Africa’s railways and ESG

High transport costs and the need for infrastructure investment

However, a report from Rand Merchant Bank suggests that the cost of transportation in Africa is about 50-175% higher on average than in other parts of the world because of poor road, rail and port transportation infrastructure. Taking just one example in Africa, it is possible to significantly reduce container transportation costs by constructing standard gauge railway (SGR) lines for freight cargo services – the 472km SGR line in Kenya linking the Port of Mombasa to Nairobi in 2017 reduced the cost of transporting a 20ft container by 50% ⁽¹⁾.

In respect of rail, there is the need to improve connectivity and substantially expand the network – Africa is over three times the size of the US but has less than a third of the rail network. Also, much of the existing and often ageing legacy assets require rehabilitation and modernization. Interoperability issues from differing gauges need to be addressed, as do single track non-electrified networks requiring diesel locomotives, the lack of spare parts and the shortage of rolling stock, equipment and maintenance vehicles to fully compete with road haulage.

Rail is environmentally friendlier

From an environmental perspective, railways have substantial advantages over road, air and maritime transport. Rail has a key role in decarbonizing transport. It is the cleanest and greenest high-volume transport mode and one of the most energy efficient. Rail accounts for 8% of global passenger and freight transport activity (in passenger km/tonne km), but railways produce only 2% of the transport sector’s emissions. Global Green House gas emissions from transport are continuing to rise – they accounted for 14% of all emissions in 2018, but rail was the only mode to reduce its emissions, down by 2% between 2000 and 2018 ⁽²⁾. Indeed, trains are on average three to four times more fuel efficient than trucks – producing up to 75% fewer GHG emissions ⁽³⁾, while the EU found that European railways are up to 9 times less CO2 intensive than road for freight ⁽⁴⁾.

In cities, rail is unrivalled for mass transit of passengers, and it also reduces congestion, is safer and significantly less damaging to air quality than road transport. Freight rail for moving large volumes of goods over long distances is an environmentally friendly alternative to long-distance inland road freight transport and high-speed rail is a low-carbon alternative to aviation for intra-continental trips.

The sustainability target

The International Union of Railways (UIC) announced its Sustainability Pledge ⁽⁵⁾ in 2021, which in addition to targeting a market share for rail of 25% by 2050, is also targeting carbon neutrality for African rail by 2050 through:

• Delivering innovative solutions to increase energy efficiency and phase out diesel services;
• Prioritizing renewable energy sources;
• Working together as a region to share best practice and common solutions;
• Embedding circular economy principles to help combat resource depletion and the impacts of material and waste production: recycling and reusing end-of-life products in all processes associated with railway activity; and
• Integrating an eco-design approach during the study, design and development project phases of new infrastructure.

When deciding upon and allocating capital to railway projects, cash flow shouldn’t be the only consideration, as social, economic and environmental factors should also be taken into account. For example, a commuter railway will reduce travel time, congestion, accidents, greenhouse gas emissions and noise pollution, while also creating employment, increasing social equality – everyone will use it regardless of status – and contributing to urban regeneration. Using such a lens may also make it easier to raise funding from development finance institutions and even financiers, who are increasingly insisting on social and environmental considerations to be cornerstones of projects.

Thelo DB

Thelo DB is an innovative and progressive African railway entity incorporated between Thelo Group and Germany’s Deutsche Bahn E&C (DB) – one of the largest, fully integrated railway companies in the world. Thelo DB provides customized and sustainable transport solutions by combining its global experience with local capacity to develop railways that are fit-for-Africa. Its aim is to shift the paradigm for African railway to a holistic, fully integrated model – and as such supports the development of new corridors as well as enhancing the operational efficiencies of existing networks. It has the skills, capacity, experience and expertise to develop, implement and support complex freight and/or passenger railway projects of any scale in Africa, from concept through to design and engineering, financing, procurement, testing and commissioning, operations and maintenance management, with a strong emphasis on skills development and job-creation. Thelo DB’s capabilities include urban passenger rail, regional and long-distance passenger rail, freight rail and all associated infrastructure, such as track and network, signaling and telecommunications, depots, stations and civil structures, energy and power. In addition, its sister company, Thelo Rolling Stock, is the pre-eminent financier of rolling stock – locomotives, freight wagons, fuel tankers and passenger cars – for rail operators, concession holders and freight owners in Africa, providing customers with effective, reliable, high-quality equipment.

⁽¹⁾ Feature: Modern railways and the route to boosted growth in Eastern Africa | Supply Chain Digital
⁽²⁾ Sustainability | UIC – International union of railways
⁽³⁾ csx_esg_report_final_7_30.pdf (q4cdn.com)
⁽⁴⁾ Green Finance and Sustainability: Which Role for Railways? – Florence School of Regulation (eui.eu)
⁽⁵⁾ sustainable-railways-africa-pledge.pdf (uic.org)