Africa Should Leverage Luxembourg Rail Protocol to Boost Transport Infrastructure

3 March 2019

Marrakesh — African States are losing out on massive opportunities to acquire railway transport vehicles at no financial cost go governments, but adherence to the Luxembourg Rail Protocol would turn things around, experts have advised.

This message came out strongly at an event to communicate to African countries on the importance of signing up to and adhering to the Luxembourg Rail Protocol to the Cape Town Convention on International Interests in Mobile Equipment.

Signing and ratifying the protocol will be a game changer as it would give private lenders and lessors full confidence to invest in railway rolling stock on the continent without the fear of losing out in case of a default by the debtors, due to clauses on state guarantees.

Besides such guarantees, the Protocol's Unique Rail Vehicle Identification System (URVIS) would be critical for "identifying owners of asset hence making it easy to finance railway rolling stock projects, supporting manufacturing and protecting operators across borders," noted Ms. Mesela Nhlapo - Head of the Railroad Association of South Africa.

In this ecosystem, monitoring will be eased for all stakeholders - the state, the lenders/lessors and the private operators of acquired rail vehicles.

According to Mr. Howard Rosen, Chairman of the Rail Working Group, countries that sign up to the Luxembourg protocol will attract private lenders and investors in rolling stock projects because the regime take cares several demotivating factors.

The current setbacks include: the lack of national titles or security registry, unstable identifiers, limited legal framework and uncertainties around repossessing assets from defaulting debtors/ operators.

"Railways hold the key to unlocking potential of States and continents," Mr. Rosen said, hence countries should consider investing in it and its rolling stock, given numerous advantages over the road transport system.

He said countries need to use railways more to combat pollution. Statistics show that rail usage currently contributes to only 0.5% of transport-induced pollution compared to road transport systems which account for 72.1% of such pollution.

Further, preference for the use of rail usage would reduce human accidents (about 50,000 persons are reported to die every year from road accidents).

In addition, "rapid urbanization and massive industrialization in Africa will create transportation challenges that can be best addressed by railways and rolling stock; hence the rail will be the future land transport mode of choice in Africa," reckoned Mr. Stephen Karingi, Director of the Regional Integration and Trade Division of ECA.

He said was is unlikely to reap the full benefits of the African Continental Free trade Area (AfCFTA) if it did not improve its transport infrastructure, noting that the Luxembourg Rail Protocol provided an opportunity to do that.

Discussants at the event noted that the Protocol would ease public-private partnerships for African countries to make gains in rail networks, citing the example of the Gautrain in South Africa which has relieved congestion on the Johannesburg-Pretoria corridor for commuters.

ECA is set to undertake a campaign to spell out the merits of signing and ratifying the Luxembourg Protocol on Rail to the attention of member States.

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