The IFC was considering an investment in the Nacala railway corridor in Mozambique and Malawi, consisting of a 912 km railway from Moatize, through Malawi, to the new, coal-specialized port in Nacala and the existing Port of Nacala. Vale, a main investor into the corridor and rail, will use the railway for exporting coal and, as part of its concession agreement, has agreed to shared use of the railway for general freight and passenger transport. Shared-use transport models of this nature are rare but present great potential benefits to host countries if properly implemented. The IFC and Vale engaged Nathan to conduct an economic impact assessment of the Nacala railway and port investment to comprehensively assess direct, indirect and induced benefits and costs on a macro and micro-economic level.

Nathan assessed the expected economic and social impacts of the Nacala corridor infrastructure investment project by conducting an ex-ante study using traffic forecasts, a rail operations model, cost benefit analysis (CBA) and a computable general equilibrium (CGE) model to quantify costs and benefits. The study provided a comprehensive assessment of the direct, indirect and induced net economic benefits and costs in the region of influence of the Nacala railway and port for the next twenty years. Nathan conducted fieldwork in Malawi and Mozambique, meeting with local stakeholders, national and regional authorities, and transporters, to develop agriculture and trade models to project future agricultural production and trade by commodity.

This model was used to forecast/allocate traffic by product, corridor (Beira, Nacala, or other) and mode (road or rail).

Nathan also assessed port infrastructure and railway operations as well as used tariff model to provide recommendations deemed necessary to achieve the projected traffic volumes. Nathan analyzed potential constraints and risks to achieving the full impact of the port and rail investments, presented a scenario analysis quantifying the impact of various scenarios, and provided recommendations on mitigating risks. Finally, we conducted CBA to estimate net benefits to Mozambique and Malawi over 20 years. The CBA included outputs from the trade and rail models, plus an assessment of the road sector to estimate impact of the port and railway investments on smallholder farmers living in the Nacala region over 5 years using a CGE model.