US / AFRICA WORKSHOP“DEVELOPING SUSTAINABLE TRANSPORTATION SYSTEMS

26 – 27 August, Arusha, Tanzania

PRESENTATION ON RAIL ISSUES IN TRANSSHIPMENT

SMAK KAOMBWEPROJECT MANAGER

CENTRAL DEVELOPMENT CORRIDOR

Importance of Rail Typical Logistics Chains for Trade:

Sea – Port – Rail – Road Sea – Port – Road Sea – Port - Rail – Inland waterways – Rail –

Road

Key means of passenger transport Long distance (Inter – Urban) Urban

Importance of Rail (Contd) Advantages of Rail to Road:

Structurally more economical especially for long distance (over 400klm) and bulk traffic

More environmental friendly (less fuel use, less pollution)

Less spread of HV/AIDS compared to road corridors

Status Rail carries far less traffic (Now about or

less than 10% of traffic of transit and long distance traffic through EA ports)

Assets depleted and sub optimal performance

ImpacDirect cost (charges paid)Indirect cost (reliability, predictability, transit times, real time cargo tracking)

t Economies suffering

Too high direct costs (Road carries 90 % traffic at $0.11 per ton-klm compared to average $0.06 for rail)

Also too high indirect cost (reliability, transit times, predictability, real time cargo tracking)

Significant contributor to high cost of doing business constraining investment and economic growth (and winning war o combat poverty)

7

Example causes to cost of doing business

Reasons and challenges Rail carries far less traffic (Now about or less

than 10% of traffic through EA ports) KRC 3.5 mil tonnes (1990s) - less than 2.0

mil (2005) TRC 1.56 mil (2003) – 0.814 Mil (2006) TAZARA: over 1 mil (1993) – 0.540 (2007)

Reasons and challenges (Contd)

Systems dilapidation and assets depletion (some aspects of technology obsolete)

Limited coverage and connectivity Inefficiency (technical, operational

management and governance) Lowering of cost (some US rail achieve $0.015

per ton-klm compared to EA average $0.06 per ton-klm)

What needs to be done Improve governance structure and

management away from “bureaucracy based” to “business discipline based”

Modernise Expand and ensure regional connectivity Ensure maintenance and future sustainability

Actions being taken and plans

Concessioning of railways (eg Kenya, Uganda an Tanzania) typically to address governance, management, maintenance and efficiency issues

Some investment (associated with concessioning) to stop decline and reverse trend

Projects and plans for modernisation and expansion on going (EAC Railways Master Plan and other specific feasibility studies)

Key future challenges Financing to implement plans

Traditional sources from public and donor resources too limited

Massive effort to attract private capital (Sub Sahara Africa reportedly gets very small proportion, less than 1%, of available substantial private sector based financing)

Sustaining governance reforms to ensure innovation and efficiency

Going forward Consolidate concessioning & governance reforms

to build strong PPP (of public sector strength in strategic development and private sector strength in innovation and business growth)

Improve capacity to design and implement major projects through PPPs

Strengthen regional institutions to ensure rail connectivity and regional harmonisation

Further improve conditions to attract large needed investment for more prosperous future generations

Going forward Consolidate concessioning and governance

reforms to build strong PPP (to combine public sector strength in strategic development and private sector strength in innovation and business growth)

Improve capacity to design and implement major projects through PPPs

Further improve conditions to attract very large investment needed in rail development for more prosperous future generations

ASANTE SANA