WHY ARE TANZANIA AND BURUNDI LOOKING FOR $900 MILLION?
In this week’s headlines, neighbours Tanzania and Burundi have signed an agreement to build a $900 million railway. We explain why rail expansion is important and who is funding it.
WHAT HAPPENED TO AFRICA’S TRAINS?
In 1870 India had very few rail lines. By 1930, the British had built over 64,000km2 of rail tracks across India which enabled goods to be shipped up to around 600km a day. Recent studies have shown that the increase of rail tracks in India encouraged trade and raised agricultural income by 16%.
Similar to India, Africa’s railway lines were built in the early 20th century during the colonial era. Their main functions were to transport goods from large mining or farming areas and to support military movements.
Unlike modern railways seen in South Africa or in Western countries, colonial rail networks only connected resource rich arrears to the coastlines. As a result, this is where many of Africa’s major urban centres grew.
Today however, these rail networks are largely neglected and in a state of deterioration. Notably, rail links between countries are close to non-existent, with an obvious absence of rail link connecting West and East Africa. As of 2019, Sub-Saharan Africa’s total rail network ran 65,000km, which is half the total running track of India’s rail network.
WHY IS TANZANIA INVESTING SO MUCH MONEY INTO RAIL?
Tanzania has its eyes set on becoming a regional trade and transport hub. Expanding its rail network is a significant part of its road to success. In December 2021, Tanzania contracted Turkish firm Yapi Merkezi to build a 368 km section of railway that is expected to cost $1.9 billion. The latest agreement with Burundi sets to build a 282km-long standard gauge railway (SGR) which will connect western Tanzanian town of Uvinza with Gitega in Burundi. Across the continent, similar rail projects are springing up to recover and build new railways.
In 2009, the East African Community (EAC) published the East Africa Rail Sector Master Plan. The plan outlined an ambitious series of rail expansions and upgrades for the region. The EAC is eager to realise the significant market potential of a connected region with movement of freight rail from landlocked areas to key ports such as Dar Es Salaam in Tanzania and Mombasa in Kenya. It is in this context that Tanzania is building rail lines to link the port of Dar es Salaam to landlocked neighbours in the East Africa region and further out.
The African continent has the largest number of landlocked countries in the world. Cities and ports like Dar er Salaam connect the continent to the world by enabling them to participate in global trade. Without links to the coast, trade and economic growth is limited. It is therefore a priority for African states to invest in connections between landlocked countries and ports.
Landlocked countries are often more than 500km away from ports, making rail transport the best alternative to road transport. Rail transport, particularly for transporting goods or cargo, is a low-cost alternative per ton kilometer to road transport such as trucks.
Just like the example of India, rail transport contributes to economic benefits such as opening up trade, creating more efficient markets, increasing household incomes, and improving food security. In addition, rail is energy efficient with reduced greenhouse gas emissions. Not only is rail transport beneficial for trade and commerce, but in comparison to other means of transport, rail transportation is ideal for mass transit systems for inter-city and urban areas.
WHERE IS THE MONEY FOR THE TANZANIA/BURUNDI RAIL LINE COMING FROM?
Just like Tanzania and Burundi, many other countries are expanding their rail networks. Angola, Botswana, the Democratic Republic of the Congo, and Namibia are also developing new rail schemes, subject to securing the necessary funding.
On the continent, funding is a consistent and major barrier to maintaining existing networks and building new rail lines. So far, funding is from overseas sources, however this has not been sufficient for the job at hand.
China and Europe are the main players in what is deemed a “diplomatic competition” to support infrastructure projects in Africa. In 2018-2019, European countries provided $5 billion of Official Development Assistance (ODA) to major infrastructure in Africa, with just over $620 million going to rail infrastructure. On the other hand, China launched its Belt and Road Initiative in 2013, which aims to connect China with emerging economies through a large network of sea, rail, road and other infrastructure projects.
This funding, particularly from China, has not been without its issues. Notably, China’s funding often comes with the condition that project contracts be awarded to Chinese contractors.This has led to criticisms that such infrastructure projects are not providing locals with jobs.
Most controversial is the view by some that China is using “debt-trap diplomacy” in developing countries, while also expanding its influence through soft diplomacy. Others however, have argued that there is no evidence that China aims to deliberately push African countries into debt to control their assets or to gain influence in their internal affairs.
Outside of these two players, public-private partnerships (PPPs) are an alternative funding source being explored across the continent. An example case can be seen in Ghana’s rail expansion ambitions, similar to those of Tanzania. Ghana plans to initiate and complete three rail projects worth a combined $US 12.9 billion through private investment. In 2021, the government of Ghana secured loans of around $600 million from the Deutsche Bank (backed by a Swedish export agency) to finance the construction of a 100km section of a rail line running from Takoradi Harbour to Huni Valley.
Although African International Financial Institutions (IFIs) like the African Development Bank (AfDB) finance rail infrastructure in African countries (e.g., Ethiopia) it is glaring however, that the financial support issued by these institutions are not efficient in fixing the dearth of the rail sector across the continent.
WHY IS RAIL AN IMPORTANT INVESTMENT FOR AFRICAN COUNTRIES?
Africa’s population is expected to double to over 2 billion people by 2050. More than a quarter of the world’s population will be in Africa. This growing population will be accompanied by growing urbanisation and industrilisation which will present new transportation challenges that will open up opportunities for rail transportation.
The main advantage of railways is in the transportation of goods and cargo. African countries are well positioned for this as they already produce large quantities of bulk minerals and commodities that are a perfect fit for rail transportation.
In an increasingly climate aware environment, trains are a greener alternative to current transportation methods. For example, gas emissions from trains per kilometer are 80% less than cars. This means there will be wide political and public support towards expanding rail travel. Rail travel will also reduce noise, pollution, congestion in cities and road accidents that come with use of cars, which are a great benefit to urban areas.
Lastly, as mentioned before, there is a need to ensure that Africa, with its large continental mass, is well connected with efficient transport corridors that enable and encourage trade within and outside of its borders.