders MAP 11.5b This map estimates for each location on the map, the nearest regional city when travelers must wait 24 hours to cross any border. It assumes that lakes can be crossed at the slightly reduced speed of the ferry. The delay at the border is assumed to be 24 hours. This was based on recent information from Trademark Southern Africa (TMSA) given recent drops in wait times a several border crossings down to 24 hours. Note: the only real change from a completely closed scenario concerns the Caprivi and extreme northeastern Angola. This suggests that even modest border delays may provide significant disincentive to trade regionally, given high transport costs. Continued improvement in the implementation of regional integration agreements and further agreement on rules of origin, bonds, and other NTBs would substantially improve sourcing and selling options and reduce costs for producers and consumers the region, particularly for Malawi and Mozambique and Angola. Growth without Borders | 23 Map 11.5c Marketsheds (Assuming No Border Delay) 24 | Growth without Borders MAP 11.5 c Nearest Regional Market Larger Than 500,000 People This map estimates for each location on the map, the nearest Luanda, the national economic powerhouse, due to long regional city with a metro area population greater than distances, the directionality and shape of its road network and 500,000 with no time delay at the border. the population distribution of its cities along them is only the nearest market for 50% of the country. For places in eastern When compared to the results from the earlier look at Angola, without border constraints, the closer large markets productive factors, investments, and market connectivity, the to be found in the Democratic Republic of the Congo (DRC). For parts of southern Angola, places as far afield as Zimbabwe shapes of these marketsheds reveal relationships between may take less time to reach in the absence of delays at the places of interest. Note that smaller potential growth poles, border. The eastern portion of Angola may find it easier to such as Livingstone and Quelimane, are located at the sell their products in Kolwezi also in DRC, rather than intersection of two large marketsheds. It is also worth noting Solwezi or Mongu in Zambia or even Luanda. Ondjiva, that several places within one country, may find their nearest Cunene, Angola finds itself not only on the border of Namibia large market in another country, such as the case with Tete, and near pockets of productive agricultural land, it is also Pemba, and Nacala (all in Mozambique) which all fall within near the meeting point of three large marketsheds, Luanda, the marketshed of Blantyre (in Malawi). Bulowayo, and Gaborone. It is also at roughly equal distance to ports at Walvis Bay in Namibia and Benguela in Angola. Malawi and its neighbors are anotherinteresting This is a very interesting result for the small town and could comparison. Lilongwe and Blantyre both have severely have implications for its potential as a logistical hub. constrained marketsheds as do producers in northern Mozambique, who currently must pay much higher These maps suggest that in addition to the broader economic transport costs to source inputs from as far afield as Biera. benefits of free trade, greater integration may reduce the need for large, expensive infrastructure designed to reduce This illustrates who and how much trade policy affects congestion, or to connect producers to distant national producers in a discrete area. Continued improvement in the markets, where a large regional market is just across the implementation or regional integration agreements and border, and a change in trade policy implimentation may be further agreements would substantially improve options for just as effective. and competitiveness of producers and consumers in Malawi, Mozambique and Zambia. Growth without Borders | 25 These illustrative scenarios do not take into account the multitude of factors that affect price and/or influence a vendor’s choice of market or buyer’s source of inputs. However, absent a similarly scaled uniform dataset about prices, this analysis does serve as a useful proxy for relative transportation costs, an important factor in investment and location decisions. It is also a useful starting point for asking more detailed, commodity and industry specific questions about particular places and related determinants of price, quality, and other differentials. Such an analysis would help uncover what infrastructure constraints, institutional capacity issues, policy choices, and bilateral and multilateral trade issues directly affect the viability of a particular industry in a specific area. 26 | Growth without Borders III. Observations relatively little infrastructure and is profitable with relatively little capital investment. However, agricultural production The results of the index analysis and review of the trade potential is high and near term diamond production and scenarios yields several clusters of districts that are of agricultural trade may increase with the reconstruction of interest and warrant further examination for growth pole National Road 180 and the Benguela Railroad, which may development strategies. in turn boost employment and create demand for related secondary activity and non-tradables. Areas of Interest Angola Benguela – Angola is the second largest oil exporter in Africa. The nearby port of Lobito is one of the biggest Luanda – National capitals are natural growth poles in many commercial ports on Africa’s Atlantic seaboard and the ways and Luanda is a good example of this. Since 2008, the Benguela area will soon reap benefits from the restoration of Luanda metro area received FDI totaling at least US$11 rail connection to the rich mineral sources to the northeast billion in everything from retail banking to manufacturing in DRC. “The City of the Crimson Acacia” also has splendid to construction to agribusiness. It is a relatively large market beaches and has received US$1.5 billion of FDI since 2008. with a deep labor pool and links to international markets. Economic links to Zambia are still largely moderated by With Chinese assistance, the government has spent US$300 distance and the most accessible routes are through DRC. million a year for the last two years rebuilding the two main rail lines out of the capital in an effort to relieve road Ondjiva – Despite its relatively small population, its congestion from trucking. Research suggests that effective distance from other economic centers, and a dearth of other implementation of regional integration agreements that endowments, Ondjiva sits atop a primary overland link reduce trade barriers and allow businesses to relocate between Namibia and Angola. The scarcity of alternative throughout the country more efficiently, will further reduce north-south overland transport options to Windhoek this congestion as firms relocate to take advantage of and Walvis Bay from Angola and the relative distance to agglomeration economies closer to their inputs or customers. Benguela and Luanda, as well as the surrounding pockets of agricultural production, give Ondjiva unexpected Lucapa – Lucapa and Saurumo are in northeastern Angola opportunity. Wholesalers over the southern border in and are connected by major roads to Luanda, as well as Oshikango, Namibia have leveraged their access to Walvis in the north to the DRC. The economic activity in this Bay to provide a wide range of goods, from furniture, to region is dominated by diamond mining, and the modest electronics to candy, to Cunene based retailers in Angola. construction and agricultural industries exist in the region While the population is small and the data on this part to support the diamond extraction activities. Generally, the of Angola is limited, British, Spanish, and Portuguese mining of precious stones does not imply significant growth investment in logistics, beverage production, and retail pole potential as valuable quantities can be moved with banking in Cunene over the past five years indicates that Growth without Borders | 27 the World Bank this area holds some commercial attraction. Greater public Kabwe – Kabwe is in the Central Province of Zambia just investment in both the area’s soft and hard infrastructure north of Lusaka and is a major transportation hub for the may help it become a more significant hub for logistic, region, hosting a key node in the Lusaka-Copperbelt railway tourism, and agroprocessing activities. line. This central position in the rail network makes Kabwe important to any growth pole strategy. The area produces Namibe – 200 miles southwest of Benguela and 270 miles zinc, cobalt, and other minerals and over the past four years, northwest of Ondjiva, Nambie is an attractive location that according to the Financial Times, it has attracted US$115 holds many advantages for further development of the million in FDI for manufacturing, mining, and agriculture. agricultural and tourism industries and is home to at least The area is also home to pharmaceuticals, milling and cotton 80,000 people. It is the interface for a railway that penetrates ginning, leather tanning, hydropower stations, and a multitude into the interior as far as Menongue. In the last five years the of potential tourist attractions. Unfortunately, however, there port of Namibe received several million dollars in support of a are serious concerns related to pollution, especially from refurbishment strategy and as of 2011 was moving upwards of mining. The transport infrastructure, its key advantage, would 1 million tons of cargo in 18,000 containers. It has also seen benefit from significant investment to repair and updates. relatively modest foreign investment in retail banking, but little else. Ndola – In the past, Ndola was a major commercial and industrial center of the country, with a large clothing Zambia manufacturing industry. But with the decline of that industry, reflecting global market trends, Ndola’s largest industry Lusaka – The Lusaka metro area’s more than two million is cement production and copper refinement, with three inhabitants are engaged in a number of value added major cement production plants in operation. While copper industries – manufacturing, food processing, beverages, refining and cement plants account for the largest source of textiles and leather goods to name a few. The majority of the employment, Ndola also has zinc and copper mines. As the nearly US$900 million FDI over the past decade has gone third largest city in the country, its proximity to DRC and into manufacturing, services, and construction sectors. As a multiple rail export routes make Ndola an important point of transport hub in the Lobito-Beira and the Cairo-Gaborone interest. corridors, Lusaka is well located to build upon its location as a transit point for goods, a characteristic it shares with Kabwe Chipata – Chipata’s 100,000 residents live along the Great to the north. Notwithstanding its potential, underdeveloped East Road, which connects Lusaka (550 km to the southwest) linkages to the ports in Angola to the west, and long to Lilongwe, Malawi (130 km to the east). This provides not distances to ports in Mozambique to the east, represent a only local trading opportunities but also an entry point to significant constraint to exports. In addition to infrastructure regional and global markets. A rail link from Malawi (via improvements, reduction in NTBs would enhance Lusaka’s Mchinji) to Chipata opened in August 2011 creating more attractiveness to firms and entrepreneurs. trading opportunities. Chipata alone 28 | Growth without Borders accounts for 10.4 percent of Zambia’s urban market for received over the same five year period and city services maize. Chipata also produced other crops such as cotton, deteriorated significantly in recent years. The economic legumes (cowpeas, common beans, groundnuts) and the potential for Harare, and indeed for the rest of Zimbabwe, Chipata-China Cotton Company processes raw cotton locally. will depend on improved investor confid nce. Its proximity to the Malawi border, as well as the Nacala Corridor in Mozambique, makes Chipata an important area Masvingo – Masvingo has potential to boost agricultural of interest from a regional growth pole perspective. The rail output and take advantage of the 2010 discovery of additional link from Mchinji to Nacala, currently being negotiated, gold deposits. These gold mines are situated next to cattle would provide a way for lower cost transit of goods and ranching and sugarcane and citrus farms, hopefully laying services from Chipata. The Zambia government has also the foundation for clear linkages to develop between expressed interest in creating a dry port in Chipata. The city’s these two sectors. In 2005 the sugar industry of Masvingo economic development will depend, to a large extent, upon province accounted for 1.4 percent of Zimbabwe’s GDP. how successful regional integration initiatives are between The area’s potential to be a regional source for ethanol and Zambia, Malawi, and Mozambique. other biofuels production is receiving investor attention. However, input market inefficiencies, the lack of rural finance Livingstone – Livingstone is one of the most visited tourist and credit, the high costs of transport and infrastructure attractions in Africa, drawing a large number of domestic, maintenance, serve as major constraints. regional, and international visitors. UNESCO added Victoria Falls to the World Heritage Site list in 1989 as a Mutare – Mutare, the third largest city in Zimbabwe, rests transboundary site shared between Zambia and Zimbabwe. along the Harare-Beira agricultural corridor. Citrus fruits The paired cities Livingstone and Victoria Falls, Zimbabwe agriculture, cattle ranching, and gold mining are major are analyzed in more detail in the following section. economic activities. Less than 4 km from the Mozambique border, Mutare is located close to Chimoio in Mozambique. It is just over 50 km from Mutarazi Falls in Nyanga National Zimbabwe Park, making Mutare a natural way point for tourists and goods to cross the border. Harare – Harare enjoys a central location with a diverse set of firms operating in many value added and service Bulowayo – Bulawayo, the second largest city in Zimbabwe at industries. The city’s 1.4 million population is surrounded by just over 600,000 residents, was an industrial manufacturing arable farmland, outstanding mineral resources, and hub. Bulawayo is also the closest large city to Matopo numerous cultural and historical attractions for tourists. National Park, Victoria Falls, and Hwange National Park. The Harare, like most of Zimbabwe, is still recovering from the surrounding distribution of population and the directionality deep economic, financial, and political crises of recent years. of its roads give it a very large marketshed that reaches into It received roughly only one-tenth the FDI that Luanda all five neighboring countries. Growth without Borders | 29 Malawi began production in mid-2008. The Malawi government received US$9.6 million dollars in 2012 from the mine, with Lilongwe – Lilongwe’s major industry is tobacco processing nearly US$2 million in royalties and the balance in taxes, although much of the population is involved in informal despite depressed uranium prices. About one-third of the trade. Around 25 percent of the approximately 800,000 company’s goods, materials, and services during 2011 - 2012 residents fall below the poverty line. New transport links with went to Malawi businesses (US$50 million out of US$150 Zambia, its proximity to numerous tourist attractions, and its million in 2012; US$65 million of US$180 million in 2011). size relative to the surrounding productive areas to the north, They have a local purchasing procedure, and tender for west and east, make Lilongwe a natural hub for agricultural food locally. Eighty-four percent of employees are Malawi processing and distribution, either by air, rail, or road. nationals and the company has made investments in the local water supply, airport, hospital, fi e engines, charities, Blantyre – Blantyre is a national center of economic and HIV/AIDS and malaria education. The uncertainty in activity thanks to its population density, history, and the global uranium market will affect the ability of Karonga location. Given its high population density and struggling farmers and miners to benefit from their natural endowment. economy, Blantyre, Malawi and the immediate surrounding area is home to a great number of urban and rural poor. Its strategic location between several agriculture, Mozambique [25] aquaculture, mining, and tourist endowments gives Blantyre the opportunity to increase employment and improve Maputo – As with all national capitals, Maputo is a natural agricultural production. Becoming a regional powerhouse growth pole that has been the traditional center of growth will require hard infrastructure and social investments and employment for the country. It is home to the largest along with improvements in the trade regime. Blantyre is port in the country and is the export point for coal, cotton, discussed in more detail, alongside Tete, Mozambique in sugar, chromite, sisal, copra, and hardwood. There is also a the following section. Blantyre is a strong candidate for a light manufacturing industry around furniture, shoes, and detailed growth pole diagnostic analysis. rubber products. Between 1990 and 2003, Maputo received 75 percent of FDI coming to Mozambique, and it has long Karonga – The Kayelekera uranium mine in Karonga is an benefited from relatively high levels of public investment. interesting example of how the viability of a growth pole This began to change in the past 10 years. After 2005, the opportunity begins with its location, endowments, and Center for Investment Promotion (CPI) began to focus investments, but is nonetheless still subject to global large projects to areas outside Maputo, such as Tete and economic headwinds. The Fukushima reactor meltdown in Nampula. [25] With further institutional capacity building Japan hit uranium markets hard at a time when the industry efforts and hard and soft infrastructure investment, was already under pressure. The mine is owned (85 percent) Maputo has the potential to leverage prior and ongoing and operated by the Australian firm Paladin Energy and investment, its proximity to local and regional markets and suppliers, 30 | Growth without Borders and its relative size to boost employment and diversify the Beira and the Beira Growth Corridor – The Beira export basket. Despite its advantages, according to the UN the corridor is one of the most productive agricultural areas majority of its 1.3 million inhabitants do not have access to in Mozambique. The governments of Mozambique and basic sanitation and other public services and many observers Norway, together with private sector investors and donors point to dramatic increases in inequality. are supporting the Beira Agricultural Growth Corridor initiative which aims to stimulate and revive agricultural Tete – The Tete region holds significant growth potential production in the region. The area itself has high potential across a diversity of sectors from agribusiness to electrical for the production of maize, sorghum, wheat, millet, rice, generation to coal extraction. It also hosts transport links to oil seeds, nuts, legumes, fruits and livestock. Large anchor three landlocked neighboring countries—Malawi, investments in the agricultural sector, namely in sugar and Mozambique, and Zambia. Over the past decade it attracted cotton production, and investments in coal and infrastructure significant public investment and the recent World Bank are reviving the economic activity in the area. financed Integrated Growth Pole Project provides US$35 million in financing for transportation and US$8 million in The city of Beira is the natural port for the agricultural capacity building activities. Vale, the Brazilian mining corridor, and agricultural produce from the rest of the company, has committed over US$1.5 billion for coal country as well as from neighbors, especially Zimbabwe exits extraction to the area. [25] These endowments, capital through the Beira port. The port of Beira is also the natural inflows, clear international interest, and investment in port for extractive industries in the region. The port is being transport infrastructure will facilitate trade and boost upgraded with the help of the European Investment Bank and employment and access to services. the governments of the Netherlands and Denmark. DANIDA is helping to rehabilitate the Beira airport, the World Bank The local population will benefit from continued efforts is supporting an urban water project and GIZ is sponsoring to deepen economic linkages with neighboring economic a business environment reform program. Beira has also centers, especially related to the flow of goods and services been successful in attracting foreign direct investments in through Tete. For instance, new transit procedures intended construction, food processing, and transport. The Beira to prevent false transit declarations for goods resulted corridor is analyzed in more detail in the following section. in reports of significant delays in cargo transit through Mozambique borders and ports. Malawi truckers report that Chimoio – Chimoio’s 200,000 residents make it the country’s they cannot clear borders because of delays, which the fifth largest city and the largest city between the two ends Mozambique government indicates results from a lack of of the Harare-Beira corridor, the transport route of much licensed clearing agents. [26] Efforts to address these types of regional produce bound for international markets. It has institutional capacity gaps and related NTBs would benefit many of the factors characteristic of potential growth poles -- firms on both sides of the border. Tete is analyzed in more population density, proximity, concentrations of investments detail in the following section. across multiple sectors, and being conveniently located Growth without Borders | 31 to deposits of gold to the northwest and rare earth to the in the region is highly dependent upon the upgrading of the southeast. Chimoio may become an attractive location for Nacala port and the supporting infrastructure. This includes firms seeking easy access to these mines, access to Zimbabwe the Nacala airport and the rail line from Moatize in Tete (Mutare and Harare), and access to Beira yet without having province, through Malawi to the port in Nacala. The cost of to be in any of those locations. Efforts to reduce lengthy infrastructure upgrades is formidable. Moreover, border crossing procedures and tackling the corruption coordination between the mining companies and the and arbitrariness reported at the border crossing at nearby governments of Malawi and Mozambique pose other Mutare, should prove to benefit economies in Chimoio and challenges of coordination, accountability and risk sharing. Beira. Doing so will make it easier for manufacturing and agroprocessing firms that locate along the corridor to source The identified areas are not all the same and while some may inputs from Zimbabwe as well as from nearby farms, making have many of the spatial characteristics, a regional growth them more competitive. pole approach may be more suited to one place than another. Table III.1 provides an overview of key attributes of the Quelimane – Quelimane, located in Zambezi province, identified areas to help prioritize further diagnostic efforts. attracts numerous investments in agriculture, fishing, and agroprocessing. It also shows potential of becoming a growth Cross Border Pairs pole for tourism. The major economic activities are in the fishing industry and the export of goods from the port. The Drawing on Table III.1, this section analyzes the endowments, main agricultural product that is traded is coconuts, which is opportunities, constraints, and challenges for three of the either sold fresh in the markets or dried into copra, which is identified cross border growth pole areas. (Given the scope of used for oil and soap production. this report only three of the identified potential growth poles are assessed in more detail.) Agglomeration economies in Nacala – Nacala is located in Nampula province and is part these locations would likely be directly affected by enhanced of the Nacala-Moatize growth corridor, about 620 km from trade integration efforts. The analysis is preliminary and will the Malawi border. Its proximity to Malawi and its deep water need to be validated through in-country consultations with port has determined the economic character of this city. The local stakeholders and additional research. Nevertheless, there port is also the exit point for the coal that is produced in Tete is a strong basis for assuming that most of the other identified province. The Zambia government expressed its interest in areas would also benefit from a growth pole strategy. exporting the copper produced in Zambia through the port Similarly, there are likely to be other potential locations for in Nacala. The Nacala Special Economic Zone, established growth poles not identified by this report since they are in 2009, attracted investments in the tourism, services, outside the five-country study area such as in DRC, Tanzania, agriculture, and biofuels industries. An oil refinery was South Africa, and Botswana. established in the Nacala-al-Velha district. The success of the special economic zone, as well as the economic activity 32 | Growth without Borders Table III.1 Key Attributes of Growth Pole Areas Another Growth FDI ‘Marketshed’ Pole across the Further Country District Sectors 2012–2013 crosses borders Border Population Study? Angola Luanda Agriculture, Tourism, Logistics  2.6 million w/in city > 4.5 million w/in metro area Lucapa Agriculture, Mining  27,000 Ondjiva Agriculture, Tourism, Logistics  20,000 Benguela Agriculture, Mining, Tourism,   150,000+ w/in city Logistics 350,000 w/in metro area Malawi Lilongwe Agriculture, Tourism    Chipata 866,000 w/in metro  area Blantyre Agriculture, Mining, Tourism,    Tete 732,000 w/in metro  Logistics area Karonga Mining, Toursim    Tanzania 40,000 Mozambique Maputo Agriculture, Mining, Tourism    S. Africa 1.9 million w/in metro area Tete Mining, Agriculture, Tourism,    Blantyre 152,000  Chimoio Agriculture, Mining, Logistics,    Mutare 238,000  Beira Agriculture, Mining, Logistics,    Blantyre – 436,000  International Markets Quelimane Agriculture, Logistics, Tourism    Blantyre – 200,000 International Markets Nacala Agriculture, Tourism, Logistics    Blantyre – 200,000 International Markets Zambia Lusaka Agriculture, Mining, Tourism  2.7 million Ndola Agriculture, Mining, Tourism    DRC – 830,000 w/in metro Lumbumbashi area Chipata Agriculture, Logistics    Lilongwe 85,000  Kabwe Agriculture, Mining  200,000 Livingstone Tourism, Agriculture, Mining    Victoria Falls 110,000  Zimbabwe Harare Agriculture, Mining, Tourism  2.9 million w/in metro  area Mutare Tourism, Mining, Logistics   Chimoio 185,000  Bulowayo Agriculture, Tourism  731,000 w/in metro area Masvingo Agriculture  76,000 Growth without Borders | 33 M ap III .1 R egiona l Grow th Pole 1: T e te ( Mo zamb i qu e ) – Blan tyr e ( M a l a w i ) 34 | Growth without Borders Map III .1 Anchor Investor Sector: Mining Primary Sub-Sector: Agriculture The area comprising Tete province of Mozambique and around remains poor. Despite the boom in extractive industries Blantyre in the Southern Province of Malawi has many of the sector, there are limited linkages between the mining and markers of national growth poles, each on the opposite side agricultural industries in the area. Table III.2 highlights the of a national border. The World Bank assesses the prospects key endowments and opportunities for the development of for a growth pole in Tete province in its August 2010 report commercial agriculture with linkages to the mining industry Prospects for Growth Poles in Mozambique. [25] Through in the area. The table also identifies the key constraints and the Mozambique Integrated Growth Poles Project [27] the challenges to a successful regional growth pole strategy. agribusiness sector will receive significant support. Similarly, the Malawi side of the border in the area around Blantyre FDI in industrial mining has been significant in the region. is home to a number of development initiatives. Analysis of Vale’s US$1.5 billion and Rio Tinto’s US$0.8 billion mining the complementarities and gaps between these development investments in Tete province have the potential to be programs and the economic complementarities between the anchor investments for innovative multimodal transport two juxtaposed growth poles may reveal opportunities for infrastructure projects. Vale and Rio Tinto are also interested regional partnership and coordination in support of enhancing in local procurement of their agricultural needs and have the competitiveness of industry on both sides of the border. initiated agriculture support programs in the area. There is significant potential for extending the value chains and The area has good soils, access to water, and a climate that is creating linkages between the extractive industry and amenable to large scale production of a variety of staple food agricultural sectors. The World Bank financed Mozambique crops, as well as crops suitable for biofuel production. Tete Integrated Growth Poles Project (FY13; US$100 million) province has the potential for large commercial farming in to create market access for smallholder farmers within staple crops, while Malawi’s Southern Province has large Tete province, is expected to lead to more commercial sugar plantations, with some agroprocessing plants already farming investment that will support the development of an operational for the production of refined sugar. Although agricultural growth pole. agricultural potential of Malawi’s Southern Province is evident, large investments in commercial agriculture have Anchor investors are interested in local procurement of not been recorded. The rural population is almost entirely agricultural products required to feed their staff, but dependent on subsistence agriculture and commercial farmers operating in the area are not able to Growth without Borders | 35 supply the volumes needed nor to the standards required. infrastructure upgrade represents a current opportunity for Major scaling up of domestic investments to create subsectors stakeholders in the commercial farming industry to increase will be needed. This will require investments to stimulate their access to markets in Malawi, Mozambique, and Zambia agricultural production, processing, and manufacturing, and along the North – South Corridor. involving enhancing agricultural supply chain businesses such as farm equipment, fertilizers, and seeds. In addition, rural feeder roads in the area are in poor condition and require significant upgrades. The main trunk The major constraint for crop production in the area is roads in the area are in relatively good condition to be able poor access to supporting infrastructure (irrigation, grid to handle increased flows of trucks if agricultural production connected electricity, all-weather feeder roads). In addition, were to significantly expand. But secondary and tertiary roads road connectivity and access to regional urban markets also in all three countries, especially all-weather feeder roads, constrains agricultural production. Upgrading of transport are in critical need of upgrades. The World Bank financed infrastructure would foster investments from domestic Mozambique Integrated Growth Poles project includes feeder and foreign investors in the commercial agriculture and roads upgrades in Mozambique, and similar upgrades are agribusiness sectors. By emulating successful experiences in needed in the areas within Zambia and Malawi to connect transport infrastructure design (such as the Mali mango value agricultural production areas to trunk roads. chain transportation innovation) [11] aimed at addressing the bottlenecks in the agricultural value chain, this region can Although the area has a high supply of low skilled labor, benefit from a common transport network. insufficient experience with commercial farming and lack of agricultural entrepreneurs and senior managers means that Multimodal infrastructure that connects smallholder there is a lack of requisite skills for large scale commercial and commercial farmers to major markets in Malawi, ventures. Existing commercial farmers have to rely on Mozambique, and along the North – South Corridor is the expatriate supervisory skills that add significant operating crucial market access factor that could unlock the agricultural costs. potential of this area. The major railway infrastructure in the area is currently receiving upgrades from the mining Farmers’ access to market information is another crucial industry. The Nacala rail corridor upgrade, which connects factor that determines the competitiveness of suppliers in the the port of Nacala to Tete province through the Southern agricultural value chain. Due to a lack of an integrated and Province of Malawi, is one such example. Vale is upgrading reliable agricultural market information system, farmers are the railway line and according to its 2012 Annual Report, often unaware of the prices of their commodities in the local 12 percent of the railway infrastructure is complete, and the and regional markets. In addition, high costs of inputs, such government expects the project to be concluded by 2015. as fertilizers and farming equipment, are affecting the However, the multimodality of this railway line to benefit competitiveness of farmers and other businesses in the local smallholder and commercial farmers is limited. This agricultural value chain. 36 | Gr owth without Borders The governments of Malawi, Mozambique, and Zambia inconsistent trade policies, and lack of a truly uniform show significant interest in opening up regional markets customs documentation system still hinder cross border through trade harmonization and infrastructure financing business activity. At the border level, large number of stamp and coordination initiatives. Under the Tripartite Free Trade and signature requirements also creates opportunities for Area initiative of EAC-SADC-COMESA, as well as through corrupt behavior. Furthermore, because cross border trade the APEI, there are numerous institutional arrangements involves a large number of documents for import and export, seeking to promote easier trade flows. Despite political logistical operations are highly complex. Innovative platforms interest, regional integration initiatives still suffer significant such as the online NTB reporting mechanisms undertaken implementation challenges. Doing business across borders by the governments under the Tripartite Free Trade Area are of these three countries has seen significant improvements being implemented to address these issues (for a geographic in the last few years. But uneven border harmonization, rendering of these NTBs, see Annex 2, Map 2.1). Growth without Borders | 37 Table III.2: Tete (Mozambique) – Blantyre (Malawi) Endowments / Opportunities Productive Factors Investments • Large potential for agricultural production • Anchor investors in the mining sector in Tete province, with major mines in Moatize – Maize and cassava in Tete province (Mozambique) and Benga districts operational – Sugar in Southern Province (Malawi) • Increasing public investments (and donor support) in commercial agriculture – Maize, cotton, groundnuts in Eastern Province (Zambia) production and agribusiness sectors • Major investment in Angonia, Tsangano, and Macanga districts in Tete province to • Anchor investors upgrading transportation infrastructure; opportunity for commercial promote market access for smallholder farmers to growing markets in the region agricultural production to utilize upgrades in railroads • Presence of agriculture/agribusiness sectors (sugar processing in southeastern • Mining companies showing interest in local procurement, have initiated agricultural Malawi, cattle raising in Zambia) support programs in Tete province • Large supply of low skilled labor • Foreign and domestic investments in light manufacturing, agricultural processing, and services sectors also increasing Market Access Regional Integration • Nacala rail corridor (Tete-Nacala via Malawi) being upgraded by Vale; 12% of railway • Political interest in regional trade, logistics, and investment harmonization (APEI) infrastructure completed as of March 2013 – Focus on transit management, facilitation, integrated border management, and • Reasonable provision of trunk infrastructure, with trunk roads in good condition and elimination of NTBs national road funds generally healthy • Establishment of Project Preparation and Implementation Unit for regional • Proximity to growing markets in Zambia, Malawi, Mozambique, and the area along harmonization in financing infrastructure under the COMESA-EAC-SADC tripartite the North-South Corridor • South African Power Pool provides ability to substitute large national investments in • Multimodal transport infrastructure could produce cost savings for both mining and power infrastructure agriculture sectors Constraints / Challenges Productive Factors Investments • Employment generation not proportionate to increasing FDI • Investments not reaching full potential due to lack of needed infrastructure in power, • Agriculture entrepreneurs have limited access to finance transport, and irrigation • Labor demand from anchor investors does not match skills of local labor force • Major focus on mining supported infrastructure; multimodal infrastructure • Labor productivity low investments limited • Competitiveness of local SMEs low • Weak forward/backward linkages between sectors • Local procurement from SMEs by anchor investors not yet realized • Private investment needs to be scaled up to create secondary sectors (agricultural processing, services, manufacturing) Market Access Regional Integration • Limited multimodality of rail infrastructure causing high cost of transport for • Political leaders committed to regional integration but not operationalized agricultural producers • Inconsistent trade policies, lack of truly uniform customs documentation • Lack of all-weather rural feeder roads • Large number of stamp/signature requirements for freight clearance contributes to • Road funds focus on trunk roads at expense of secondary and tertiary network corrupt behavior • Corridors link economic centers to ports but not to each other • Trade transactions inefficient and burdensome • Farmers’ access to market information is limited • Coordination, risk management, and accountability related to regional projects weak • Imported input, transportation, and licensing and inspection costs high leading to low margins for agricultural producers 38 | Growth without Borders M ap III .2 R egiona l Grow th Po le 2 : L i v i n g sto n e ( Zamb i a) – V i c t o r i a Fa l l s ( Z i m ba bw e) Growth without Borders | 39 Map III .2 between the two countries, the so-called UNIVISA. In support of the UNIVISA the World Bank has funded The Anchor Investor Sector: Tourism Southern African Development Community Visa Facilitation The Victoria Falls UNESCO World Heritage Site is the main Initiative. This initiative helps SADC member countries to tourist destination in Southern Africa, renowned worldwide streamline visa processes as part of a broader liberalization for its exceptional geomorphological features and outstanding of the travel and tourism sectors. In addition, SADC has natural beauty. It is one of the most visited tourist attractions created a tourism regional master plan to promote regional in Africa, attracting a large number of domestic, regional, tourism as a basis for deeper integration and growth, but and international tourists. UNESCO added Victoria Falls implementation has not yet started. to the World Heritage Site list in 1989 as a transboundary site shared between Zambia and Zimbabwe. The Falls is also The cities of Victoria Falls in Zimbabwe and Livingstone in at the center of the The Kavango Zambezi Transfrontier Zambia are the nearest access points for tourists visiting the Conservation Area the world’s biggest conservation zones Falls. The two countries increasingly appreciate tourism for which will eventually span an area of approximately 520,000 its wealth and job creating potential, including spillovers square km (similar in size to France). Plans include 36 across the border. Table III.2 outlines the major endowments national parks, game reserves, community conservancies, and opportunities for a regional tourism growth pole, and game management areas -- such as Botswana’s Chobe with linkages to other tourism attractions within the area National Park, Namibia’s Caprivi area, and Kafue National that could be fostered. The table also outlines the major Park in Central Zambia -- making it an ideal tourism growth constraints and challenges related to a successful tourism pole. The cross border nature of the tourism site, the unique growth pole development strategy. opportunity for collaboration between the two countries, and the immense attractiveness of the Falls makes this area a Currently, however, the destinations at either side of the prime site for a regional tourism growth pole. Falls are competing for a limited tourist consumer base for those visiting the destination as a two day add-on to The United Nations World Tourism Organization’s travel to South Africa. Because of limited time and border (UNTWO) General Assembly was held in Victoria Falls in crossing bureaucracy and associated costs, tourists generally August 2013, jointly hosted by the Zambia and Zimbabwe just visit one side of Victoria Falls. But the diverse range of governments. This was the fi st time the event was hosted in attractions would easily justify a weeklong vacation if tourists Sub-Saharan Africa. The choice of the Victoria Falls indicates could experience a “borderless destination”. Despite the its status as an iconic tourism resource and the potential it potential, neither country appears to have integrated regional has to become a global destination. The UNWTO event was destination planning, tourism management, and tourism also the pilot for a long awaited visa facilitation initiative branding and marketing strategies. 40 | Growth without Borders Tourism was historically concentrated on the Zimbabwe Falls area with only three days notice. Regulatory changes side, which is widely considered to have better views of the such as these often occur without sufficient communication waterfall. Due to political turmoil and negative international between different governing bodies, significantly affecting media attention on Zimbabwe, the tourism industry in the tourism and investment attractiveness in the Falls area. town of Victoria Falls has significantly diminished over the past decade. [28] Although tourist arrivals have been Limited access to finance and high costs related to increasing since 2008, the industry has not completely establishing and operating tourist facilities hinder operators’ recovered; a concerted effort at destination branding and ability to establish and scale up their businesses. Despite FDI, promotion is thus required. In response, the Zimbabwe the tourism industry in the area is not competitive nor fully government has initiated the promotion of Tourism meeting its high potential. Expensive construction material Development Zones to attract tourism investments. in both Zambia and Zimbabwe and high duty and costs of items demanded by tourists, add to the costs of operating In contrast, tourists have flocked to Zambia, hotel a business. In both countries, access to finance for small construction there has increased, and hotel occupancy tourism businesses, especially those that are owned locally, rates remain high. As a major policy focus, the Zambia is extremely limited. There is also a lack of understanding by government’s Poverty Reduction Strategy includes tourism the banking sector about the structure of the tourism sector related incentives for private investors and marketing and where large upfront costs are required to set up facilities, but branding of destinations. Livingstone was also able to create which have a long payback period. Where loans are available, a robust MICE (meetings, incentives, conventions, events) the tourism industry faces high interest rates and collateral industry catering to international high end consumers. There requirements that are difficult for operators to secure. is also ongoing work to further promote activities within the Kavango Zambezi Transfrontier Conservation Area, thus Major international hotel chains, such as Intercontinental creating a regional itinerary for international tourists. (Livingstone) and Protea Hotels and Southern Sun (both Livingstone and Victoria Falls) operate in the area. And there Despite these efforts, longstanding problems related to lack are a number of small lodges (mostly foreign owned) and of a predictable and stable regulatory environment in both many small informal enterprises (locally owned). The larger, countries continue to pose risks for investors and operators. foreign owned anchor investors have not been able to build The tourism sector is highly sensitive to political instability at sustainable linkages with the local economy, mainly due to the country, regional, and global levels. The sector is especially the need to source items demanded by tourists, such as wine, sensitive to fluctuations in the regulatory environment outside of the area. Local agricultural production is also and sudden changes can have drastic consequences for unable to meet these hotels’ procurement requirements and profitability and the investment climate. For example, in June standards. There is also a lack of knowledge among the small- 2010 the Zambia authorities enacted a rule that imposed a scale tourism operators about regional and international US$15,000 helicopter license fee for operators in the Victoria markets. Growth without Borders | 41 A large labor pool is employed by the locally owned tourism The major hub airport for international travelers from source operators, lodges, guesthouses, and activity and transport markets in Europe and the United States that serves the area providers. Labor costs account for up to one-third of total is in Johannesburg, South Africa. Significant upgrades for the operating costs for hotels and safari lodges. [29] Since area airport in Livingstone were concluded for the UNWTO tourism is a labor intensive industry, productivity is crucial General Assembly and upgrades are also taking place in the for lowering operating costs. Labor productivity relates Victoria Falls Airport and are expected to be concluded by to cost per task completed, and is typically low for local March 2014, enabling it to cater to 1.5 million visitors per operators with staff that lack exposure to international service year. Access to the area from international source markets is standards. A disconnect between employee remuneration and thus adequate, although long haul travel times do discourage service standards also contributes to low labor productivity. many potential tourists. This bodes well for creating regional For example, Zambia’s law that guarantees 10 percent tourism packages that could include different destinations hospitality service tax be passed on to employees leads to within the area and could be sold as bundles in the major higher prices but not necessarily better service. source markets of the US, Europe, and China. 42 | Growth without Borders Table III.3: Livingstone (Zambia) – Victoria Falls (Zimbabwe) Endowments / Opportunities Productive Factors Investments • Victoria Falls, a UNESCO World Heritage Site, and the Zambezi River are major • Governments incentivizing investments in tourism, evidenced by recent policy international tourism attractions announcements by the two governments • Other tourism attractions in nearby countries have potential to be part of a regional • Zimbabwe Ministry of Tourism pursuing a Tourism Development Zone strategy (no tourism itinerary package levy, license or lease taxes for a five year period) • Livingstone has a robust MICE (meetings, incentives, conventions, events) tourism • Zambia government’s Poverty Reduction Strategy focuses on attracting investments industry catered to business travelers; tourist day activities concentrated on Zambia for tourism growth side • Hotel investments on the rise in the area, in response to the UNWTO General • Accommodation for leisure travelers is more competitive in Victoria Falls (Zimbabwe) Assembly held in August 2013 Market Access Regional Integration • Major international hub airport in Johannesburg • UNWTO General Assembly in August 2013 as platform to bring together senior • New airport in Livingstone opened in 2013 for UNWTO event and Victoria Falls Airport tourism officials and high level business representatives for public-private dialogue undergoing expansion to become a regional hub airport able to cater to 1.5 million • Significant potential to market regional itineraries for tourists, under the SADC visitors per year, to be completed March 2014 Tourism Sector Development Master Plan • High potential for diversified tourism across tourism value chain • Increased economies of scale between the Zambia and Zimbabwe sides for tour • Opportunities for tourism SMEs to pursue collective marketing, promotion, operators operational, and flexible labor strategies • Duty free imports, automatic work permits, permanent residence, and tax holidays announced for tourism investors by Zimbabwe Tourism Authority • Zambia government launched a national tourism rebranding campaign in 2011 • Government commitment to visa facilitation Constraints / Challenges Productive Factors Investments • High cost of supplies for establishing and operating tourist facilities (e.g., price of • FDI investment in tourism low in relation to potential, especially in Zimbabwe due to cement in Zambia is 80% higher than in Kenya) deterring investments in tourism political economy • Improved labor productivity could lead to lower operating costs • International hotel chains do not procure agricultural products locally; capacity of • Lack of exposure of labor to international level services standards and training, local suppliers to supply international hotel chains are limited especially for small operators, contributing to low quality of tourists’ experience • Low levels of domestic investment in hotels, lodges, restaurants, tour operators, • Zambia’s law that guarantees 10% service tax on all hospitality products to be mainly due to difficulty in accessing finance passed on to employees may contribute to low motivation and increased prices • High levels of inflation in Zimbabwe, and the unpredictable legal, political, and economic environment is disincentive Market Access Regional Integration • Lack of knowledge of international/regional market limits the success of small scale • Lack of a predictable regulatory environment directed towards fostering cross border and community based tourism products synergies in tourism • High level of competition with global and other regional tourism destinations • Lack of a harmonized regional labor law regime to ensure flow of skills and labor • Travel to and within the countries is expensive, with low level of competition among across borders airlines • Limited management, destination planning, and marketing skills at the institutional • Key items demanded by high end tourists face high import taxes (e.g., excise duty on level wine at 125%) • Need to promote dialogue between stakeholders to chart an effective way forward for • Zimbabwe political image hinders its attractiveness and deters private sector growth business promotion and job creation on both sides of Falls Growth without Borders | 43 M ap III .3 R e giona l Grow th Pole 3 : H ar ar e ( Zi mb ab we ) – Be i r a ( Mo z a m bi q u e) 44 | Growth without Borders Map III .3 R egional Growth Pole 3 Anchor Investor Sector: Mining Sub Sector: Agriculture The Beira Development Corridor that connects Harare opportunities for a regional growth pole in the Harare-Beira with the port of Beira is an important area with potential corridor and related challenges. for linkages between the mining industry in Zimbabwe and the agriculture/horticulture sectors in Mozambique. In contrast, the investment climate for commercial Mozambique already has a high volume of trade with agriculture in Mozambique is attractive, with various Zimbabwe. There are commercial agricultural activities companies currently operating in the area. There is great taking place on the Mozambique side of the corridor, such as interest from the international commercial farming industry the production of ethanol from sugarcane and biodiesel from in the Beira corridor. And there are numerous commercial jatropha in Cheringoma (Sofala province) and in Chimoio farmers currently operational in Mozambique. Mozbife in (Manica province). There are also plans for a large fertilizer Manica province is expanding its cattle production with a terminal in the port of Beira, which will speed delivery and US$5.1 million investment seeking to increase the head of provide fertilizer all year round. The area has high potential cattle from 750 to 10,000 by 2014. Principle Energy invested for agricultural production, building a link between the US$400 million towards ethanol production from sugar agricultural sectors in the area with the mining industry cane in Dombe, Manica province. Enerterra aims to invest across the border in Zimbabwe. US$53 million in Cheringoma in Sofala province to produce biodiesel from jatropha. And Sun Biofuels invested US$5.5 Foreign investors have not paid as much attention to million for biofuels from jatropha in Chimoio, Manica Zimbabwe’s mining industry as to its neighbors, despite province. International commercial farming in Mozambique Zimbabwe’s vast deposits of minerals including gold, is also established, with the potential to be scaled up. platinum, and rare earth metals. Few mining companies are operating to capacity. The uncertain political climate is the Land tenure security and other political factors pose primary constraint to investments in Zimbabwe’s extractive constraints for investments, both in Mozambique and industry. Any successful regional growth pole strategy Zimbabwe. The uncertain nature of land tenure rights in based on anchor investments in Zimbabwe (and linked to each country increases the business risk for commercial commercial agriculture and horticultural farming activities agriculture investors in Mozambique. In Zimbabwe, the in Mozambique) will require a major improvement in Indigenization and Economic Empowerment Act that Zimbabwe’s investment environment. Table III.4 outlines the requires at least 51 percent divestment of equity interest in Growth without Borders | 45 favor of Zimbabwe nationals in the mining sector, continues other neighboring countries. Issues such as import and export to seriously constrain FDI. licensing, delays in classification of items crossing borders, as well as delays due to weak infrastructure capacity of the Access to finance for commercial farmers in Mozambique border posts are constraints to regional trade. Numerous limits agricultural production. The volume of loans directed checkpoints on the borders and highways in Zimbabwe foster towards financing commercial and smallholder agriculture rent seeking from transport officials, as well as cause delays is low, affecting the ability of small and middle sized in the delivery of goods and raise transportation costs. The commercial farmers to increase production. Moreover, poor need to handle numerous customs regulations manually, in access to supporting infrastructure (irrigation, grid connected the absence of automated or semi-automated systems, add electricity, and all-weather feeder roads) is a major constraint further delays in border processing. to commercial agriculture. Formal tariff barriers in place in Zimbabwe also pose another The area is well connected to the backbone infrastructure constraint to regional trade. Successful rounds of multi and in road and rail. The railway line connecting Beira to bilateral trade negotiations have reduced the number of the Zimbabwe border is operational. Beira port itself is formal trade tariffs between Mozambique and Zimbabwe, but undergoing major overhaul to be completed in 2015. Vale has complete liberalization of trade in major commodities has announced that 15 percent of the Beira port infrastructure not been achieved. Maize, the major agricultural commodity overhaul has been completed. However, transport costs in is a controlled product in Zimbabwe, and only the Grain the corridor are very high at around US$0.10 per ton per Marketing Board is empowered by act of parliament to km (compared to US$0.03 in Brazil, for example). The area import and export maize. In addition, Zimbabwe is subject is connected to markets in the north of Africa through the to high levels of government intervention in trade policies, Gabarone-Cairo highway corridor and to the east through the unpredictable fiscal environment, and a fragile macro- Beira-Lobito trans-Africa highway. economic policy environment. These conditions are affecting its neighbors’ confidence in a stable and predictable regional NTBs pose significant challenges to trade in agricultural and trade regime, which consequently has effects on efforts at other products between Zimbabwe and Mozambique and regional integration. 46 | Growth without Borders Table III.4: Harare (Zimbabwe) – Beira (Mozambique) Endowments / Opportunities Productive Factors Investments • Prime fertile land suitable for agriculture products (maize, wheat, soya, rice) in • High interest from foreign commercial farming investors already operating in the area Mozambique to scale up their production • Availability of water for irrigation from the Zambezi, Pungwe, and Buzi river basins • FDI increasing in agricultural production in Mozambique, with major investments in • Potential for increased output of diamonds, gold, and platinum-group metals such as biofuels, livestock, sugar refining platinum, palladium, and rhodium in Zimbabwe • International commercial farming in horticultural products is established, with potential to scale up Market Access Regional Integration • Area has good access to backbone infrastructure in road, rail • Area is connected to markets in north of Africa through the Gabarone-Cairo highway – Machipanda rail line from Beira to the Zimbabwe border is operational corridor and to the east through the Beira-Lobito trans-Africa highway – Beira port is undergoing major upgrade with channel dredging and port overhaul, to • Zimbabwe’s membership in SADC and COMESA provide a platform to engage in be completed 2015 institutional arrangements for infrastructure financing, trade liberalization, and other • Wheat, maize, soya, and rice are not demand constrained, and scaled up production regional integration issues could find regional (Egypt) and international markets (Brazil) • Mozambique government has shown interest in regional cooperation through SADC- • Scaled up agricultural production would also supply the extractive industry in COMESA-EAC tripartite, reflected by engagement in various high profile institutional Mozambique and Zimbabwe arrangements Constraints / Challenges Productive Factors Investments • Limited domestically sourced funding for the agricultural activities in Mozambique • Security of land tenure and investments is low due to uncertainty of land ownership and for the extractive industry in Zimbabwe and leasing rights in both countries • Absence of comprehensive mining regulatory system in Zimbabwe with ad hoc and • Banking system in both countries not fully developed, coupled with low volume of onerous multiple taxes on mining creating uncertainty for long-term capital investors loans to finance commercial or smallholder agriculture • Cost of agricultural inputs high due to lack of demand and lack of scale for suppliers • Extractive industry activity in Zimbabwe is subject to continued political uncertainty • Commercial farmers unable to connect to electricity grid, need to rely on expensive diesel powered irrigation • High interest rate for agricultural loans in Mozambique • Commercial farmers unable to hire senior managers and local skilled; need to rely on expatriate mangers adding to cost Market Access Regional Integration • Transport costs for the Beira corridor are significantly high at around US$0.10 per ton • High level of government intervention in trade policies in Zimbabwe is a constraint for per km free flow of goods and services between the two countries • Poor access to agriculture supporting infrastructure (particularly irrigation, grid • Unpredictable fiscal policies, high levels of inflation, and a fragile macro-economic connected electricity and all-weather feeder roads) in both countries environmentin Zimbabwe contribute to the continuing uncertainty of its participation • Beira port operating at 40% capacity due to delays in infrastructure upgrading in regional integration initiatives • Lack of knowledge of the international/regional market limits the success of smallholder farmers • Custom delays a major constraint in the transport of agricultural and horticultural products Growth without Borders | 47 IV. Conclusions and Next Steps a physically smaller geographic area (larger scale) and considering more precisely defined sector and industry This report outlines a geospatial framework for identifying activities. Accordingly, subsequent work will seek to suitable places for growth pole strategies within and across validate and deepen the findings related to a specific Angola, Malawi, Mozambique, Zambia, and Zimbabwe. This growth pole area. This will involve targeted assessments to involved spatial analysis of the economic endowments of identify economic complementarities and specific barriers agribusiness, mining, and tourism using GIS data collection to competitiveness, investment, and trade. and analytical methods. Specifically the analysis showed where features related to productive factors, investment, market Fundamental to this work will be in-depth consultations access, and regional integration potential are co-located. While with a range of stakeholders—domestic and foreign several areas in the five countries examined possess many of businesses, national government officials, regional economic the ingredients for a successful growth pole, a few places stand communities, donor agencies, among others—to discover out. Growth pole potential is comparatively high for: specific issues and priorities. The aim will be to highlight constraints, opportunities, stakeholder interests and, where • Mining and agriculture in the Tete province of possible, comparisons between idealized “borderless” Mozambique with the area around Blantyre in the scenarios and the status quo. This will entail the identification Southern Province of Malawi. and consideration of mechanisms that can effectively address • Tourism on both the Zambia and Zimbabwe sides of the coordination, accountability, and risk management issues Victoria Falls. inherent in any growth pole strategy. It is anticipated that this • Mining and agricultural integration between nodes along follow-on, larger scale spatial analysis will be web enabled to the corridor between Harare, Zimbabwe and Beira, encourage broader stakeholder involvement. Other outputs Mozambique, such as Mutare and Chimoio. may include background reports, action plans, geocoded • Agricultural and tourism integration between Chipata, databases, and communication materials (e.g., websites, Zambia and Lilongwe, Malawi. videos) to build consensus for growth pole interventions. • Agribusiness and tourism potential near the northern Given the multi-sector nature of such strategies, expertise and Mozambique coastal port at Nacala. While relatively small insights will be drawn from practice groups across the World and not on an international border, Nacala’s port is on Bank Group. In particular, this analysis will be supported by average deeper than ports to the south; with infrastructure ongoing research on trade infrastructure linkages, geospatial improvements it may prove to be a needed link to global analysis of extractive industry linkages to local economies, markets for landlocked areas in eastern Zambia, southern as well as geospatial and quantitative analysis to support the Malawi, and Tete, Mozambique. prioritization of infrastructure investments. This initial insight is useful in highlighting those areas which merit more detailed analysis across Growth without Borders | 49 the World Bank Annex 1: Competitiveness Indicators Table 1.1 Factors Affecting Foreign Investor Attractiveness Investing in Sectors Access to Industrial Agriculture & Tourism, Land Information Protection of Ease of Establishing Ease of Doing Mining, Oil and Gas Forestry Construction, Retail Index Investors Foreign Business Business Rank Range 0–100 (100 = Range 0–10 Range 0–100 Range 0–100 (100 = Full Equity Ownership) Highest) (10 = Highest) (100 = Easiest) Rank/185 Angola 74.5 100 100 36.8 5.7 39.5 172 Malawi n/a n/a n/a n/a 5.3 n/a 157 Mozambique 100 100 100 33.3 6 65.8 146 Zambia 100 100 100 37.5 5.3 47.4 94 Zimbabwe n/a n/a n/a n/a 4.3 n/a 172 Source: Investing Across Borders 2010; Ease of Doing Business 2013. Table 1.2 Factors Affecting Trade Across Borders Logistics Trading Prevalence of Competence/ Logistic Time to Across Trade Barriers Quality Performance Time to Export Cost to Export Import Cost to Import Borders US$ per US$ per Range 1–7 Range 1–5 Days container Days Container Rank/185 Angola 3.7 2 2.28 48 1850 45 2690 164 Malawi 4.1 2.85 2.81 34 2175 43 2870 168 Mozambique 4.2 2.2 2.29 23 1100 28 1545 134 Zambia 4.3 2.01 2.28 44 2765 56 3560 156 Zimbabwe 4.8 2.27 2.55 52 3280 73 5200 167 Source: Trade Logistic Performance Index 2012; Ease of Doing Business 2013; Global Competitiveness Index 2013-2014. Growth without Borders | 51 the World Bank Table 1.3 Factors Affecting Competitiveness of SMEs Labor Market Goods Market Financial Market Cooperation in Cooperation Ease of Reliance on Higher Education/ Labor-Employer in Labor-Employer Domestic Market Foreign Market Access to Professional Legal Rights Training Relations Relations Size Index Size Index Loans Management Index Range 1–7 (7 = Highest) Range 1–10 Angola 2.1 3.1 2.2 3.5 4.9 2.8 2.4 1.7 Malawi 2.6 4.1 4.2 2.3 3.1 4.3 3.7 2.6 Mozambique 2.3 3.6 3.4 2.8 3.6 4.2 3.7 1.8 Zambia 3.1 4.3 4.6 2.5 3.7 5.2 4.4 2.7 Zimbabwe 3 3.7 5 1.8 3 4.9 3.8 2.1 Source: Global Competitiveness Index 2013 -2014. Table 1.4 Effectiveness of the Public Sector Public Sector Economic Management and Government Political Stability/ Control of Management Institutions Regulatory Quality Effectiveness Absence of Violence Corruption Range 1–6 (6 = Highest) Range –2.5 to +2.5 (+2.5 = Highest) Angola 3 2.3 –1.1 –1.15 –0.33 –1.36 Malawi 3.2 3.3 –0.7 –0.43 –0.07 –0.36 Mozambique 4.5 3.4 –0.4 –0.55 0.27 –0.41 Zambia 3.7 3.1 –0.43 –0.65 0.47 –0.51 Zimbabwe 1.8 2.2 –1.9 –1.4 –1.04 –1.3 Source: Country Policy and Institutional Assessment 2012; World Governance Indicators 2012. 52 | Growth without Borders Annex 2 Regional Maps of Productive Factors Growth without Borders | 53 the World Bank M ap 2.1 P op ula tion D ens ity (2 010) 54 | Growth without Borders Map 2.1 Future sustainable urban growth depends on an individual’s for Zimbabwe 34.5 per square km. The countries’ rates of capacity to relocate, the relative level of economic urbanization show large variation as well. In 2012, Zambia opportunity, and other attractiveness factors and to some and Zimbabwe’s urban population was around 40 percent of degree on the initial population distribution. Approximately their total. Mozambique’s urban population is 31 percent of 85 million people live in the five-country study area, its total. Meanwhile 60 percent of Angola’s population lives in averaging 26.5 people per square km. However, as this map cities. Despite having the highest population density among shows, the region’s population is not uniformly distributed. In the five-country study area, Malawi still has the lowest rate of 2011, Malawi’s average population density was 164 people per urbanization, only 15 percent of Malawi’s 16 million people square km, while Angola is at 16.2 and Zambia at 18.3 people live in its cities. per square km. For Mozambique, the number is at 31.3 and Growth without Borders | 55 M ap 2.2 S t ap l e C rop Produc ti o n ( 2 000) 56 | Growth without Borders Map 2.2 While one country may be physically larger than another, it does not always follow that the land itself is equally productive, or potentially productive. The five-country study area contains 179,000 square km of arable land, with Zambia containing two-and-one-half times as much as Malawi. While countries in the study area all produce maize, Malawi and Angola produce large quantities of cassava as well. Angola captures four times as much fish as Mozambique captures and farms, while Malawi and Mozambique each raised twice as many pigs as Zimbabwe. Growth without Borders | 57 M ap 2.3 ag ricultura l inv es tm e n t ( si n c e 2 005 ) 58 | Growth without Borders Map 2.3 While the agricultural investment dataset is incomplete (only land purchases, infrastructure, or production improvements). Zambia and Mozambique are available), some places stand In Mozambique between 2005 and 2010, 190 agribusiness out. For instance, agribusiness investment in Mozambique investments totaled US$4.8 billion, averaging US$25.6 is distributed across the country even though most of the million with the largest single investment of US$1.6 billion investment is in the south. In Zambia, by contrast, it appears in Ile (north of Quelimane, east of Blantyre). In Zambia confined to population and transport corridors. Mozambique between 2007 and 2011, 105 agribusiness investments were distribution tends to mirror the distribution of maize and undertaken, averaging US$9.3 million and which were cassava production (see previous map) more so than in expected to create an average of 137 jobs. The largest single Zambia. This may reflect differences in data collection by the investment totaled US$250 million from an Anglo-American responsible agencies, but it may also reflect differentiation company recorded in Lusaka in 2009. in the investment (investment in processing plants versus Growth without Borders | 59 M ap 2.4 M in es by c ommodity ( 2 012 ) 60 | Growth without Borders Map 2.4 Coal deposits in the north of Mozambique near Tete, and copper deposits in the central north of Zambia drive much of the mineral extractive wealth of the region. Zimbabwe shows the greatest diversity and dispersion of its mineral wealth. Growth without Borders | 61 M ap 2.5 M in i ng inv es tment (2003 –2 013 ) 62 | Growth without Borders Map 2.5 This Financial Times FDI markets data provides insight as to the major actors, where and how much they are investing, and in which commodities. While Zimbabwe has more diversity in mineral deposits, Zambia received a greater volume and frequency of investment in mining since 2003. Growth without Borders | 63 M ap 2.6 H o tels a nd Touris t A ttr ac ti o n s ( 2 012 ) 64 | Growth without Borders Map 2.6 In addition to multiple game and safari parks and the spectacular Victoria Falls on the border between Zambia and Zimbabwe, the region boasts eight UNESCO World Heritage Sites: one in Mozambique, two in Malawi, and five in Zimbabwe. Unfortunately, available disaggregated information about hotels in the region varies greatly from one country to another. This is evidenced by the concentration of hotels in Malawi yet a dearth of hotels in Angola. Growth without Borders | 65 M ap 2.7 T ouris t inv es tment ( 2 003 –2 013 ) 66 | Growth without Borders Map 2.7 Zimbabwe and the northeastern quadrant of the study area appear to have a greater quantity of tourism natural endowments (see previous map) and the southeastern coast of Mozambique appears to receive the most investment. This result is somewhat biased by the greater availability of investment data for Mozambique and Zambia. But the dearth of investment shown in Zimbabwe likely reflects the country’s political and economic turmoil over the past decade. Growth without Borders | 67 M ap 2.8 I n ves tments in S erv ice s, I n f r astr u c tu r e o r Co n str u c ti o n ( 2 0 0 3 – 2 0 1 3 ) 68 | Growth without Borders Map 2.8 Investment in infrastructure, facility construction, and the electrical grid is more dispersed than investment in other sectors. The majority of such investment since 2003 has ended up in the capital cities and near extractive industry centers. Growth without Borders | 69 M ap 2.9 D istricts C a tegorize d b y e le c tr i c al g r i d ac c e ss ( 2 006) 70 | Growth without Borders Map 2.9 District level data about access to electricity was not available for several of the countries studied, so this report drew on ad hoc inferred measures of electrical availability. Th s map color codes districts based on the presence of electrical transmission lines and power plants as reflected in the AICD data from 2006. It does appear to reflect the distribution of population at this scale; larger scale analysis will require an improved dataset. Growth without Borders | 71 M ap 2.1 0 regiona l tra d e c orri do r s 72 | Growth without Borders Map 2.10 The roads highlighted in this map are designated trade corridors. Th s information was made available courtesy Trademark Southern Africa. [The data can be examined in more detail by going to http://www.tmsagis.co.za/ and selecting the “Click to see all tripartite corridors” button at the bottom of the screen.] As noted, the road, rail, and air network in the eastern half of the five-country study area is more complete and integrated than the western half. Angola’s corridors travel northeast and connect to DRC. Only one major corridor connects it to Zambia. Every other country in the region enjoys at least two overland connections with each of its neighbors. Growth without Borders | 73 M ap 2.1 1 ma rket a c c es s : es ti mate d ti me to mar k e t 74 | Growth without Borders Map 2.11 This map shows small scale categorization of the relative cumulative time it would take to reach the nearest mid size city or port. Several patterns emerge: Angola’s road network and population distribution mean that its integration potential (from a market access perspective) lies to the north and east with DRC or south to Namibia, rather than to the east with Zambia over the Lungwebungu River. Zimbabwe’s accessibility is well dispersed and Malawi benefits from its small size resulting in both countries having relatively high levels of accessibility. Zambia and Mozambique appear to have multiple poles of accessibility, while large stretches of their respective area remains less easily accessed. Growth without Borders | 75 M ap 2.1 2 N o n- Ta riff Ba rriers to T r ade – N T B s ( 2 013 ) 76 | Growth without Borders Map 2.12 This map reflects the trade relationships of the five countries studied in this report. Trademark Southern Africa provided the underlying data which was then mapped for this report. Every country in the study area is a member of SADC, although Zambia, Zimbabwe, and Malawi are also members of the COMESA; Angola and Mozambique are not members of COMESA. The purple dots of varying size indicate reports of NTBs along the region’s regional trade corridors. At first glance, the cross border issues between Zambia and Zimbabwe seem to be generating the most reports. Reports in Mozambique occur not only at the border but also along the corridor. This data is very new and warrants further investigation. Growth without Borders | 77 M ap 2.1 3 W orld Ba nk F ina nc e d Pr o j e c ts 78 | Growth without Borders Map 2.13 This map shows World Bank financed projects across the five-country study area in selected sectors, up to 2011. Spatial rendering of World Bank financed projects in the region provide some interesting insights. For example, the map reflects that: transportation projects are implemented countrywide in Zambia and Mozambique; projects related to justice, law, and administration investments are concentrated in northeast Mozambique; and central and southern Mozambique are being targeted for agriculture, fishing, and forestry projects. The map also reveals that the World Bank is currently not financing projects in Zimbabwe but that there is a cluster of agricultural interventions in Angola. There appears to only be one industry and trade project in the entire region (in Zambia). It also shows a high concentration of several sector interventions in Maputo. This also reflects a similar concentration of projects in most of the other capital cities. Growth without Borders | 79 M ap 2.1 4 Angol a Exp ort Volu me i n US $ ( 2 012 ) 80 | Growth without Borders Map 2.14 The data on Angola exports is a challenge. It seems clear that it has little to no formal export relationship with the other four countries evaluated. While the UN COMTRADE data on the composition of trade was incomplete, the IMF data indicate significant exports to South Africa. Growth without Borders | 81 M ap 2.1 5 M a la w i Exp ort Volu me i n US $ ( 2 012 ) 82 | Growth without Borders Map 2.15 Taken from the IMF Direction of Trade Statistics, this cartographic representation of export flows illustrates the relative importance of a regional trading partner to Malawi exporters. Agricultural exports dominate Malawi exports, and UN COMTRADE data suggest that tobacco, sugar, and maize compose the majority exports to Zimbabwe. Malawi follows a pattern similar to its neighbors in that its main customer is to the south, although it is unusual in that it is the only one of the five countries examined whose largest export relationship is not with South Africa. Growth without Borders | 83 M ap 2.1 6 M oza mbique E xp ort V o lu me i n US $ ( 2 012 ) 84 | Growth without Borders Map 2.16 Electricity and flour compose the majority of Mozambique exports to Zimbabwe, while oil and fertilizer are the main exports to Malawi, according to UN COMTRADE data. Growth without Borders | 85 M ap 2.1 7 Z ambia Exp ort Vol ume i n US $ ( 2 012 ) 86 | Growth without Borders Map 2.17 Zambia’s exports are more directionally diverse. While little goes directly to Angola or Mozambique, it is generally in the form of copper. Exports to its other neighbors are agricultural products such as maize, seed, and tobacco. Growth without Borders | 87 M ap 2.1 8 Zimba bw e E xp ort Volu me i n US $ ( 2 012 ) 88 | Growth without Borders Map 2.18 Zimbabwe has significant export relationships to the north and south and exports little to the Lusophone countries to the east and west. Sugar, tobacco, and other agricultural products dominate Zimbabwe exports according to UN COMTRADE. This reflects a pattern of trade of other countries in the region which appear to trade in the same type of goods (imported and exported). Perhaps this is the result of a difference in unit prices, but will provide an interesting question for more localized study. Growth without Borders | 89 M ap 2.1 9 e stima te of dens ity o f g r o ss do me sti c p r o du c t ( 2 008 ) 90 | Growth without Borders Map 2.19 The colors in this map estimate the annual amount of GDP of a given square km in both the formal and informal sector, by calibrating the amount of light detectable from space to national statistics in a sample set of countries. Interesting discrepancies appear between the expected distribution of population and the estimated distribution of income generating areas. [30] Growth without Borders | 91 Figure 2.1 GDP Growth Rate of Selected Countries Figure 2.2 FDI by Sector to Angola 25 10 20 15 8 10 Billions (US$) Billions (US$) 5 6 0 2007 2008 2009 2010 2011 2012 4 –5 –10 2 –15 –20 0 Angola Malawi Mozambique Zambia Zimbabwe 2008 2009 2010 2011 2012 2013 Angola Source: World Development Indicators, 2013 Tourism Services Manufacturing Mining Other Source: Financial Times FDI database, 2013 Figure 2.3 FDI by Sector to Malawi Figure 2.4 FDI by Sector to Mozambique 800 14 700 12 600 10 Millions (US$) Billions (US$) 500 8 400 6 300 200 4 100 2 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 2013 Malawi Mozambique Tourism Services Manufacturing Mining Other Tourism Services Manufacturing Mining Other Source: Financial Times FDI database, 2013 Source: Financial Times FDI database, 2013 92 | Growth Without Borders Figure 2.5 FDI by Sector to Zambia Figure 2.6 FDI by Sector to Zimbabwe 5 7 6 4 5 Billions (US$) Billions (US$) 3 4 2 3 2 1 1 0 0 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 Zambia Zimbabwe Tourism Services Manufacturing Mining Other Tourism Services Manufacturing Mining Other Source: Financial Times FDI database, 2013 Source: Financial Times FDI database, 2013 Figure 2.7: Expected Job Creation by Sector: Tourism, Services, Manufacturing, Mining, and Other 12 10 Jobs (thousands) 8 6 4 2 0 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 Angola Malawi Mozambique Zambia Zimbabwe Tourism Services Manufacturing Mining Other Source: Financial Times FDI database, 2013 Growth Without Borders | 93 Annex 3: Spatial Analysis is simply too much data to view in a table or panel. GIS Method expands panel upon analysis by providing powerful tools for the visualization, quantification and evaluation of spatial Where are the Growth Poles? relationships between features, such as distance, pattern of distribution, level of interaction, and colocation. To do this, At the request of the two World Bank Country Management GIS companies and users developed a series of tools and Units covering the five countries, this report sought to standards that enable the rapid collection, management and identify and visualize potential regional growth poles. comparison of enormous datasets, which can reduce the The challenge was to do this in a data driven, repeatable, amount of time it takes to complete such a project. transparent way and for that, the team used Geographic Information Systems (GIS). This annex describes the spatial Analytical Approach Using GIS analysis techniques used to overcome the broad scope and data challenges of this work. The model is simplified and The first step was to identify a scale of analysis. Finding a the number of variables limited in order to answer the common unit of analysis is useful way of comparing data requirement in a timely fashion. The goal is to ensure that points of different scale, purpose, or accuracy. (In this report, readers understand the method, and so can contribute to district boundaries are used). While districts are not of a improving the model over time. uniform size and shape, they do provide this common unit. This constraint leads to findings that while correct in a broad It did this by first geo-locating investments and endowments, sense, may breakdown in the specifics (when one zooms in). and correlating that information with proximity to markets, Therefore, it is important to read these maps as a guide for active cross-border trade and international borders. This more detailed analysis of a much narrower geographic area, process aimed to put information into its regional context. guided by a more specific trade and competitiveness question However, this is only a first step. In geographic analysis, as in can be examined. This more focused view allows higher most types of analysis, the scale and unit of analysis affects resolution data to be considered alongside context specifi the results. Therefore the scope of this analysis is limited to datasets. identifi ation of places of interest. The economic viability of the proposed Regional Growth Poles a single coherent The growth pole concept points to the need for an inherent economic unit will be evaluated in a subsequent analysis. revenue producer to be present in order to build upon existing economies of scale or agglomeration. Given that such a revenue producer source is often immobile (such as the Why Use GIS? locations of mines), the identifi ation process would create Why not conduct a simple panel analysis? The advantage three sets, those with a revenue producer, those without and of maps is the ability to visualize patterns or relationships those nearby. The concept also looks for variables whose that are often not apparent in other formats or when there location is mobile or fungible (such as the worker’s location). Growth Without Borders | 95 the World Bank In this analysis, the initial selection of a district depends theme. In the third stage, the identified growth poles are more on the immobile than the mobile. This dependence on selected for their appropriateness for agglomeration as an immobile factors also means that certain areas are unlikely economic unit for analysis in phase two. candidates for development of a mining growth pole no matter the enabling environment. Therefore, it seems logical In all, data was gathered from over 20 different organizations to sort locations based on membership in sets representing and World Bank country offices to create the geodatabase. In the characteristics of the area, i.e. on the presence of an ideal scenario, analytic questions drive the analysis, rather immobile factors or aspects of the enabling environment, than by data availability. However, despite tremendous data immobile versus mobile, accessible versus inaccessible and to availability, it varied greatly in resolution and quality between bias the results toward areas with immobile assets. [10] countries and information type. “Everything relates to everything else, near things are more Furthermore, World Bank analysts often needed to add related than distant things”. [31] With this in mind, the location data to a non-spatial dataset in order to fill gaps in analysis involved three stages. The first stage narrowed the data between countries. Other datasets (hotels, for instance) list of candidate growth poles through an overlay analysis of had to be triangulated data from different sources to develop available data to assign membership to the aforementioned a common analytical baseline that aggregated data to at least sets. Each of the 790 districts in the five-country study the district level, given that the data was high resolution region received a rating based to the presence or proximity in Malawi and Zimbabwe, but less readily available in the to agriculture, mining, and tourism sites, the presence and remaining three countries. Th s data gathering, processing, volume of foreign direct investment, and the location’s and triangulation eff rt consumed much time and eff rt, relative connectivity to markets. It then establishes relative yet had the benefit of collating data that is useful for several suitability based on the intersection of those sets. This other types of analyses at various scales. identifies the sites in close proximity to economic inputs, activity and enabling environment factors. It then examines that final set of highly suitable places in context to one 1 A geodatabase organizes data by its location on Earth. This enables users another and to international borders and trade corridors. to visualize, analyze, and manage vast amounts of information based on where and when known facts apply. This makes it ideal for analysis requiring the interaction of traditionally discrete datasets. It also provides insights to This required specifying which aspects of these sector questions that have multiple dimensions or considerations, relationships activities manifest themselves spatially in the districts, based between those dimensions and across space and time, but also apparent in the same place. Later, maps generated from the GIS analysis become an effective on desk research, literature review, and gathering of available and persuasive tool for stakeholders at country and sub-regional levels. Finally, data (spatially enabled or not) from several sources or finding through online data sharing and “mash-ups” with data from other service usable proxies. The resulting output from the initial data providers these maps hold the potential to democratize data creation and analysis, potentially enabling a truly comprehensive situational awareness collection effort was a large large geodatabase.1 Table 3.1: to emerge that enhances transparency, accountability and communication outlines the criteria used for rating sites according to each between business, civil society, government and the public. 96 | Growth Without Borders Table 3.1: Potential Regional Growth Poles Theme Criteria Justification Data Source Productive Sector based immobile factors 1. Producers want to locate close to their Crop Production: International Food Policy Factors Agriculture suppliers / inputs and their customers. Research Institute (IFPRI) – Maize AND Cassava production greater than 2. The immobility of certain resources constrains United States Government LandCover 2009 10,000 tons/ha AND bordering a lake or river the location choices of those resource suppliers. Location of mines: Mining Atlas, Commodity and =3 [10] other attribution of mines – Production greater than 10,000 tons/ha = 2 3. Growth Poles are built around revenue Protected Areas: UNECSO World Heritage Sites – Production less than 10,000 = 1 sources which must produce significant volumes and National Parks of goods for profitable exploitation. Traditional Extractive Hotels: World Bank Group staff research diamond and gold mines are excluded as – Districts with Mining sites of heavy resources individuals can move valuable quantities without Population: AfriPop, World Bank Africa Cities =3 much infrastructure. Diagnostic – Districts with Mining sites of other resources 4. Tourist attractions only succeed when tourism Electricity: Afirca Infrastructure Country =2 related infrastructure is sufficient: connectivity Diagnostic (AICD) – Districts that are neither = 1 to international transport networks, the ratio of Tourism high-end to low-end overnight accommodation. Ground transport connectivity is captured in the – Districts w/in 50 km of UNESCO sites OR Access Theme and therefore not included in the Wildlife OR Safari Area OR Coastline OR Lake primary selection. Other factors are required =3 however the data for those facture for the region – Districts with Hotels or Airports w/in 100km of are limited. the attractive sites = 2 5. District level data on access to electricity was – Districts without either = 1 not available across the study area. Sector based changeable factors 6. Population distribution serves as a proxy Population Density for the easy availability of labor. This effect – Districts containing Cities with more than diminishes with distance. 500,000 = 3 7. The presence of electrical infrastructure – Districts with Cities less than 500,000 but (for which data is available) serves as a proxy. more than 50,000 OR w/in 50 km of Category The presence of nearby power generation or 3 city =2 transmission lines indicates that if access to electricity in a highly rated district is in fact – Districts town populations less than 50,000 or limited, the relative costs of improving access none at all = 1 would be lower when compared to areas without Electrical any infrastructure whatsoever. – Districts with Electrical Generation plant = 3 – Districts with Transmission lines only = 2 – Districts without either = 1 (continued on next page) Growth Without Borders | 97 Table 3.1: Potential Regional Growth Poles (continued) Theme Criteria Justification Data Source Investment – Districts with recent above average* 1. Indicates recent investor interest in location / Financial Times FDI database, Zambian 2008 - 2012 investment or expected job creation in industry pairs Development Agency, Mozambique CPI, World Agriculture, Mining, Tourism AND recent 2. Multi-sector investments indicate diversity Bank Group staff collection Manufacturing or Services investment = 3 of local economy and may indicate greater – Districts with recent above average* potential for stronger input-output linkages in a investment or expected job creation in given location. Agriculture, Mining, Tourism = 2 3. May indicate presence of perceived resource – Districts without investment = 1 value or comparative advantage. *recent refers to investments after 2008 4. Reduces the likelihood that the overall model *mean calculated for each industry and country will highlight districts whose investment levels are unknown. 5. Excluding investments prior to 2008 reduces spatial bias from outliers without links to current economic activity. Market Access – Assuming 60 kph average on road (variable 1. Shorter distances can translate to lower Author’s calculation regional road condition, stops, traffic, etc), prices as transport costs are significant portion Doing Business Indicators 4 kph off road (on foot), 3 hour wait at the of trade costs (particularly in the region). [10] border [32] [33] – Half day travel to nearest market (city > 2. This approach incorporates two types of 50,000 or port) = 3 cost (transport and border delay) across three – Full day travel to nearest market (city > cost producing media (on-road, off-road, and 50,000 or port) = 2 borders) resulting in one cumulative cost to the – Greater than a full day travel = 1 proximate local market (Cities) or global market access point (Ports). Regional – Districts with reports of Non-Tariff Barriers to 1. Non Tarrif Barrier reporting is indicative of Non-Tariff Barriers to Trade : Trademark Integration trade = 3 trade activity and the presence of reporting Southern Africa Potential – Districts with International Border = 2 mechanisms and a willingness to make reports. (2nd Iteration) – Districts without either = 1 Tradebarriers.org Despite these challenges, the data was sorted into two growth pole factors in that theme in that district. The criteria categories and four spatial themes of growth pole relevant used for this rating is outlined in the Table 2. factors. The four themes were: productive factors, investment, regional integration potential, and market access were further The analysis averaged the fungible, or mobile, factor maps, divided by mobility—it is either “immobile” or “mobile” (or to fi d those areas with high correlation of enabling subject to change). The analysis then rated districts on a scale environment. Those areas in turn were averaged with of 1 to 3 (1 as lowest, 3 as highest) based on the presence of immobile factor ratings, resulting in an overall rating for 98 | Growth Without Borders each district that biases the result toward districts with an welcomes subject matter or regional expert inputs on how “immobile” revenue source in said sector (such as a gold to better specify this model. Second, several potential cross mine, UNESCO world heritage site, or productive arable border growth poles may fail to show up in the analysis due land) over other fungible factor such as present population because relevant details are located across the border with distribution. a country not represented in the initial selection set (South Africa, Tanzania, DRC). Finally, the broad geographic context This explicit process for nominating areas of interest allows resulted in an uneven level of data availability, quality and adjustment of the selection model criteria and relative comparability between countries. For instance, FDI data was importance of any given theme, based on expert input, or available for each country in every sector except agriculture changes in circumstances or priority. The formula below (only available for Zambia and Mozambique); however the determined a district’s rating: database used records only four investments for Malawi that could be geo-located within the past 10 years. Rmk + Rpk + Rck + Rek Rk = Rik + ( 4 ) To address the question of identifying the potential role of 2 regional integration would require the analysis of a given area Where the calculated rating of district k is Rk. Rik is a rating of in two separate scenarios, one in which the local economy is divided between participants, and a second scenario in those with immobile inherent revenue source (areas which barriers are removed and coordinating institutions are of production, i.e. mines, productive land, natural tourist effective. In order to examine this question at a subnational attractions). The parenthetical variables are ratings of districts scale requires three criteria are met; the first that the new with factors that are either mobile or subject to policy region is spatially contiguous or highly connected, the second intervention, investment, or other dynamic process or is that some measureable level of trade already takes place circumstance. Rmk is market access category, Rpk is population between the market’s spatial components; the third is that density, Rck is financial investment assessment, Rek is electrical these areas operate in similar or complimentary markets. The access. Th s selection process identifie candidate growth poles third criterion will be evaluated in the next phase of analysis. at national level, industry by industry. The first to criteria however will allow us to identify specific Three explanations for why the maps may not match growth poles candidates from within the set established expectations present themselves: the analytical criteria need above to create and new fictional spatial economic unit for a refi ement, the initial set of countries did not to match regional integration “what if ” scenario. the context, or weaknesses in the data. Initially, the report’s broad scope made specifying a selection model that correctly Non-Tariff Barrier reporting is indicative of trade activity accounts for sector specific growth pole linkages across and the presence of reporting mechanisms and a willingness several countries, difficult. The team sought to simplify the to make reports. We use this data from the tradebarriers.org problem, by reducing the number of variables. The team and proximity to international borders to create a suitability Growth Without Borders | 99 criterion for regional integration Rbk where Districts with 2013) cost distance model was used to estimate a time to reports of Non-Tariff Barriers to trade = 3, Districts with nearest market, based on a series of assumptions spelled out International Border = 2 and Districts without either = 1. above, as a proxy for market access. This model applies graph When then average this with our above rating of growth theory’s node\link representation method, where the center poles from all three industries. of each cell is a node and multiple direct links connect it to its adjacent nodes. These links have mathematical values Rk + Rbk RkRI = that represent the degree to which they impede movement 2 from one cell to another. So the links represent the cost of This approach allows for later adjustment of the relative movement between cells. weighting to test for which of the six factors, endowment, labor, electrical connectivity, market access, or border/ When a cell represents one square kilometer of the Earth’s corridor proximity most reduced or improved a given surface, one can calculate the implied cost of movement districts result. For instance, this calculation could be rerun (or impedance) between two locations in which ever units considering only endowment, market access, and population the cell represents; distance, time, money, etc. For example, distribution. Subtracting one result from the other will it takes X amount of time or $Y to go from cell A to cell identify which districts overall rating changes given the B, which in this case is 1 km. This model calculates the new relative importance and indicating how important the impedance from both the value of the cell and the direction removed factors were to the output. of movement through the cells. The value of the cell is derived from the per unit distance for moving through the The first iteration of the above process nominated some cell, such that the final value of the cell is its size times its cost areas and excluded others and thereby provided the basis value. If the raster’s cell size 10 and a cost value of 20, then for the second stage: more detailed spatial, economic, and the final cost of that cell is 200. Travel times accumulate as a political economy analysis given the local context. This initial hypothetical traveler moves away from designated sources, evaluation should provide the basis for further investigation in our case cities with populations greater than 50,000 and of local trade and competitiveness issues as well as an maritime ports. This number is a quantitative value for how engagement strategy for the World Bank. accessible the nearest “market” is to a given location in the study region. Estimating Market Access Using a Cost Distance The cost value depends on the orientation of the nodes Model and creating “Marketsheds” and how they are connected, so that movement to directly Many academic papers discuss various ways to measure neighboring cells across links is cell 1 plus cell 2, divided by the accessibility of markets, usually through calculation the number of cells (in this case two). of transport costs or using trade flows as a proxy. For this report the ESRI (Environmental Sciences Research Institute, a1 = (c1 + c2)/2 100 | Growth Without Borders where: While off road, travelers average 4kph. Off road cost assumes that travelers do not have access to a vehicle, or that their c1—the cost of cell 1 vehicle will not easily cross this terrain, and is therefore c2—the cost of cell 2 assumed to be 4 kph, this cost applies to cells without roads. a1—the total cost of the link from cell 1 to cell 2 Border cost is a three hour (180 minute) penalty paid by travelers for crossing an international boundary. In this This initial calculation repeats for every adjacent cell that calculation travelers can only cross borders where the borders is not an origin cell (where the calculation starts) and not intersect a road. Th s model could adopt less conservative already calculated, resulting in an accumulated cost estimate: assumptions, but at this scale would only improve accuracy in some areas while distorting the aggregate picture, therefore acccost = a1 = (c1 + c2)/2 it is recommended to adapt the model to less conservative assumptions when examining a smaller area with higher acc_cost = a1 = (c1 + c2)/2 quality data. where: The result is a grid where each 1 km square cell receives a c2—the cost of cell 2 value equivalent to the number of minutes it would take to get to the nearest city or port under these assumptions. To c3—the cost of cell 3 incorporate this accessibility estimate into the growth pole a2—the cost of moving from cell 2 to 3 identifi ation model, the resulting values were reclassifi d from the cost distance calculation into three categories: less acc_cost—the accumulative cost to move into cell 3 from cell 1 than 6 hours from a city or port, 6 to 12 hours from a city or port, and greater than 12 hours from city or port. The logic For this analysis three levels of cost to move between cells is that areas at a distance greater than 12 hours from any city was assumed; on road cost, off road cost, and border cost. The or port are less attractive places to locate a firm and or invest calculation makes the following conservative assumptions: given the resulting increase in uncertainty that accompanies that distance. If a district’s centroid (mathematical center) While on road an individual can travel at 60kph (this is intersected category market access category 3, the model a concession the scale of the study region, a great deal of classifies the district as a category 3 (563/790), likewise for variation that exists in the quality of roads (and the data category 2 (161/790). All others received category 1 (108). about the roads), the levels of congestion, the non-monetary [34] [35] costs such border and police stops. On road cost assumes that travelers can maintain 60 kph on average between cells connected by a road. Growth Without Borders | 101 Marketshed along five lines: data scale, quality/consistency, availability, age, and geo-locating data. Once we establish the relative accumulated travel time from one location to another, we can derive multiple other forms Scale: Data producers, knowingly or unknowingly, choose of insight. For the marketshed maps, these travel times are a scale when they create data. They create information to analyzed in the same manner one would analyze topographic support a narrow purpose and because it is time consuming elevation to understand a hydrological network. If a high to generate, they break it down into manageable packages travel cost (in terms of time or money) is equated to elevation according to sometimes arbitrary breakpoints that do not in the real world, then one can analyze choices about necessarily reflect the phenomenon under measurement. For directional flow of people and goods (services is another instance, many statistics agencies aggregate tourism data to matter) just as one would determine the flow rainfall on a the national level. This makes uncovering and analyzing the mountain as it flows through a watershed basin toward the economic linkages of the industry in a given city quite difficult. mouth of a river. Assuming travelers always seek minimum travel time, always know the best route and are only slowed Quality / Consistency: In other cases, the data may be sub- by the included factors, then defining a “service area” or national and quite detailed, however the methodology for its “marketshed” is possible by identifying which places, face the collection or the level of detail may change substantially at a least accumulated cost to each potential outlet, or market. national border, as is often the case when looking at ground transportation data, such as the Africa Infrastructure Country Buffer Analysis Diagnostic (AICD) from 2006. [35] For estimates of tourism locations, preference was applied Data availability: To track investment, the Financial Times to tourist attractions within 50km and 100km of airports, Foreign Direct Investment database was used. This database using a buffer analysis to determine which areas met these contains data on the place, amount, source and year of criteria. A buffer assigns a value to places based on proximity money moving into a country for a specific purpose. This to a predefi ed feature, either a point, such as an airport, a data was available for each country, but did not include line, such as a road, or a polygon, a two or three dimensional information about the agricultural sector. The national feature such as a lake. Buffers are normally straight-line economic development agencies track investments in order to distance calculations and do not account for any other maintain situational awareness and to prioritize investment. factors. This is useful in determining “as the crow flies” This data filled the gap in agricultural investment, but was distance from a given locations. only available for Zambia and Mozambique, thus skewing the agricultural results toward these countries. Data Challenges and Caveats Data age: To find data that is of an appropriate scale, Several tremendous challenges presented themselves in quality and consistency, one sometimes must use data that finding usable data sources. These challenges breakdown 102 | Growth Without Borders is significantly older than other datasets and this becomes a is a tedious and time consuming process, particularly when source of error. To determine those areas where agribusiness accuracy is a concern. In order to speed up this process in the could serve as the inherent revenue producer, it was necessary future, two tutorial documents were produced. These guide to find areas with relatively high agricultural output. novice users in the transformation of raw data into spatially Unfortunately, the readily available data on agricultural enabled data, allowing staff with little experience in GIS the production varied greatly in quality from one country to ability to contribute to spatially enabling the data. another. Therefore, the analysis relied on a high quality dataset that estimated production in a uniform fashion across FDI data provided the greatest challenge in geo-locating the the entire study region, distributed by the International data. The cross-nationally comparable data set from Financial Food Policy Research Institute (IFPRI). This dataset has Times Foreign Direct Investment database covers green and several advantages but one severe disadvantage: it estimates brownfield investment from 2003 - 2013. It only provides production for the year 2000. A new estimate for the year a location down to the city level 69 percent of the time on 2012 should be available soon, but is currently still a work in average across the study region (431 investments of 620 progress. provided enough details to identify a particular location). There are concerns about the accuracy of the data, as certain Geo-locating data: In order to symbolize non-spatially records values appeared to be duplicates and employment enabled information (spreadsheets, word documents, PDFs) estimates did not always display clear connection to the one must find information either intrinsic to the data or investment itself. It is recommended that the data points relate the data to known locations already in the database. If themselves be further researched to verify the activities in a data contains a latitude and longitude, then one can directly given area. plot data on the map. If only a place name is available, then users can locate a gazetteer database to associates coordinates Given these challenges the reader is advised to treat this with those place names. If no database exists or is incomplete, analysis as a prototype to be refined with better data and as is often the case in Africa, then each data point must be more expert input. individually researched to in order to plot it on the map. This Growth Without Borders | 103 References [10] Fujita, Masahisa, Paul Krugman and Anthony Venebles. 1999. The Spatial Economy: Cities, Regions, and [1] UN (United Nations). 2013. “World Population Prospects: International Trade. Boston: MIT Press. The 2012 Revision.” Department of Economic and Social [11] Speakman, John and Marjo Koivisto. 2013. “Growth Affairs. Accessed 06.13.2013. http://esa.un.org/wpp/ Poles: Raising Competitiveness and Deepening Regional [2] Farole, Thomas, Deborah Winkler and Julia Oliver. 2013. Integration.” Africa Competitiveness Report. 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