Government restrictions deter private rail investors

A disconnect between investor and government objectives in the construction of railway infrastructure is crippling the future viability of rail transport in Africa. This was the one of the conclusions of a roundtable discussion at last week’s Africa Rail 2015 conference and exhibition held in Johannesburg. In the last 50 years only around 400 kilometres of new railway lines have been built in the southern Africa region as funding is a major obstacle to development. The catch-22 scenario is that government restrictions make it almost impossible for private sector partners to play a meaningful role in that development, thus making them wary of investment. “African governments allow private sector investors to have a say in rail operations only up to a point. Beyond that point, the government-owned railway operators will make all the strategic decisions,” said Jack Dempsey, rail and transport economics consultant. Furthermore, rail volumes in the southern African region are limited. “If there was investment and railway operators could guarantee efficiency and reliability, the volumes would improve. However, faced with major red tape and severe operating restrictions, coupled with a very longterm return-on-investment (ROI), the private sector is understandably nervous to invest,” said Dempsey. Backing up this assertion, one of the delegates said it had taken a year and a half for the Mozambican government to give permission for a coal line to be built out of the coal mining region of Tete to the port of Maputo. “Once permission was granted and the coal mining company had invested in the line, the government pronounced that the line would be used for the movement of other bulk cargo as well, which of course affected the reliability and availability of the line to the coal mining operation,” he said. Winston Cluff, managing director of Cluff Trade and Investments, agreed that private sector partners and governments did not speak the same language in terms of investment objectives. “Countries need to create endto- end transport solutions that meet investor and government objectives in order to attract investment,” he said. He added that governments also needed to work with reputable, well-established funding agencies that had a proven track record of good governance to set up the investment and funding deals. INSERT & CAPTION Private sector partners and governments do not speak the same language. – Winston Cluff