1. US / AFRICA WORKSHOP “DEVELOPING SUSTAINABLE TRANSPORTATION SYSTEMS 26 – 27 August, Arusha, Tanzania PRESENTATION ON RAIL ISSUES IN TRANSSHIPMENT SMAK KAOMBWE PROJECT MANAGER CENTRAL DEVELOPMENT CORRIDOR

2. 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

4. 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

5. 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

6. Impac Direct 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. 7 Example causes to cost of doing bus iness

8. 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)

9. 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)

10. 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

11. 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)

12. 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

13. 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

14. 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

15. ASANTE SANA