When trains vanish, transport gets tricky
WHEN he was CEO of Transnet, Brian Molefe once told a group of international clients that I had brought to the stateowned enterprise a story about a missing South African cargo train in the Democratic Republic of the Congo.
The story went: Transnet sent a cargo train to the Congo. When the train reached the Zambian-Congo border, a local driver had to drive it across. But then it disappeared and Transnet was unable to track its whereabouts.
Molefe told this story to illustrate the complications of intra-African trade and I’ve used this incident in my own presentations to illustrate the difficulties of transporting goods across the continent. Besides the odd case of a disappearing train, rail infrastructure constraints are one of the main issues holding back Africa’s development.
The interface between transportation investment and economic development has broad ramifications that go beyond transport’s basic purpose of moving goods and people from one place to another. The economic growth of a country is always accompanied by increased market activity in terms of private consumption and the production of goods. The result is an increase in the exchange of goods and the mobility of people, growing the demand for transport.
Railway lines in most African countries were built during colonial times, mainly by mining companies to connect mines and other natural resources to ports. The DRC, for instance, is the second-largest country on the continent, yet there is no road or railway to connect one end of the country to the other.
Most of Africa’s railway lines and roads are in bad shape and need huge investment. This has undermined the potential of the rail system to play a strong role in economic development.
Rail transport market share in most countries on the continent is below 20% of the total volume of freight transport. The main reason is the lack of investment in infrastructure and the absence of a supporting institutional framework. Transport costs alone are 63% higher in Africa than in developed countries.
According to the African Development Bank, transport costs represent 30% to 50% of total export value in Africa. These costs are even higher in 16 landlocked countries, including Zimbabwe, South Sudan and Mali, and constitute up to three-quarters of their total export value.
Intra-African trade is only about 13%. Trade among Southeast Asia’s 10 countries is around 37%.
Strides have been made. East Africa’s $3.2-billion railway project has the potential to transform trade in the region. It will be Kenya’s biggest investment since independence in 1963 and is among the most advanced of the more than $30-billion of African rail projects planned.
No railway or road to link one end of Congo to other
In West Africa, Bolloré plans to develop a 2 700km rail corridor which will link Côte d’Ivoire, Burkina Faso, Niger and Benin. In December, Senegal signed an agreement with China Railway Construction for the renovation of 645km of rail, and Ethiopia recently completed a line connecting Addis Ababa to Djibouti.
Transport investments underpin a web of relationships between producers and consumers to create a more efficient division of production, to leverage geographical comparative advantage, and to provide the means to expand economies of scale and scope. Africa’s success will be dictated largely by the development of its transport sector.
Leoka is an economist at Argon Asset Management