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All Aboard: A Rail Infrastructure Resurgence in Africa

Andrew Buisson

With more than $30 billion in African rail projects either in development or planning phases, rail infrastructure is going full steam ahead on the continent.

Once a major industrial driver during the colonial period, rail infrastructure has been neglected over the past decades, but innovative projects (transnational, light rail and refurbishments) have now returned with a bang.

Foreign investors — particularly from China — are investing aggressively while local African governments are eager to lay new tracks and refurbish rail systems in order to stimulate economic growth. 

For instance, in West Africa alone, rail infrastructure opportunities around the region are approximately 50% higher than they were 10 years ago, according to Bloomberg.

The key drivers for this ‘rail resurgence’ are the desire to connect landlocked countries, alleviate travel congestion and to expedite trade, most notably for Africa’s core industry, mining.

In late April, China announced a partnership with Tanzania for the construction of a 2,561-km railway line that will help bridge trade between Eastern and Central African countries, in particular Burundi, Rwanda and the Democratic Republic of Congo. The cost of the project is an estimated US$6.8 billion,  to be implemented over several phases.

Another massive project that has commenced is the Kenyan Standard Gauge Railway, which is being built in three phases. The track will run from Kenya’s port city Mombasa to the capital Nairobi, and to the western border town, Malaba. The project is 90% financed and constructed by the Chinese government. The 609km and US$3.2 billion line is scheduled to be completed in 2017. This project was implemented as part of a transport alternative to the trucks currently obstructing the only road running inland to Nairobi. The railway has the potential to transform trade in the region and has already provided 30,000 local jobs.

From a financing perspective, projects are not just being funded by financial institutions, but are receiving support from mining companies and by other means. For instance, a 3,000-km rail line that will link Benin, Burkina Faso, Niger, Ivory Coast, Nigeria, Togo and Ghana is being partially funded by Bolloré Africa Logistics (BAL) to ensure that the capacity of mineral exports is increased from 109,000 tons a year to 3.4 million tons by 2020.

Other African countries are looking internally, rather than cross-nationally, to create better passenger systems and enhance economic prosperity.

Nigeria has outlined proposals to try and alleviate its plagued public transport system. With the largest population on the continent (181 million and rising), congestion remains a massive issue. The country has recently been upgrading its domestic railway linking the financial centre Lagos with Kano in the north and has plans to create a new line linking Lagos with Calabar in the east. With several budget setbacks, the government recently announced that the national railway projects contained in the 2016 National Budget are priorities for the Buhari administration, which should see new projects come to fruition. 

Another indicator of the rail renaissance is the Ethiopian light-rail system – the first of its kind in sub-Sahara Africa. The project, a US$500 million, 32km line, opened this year and has proved useful for local commuters. Ethiopia is also in the process of developing a 756km line with Ethiopian Railways Corporation (ERC) announcing the Ethio-Djibouti railway is readied for full service by next year. Installation work for the railway is now 98%finalized. The electrified US$4 billion railway connects Addis Ababa to its closest port in neighbouring Djibouti.

These are just a few examples of the vast volume of projects underway; what is certain is Africa will not be going “off rail” any time soon and that a resurgence in rail infrastructure is here.

For more, see our blog post on multi-modal transport corridors here, and our article on the shared use of rail infrastructure here.

The Inside Africa team would like to thank Samuel Burleton, Trainee Solicitor, for his contribution to this blog post.

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Africa is as dynamic a market as it is diverse. We understand that changes impacting your business can arise rapidly and vary significantly across the continent.

Our understanding of Africa’s markets stems from extensive experience on the ground. Through our Inside Africa blog, we aim to apply this insight to provide you with timely commentary on the latest developments across Africa, as well as insight into the many nations that make up this vast continent.

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