On bumpy roads and rails

Un­prece­dented in­vest­ments in Africa’s ground trans­porta­tion are hardly enough

Africa Renewal - - Contents - By Nirit Ben-Ari

The Demo­cratic Repub­lic of the Congo ( DRC), which sprawls over 905,000 square miles, is the sec­ond largest coun­try in Africa. Fifty­four years after in­de­pen­dence, the DRC has few roads con­nect­ing one end of the coun­try to the other. In fact, the only way to travel be­tween two dis­tant points is by air and ca­noes. Many Con­golese can­not af­ford air travel, and most feel as if their coun­try is made up of dif­fer­ent coun­tries.

But imag­ine multi-lane tarred roads link­ing Kin­shasa in western DRC to Goma in the east, or roads and rail­way lines from Cape Town in South Africa to Cairo in Egypt, and from Dakar, Sene­gal to Nairobi, Kenya. Just imag­ine the end­less pos­si­bil­i­ties that would bring.

Im­prov­ing road and rail sys­tems in Africa will boost the trans­porta­tion of goods and raw ma­te­ri­als, fa­cil­i­tate trans­ac­tions and ne­go­ti­a­tions, es­pe­cially when face-to-face meet­ings are re­quired, boost tourism and pos­i­tively im­pact or­di­nary lives in di­verse ways such as en­sur­ing that peo­ple get to the hos­pi­tal quickly dur­ing emer­gen­cies, for ex­am­ple. Count­less other ac­tiv­i­ties de­pend on re­li­able roads and rails.

Most of Africa’s rail­way lines and roads are in bad con­di­tion and need huge in­vest­ments, ac­cord­ing to the African Devel­op­ment Bank (AfDB). The pro­por­tion of paved roads on the con­ti­nent to­day is five times less than those in de­vel­oped coun­tries, notes the Bank. As a re­sult, trans­port costs alone are 63% higher in Africa than in de­vel­oped coun­tries, ham­per­ing its com­pet­i­tive­ness in the in­ter­na­tional and lo­cal mar­kets.

The AfDB fur­ther points out that trans­port costs rep­re­sent be­tween 30% and 50% of to­tal ex­port value in Africa. These costs are even higher in 16 land­locked coun­tries, in­clud­ing Zim­babwe, South Su­dan, Mali, and Niger, and con­sti­tute up to three-quar­ters of their to­tal ex­port value.

Poor roads and rail­ways also have a neg­a­tive im­pact on in­tra-African trade, which is cur­rently just 11% of to­tal trade. Devel­op­ment ex­perts be­lieve this fig­ure might have been higher with bet­ter roads and rail­way lines. Trade among South­east Asia’s 10 coun­tries, at 37%, is much higher than in Africa, for ex­am­ple.

Rail­way lines in most African coun­tries were built dur­ing colo­nial times to con­nect mines and other nat­u­ral re­sources to ports. In fact, most of the lines were con­structed by min­ing com­pa­nies. Even now, pas­sen­ger ser­vices ac­count for no more than 20% of rail traf­fic, says the AfDB. Over the years, pas­sen­ger busi­ness has been shrink­ing steadily, vi­able only when road net­works are in­ad­e­quate or non-ex­is­tent, it says. Ac­cord­ing to the bank, the costs of main­tain­ing rail tracks and sig­nalling sys­tems, and the level of spend­ing needed to reach pas­sen­ger speeds, run into bil­lions of dol­lars and, if not sub­si­dized, pas­sen­gers would be un­able to af­ford to pay for op­er­at­ing costs alone.

Pro­gramme for in­fra­struc­ture devel­op­ment

With Africa’s econ­omy grow­ing at 5% a year on av­er­age, African lead­ers worry that with­out a good road and rail net­work, such im­pres­sive eco­nomic growth may not trans­late into real so­cioe­co­nomic devel­op­ment for Africans. In order to turn the sit­u­a­tion around, they es­tab­lished the Pro­gramme for In­fra­struc­ture Devel­op­ment in Africa ( PIDA) in July 2010. An ini­tia­tive of the AfDB, New Part­ner­ship for Africa’s Devel­op­ment ( NEPAD), and the African Union, PIDA is an am­bi­tious ef­fort to boost African in­fra­struc­ture, in­clud­ing rails and roads.

Ibrahim Mayaki, the chief ex­ec­u­tive of­fi­cer of NEPAD, says PIDA was de­signed to trans­form Africa and bridge its mas­sive in­fra­struc­ture gap. “At the mo­ment,” he noted, “Africa is the least in­te­grated con­ti­nent in the world, with low lev­els of in­tra-re­gional eco­nomic ex­change and the small­est share of global trade.”

One of PIDA’s re­mark­able projects is the con­struc­tion of the 4,500 km Al­gier­sLa­gos high­way. Also known as the Tran­sSa­hara high­way, the project is al­ready 85% fin­ished and the re­main­der is ex­pected

to be com­pleted this year, ac­cord­ing to PIDA. Upon com­ple­tion, the high­way will cre­ate a cor­ri­dor through the desert that will fa­cil­i­tate trade be­tween North Africa and sub- Sa­ha­ran Africa. This means coun­tries such as Nige­ria, Al­ge­ria and Niger will be able to con­duct trade by road trans­port eas­ily. His­tor­i­cally, the Sa­hara Desert has hin­dered trade be­tween the two sub-re­gions.

Many other rail and road con­struc­tion projects are un­der­way across Africa. In Kenya, a $25 bil­lion in­fra­struc­ture devel­op­ment plan, in­clud­ing a road con­struc­tion that links Kenya to South Su­dan and Ethiopia, was re­cently launched by the gov­ern­ments of the three coun­tries. In ad­di­tion, the AfDB is fi­nanc­ing several roads projects in Cen­tral Africa.

State of rail trans­port

To­day, only South Africa has a fairly good rail­way sys­tem, ac­cord­ing to the World Bank. Be­fore the FIFA World Cup in 2010, South Africa re­vamped its rail­way sys­tem, in­clud­ing the new un­der­ground com­muter train be­tween Pretoria and Johannesburg. Some min­ing com­pa­nies in Africa also have ded­i­cated rail­way lines for trans­port­ing their goods. For ex­am­ple, African Min­er­als, a com­pany min­ing iron ore in Tonko­lili Prov­ince in north­ern Sierra Leone, has in­vested up to $2 bil­lion in min­ing and rail in­fra­struc­ture, ac­cord­ing to Africa Re­view, a Kenyan pub­li­ca­tion.

Most rail net­works in Africa are as old as 100 years and have not been up­graded since they were first con­structed in colo­nial days due to lack of funds. These net­works can­not meet the de­mands of mod­ern times, says the AfDB. “Most lines are low-speed, small-scale, un­der­cap­i­tal­ized net­works car­ry­ing low axle loads.”

Big projects and China

China is throw­ing a life­line for Africa’s rail­way in­fra­struc­ture. Some 2,000 Chi­nese com­pa­nies are in Africa and many of them are heav­ily in­volved in roads and rail con­struc­tion, re­ports Der

Spiegel, a Ger­man news­pa­per. A study by Price water­house Coop­ers ( PwC), a global fi­nance com­pany, says that China’s goal is to take ad­van­tage of the in­creas­ing growth of African mar­kets. In the DRC, two Chi­nese con­struc­tion com­pa­nies and a cop­per com­pany, all state-owned, have signed a $9 bil­lion con­tract for the con­struc­tion of a rail and road net­work, which is more than the DRC’s en­tire na­tional bud­get.

Rail in­fra­struc­ture in An­gola, one of China’s top oil sup­pli­ers, is rapidly ex­pand­ing as part of an ‘in­fras­truc­ture­for- oil’ trade agree­ment be­tween the two coun­tries. Kenya re­cently signed a $5 bil­lion deal with China to con­struct a 952-km rail link from the city port of Mom­basa to Mal­aba, a town near its bor­der with Uganda. This is ex­pected to be ex­tended to Rwanda, Uganda and Tan­za­nia by 2018. And that is not all. In Septem­ber 2012, the China Rail­way Con­struc­tion Corp. (CRC) signed a $1.5 bil­lion con­tract to re­ha­bil­i­tate a rail­way sys­tem in Nige­ria. The CRC has on­go­ing projects in Dji­bouti, Ethiopia and Nige­ria worth about $1.5 bil­lion in to­tal.

China South Lo­co­mo­tive and Rolling Stock Cor­po­ra­tion, a ma­jor train man­u­fac­turer in China, is bring­ing $400 mil­lion worth of lo­co­mo­tives to South Africa. And China’s Ex­port-Im­port Bank is fi­nanc­ing the Mom­basa-Nairobi rail­road line with $4 bil­lion, while the Addis Ababa-Dji­bouti line is be­ing re­ha­bil­i­tated at a cost of $3 bil­lion.

In­vest­ing in in­fra­struc­ture

Rais­ing enough fi­nance for in­fra­struc­ture devel­op­ment is one of the key chal­lenges fac­ing Africa’s ex­pand­ing economies. Al­though most state- owned rail­roads have been pri­va­tized in re­cent times, and many con­ceded to pro­grammes funded by in­ter­na­tional fi­nan­cial in­sti­tu­tions, lead­ing to in­creased traf­fic vol­umes, only a few rail­way sys­tems are able to gen­er­ate suf­fi­cient rev­enues to fund sig­nif­i­cant track main­te­nance. The AfDB re­cently an­nounced plans to launch a pan-African in­fra­struc­ture bond to­talling about $22 bil­lion. Part of this money will be ploughed into rail and roads projects, most of them in East and Cen­tral Africa.

There have been sug­ges­tions that gov­ern­ments and the pri­vate sec­tor could de­velop in­fra­struc­ture in part­ner­ship. Ex­am­ples of suc­cess­ful pub­lic-pri­vate part­ner­ships are the Ci­tadel Cap­i­tal of Egypt, the largest in­vest­ment com­pany in Africa and the Tran­scen­tury of Kenya, a com­pany that is in­volved in in­fra­struc­ture projects. These ef­forts are sup­ported by African banks, which are com­ing up with in­no­va­tive prod­ucts, such as syn­di­cated loans, that pro­vide the nec­es­sary fi­nan­cial sup­port. The banks are also bring­ing on board devel­op­ment fi­nance in­sti­tu­tions such as the Ger­man In­vest­ment Cor­po­ra­tion, Nether­land Devel­op­ment Fi­nance Com­pany, In­dus­trial Devel­op­ment Cor­po­ra­tion of South Africa, as well as transna­tional fi­nance in­sti­tu­tions such as Euro­pean In­vest­ment Bank, the In­ter­na­tional Fi­nance Cor­po­ra­tion and the AfDB.

On­go­ing rail and road projects will help ac­cel­er­ate Africa’s in­dus­tri­al­iza­tion ef­forts, says Dr. Mayaki. Ex­perts add that there has to be a trans­fer of knowl­edge to lo­cal man­agers, lo­cal ex­perts and lo­cal work­ers. This means that when the ex­pa­tri­ates leave, lo­cals can con­tinue to main­tain the in­fra­struc­ture. The ur­gent task now is to com­mit more re­sources to im­prov­ing Africa’s rail and roads net­works. With­out good roads and rail­ways, in­dus­tri­al­iza­tion is im­pos­si­ble.

Graeme Wil­liams

The Braam­fontein train yards in Jo­hannnes­burg, South Africa.

Panos/Mar­cus Rose

A newly tarred road in Abuja, Nige­ria.

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