Guest Column by Dr. Lubinda Mufalo Sakanga
It is always interesting to learn how railway sector projects are being financed and implemented in Africa. In engineering field projects, one always wants to appreciate the ‘safety by design’ and sustainability capacity aspects. From a finance perspective, it is the bankability niche which closed the deal whilst, from a development perspective, it is the strategic aim and impact of the project from which lessons may be drawn. Naivety to all would be to ignore the interests of political players and just but, to consider the earlier alluded to interests of the private and public sector actors.
TRANSNOMICS is a philosophy advocating for socio-economic development via transport sector economic regulation. Effective consideration and management of rail sector investment is an integral aspect of transport sector economic regulation. For ‘the Africa we want’, the investment perspective or driver of the investment project becomes the determining factor for considering all stakeholder interests. Ideally, with an approved integrated rail sector development master plan, all investment stakeholders are guided as to:
- priority projects of the plan;
- manufacturing demands for the plan;
- Service support capacity demands of the plan;
- Subsidies to be enjoyed;
- Human capital demands for implementation and sustainability of the plan; and
- multi-sectoral backward and forward linkages of the plan.
With this guidance in place, a comprehensive procurement strategy highlighting the investment opportunities and returns may be pitched for effective exploitation-crafting the subsidies and other incentives for a balanced and sustainable rail industry development. Such a strategy would be economically regulated ensuring accounting and control to facilitate; multi-sectoral employment creation, research and development, industrialisation, growth of manufacturing plant and equipment, attraction and retention of a broad base of specialised human capital. That would essentially be TRANSNOMICS in effect for the Africa We Want.
An appreciation of the background and current approaches to Africa’s railway sector project financing and development hints at their alignment with the TRANSNOMICS philosophy. Essentially, the clarification of the interests and treasure opportunities being satisfied.
Background: The African railways maintenance backlog on both rolling stock and infrastructure has necessitated the need for full rehabilitation to restore them to minimum recommended standards. This argument could be extended to the need for human capital resource capacitation in light of the evolved technology, advent digital solutions introduced in the sector and further, to the skill and knowledge needs for operations and management post ‘parastatal public rail service operations’ to the current competitive versions of rail concessions, vertical separation, vertical integration and vertical holding separation and open access economic regulatory regimes.
Some options employed for improving rail operations and the development of new lines are:
- Engineering, Procurement, and Construction (EPC) + Finance type of Public-Private Partnership arrangements, which may also be considered as Build, Own, Operate, and Transfer (BOOT) deals. These are turnkey EPC + Finance contracts backed by a guaranteed rail fund.
- Full Concession Agreement or franchising of an integrated rail operation. As undertaken in South America and some countries in Africa;
- Open access operations as now being introduced in most parts of Africa for the attraction of private sector operators on primarily public sector rail infrastructure; and
- More variations to these options exist for policy exploit.
Of most value is detaining how these rail economic regulatory practices should be crafted to yield success and investor confidence to the desired;
- Picture of the African railway sector we want to have in the next 20 to 30 years.
- National rail strategy.
- Corporate strategy.
- Characteristics and artistry of the painters of the picture-national or Africa Rail sector we want in 20 to 30 years.
- Stakeholder interests we want to satisfy.
- Sustainability of the national/African railway sector.
The Transport Sector, particularly railways, is a multi-billion-dollar treasure industry with the capability to facilitate Africa’s desired balance of payments and development interests. Realising your treasure map is now attainable. Engage and apply TRANSNOMICS for your corporate, national and regional transport strategies to guarantee your effective exploitation of economic regulatory practices and policy. Application of TRANSNOMICS in your policy development and business plans transforms your policy into a powerful marketing and investment-pulling instrument.
Dr. Lubinda Mufalo Sakanga
Dr. Lubinda Mufalo Sakanga is a transport economist specialised in economic regulation, project and operations management. He has over 17 years of progressive transport sector experience gained at national and international levels. He worked in the public sector from 2006 to 2017 (Zambia) as a Senior Transport Economist position and progressively promoted to Assistant Director for Road and Rail.
From 2017 to date he has served the SADC region as Southern African Railways Association- Director Technical and Operations in charge of Programmes Coordination (Rail transport corridor development, policy, projects coordination and resource mobilization). Dr. Sakanga also provides transport, infrastructure, economic policy & operations management consultancy services.
His professional experience is complemented by astute academic qualifications: PhD degree in Operations Management under the Faculty of Engineering and the Built Environment of the University of Johannesburg in South Africa. His research focused on developing a regional railway corridor economic regulatory framework for sustainable economic development in SADC. He has a Master of Science degree in Project Management from the University of Salford, a Master of Arts Degree in Economic Policy Management and a Bachelor of Arts Degree in Economics from the University of Zambia. In addition, he holds professional certificates in Infrastructure and Public Private Partnership Financing, Road Management & Transport Technology and Business Accounting, amongst others.
