Cracking Down on Brazil’s Infrastructure
Rusty tracks are hidden underneath a layer of weeds on Brazil’s unfinished railroads. The ambitious Transnordestina railway project had a goal of connecting the nation’s northeastern farms to the ports of Ceará and Pernambuco for trade with Brazil’s main export market, China.
After plowing $1.8 billion in spendings, the approximately 1,700-km plan remains incomplete.
“This was meant to bring cheap fuel and jobs for the population,” laments Francisco Emiliano, a cattle farmer who lives behind the tracks.
In the state of Paulistana, the abandoned railroad towers 150 feet above ground, darkening the rural area underneath with its long strip of shadow. The failure to complete the project has been attributed to diminishing public funding.
Consequently, the inability to execute a new railroad system has been a huge blow for the region’s businesses, forcing them to use poor roads to transport products like soy, corn, iron, ore and gypsum.
However, Brazil’s growing list of troubled economic projects doesn’t stop with the Transnordestina railways.
A $3.4 billion dollar network of concrete canals to transport water to drought-plagued boondocks of the northeast was supposed to be finished by 2010; delayed by bureaucracy and contract problems, it also remains unfinished.
According to business columnist Raja Simhan, how well a nation can trade its goods in the global markets “depends on its traders’ access to global freight and logistics networks. The efficiency of a country’s supply chain (in cost, time and reliability) depends on specific features of its domestic economy (logistics performance).”
Brazil expends only 2.5 percent of its GDP on infrastructure, which the consulting firm McKinsey states is less than a third of the proportion disbursed by China. Other major economies spend 5 to 7 percent of their GDPs on infrastructure.
According to data from August 2017, transportation in Brazil via roads represents 61 percent of total freight, by railroads 25 percent and by waterways only 13 percent.
Richard Klein, Chairman and Vice-President of the Board for Multiterminais and Santos Brazil publicly clarified that “Brazilian social and economic development depends upon the growth of international trade.”
Recently, the fall in global interest rates has given Latin America the rare opportunity to raise money for repairs and new infrastructure projects. As noted by economists, there is an urgent need for roads, railways, ports and urban transport in order to speed up exports and travel time for workers throughout the continent.
An article by The Economist explains how moving “sugar from Jujuy in northern Argentina to Buenos Aires by rail, a journey of 1,675km, takes 22 days, as long as it takes to ship it on to Hamburg.”
Some leaders have already taken advantage of this sudden window of opportunity. For instance, countries like Argentina and Peru have announced their decision to prioritize improvements to infrastructure.
President Mauricio Macri of Argentina has launched a project called Plan Belgrano, which hopes to increase accessibility to northern Argentina. Similarly, President Pedro Pablo Kuczynski of Peru launched a million-dollar investment plan with one of its main goals being to build over 7,500 kilometers of roads.
River transport is the most economical and non-polluting means of transport, yet it continues to be least common method of transport in Brazil. With approximately 45,000 navigable rivers and lakes, Brazil has immense potential for inland water transport. Columnist Thalita Carrico states, “Waterways in the sparsely populated Amazon area are essential for survival. Elsewhere in the country, they are underutilised, with roads accounting for 60 percent of Brazil’s transport system.”
Brazil’s biggest challenges as far as water transportation is concerned are manyfold. Firstly, Brazil's regional economies have been unsuccessful in scaling high-volume cargo. Secondly, many of Brazil's’ waterways need dredging and lastly there is still much conflict surrounding whether Brazil's rivers should be used for transport or for hydropower.
Given how Brazil’s government has allocated its capital in the past, whether they will manage to complete infrastructure projects remains to be seen.