FROM MAGAZINE: Africa’s Rail Infrastructure shaping a logistics revolution
Logistics - Africa seeks to fuel the growth of railway sector across the continent in order to accelerate and intensify trade in its burgeoning consumer markets.
Africa seeks to fuel the growth of railway sector across the continent in order to accelerate and intensify trade in its burgeoning consumer markets. A well knitted network of railways can assure a bright future for the region. Shreya Bhattacharya reports
Africa’s ability to rebound its growth rate while other regions struggled to pull out of the economic slowdown has restored the continent’s reputation as the land of opportunities for business and investment. The growth could be attributed to the large scale urbanisation, operation of new mines, gas and oil fields, as well as the increase in intra-regional and international trade.
A strong transport infrastructure could further accelerate and intensify trade in the burgeoning consumer markets of the continent. While African air and sea ports are the gateways of the continent to the outside world, the rail network strengthens intra-regional as well as inter-continental trade. As a result of its energy efficiency, reduced greenhouse gas emissions and lower cost per tonne kilometre, railways makes for a useful mode of transportation in mass transit systems for both inter-city and urban settings.
However, the current condition of the existing network of railways infrastructure and rolling stock is sparse in many African countries. It is said that intra-African trade costs are 50 percent higher than trade among countries in East Asia and other developing regions, resulting in Africa integrating with rest of the world at a faster pace than its own regional integration. Governments in Africa understand this really well and hence have identified railway infrastructure development as one of their key priorities.
Major rebuilding and extension projects are underway across the continent to ensure smooth transit of freight as well as passengers. For instance, the Addis Ababa-Djibouti Railway, a new 752 kilometre track linking Ethiopia’s capital with the Port of Djibouti has recently been completed. The new line provides landlocked Ethiopia with improved railroad access to the sea. Currently, more than 90 percent of Ethiopia’s trade passes through Djibouti, accounting for 70 percent of the overall activity at Djibouti’s ports. The new line will cut cargo journey times between the Port of Djibouti and Addis Ababa from three days by road to just 12 hours. The new railway can reach speeds of 160 kilometre/hour for passenger trains and 120 kilometre/hour for cargo trains.
“The opening of the Addis Ababa-Djibouti modern electric railway in January this year was a proud moment for our two nations: Ethiopia and Djibouti,” says Aboubaker Omar Hadi, Chairman, Djibouti Ports and Free Zones Authority (DPFZA). “Our partnership with Ethiopia is already helping accelerate wider prosperity and has been recognised as a model of regional integration. Ethiopia’s double-digit economic growth over the past decade is a huge success story for the region and the continent as a whole. Djibouti is also one of the fastest growing economies in the world, with over 7 percent growth. The railway makes full use of both of our comparative advantages, and make an important contribution to the economic wellbeing of both of our countries.”
It took six years to complete the construction of the double-track railway. The project has been implemented by China Railway Group Limited and China Civil Engineering Construction Corporation, with a total investment of $4 billion. Hadi further adds, “This railway project represents just the beginning. Djibouti is the starting point for what will one day become a Trans-African railway, crossing the continent from the Red Sea to the Atlantic Ocean. This is a journey which currently takes eight weeks by sea.”
He also informs that the railway is part of a wider package of infrastructure developments worth more than $15 billion. These projects include improvements and expansion of Djibouti’s port facilities, new highways, and airports - establishing Djibouti as a multi-modal transport hub.
Moving to Kenya, President Uhuru Kenyatta very recently commissioned a 472.3 kilometre Standard Gauge Railway (SGR) service, which will run from Nairobi to Mombasa. Earlier, in absence of a modern rail system between the two cities, there was enormous pressure on the highway from Mombasa to Nairobi, resulting in increasing delays and rising costs in passenger movement and cargo transport. The passenger train will be equipped with seating arrangements for upto 960 passengers. The new SGR line is expected to reduce the travel time between Mombasa and Nairobi from an average of nine to ten hour journey by bus to roughly four or five hours by train. It will also reduce the cost of cargo transportation between the two cities.
However, this is part of a much wider project covering almost 3000 kilometre. The rail line will eventually link Mombasa with other major east African cities such as Kampala, in Uganda, and Juba, in South Sudan. The East Africa Railway masterplan is being managed by the East Africa Community; an intergovernmental organisation of six partner states; Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda, which aims to create a politically united and secure East Africa.
Meanwhile in the west, where mineral exports are a major economic driver of nations such as Nigeria, Burkina Faso and Niger, a proper transport infrastructure could streamline the entire process. Mineral exports are expected to rise from 109,000 tonnes a year to 3.4 million tonnes a year by 2030, say reports. In a bid to facilitate the business, an efficient transport system needs to be in place, which can shift commodities from the sites where they are unearthed, to major ports from where they could be exported.
For this reason, countries in the region and mining companies have joined hands and are investing in a massive rail project which, when completed, will be 3,000 kilometre long and link Benin, Burkina Faso, Niger, Ivory Coast, Ghana, Nigeria and Togo. The network will be a combination of newly constructed tracks with existing ones which will be upgraded, and the service will particularly benefit landlocked countries like Niger, which face the most excessive transport costs on the continent.
Down in South, Transnet, South Africa’s state-owned ports and rail company, is doing massive investments aimed at turning the country into a key player in the global freight industry. In 2012, Transnet launched the Market Development Strategy, a seven-year R300bn ($33.82bn) investment scheme in its effort to strengthen the country’s ports, rail and pipelines infrastructure. A big portion of this investment is dedicated to rail.
Currently, the Transnet Freight Rail (TFR) is working on the Swaziland rail link – a 146 kilometre strategic rail network which will provide the western link between South Africa and Swaziland. The link from Lothair in Mpumalanga to Sidvokodvo in Swaziland is a strategic investment to unlock the Ermelo coal line to Richards Bay (R/B) by providing an alternative General Freight (GF) line to R/B. By diverting general freight traffic, this investment will also release capacity on the coal line to run a cost effective, dedicated, heavy haul coal export system. The line will also create an alternative route to and from Maputo.
Apart from this the company says, “We are upgrading our locomotives of old 6E1 fleet to 18E. Increase of tractive effort (force required to haul a load) from 170Kn to 200 Kn, also the installation of new modernised control systems. We are also busy with the upgrade of 34 GM, 34 GE and 37 GM diesel fleets with modernised control systems. Fitment of cameras and on board computers to our locomotives as well as the Fitment of Data loggers (Blackbox) to locomotives.”
In December 2012, TFR also re-opened its Orkney-Vierfontein branch line in order to cut transport times for railed goods and developed additional business and economic activities in rural, small towns and major cities.
As part of its Market Development Strategy, TFR has been following a road to rail migration strategy by attracting rail friendly cargo from the road and thereby reducing carbon emissions. The company informs that since the establishment of this drive TFR has secured several businesses with companies such as ESKOM, Toyata, Arcelor Mittal South Africa, Transportation of Hematite, Value Cement.
Transnet has also concluded various locomotive acquisition contracts since the 2014 financial year, which resulted in the contracting for approximately 1319 new locomotives for the General Freight and coal businesses over the corporate plan period in order to increase its fleet and to meet the need of its demanding customer base. It is also upgrading its container wagons in order to increase their carrying capacity.
Foreign investors playing major role in mega projects
As governments in Africa seek to fuel the growth in railway sector, foreign investors like China are marking the continent as their largest overseas market for rail industry. Until 2002, European companies were the principle suppliers, advisers and backers of African rail projects. However, since then, China has taken a dominant role, funding on average of $160 billion of rail infrastructure a year reportedly.
According to the Ernst & Young’s (EY) latest Africa Attractiveness report, China is investing in Africa heavily, which makes it the single largest contributor of foreign directive investment (FDI) capital and jobs in Africa in 2016. The report further says that China has invested in 293 FDI projects in Africa since 2005, totaling an investment outlay of $66.4 billion and creating 130,750 jobs. The report also states that Chinese FDI into Africa is well diversified across various sectors and in various countries, covering both resource-rich nations, such as South Africa, Nigeria and Angola and agriculture exporting countries like Kenya.
Talking about China’s role in the Ethiopia-Djibouti Railway Line, Omar Hadi says, “Djibouti’s partnership with China has been instrumental in the delivery of the new railway link. Implemented together with China Railway Group Limited and China Civil Engineering Construction Corporation, the railway has been essential in strengthening trade routes that integrate Africa into the Belt and Road initiative.”
Apart from the above mentioned line, other railway projects where China has been a vital associate include Mombasa-Nairobi Standard Gauge Railway Project, Kenya; Zambia – Malawi railway; Lagos Rail Mass Transit System, Nigeria; Abuja-Kaduna Rail Line, Nigeria etc.
It is important to note that modern transport links are vital to national and global prosperity. Without quick and reliable routes to move goods and the facilities required to handle them, trade will be stifled and living standards would be held back. These mega projects and many in pipeline would ensure that the future of the continent is on track.