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OVER the last 20 years the value of trade between Africa and the rest of the world has quadrupled, but trade between African nations remains extremely limited. According to the World Trade Organisation, intra-regional trade accounts for just 18% of Africa’s total trade volume. This compares with 50% for North America, 52% for Asia, and 70% for Europe.
Lack of connectivity between African nations is a fundamental cause of this imbalance. According to the African Economic Outlook 2017 (PDF link), which was compiled by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Development Programme, the transport and communications infrastructure needed for intra-African trade is less developed than those that link the continent to the rest of the world and this “undermines the impacts of regional integration on trade and development.”
During the colonial era, infrastructure was built with the primary objective of abstracting raw materials as efficiently as possible. The legacy is a lack of integration and disjointed networks, with railways of differing gauges focussed on getting commodities from the hinterland to the port, rather than achieving regional connectivity. For example, Mozambique has three networks that share the same gauge but are only physically connected via the systems of neighbouring countries. Tanzania has a 1067mm-gauge line linking Dar es Salaam with the Zambian border, a metre-gauge network connecting the Indian Ocean with Lake Tanganyika and Lake Victoria, and an east-west standard-gauge line under construction.
“The African Union’s Agenda 2063 vision seeks an integrated, prosperous and peaceful Africa, but there is a major deficit in terms of the connecting tissue that is required,” Mr Albert Links, executive manager for Transnet and board member of the South African Railway Association Corridor Executive Committee told delegates at the International Heavy Haul Association 2017 Conference in Cape Town on September 6. “We need to build the parts that are missing - not just the railways but the terminals, and many ports in the region are at or near capacity. The African continent must attain the goal of becoming a seamless operation.”
This lack of connectivity is compounded by the massive gap in infrastructure investment in sub-Saharan Africa, which is estimated at around $US 93bn annually. According to the United National Conference on Trade and Development, this deficit shaves an estimated 40% off the productivity of companies, leading to increased production and distribution costs, lower competitiveness, and low adoption of innovative technologies.
The AfDB’s Private Sector Development Strategy estimates that the average cost of infrastructure services in Africa are double those in other developing regions. “African countries should seize opportunities presented by increasing energy and transportation links,” says the African Economic Outlook. “Improving the large number of roads and railways that connect borders to internal growth centres could slash the time and cost of doing business in Africa. Evidence shows that African regions with longer transport corridors attract a larger density of trade.”
However, where links do exist, national frontiers bring administrative and technical obstacles which slow the transit of freight through multiple countries. “In South Africa, we can run a 60-wagon freight train across the border to Beitbridge in Zimbabwe, but as it goes north from there it disintegrates into shorter trains,” says Mr Ravi Thaver, senior manager, international business, Transnet Freight Rail. “Investment in traction and infrastructure is needed to address this.”
Rail moving less than 10% of volumes on the 4000km north-south corridor linking the Democratic Republic of Congo, Zambia, Zimbabwe and Mozambique with South Africa. “Cost and reliability are the most important issues for customers on this corridor, followed by speed and security,” explains Mr Peter Varndell, programme manager, Africa infrastructure desk (North - South Corridor) for the New Partnership for Africa’s Development (Nepad). “We are not operating as a single corridor but a series of corridors, which drives up cost. Poor reliability drives down asset utilisation and pushes up costs. We need to look together at the whole ecosystem and converge on a single operating system with key performance indicators that are met by all partners.”
Links highlights the Maputo Development Corridor (MDC) as a prime example of how integration of cross-border transport infrastructure can unlock huge benefits. The MDC is a road and rail link between Mozambique’s capital Maputo and the South African provinces of Mpumalanga and Gauteng. As well as connecting Mozambique and South Africa, the MDC provides landlocked Swaziland with an alternative to the South African port of Durban.
A non-profit organisation, the Maputo Corridor Logistics Initiative (MCLI) pulls together 150 private sector stakeholders in the corridor and this has progressively removed barriers along the corridor and driven public-private partnerships to improve infrastructure. According to the AfDB, the MDC has attracted investments of around $US 2.8bn and now accounts for 42% of Mozambique’s export revenue.
“This route has become borderless from an operational point-of-view,” says Links. “We have quite sizeable rail volumes, with 9.5-10 million tonnes crossing the border this year, and we hope to grow that.”
MCLI says more work is needed to improve border procedures and enhance the scope and competitiveness of transport services on the corridor, but the MDC remains the example others are looking to emulate. “It is important for every country in Africa to create a competitive supply chain,” says Mr Stephenson Ngubane CEO of Swaziland Railways. “Once we have the physical connections and landlocked countries have the links they need with their neighbours, intra-African trade will open up. To realise this, we need private sector participation so we must be prepared to open up, and look at the legal framework we need to allow private investment in.”
As well as hard measures such as new infrastructure, soft measures such as harmonisation of legal and financial systems and customs procedures would help to ease the passage of rail freight across borders. Both the African Union’s Boosting Intra-Africa Trade action plan and the WTO’s Trade Facilitation Agreement seek to address this issue and some bilateral projects have already had a significant impact on some corridors such as Mombasa - Kampala and the Walvis Bay Corridor between Namibia and Zambia.
Variation in technical standards, including track gauge, maximum train length, braking systems, and axleloads complicate cross-border rail freight movements in Africa, but there are also institutional challenges. “There are two relationships that govern interoperability,” says Mr Harry Tournay of TTCI, United States. “The first is technical, and there are major issues to be addressed there. The second is the relationship between railway organisations - if these links are strong, the relationship between countries becomes less important. As soon as you engage in that close commercial relationship, the technical standards will fall into place.”
This article first appeared on www.railjournal.com
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