Addis Ababa — Economic Commission for Africa has urged African countries to sign the Luxembourg Protocol, which was adopted in 2007, as it creates a new global legal regime for securing credits, facilitating more and cheaper asset-based financing of railway equipment without state support.
Chief of Industrialization and Infrastructure at ECA, Soteri Gatera said railways are the key to open and free trade across Africa, and their development is critical to the continent's sustainable development agenda.
In a presentation at PIDA Week 2018 in Victoria Falls, Zimbabwe, Gatera stated that Africa badly needs an integrated railway network as its roads cannot contain the growing strain from trucks transporting goods across the continent.
"Lack of integrated African rail networks is holding back African growth and intra-continental trade," he said, adding that moving passengers and freight onto high speed rail networks is vital for environmental, social and economic reasons.
Doing this requires billions of dollars in investment infrastructure and rolling stock, but states resources are limited.
Gatera urged African countries to ratify the protocol saying it removes a significant financial burden from governments; liberates public and private operators to obtain private sector finance for rolling stock when needed thereby placing no budgetary constraints on States.
"There are many benefits which include encouraging foreign investment in the railways, creating a key driver for a modal shift from road to rail with various environmental, social and economic advantages, and opens up non-recourse private financing of existing fleets," he added.
The European Union, Gabon, Luxembourg and Sweden are the only ones who have ratified the Luxembourg Rail Protocol so far. Italy, Germany, France, Mozambique, Switzerland and UK have signed but are yet to ratify. Finland and Malta have signaled that they would be signing shortly.
The protocol is expected to be in force in contracting states by late 2019.