Many other rail and road construction projects are underway across Africa. In Kenya, a US$25bn 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 $2bn 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, undercapitalised 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 PricewaterhouseCoopers, 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 $9bn 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 ‘infrastructure-for-oil’ trade agreement between the two countries. Kenya recently signed a $5bn deal with China to construct a 952km 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, China Railway Construction (CRC) signed a $1.5bn contract to rehabilitate a railway system in Nigeria. The CRC has ongoing projects in Djibouti, Ethiopia and Nigeria worth about $1.5bn in total.
China South Locomotive and Rolling Stock Corporation, a major train manufacturer in China, is bringing $400m worth of locomotives to South Africa. And China’s Export-Import Bank is financing the Mombasa-Nairobi railroad line with $4bn, while the Addis Ababa-Djibouti line is being rehabilitated at a cost of $3bn.
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 privatised 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 $22bn. 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, Netherlands 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 industrialisation efforts, says 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, industrialisation is impossible.
This article was first published by Africa Renewal.