AFRICA INFRASTRUCTURE
COUNTRY DIAGNOSTIC
Railways in
Sub-Saharan Africa
June 2009
Sustainable Development
Africa Region
Document of the World Bank
Vice President:Obiageli Katryn Ezekwesili
Sector Director:Inger Andersen
Task Team Leader:Vivien Foster
Railways In SSA
Table of Contents
1Introduction
2The Railways
2.1The Networks
2.2Traffic Density
2.3Infrastructure Condition
2.4Network Expansion Proposals
3Infrastructure Investment and Maintenance
3.1Overview
3.2Infrastructure
3.3Economic Evaluation of Infrastructure Investment
3.4Economics of Mechanized Track Maintenance
3.5Indicative Investment Needs in SSA Railways
4The Market
4.1Overview
4.2Traffic Trends
4.3Passenger Traffic
4.4Freight Traffic
4.5Competition
4.6Freight services
5Institutional Arrangements
5.1Overview
5.2Legal and regulatory framework
5.3Governance and management of State-owned railways
5.4Structure of concessions
5.5Concessionaires
6Operational Performance
6.1Overview
6.2Labor productivity
6.3Rollingstock productivity
6.4Impact of concessioning on productivity
6.5Service quality
7Financial Performance
7.1Revenue and Cost Structure
7.2Financial results
7.3Passenger services
7.4Freight services
7.5Concession financing issues
8The Way Ahead
8.1Introduction
8.2Concession performance
8.3Four key issues
Note
This report contains a number of data tables summarizing railway performance, which reflect the data which was available as at December 2008. While in several cases detailed information is available on a regular basis following privatization and concessioning, in a number of others there is far less authoritative information available compared to previously. This is due to a combination of factors: the replacement of detailed annual reports of public operators by summary reports of companies which are often diversified; the limited reporting requirements in many concessions (which even then are often only partially complied with), and the emphasis by some concessionaires on commercial confidentiality.
As a result, information in many cases has to be gleaned from a variety of sources, some of which are less reliable than others. In order to provide a guide to the reliability of the information in this report, the following convention has been adopted:
Where information is simply stated, it has been directly sourced from official reports or concessionaire data
Where information is qualified by “it is reported that,” it has been sourced indirectly from third-party reports, the press or the internet
Where information is qualified by “it is understood that,” it has been sourced from unattributable third parties.
The peer reviewers and World Bank staff, particularly Pierre Pozzo di Borgo and James Leigland provided valuable contributions and comments concerning many of the transactions. However, all responsibility for the material remains that of the author.
Executive Summary
The role of rail in Africa has changed greatly in the last thirty years and is likely to change just as much in the next thirty. Thirty years ago, many of the railway systems were carrying a high share of their country’s traffic, either because competing road transport had poor infrastructure or faced restrictive regulations, or because rail customers were established businesses who were locked into rail through physical connections or (if they were parastatals) through policies which directed them towards the use of a fellow parastatal. During the intervening period, both the economies in general, and transport in particular, have become liberalized. Coupled with the general improvement in road infrastructure this has led to much stronger competition and, generally, a significant loss of their previous market by railways.
Railways in sub-Saharan Africa (SSA), as in much of the rest of the world, were slow to respond to these changes. Very few governments, other than South Africa, invested significant sums of their own, or their own Government’s funds, in rehabilitating and renewing infrastructure. Such investment as there was, other than for purely mineral lines, usually came from bilateral and multilateral donors. As this typically arrived after the damage was done, and in some cases not at all, the continent is full of railways that can best be described as “walking wounded.” Whether they can be patched up by the appropriate investment medicine and a new exercise regime under a concessionaire is a moot point. In some cases, help never arrived and the railway has collapsed; this has been their fate in Guinea, Sierra Leone, the north-east network in DRC and some of the Angola short lines.
Railways have also suffered severely during the various wars and conflicts that have occurred during this period: much of the Mozambican central and northern networks, as well as railways in Angola, Ethiopia, Eritrea, Congo Brazzaville and Ivory Coast have either been damaged or have been unable to operate for long periods because of civil unrest, in some cases up to twenty years. Although it is an understandable desire of governments to reinstate networks in such cases, this is often extremely expensive and it is legitimate to question whether the transport solutions of one hundred years ago are still the most economical solution.
Much is often made of the inherent lower cost of rail as compared to road. This is certainly true where minerals have to be transported from a rail-connected mine to a rail-connected port but is not so clear-cut for medium-distance general freight which has to be transported by road to and from the railheads. Comparisons between rail and road line haul rates often show rail is much cheaper but if this were a direct measure of the value of the service then why does rail have such a small share in many of these traffics? It is because the line haul rate is only one of many factors which are taken into consideration by customers when they have a choice; the costs of pick-up and delivery also need to be considered, as do the service-level factors such as transit time, reliability, and service frequency. For rail to play a significant role in the future general freight transport system it must provide an acceptable service level and ensure it is addressing the needs of customers. In too many cases, what rail has historically offered as “transport” has been a totally different product from what the competing road hauler has been offering, and for which road is able to charge a significant premium.
The role of rail has therefore changed significantly in recent times. Within ten to twenty years, any remaining monopolies for general freight will have gone and the only traffics for which African railways, as a mode of transport, will have an undisputed grip will be mineral traffics. Historically, many such pure mineral rail transport operations have been run as an internal ancillary operation by mining companies and this is likely to be a continuing trend in the future (either through a subsidiary or a contract organization). Experience in many countries around the world has repeatedly demonstrated that general freight transport has become an increasingly dynamic business, in which operators need to be flexible, responsive and capable of adapting to changing circumstances. Fewer and fewer customers are fellow parastatals who are effectively directed to use the railway and few government-owned organizations, no matter how “corporatized” they may be, have the commercial freedom to operate effectively in a fully competitive environment, in which transport services increasingly need to be tailored to the particular requirements of individual customers. If rail is not to die a lingering death, it must adapt to the new market and become a transport business – and the predicaments of the remaining government-owned railways show it cannot compete effectively in doing this whilst it is handicapped by the bureaucratic constraints and the lack of commercial incentives and accountability of a government organization.
Since 1993, several governments in SSA have responded by concessioning their systems. Although results have been mixed, many systems have increased their traffic volumes and there has often been significant investment for the first time in many years. In general, railways have performed more efficiently and there has been little evidence of any monopolistic behaviour. However, relations with governments have often been fraught, especially concerning passenger services, and it is clear many governments (and possibly advisors) had unrealistic expectations of the difference the private sector could make in terms of both business operations and investment. In particular, it is clear that concessionaires are reluctant to spend anything on infrastructure from their own funds beyond what is required for day-to-day maintenance. Thus the funding of long-term asset renewal and upgrading remains an open question for most of the SSA network; unless this issue can be addressed, it will be impossible for rail to survive in the long-term, other than for large mineral movements, as the competition from the road networks continues to increase.
1
RAILWAYS IN SSA
1Introduction
The changed role of rail in Africa over the last thirty years has seen it move from a situation where many of the systems were carrying a high share of their country’s traffic to one in which their market share has declined, their assets have steadily deteriorated, their quality of service has reduced, and they are in many instances only a minor contributor to solving the transport problems of the continent.
The first railways south of the Sahara were built in South Africa in the 1860’s and 1870’s, with lines heading inland from the ports at Cape Town and Durban. The networks in what were then Cape Province, Natal and Transvaal continued to develop but it was not until the turn of the twentieth century that large-scale railway development began in other parts of the continent.
In almost every case, the pattern was the same, with isolated lines heading inland from a port to reach a trading centre or a mine, and a few branch lines then being built over a period of time. As almost all the lines were constructed under colonial administrations, many of the lines were State-owned but several were also constructed as concessions or, in the case of some mineral developments, by the mining company as an integral part of its mining operation.
This process has continued until recent times, with several lines having been built since the Second World War. Although there have been grand masterplans for over a century(Figure 1),most of the African networks remain disconnected lines, either within a single country or linking a port and its immediate regional hinterland. The only true international networks are those centered on South Africa and stretching north to Zimbabwe,Zambiaand DRCand, to a lesser extent, the old East African Railways network in Kenya, Uganda and Tanzania.
This also reflects the limited amount of inter-country trade. While the countries were European colonies, there was naturally little trade between, say, English and French colonies but, even today, trade volumes between adjacent countries are still often remarkably small. For example, between 1996 and 2000, less than 6 percent of Tanzania’s trade by value was with Kenya, and about 2.5 percent with her other neighbors (Zambia, Rwanda, Burundi, DRC, Uganda and Malawi); even South Africa only represented 7 percent. The same pattern can be replicated in many other countries. It can be argued that this lack of regional trade is a product of the transport infrastructure inherited from colonial times but the similarity in the products exported from many countries suggests that, even if such inter-regional links existed, it is likely they would be only lightly-used.
This pattern of economic development has meant that African railways, more than almost anywhere else in the world, are closely linked to the ports (indeed, much of Africa had integrated port and railway organizations for many years) and, where railways traverse more than one country, freight traffic is generally largely transit with comparatively little originating or terminating in the intermediate country[1].
Figure 1 What might have been – the Trans-Sahara and Cape-to-Cairo RailwaysSome of the railways were struggling financially from the start but they generally managed to operate reasonably successfully up to the 1960’s. However, as the road system developed and larger trucks were introduced, the higher-value general freight was gradually captured and rail traffics increasingly comprised bulk mineral and agricultural traffic and semi-bulks such as fuel. Whilst this has in many cases provided enough funds to cover working expenses, railways have rarely been able (or allowed by government where they had the potential) to collect enough reserves to fund asset renewal; this has almost universally been provided on an intermittent basis through loans from multilateral or bilateral agencies, often leaving railways with a patchwork collection of disparate kinds of equipment and rollingstock. The steady degradation of the asset base has meant that even when, as in recent years, efforts have been made by railways to capture higher-value traffics such as containers, the quality of service has been so low that they have only achieved a limited market share wherever there is road competition.
Another problem for most African railways has been the continued requirement to operate passenger services without budgetary compensation. These have been required by governments but are generally covering only a part of their working expenses; this not only consumes cash that should be being used to renew the freight and infrastructure assets but also, for many railways, ties up traction power that could be being used for cash-generating freight services.
The final difficulty for many operators has been the impact of the many wars and civil disturbances that have occurred over the last fifty years. Railways are often one of the first targets for destruction and this has affected many railways, either directly (e.g. Angola, Mozambique, Ethiopia, Eritrea) or indirectly by cutting inland railways off from their ports (e.g. Malawi and Burkina Faso).
As a result, most of the railways that have been presented for concessioning in Africa have been (and generally still are) badly run-down, requiring substantial rehabilitation of both infrastructure and rollingstock. Even where they may have significant traffic volumes by local standards, these are generally low by world standards (a railway carrying more than 1 billion net tonne-km is the exception rather than the rule in much of Africa), and the concessions often come with requirements to continue operating a loss-making passenger service
Nevertheless, the rhetoric accompanying some of the transactions suggests that many politicians believe, or want to believe, that the concession award will be the prelude to very substantial investments by the concessionaires, particularly in infrastructure. To date, this has barely materialized, with most infrastructure improvements being done with international financial institution (IFI)or donor funds. The main issue for most sub-Saharan railways is whether concessioning is just a temporary solution or whether some alternative approach is needed to ensure a long-term future for railway systems providing acceptable levels of service.
2The Railways
2.1The Networks
At the end of 2008, there were 52 railways operating in 33 countries in sub-Saharan Africa (Annex 1 and Figure 2.1). Most of these used either the ‘Cape gauge’ (1,067 m or 3’6”) or the meter-gauge. The main interconnected network in southern and central Africa is Cape-gauge, as far north as DRC and southern Tanzania; it is also used in the ex-British possessions of Ghana, Nigeria and Sudan and, a little surprisingly[2], in Congo Brazzaville. Meter-gauge is used in all the other ex-French possessions and also in the East African network linking Kenya, Uganda and northern Tanzania as well as the disconnected Ethiopian line. There has been a number of narrow-gauge lines at various times; most[3] of these remaining are either derelict or not operating. There are also a number of isolated standard-gauge lines; those in Mauritania and Guinea are privately-operated mineral lines whilst that in Gabon, although primarily developed for mineral traffic, is a public railway which also carries general traffic and a passenger service.
Although the multiplicity of gauges suggests that inter-operability is a major problem in Africa, this is far from the case at present as there are only three places, two in Tanzania and one in Guinea, where there are two gauges in the same location. However, if some of the proposed connecting lines are constructed, this will become more of an issue.
The South African-based Cape-gauge network, in theory[4], connects eleven countries, and the East African network directly connects three. There are two international meter-gauge networks in West Africaconnecting land-locked French-speaking countries to the coast: Ouagadougou-Abidjan (Sitarail), linking Burkina Faso to Côte d’Ivoire and Bamako-Dakar (Transrail), linking Mali to Senegal and one in East Africa, linking Ethiopia to Djibouti. Other networks do not cross international borders but provide railheads from which traffic can be on-carried by road: Cotonou-Niamey (OCBN), which is entirely within Benin, provides a link to Niamey through a railhead at Parakou;Camrail provides railheads for traffic between the port of Douala in Cameroon and the Central African Republic and Chad.; and, in East Africa, TRC and KRC, carry traffic for Burundi (and eastern DRC) and Rwanda respectively.