1AcknowledgementsMy supervisor, Professor V. Seshamani, your guidance extends from academics to real lifeexperiences and am confident to succeed.My fellow students of the Economic Policy Management 2011/2012 academic year cohort, yoursupport and competitiveness always made me strive to produce the best out of my capabilities.
2DedicationTo my wife Viviane and daughter Thabo, your support and confidence in my efforts arethe pillars of my inspiration.
3AbstractThe Railway Sector has shaped the development pattern of Zambia. Historically, Zambia waspositioned as a source of copper which was transported to the coast (Port of Durban) via railwayspecifically constructed for this purpose. Today, most is not all of Zambia’s cities are developedalong the line of rail and most of them, including the capital city Lusaka, started as simplerailway sidings.In the Sixth National Development Plan (SNDP) 2011-2015, the Government of the Republic ofZambia (GRZ) has cogently raised concern on the status of transport infrastructure including thedeteriorated state of the main railway lines: Railway Systems of Zambia (RSZ) under a 20 yearconcession from 2003 and the Tanzania Zambia Railways Authority (TAZARA). In this regard,GRZ has proposed to rehabilitate and maintain the two main railway lines and also to developnew railway spurs.This report unveils the challenges and provides a justification for the case for railway transportdevelopment in Zambia. It comprehensively analyzes GRZ economic policies and synergy withTransport sector policies especially with a view to realize the lag in railway transportinfrastructure and how it can be improved. I show the importance of the railway industry toZambia in terms of Cost Benefit Analysis based on broad and specific appraisal guidelines beingapplied universally and those specific to Zambia. Further, I advocate for policy reforms torevitalize the railway sector by making them more relevant to the current economic scenario.My arguments and analyses presented in this research are founded on empirical secondary dataand supplemented by primary data collected from the railway policy formulators, implementersand operators. The Secondary data includes railway statutes, public policy and the internationalnorms of conducting the railway business. Overall, the report provokes Government to take upits role in a liberalized economy: protecting strategic public infrastructure (and) services and alsoprovision of the desired public goods.GRZ must have an inter-modal transport network which efficiently serves as a means toeconomic development in light of the risen volumes of imports and exports and transiting goodsin Zambia. This is the rationale behind the proposed development of the National TransportInfrastructure Master Plan as captured in the SNDP and the railway sector serves as one of themain components of this plan.My report endeavors to develop the most workable financing models for railway infrastructuredevelopment.
4DeclarationThis work is original and has not been submitted previously for any academic purpose.All secondary sources are acknowledged.Signed……………………………………………………………………………………Date………………5thOctober 2012……………………………………………
5CertificationI declare that this thesis is from the student’s own work and efforts and where he has usedsources of information, all have been appropriately acknowledged.This policy paper has been submitted with my approvalSupervisor: Professor V. SeshamaniSignature: …………………………………………………………….Date: ……………………………………………………………..
6ContentsAcknowledgements.......................................................................................................................................1Abstract.........................................................................................................................................................3List of Acronyms............................................................................................................................................7List of Tables .................................................................................................................................................8Annexure.......................................................................................................................................................9List of Maps.................................................................................................................................................101.0 Introduction ....................................................................................................................................111.1 Background .......................................................................................................................................111.2 Rationale for the Research................................................................................................................111.3 Problem.............................................................................................................................................121.4 Objectives..........................................................................................................................................121.5 Research Question............................................................................................................................121.6 Hypotheses .......................................................................................................................................122.0 Literature & Empirical Framework..................................................................................................123.0 Research Methodology...................................................................................................................253.1 Study Design................................................................................................................................253.2 Research Instruments .................................................................................................................263.3 Data Collection Procedure..........................................................................................................263.4 Data Analysis...............................................................................................................................274.0 Results.............................................................................................................................................285.0 Discussion........................................................................................................................................476.0 Conclusion.......................................................................................................................................497.0 Recommendations..........................................................................................................................508.0 Bibliography ...................................................................................................................................529.0 Annexure.........................................................................................................................................53Annex 2: Annual Financial Data: ZRL & RSZ 1994-2011..........................................................................55Annex 2.b: Adjusted ZRL &RSZ Financial Data (1995-2010) ...................................................................56Annex3: Unit Root Test -Stationarity of regression variables.............................................................58Annex 4: Regression results for using data in Annex 2b.........................................................................62
7List of AcronymsAoS Appraisal of SustainabilityARU African Railway UnionCBA Cost Benefit AnalysisEU European UnionGRZ Government of the Republic of ZambiaJICA Japan International Cooperation AgencyROADSIP Road Sector Investment ProgramRSZ Railway Systems of ZambiaSNDP Sixth National Development PlanTAZARA Tanzania Zambia Railways LimitedUK United Kingdom
8List of TablesTable 1: List of prioritized SSA Corridors which transverse ZambiaTable 2: ROADSIP II cash inflows in US$ over a period of 10 yearsTable 3: Organs of the Road Management InitiativeTable 4: Respondents: Institution, Designation, Age, experience in organizationTable 5: Respondent Institution; Transport focus; Railway SupportTable 6: Respondents Institution: Appraisal guidelines for railways, considerations for CBATable 7:Respondent Institution; How railway projects are appraised in Zambia; Are the GRZappraisal guidelines?Table 8: Name of Institution: What is the value of railway efficiency to the Zambian economy?Table 9: Respondent Institution; regional significance of Zambia railway networkTable 10: Respondents’ prioritized transport corridorsTable 11: Respondent Institution; Zambia railway policy sufficiency and relevanceTable 12: Respondent Institution; Strategic nature of the railway sector institutions in ZambiaTable 13: Respondent Institution; ownership of railway infrastructure in ZambiaTable 14: Pro-competitiveness of the railway policyTable15: Goods fit for Railway TransportationTable 16: Railway traffic regulatory policy in ZambiaTable 17: Respondent’s financial support to railwaysTable 18: Options on how the railway sector can be revamped in Zambia
9AnnexureAnnex 1: Questionnaire used in researchAnnex 2a: Financial data on ZRL and RSZ 1994-2011Annex 2b: Adjusted Financial data on ZRL and RSZ 1994-2011Annex 3: Unit Root test of Stationarity for the dependent and explanatory regression variablesAnnex 4: Regression results for using data in Annex 2b
10List of Maps1. Map 1: Proposed railway projects in Zambia2. Map 2: Southern Africa Transport Corridors
111.0 Introduction1.1 BackgroundTransport is critical for development. Inappropriately designed transport strategies andprogrammes result in networks and services that are not responsive to the needs of the users,harm to the environment and exceed the available public finances. In the urban setting, thequality of transport infrastructure and public transport service influence the location of firms andindividuals. The productivity of the labour market and the costs at which it is obtained are alsofactors affected by quality transport infrastructure and service.Railway transport infrastructure is ideally meant for bulk and heavy goods carriage. In thisrespect, it is second to water transport in the context of the big vessels which ply the oceans andseas transporting massive goods between continents. In Zambia, railway transport infrastructurewas traditionally built for transportation of copper being mined within the Copperbelt area to thecoasts of Africa for trade purposes.Raballand and Whitworth (2011) recently attempted to find out if it is worthwhile for theGovernment of Zambia to invest in the railways considering the shift in trade traffic from therailways to the road. They argued that this shift in trade transport mode is because the road ismore competitive than the railways in terms of transit times, security, reliability, safety and evenoffers better rates per ton kilometer. The shift from railway to road come about after theprivatization of the mines which saw GRZ ‘hand off’ policy on regulating which transport modeto use for transport copper and related goods.My research builds a case for railway transport development in Zambia. It is a pragmaticpositivist approach which comprehensively analyzes GRZ economic policies and synergy withTransport sector policies. I essentially identify the lacunae in railway transport policy andimplementation strategy thereby proposing a Railway Sector Management Plan, the strategicplan for development of the respective sector.1.2 Rationale for the ResearchThis research study has not been undertaken before in Zambia. However, a related study:“Should Zambian Government Invest in Railways” (2011), was undertaken by Gael Raballand, aSenior Economist with the World Bank, and Alan Whitworth, a Technical Advisor to the ZambiaInstitute of Policy Analysis and Research. Their research was undertaken to critique GRZproposed railway investments. This is on the assumption that the road sector performance andservice delivery is too competitive for the railways to be revamped. (Road has replaced railwayas the transport mode for trade.) This is despite the current high cost of road maintenance &rehabilitation.This study builds on this knowledge and presents insight on the important role of policy reviewand institutional setup for policy implementation. I also advocates for role of the state in adynamic and competitive liberalized economy with respect to transport infrastructure.
121.3 ProblemThere has not been any policy comparative study on surface transport modes in Zambia. RailwayTransport infrastructure is in a poor and redundant state relative to road transport infrastructuredespite their essential complementary role as surface transport modes for social and economicdevelopment facilitation.Transport policy and its implementation should not be an end in itself but a strategic means to anend. As noted in the Zambia National Transport Policy (2003), there is need for an efficienttransport system to stimulate production and development by linking production to demand,employment generation and income creation.1.4 Objectives4.01 To review the railway transport sector policy reforms and their impact onoperations, profitability and employment levels in the last 40 years; I haveconsidered4.02 To investigate the institutional structures and/or strategies for policyimplementation in the railway transport sector in comparison to the road sector;4.03 To establish the plausible financiers for transport infrastructure development.1.5 Research QuestionWhat are the underlying reasons for poor performance of the railway sector in Zambia?1.6 Hypotheses1.61 The feasibility of Zambia railway sector development is not only at national levelbut regional level as well;1.62 Publicly owned railway infrastructure is key for viability and competitiveness inoperations of the railway sector; and1.63 Deliberate or direct investment and institutional restructuring are relevant forrevamping the railway sector in Zambia.2.0 Literature & Empirical FrameworkThe Literature reviewed for this research builds a case for existence of the railway sector inZambia. I have reviewed recent railway sector developments from a global theoreticalperspective and then evaluated empirical research cases so as to benchmark my understandingand analysis of the railway scenarios relative to the Zambian case. The following literature isreviewed and serves as points of analytical reference.2.1 Appraisal of Railway Performance Projects - A UK Approach (2005)This document is strategically reviewed because it presents the analytical framework andguidance used to appraise and select railway performance projects. It recognizes the fact
13that projects compete for scarce resources hence the need for a business case to be raisedwhich usually involves a form of investment appraisal. For government funded projectsthe most common appraisal technique is a cost-benefit analysis (CBA) (also called aneconomic appraisal because it seeks to quantify, value and monetize unpriced economicbenefits)Appraisal guidance establishes broad guidelines and introduces consistency in theconduct of CBAs. It helps government to prioritize and select projects across a range ofindustries. In the UK the Department of Transport adopted a multi-criteria analysisframework for the appraisal of projects and policies. For the Railway Sector, inparticular, the UK has a Strategic Railway Authority which has also developed its ownguidance based on the broad appraisal framework and the Department of Transportadopted guidance but is directly concerned with appraisal techniques in the railwayindustry.There is need to consider a number of appraisal guidance documents that exist in thepublic sector, several of which impact directly on the investment appraisal of railwayprojects and policies. There is also a need for specific appraisal guidance on valuingrailway benefits, e.g, in the UK generalized journey time and value of time are the twomost important economic concepts used to measure the non financial benefits of railwayperformance improvements. What appropriate measurable factors can I similarly considerfor Zambia?Comprehensive appraisal guidance on railway projects is developing with some speedand sophistication in some countries like Australia and the Netherlands. Is it plausible forZambia?According to this report, “An application of current appraisal guidance” as arecommendation for railway infrastructure investment might change under past andpresent appraisal guidance for two main reasons, namely:(i) Changes in policy andGovernment objectives can lead to changes in appraisal practices which will, in turn, leadto new appraisal guidance; and (ii) New appraisal guidance can also impact the appraisaloutcome and the recommendation that would be given to Ministers.The implications of the UK case study which need to be considered in designingappraisal guidance are as follows: The simplicity and user-friendliness of the guidance (consistency within and betweenguidance documents) The risks of having formal guidance in place e.g. distortions will exist in the marketfor public sector funds if some projects are assessed using the official guidelineswhile other projects are appraised using other methods The importance of establishing value for money based on consistent guidance The costs of implementing the appraisal guidance e.g. will the railways be able toperform the cost-benefit analysis without consultancy resources
14 The costs of compliance with the guidance e.g. will the Government be able toenforce the guidance without performing ex-post evaluations or formal auditsMy research probes the railway policies in Zambia and determines the prescribedguidelines for infrastructure investment in reference to practice at international level.2.2 European Railway Research (2008)The overall objectives of this research where to Develop “safer”, “greener” and“smarter” transport systems for: respecting environment and natural resources the benefitof citizens and society (2) Secure and develop the competitiveness of European industryin the global market: By Dennis Schut, EU Research ManagerIn this research I appreciate, in addition to environmental concerns, the encouraging andincreasing modal shift and decongesting of transport corridors through efficient interfacesbetween transport modes; Ensuring sustainable urban mobility through new transport andmobility concepts for passengers ensuring accessibility for all, Intelligent mobilitysystems and multi-modal interfaces for transportation of passengers; Improvingintegrated safety and security for surface transport systems by design; Strengtheningcompetitiveness in industrial processes through advanced and cost effective infrastructureconstruction, maintenance and monitoring, competitive surface transport products andservices and competitive transport operations and innovative product concepts;The research also highlights important cross-cutting activities including: Stimulating ofInternational Cooperation within Surface Transport Research; Stimulating InternationalCooperation with Latin American countries in developing sustainable freight transportsystems, Shaping the new generation of sustainable surface transport mobility for Europe.This research serves as a guide in considering the importance of regional andinternational benefits of Zambian railway infrastructure developments and not onlynational considerations.2.3 Applied Transport Economics: Policy Management and Decision making (2005)This is theoretical text on transport economics. I have used it to guide and inform myarguments from a transport professional discipline perspective. The book advises onpolicy management and decision making for transport sector. It considers (1) Transportmarket dynamics including: market demand, elasticity of demand, the supply of transport,pricing policy, cost levels and structure for railways, forecasting transport demand,revenue & expenditure; (2) Public policy including: transport economic appraisaltechniques, economic appraisal valuation of elements, Public Private Partnership (PPP)investments, funding an integrated transport policy, consideration between Regulation &Competition; and (3) Transport and development which considers the linkage betweentransport and economic activities.
152.4 India Railway Sector Investment Program (March 2009)This is a report prepared by Scott Wilson PLC and it presents the Hospet - TenaighatTrack Doubling Railway Investment Program approved for financing by the AsianDevelopment Bank. The relevance of this report is in the nature and purpose of theHospet – Tenaighat Track which was then being proposed for upgrading by doubling.“This section primarily caters to the inland transport of Iron Ore and Iron and Steel forexport with Coal and Fertilisers imported through Mormugao Port on the west coast andCement traffic primarily from South Central Railway. Besides freight traffic, there arealso a substantial number of passenger trains on the project section. The bulk of trafficmoving across the project section is through traffic originating and terminating outsideHospet to Tenaighat for/from Goa and other ports on the west coast, south of Goa. Therail line is now carrying 14.25 million tones expected to reach 27 million tones in 2013-14. It is therefore proposed to double the single line section between Hospet andTenaighat.” (Scott Wilson Railway Limited: 2009,10)I have realized that that aims of this project (to enhance capacity and in doing soincreasing speed and operational efficiency of the project section whilst also ensuring thatthe project impact positively on the local population and the environment) and the natureand purpose of the railway line are akin to the railways in Zambia. The report emphasizesthe need for this proposal to be tune with the policies of the Government of India.According to an extract from the website of the Department of Transport of the UK, theGovernment’s role in the running of the railways is to provide strategic direction and toprocure rail services and projects that only it can specify. (http://www.dft.gov.uk/rail)This Indian case is akin to the railway sector in Zambia. It has provoked my research toquery the strategic role of Government in railway infrastructure development andperformance. I ask the question: What are the primary government railway policies thatneed to be in place for the sector’s sustainability?2.5 Rail development in Africa: Stakes and prospects, objectives and missions of theAfrican Rail Union (2006)This is a report by the specialized institution of the African Union responsible for raildevelopment in Africa. It aims at studying ways and means of unifying rail networks;standardization of equipment and rolling stock; Interconnection of rail networks;Coordination between railway and other means of transport; and improvement of railperformances and quality services.The African Railway Union (ARU) advocates that the importance of rail transport can begauged from the policies and programmes implemented by African governments,Regional Economic Communities and Specialized institutions at regional and continentallevel. As a member, Zambia – Kabwe Center, had been retained in 1976 within the
16framework of at the Transport and Communications in Africa decade (1978-1988) forrailway human resource development.“The politico-economic developments that occurred at the Southern African level withAngola, Namibia, Zimbabwe gaining their independence and the eradication of theapartheid system in South Africa brought new data in the choice of the center and theneed for obtaining an agreement on the site for the center between the various SouthernAfrican networks. The Union proposes to launch a broad consultation with the networksconcerned in collaboration with the Southern African Railway Association (SARA).”(Ibid 2006:10)This report presents insight into the concerted efforts which Africa puts on therevitalization and operations of the railway networks of the continent. Can the humanresource development projects and other initiatives that were under this organization bereconsidered? What is the current continental opinion over railways? Is Kabwe still aplausible centre of railway academic promulgation?2.6 Preparatory Survey for Southern Africa Integrated Regional Transport Program(March 2010)This is a research undertaken by JICA, which perceives Africa as being at an economicstage which Asia was 15 years ago. The study realizes the region’s abundance of naturalresources and its productive agricultural sector which is reported to have led toexponentially increased trade with emerging market partners such as China, India, andBrazil. However, while the region’s balance of trade is moving in a favorable direction,inadequate transport (as well as energy and information and communications technology)infrastructure poses a major bottleneck to the region’s achieving its full growth potential.Of interest is the second of three research study objectives: To formulate a holistic viewof regional infrastructure creation, which is necessary to materialize the growthscenarios, and clarify the issues to be addressed mainly from an assessment of theregional transport sector.(Evaluation of the potential of Southern Africa regionaltransport development corridors)This study covered eight countries of the Southern African Region: Angola, Botswana,Malawi, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe; in addition, italso covered the Democratic Republic of Congo and Tanzania, which play an importantrole due to their direct linkages to the Southern African Region.For the Railway sector, this report proposes an overall strategy of infrastructuredevelopment following operational improvements and strengthening of internationalcompetitiveness of products through reductions in transport costs.The JICA Study Team analyzed the potential for integration of essential elements alongthe 18 corridors of southern Africa in terms of:
17(i) Contribution to growth scenarios: Corridor-based “contribution” to each of the threegrowth scenarios: Referring to the condition of each corridor and the geographicdistribution of resources, evaluate each corridor based on its contribution to realizingthe growth scenarios. That is evaluation of Corridors on Contributions to GrowthScenarios(ii) Cost-benefit Analysis: Efficiency of corridor development: Referring to otherindicators such as traffic volumes and the cost of implementation, evaluate efficiencyof corridor development based on a benefit-cost analysis. Although this evaluation isrelative, after the standardization of the outcomes, corridors with higher efficiencythan average should be selected as prioritized corridors. Benefit/Cost Score ＝ (TrafficScore) ×(Benefit Score) ÷(Cost Score)(iii)Socio-economic impact: Ease of corridor development implementation by analysis ofeach country traversing the corridor by considering: Demographic Potential, Scale ofEconomy, Governance and Business Environment in order to propose eight candidategrowth corridors.In accordance with the Fourth Tokyo International Conference on African Development(TICAD IV) held in May 2008 it is necessary to consider both internal and externalelements in order to realize the impact of a corridor development program in terms ofaccelerating the growth of the region, with budgetary constraints however, it is necessaryto optimize resource allocation and prioritize corridor development programs in order tomaximize the effect on regional economic growth.In this report, the following corridors were deemed as priority as ordered: MaputoCorridor, North–South Corridor, Dar es Salaam Corridor, Beira Corridor, NacalaCorridor, Trans-Caprivi Corridor, Trans-Kalahari Corridor, and Lobito Corridor. Of thesecorridors Zambia is traversed four of them (North-South, Dar es Salaam, Nacala andLobito corridors)Below is an extract from the report, which presents the details with respect to thecorridors on which Zambia is traversed and plays a significant role :
18Table 1: List of prioritized SSA Corridors which transverse ZambiaCorridorNamePotentialResourcesCountriesTraversedExisting Condition / Bottlenecks1. North-SouthCorridorMaize, Copper South Africa,Zambia,Zimbabwe,Botswana ,DRC- The only missing road (bridge) link is currently at theKazungula border crossing.- Long border crossing time (1–2 days) at Chirundu andBeitbridge addressed by ongoing projects.- Long border crossing times at Kasumbalesa, betweenZambia and the DRC- Railway operated inefficiently due to issues related to“hard” infrastructure and operations.2. Dar- esSalaamCorridorCobalt,Magnesium,Copper, Seed,Cotton,Cassava,Sugarcane,MaizeTanzania,Malawi,Zambia- Nakonde/Tunduma border crossing busy with long bordercrossing times (4-5 days).- Deterioration of road conditions caused by heavy mineraltransport- Decreasing rolling stock availability on the TAZARALine- The long clearance time at the Port of Dar es Salaam- Long dwell time at the container terminal (26 days)3. NacalaCorridorCopper, Oilbearingplants, SeedCotton,Cassava,SugarcaneMozambique,Malawi,Zambia-Trunk route to the port currently serves low trafficvolumes.-Most road sections unpaved and/or have high roughnesslevels.-Low railway operation speed and capacity due to trackdeterioration.-Traffic at the port is expected to increase rapidly beyondits current capacity.4. LobitoCorridorCopper Angola,DRC,Zambia- Rehabilitation required for Lobito rail link linking theport with the DRC/Zambia Copperbelt.- Repair and development of mines following the extendedconflict in the DRC has been hampered by the lack ofreliable transport to the sea.The JICA Study Team identified potential programs for improving the prioritized corridorsspecifically:Road: Formulation of systems to prevent road deterioration; Improvement of the regional roadnetworkRailways: Infrastructure development following operational improvements; Strengthening ofinternational competitiveness of products through reductions in transport costsPorts: Simplification of port procedures aiming at a single window approach; Development ofthe capacity of container terminalsBorder Posts: Development of legal framework and procedures for railway OSBPs;Infrastructure and system improvements through OSBP implementationTransport facilitation: Addressing non-physical barriers to cross-border transport
192.7 Road Sector Investment Program (ROADSIP) & Road Sector ACT of 2003RoadSIP is a deliberate Investment Program which saw to the rehabilitation and,restructuring of the Road Sector through policy reforms. It resulted into dismantling ofthe Road Sector Institutions making them more specialized to specific function (RoadDevelopment Agency, National Road Fund Agency, Road Transport and Safety Agencyand the National Council for Construction.)The Road Sector is now evidently argued to be the most competitive mode of transport inZambia and the entire sub Saharan Africa. The mantra of the RoadSIP program includesthemes advocated for in most if not all African countries. Institutions like the SubSaharan Africa Transport Policy Program endeavor to realize the harmoniousimplementation of this program in all these respective countries. It is a robust programwhich not only includes policy reforms but institutional restructuring and financemobilization with guaranteed donor technical monitoring and evaluation at all times.ROADSIP is a 15 year programme which, commenced in 1998 and will end in 2013 butdivided into two phases, namely ROADSIP I and II. Phase I started in March 1998 andended in 2003. The second phase started in 2004 and will end in 2013. The originalestimated budget for ROADSIP II was US$860 million but due to the large network, theprogramme was extended to 10 years and costs also went up to US$1.6 billion.ROADSIP II would first concentrate on roads that were identified in ROADSIP I, but hadno funding sources and as such, they could not be maintained.GRZ is intends to implement ROADSIP II within the same economic, institutional andlegal framework as outlined in ROADSIP I. The objectives have been improved aftertaking into account lessons learnt from ROADSIP I. ROADSIP II will address poverty inrural areas and gender imbalance through the use of labour based methods and packagingof contracts, maximum involvement of road users, transparency and accountability intenders and needs based management and budgets.In view of the shortfalls in ROADSIP I, consultants were commissioned in 2003 tofinalize the ROADSIP II Bankable Document and Financial Strategy. Government andCooperating Partners approved these documents in 2003, below is the committedfinancing framework for the program
20Table 2: ROADSIP II cash inflows in US$ over a period of 10 years:Internal Funding Total first5 yearsTotal in 10 yrs1. Government Funding 113,793,750 259,431,2502. Fuel Levy 162,387,305 272,973,1583. Donation of Excise Duty 5% 40,698,573 77,560,5244. License Fees 186,473,335 272,686,6695. Road Haulier tariff 53,104,238 77,656,2386. International Transit charges 14,364,202 27,374,302Subtotal 570,821,408 987,682,151External Funding1. World Bank 53,900,000 130,900,0002. NORAD Funding 17,500,000 42,500,0003. European Union 80,500,000 195,500,0004. JICA 21,000,000 51,000,0005. BADEA/Kuwait 17,500,000 42,500,0006. KfW Germany 17,500,000 42,500,0007. DANIDA 38,080,000 106,480,0008. ADB 25,000,000 35,000,000Subtotal 270,980,000 646,380,000Grand total 841,801,402 1,634,062,141Internal contribution 67.81% 60.44%Source: Government of the Republic of ZambiaThe Road SIP II is management by the Road Management Initiative which operatesunder for organs, guiding the operations of the implementing specialized road agencies:The four organs being:Table 4: Organs of the Road Management InitiativeCommittee Members Meeting ScheduleCommittee of Ministers on RMI Chairman: Minister of MCTMembers Cabinet Ministers andDeputy MinistersSupport Staff: Permanent Secretaries,Officials and Other StaffAt least 4 times a year andas and when necessary(extra ordinary meetings)Committee of Permanent Secretarieson RMIChairperson: MCT PSMembers other PSs (from MoFNP,MWS, MLGH, MTNR, MEW,MACO, MoJ) and other support staffQuarterly and as and whennecessaryRoad Sector Investment Program(ROADSIP) Steering CommitteeChairman MCT: Deputy MinistersMembers Component Managers andother support staff.Monthly
212.8 Zambia National Transport Policy (2003)This is the main transport policy document in Zambia. For the railway sector, the Policystates:“ In order to address the problems of rail transport the Government shall focus on thefollowing issues:-(a) streamlining of the railway organization, reforming management and upgradingessential railway labour to improve labour productivity;(b) encouraging private sector involvement in rail management through concessioning inorder to improve railway efficiency;(c) ensuring that the bulk of cargo transportation is carried by rail in order to reducepressure on the road network;(d) ensuring the preservation of investment and the continuous improvement of railinfrastructure;(e) expanding and strengthening of government capacity to develop supportiveregulatory and investor-friendly legislation, monitor compliance with policies andlegislation; and(f) standardizing practices and procedures in line with SADC member states to provideseamless and predictable service throughout the region.For this purpose the goals, policy objectives and strategies of rail transport are detailedbelow:Goal: To provide a competitive, cost- effective, commercial, efficient and market-drivenrailway transport system.Policy Objectives: In order to meet the above stated goal, the policy objective shall be to:(a) maximize railway capacity;(b) reduce railway deficits and government funding burdens;(c) encourage the functioning of railways as a market-sensitive commercial enterprise;(d) enhance inter-modal transport competition; and(e) ensure private sector participation.Out of the planned strategies to achieve the above objectives four of them are mostcritical for our evaluation, though not ignoring the rest: (f) review the regulatory structureto facilitate appropriate concessioning of railways; (g) develop an integrated railwaytransport system, which will support competition among the various modes of transport;(h) foster inter-modal co-operation between road and rail, especially for the movement ofinternational freight and passengers; and (i) promote co-operation with regional railwaysin order to ensure undisrupted movement of cargo at interchange points, through- runningof locomotives, as well as other rolling stock and other measures to improve customersatisfaction.
222.9 Sixth National Development Plan (2011).A GRZ national development plan towards the country’s long term ‘Vision 2030’The Government of Zambia (GRZ) has declared its intention to rehabilitate and maintainits main railway lines (TAZARA and RSZ) and also build new railway spurs to supportthe existing infrastructure for trade facilitation. This is being proposed as part of aNational Transport Infrastructure Master Plan (to be developed). (Republic of Zambia2011)There are essentially five (5) new proposed railway spurs to be developed in Zambia.These include:Map 1: Proposed railway projects in ZambiaSource: Government of the Republic of Zambia(i) Chingola-Solwezi-Jimbe (Angola): to link Zambia railway network to the Angolannetwork through to Port Lobito(ii) Nseluka-Muplungu Railway: to link TAZARA to the Great lakes region of EastAfrica via Lake Tanganyika(iii) Chipata- TAZARA-Mpika: to enhance trade via the Nacala Corridor by facilitatingfreight through Port Nacala and ease congestion at Dar es Salaam(iv) Kafue-Lion’s Den (Zimbabwe): to link the Zambia railway network to Port Beira ofMozambique via Zimbabwe(v) Livingstone-Katima Mulilo via Kazungula: to enhance trade links amongst Zambia,Botswana and Namibia by utilizing Walvis Bay Port. This is hoped to encouragetrade even with South America especially Brazil.
232.10 Railway Legislation in ZambiaThis include: The Railways Act; The Tanzania Zambia Railway Act; The Railways(Deviation) Act; Nkana-Nchanga Branch Railways Act; Rhodesia Railways Act;Mashona Railway Company Limited Act; Roan Antelope Branch Railway Act; MufuliraMokambo Railway Act; Railway Transfer of Statutory Powers Act; The RhodesiaRailway Act, 1949The railway legislation above are operational policy documents and statutes whichoversee the administration of the railway lines in Zambia. They serve as key policy andstatutory references for my research. I reviewed these policies, where necessary todetermine their relevance in today’s economy.2.11 2003 GRZ/RSZ ConcessionThis is a railway concession signed between the GRZ and NLPI (RSZ) for exclusiverights to the operation and management of the Zambian main railway line betweenLivingstone and Chingola, including the inter-mine network and passenger serviceprovision.“…the concessionaire took over operations on 3rdDecember 2003. The initial target wasto concession the railway by September 2001. There were three main reasons for thedelay: (i) the MCT at one point constituted a committee of eight cabinet ministers tooversee the process and the committee took a long time to convey approvals for theconcession design and eventually the committee was scrapped; (ii) the second-rankedbidder made a representation to the Government and dealing with that also delayed theapproval of the concession by the Attorney General; and (iii) The negotiations betweenthe preferred bidder and the Government-appointed negotiating team took an inordinatelylong time.” (Zambia Railways Restructuring Project Report, 2005, P8)In view of the 2003 GRZ/RSZ Concession, the World Bank undertook a railwayrestructuring project ( costing US$27 million) producing an Implementation completionReport December 20, 2005. The objective of this project was to enable Zambia Railways(ZR) through restructuring and privatization to: (i) increase operating efficiency; (ii)reduce cost of operations; and (iii) make freight services and tariffs competitive, and,consequently, increase the railways’ share of the local, international, and transit freighttraffic. These objectives were to be met through implementation of 8 strategic projectcomponents. Two of these, cited for the purpose of my research, are component (e) ZRLrestructuring(US$0.5 million, 2% of total project cost); (f) regulatory and legalframework (US$0.8 million, 3% of total project cost; and (g) MCT strengthening(US$0.5 million, 2% of total project cost).It was reported that component (e) rated satisfactory in that ZRL downsized to 25 staffand its role redefined to manage the railway concession instead of being a railwayoperator. Component (g) was rated moderately satisfactory in that MCT through a
24consulting firm produced a report for Review of the regulation and legal framework forthe railway industry in 2005. It includes:- An outline of the existing legal framework;- A draft of an enabling new railway legislation to reflect the changed railway structureand a liberalized business environment;- An overview of the agencies currently and potentially involved in railway regulation;- A discussion on the need for railway specific economic regulations and theapplication of environmental regulations; and- Specific proposals for licensing of railway operators and institutional structure forrailway safety regulations.However it is reported not to have been implemented because “the way forward was notall clear-and experience in other countries did not point to an obvious answer. The needfor economic regulation for the railways was questionable as there is reasonablecompletion from road transport services and the Concessionaire is free to set freighttariffs and select the freight it wants to carry…The moderately satisfactory rating reflectsthe fact that the amendment need not have been delayed to this extent.” (Page 11,WorldBank Report No:32520, 2005)2.12 Should Zambian Government Invest in Railways? (2011).This is a study conducted by Gael Raballand, a Senior Economist with the World Bank,and Alan Whitworth, a technical advisor of the Zambia Institute of Policy Analysis andResearch. The study assesses the Zambian railway sector’s survival in the presence of acompetitive road sector. It criticizes GRZ proposals to invest in the Railway Sector.The study argues that he railway sector was constructed for copper transportation.However, despite rekindled increase in copper production, it is unlikely that the railwaysector can regain it transport market share from the road because of relatively lower roadoperating cost and higher efficiency. However, the road sector is not blameless. It hasincreased road maintenance cost, traffic congestion, road safety concerns and despitebeing privately driven, it is argued that it pays insufficient road user charges to meet fullcost of these market failures. It is also deduced that railways consume about 30% lessfuel than road transport.Events in the 1990s changed the railway transport economic environment in Zambia. Themain explanatory variables of this adverse change being: Economic liberalization ofZambia; Independence of South Africa and the resulting proliferation of the truckingindustry along the North South Corridor to facilitate trade between Zambia and SouthAfrica; deteriorated railway infrastructure due to deferred maintenance and lack of itsrecapitalization; and, competitiveness from the trucks due lower rates per tone-kilometer,reliability and reduced transit times.The railway sector was constructed for copper transportation. However, despite rekindledincrease in copper production, it is unlikely that the railway sector can regain it transport
25market share from the road because of relatively lower road operating cost and higherefficiency. However, the road sector is not blameless. It has increased road maintenancecost, traffic congestion, road safety concerns and despite being privately driven, it isargued that it pays insufficient road user charges to meet full cost of these marketfailures. It is also deduced that railways consume about 30% less fuel than road transport.The study proposes that Government’s investment in railway lines is highly risky toundertake. First, Government would have to choose between rehabilitating TAZARA orRSZ line before developing new lines as these would serve as tributaries to the two mainlines. Further, exploitation of the Congo DRC mining opportunities would require priorstrategic market planning to commit and guarantee traffic for the railways. Consideringscarcity of funds, Government could be more prudent by improving road sectormanagement and consider the railways as a sunk cost.I envisage that the review of the above carefully selected literature will enrich mytheoretical concepts and help us to clarify my hypotheses, models and distinguish therelevant variables for my research. In addition, they will inform my development of thedata collection tool.3.0 Research Methodology3.1 Study DesignIn this research, we used a mixed method approach involving primary and secondarydata. The Primary data was essentially qualitative where as the secondary data wasquantitative. The primary data was collected from a purposively sampled group ofrespondents who comprise the key transport sector holders in Zambia including:3.1.1 Government Ministries: Ministry of Finance and National Planning,Ministry of Transport Works Supply and Communications and theMinistry of Commerce Trade and Industry3.1.2 Railway operators: Railway Systems of Zambia (RSZ) and TanzaniaZambia Railways Authority (TAZARA)3.1.3 Railway asset holding company in Zambia: Zambia Railways limited(ZRL)3.1.4 Infrastructure construction regulatory institution: National Council forConstruction (NCC)3.1.5 Transport training institute: Chartered Institute of logistics and Transport(CILT)3.1.6 Foreign missions to Zambia: Danish Embassy, Embassy of the People’sRepublic of China, Embassy of Japan and the German Embassy3.1.7 Transport donor agencies/organizations: European Union (EU), WorldBank (WB), African Development Bank (AfDB), Japanese InternationalCooperation Agency (JICA), Danish International DevelopmentAssistance (DANIDA) and Kfw Germany.
263.1.8 Regional economic communities: Common Market for Eastern ansSouthern Africa (COMESA) and the Southern Africa DevelopmentCommunity (SADC)Ideally, the questionnaire was also supposed to be administered to the main railwaycustomers vis; the copper and other mining companies, cement producers (LafargeZambia), Nakambala Sugar Company Plc, Ndola Lime and bulk exporters of agriculturalproducts. However, due to the time limitation with this research, this was not done.Secondly, I endeavored to understand the political and economic policy influence onrailway development and operational efficiency of the main railway line underconcession. The significance of the role of government in transport infrastructuredevelopment was analyzed over regulatory and competitive economic policy realms. Thisentailed application of economic theories, mathematics and statistical inference toanalyze the variables influencing revenues of the railway sector. In essence I investigatethe structural stability of the operations considering government interventions andprivatization railway (RSZ concession) between1994-2011. In this regard, I used theordinary least squares method to determine the relationship below:Railway Returns = Passenger numbers + Freight (cargo) volumes - Number ofEmployees + capital Investment + Regulatory policyIn the proposed regression equation above I expected railway revenues to be positivelyinfluenced by passenger numbers, freight (cargo) volumes, capital investment, andnegatively to the number of employees and, I want to realize the effect of regulatorypolicy. The qualitative analysis of the data collected was also supplement by quantitativemethods on a case study basis. This will be used to evaluate essential key qualitativevariables like types of government systems and the political influence on infrastructuredevelopment.3.2 Research InstrumentsI main used one research instrument: A structured questionnaire which was composed offour parts. This tool was essentially used to collect the primary data which as we shallrealize, supplements the secondary data that was analyzed. The Questionnaire is attachedhereto as Annex: 13.3 Data Collection ProcedureThere we 3 forms of data collection procedures.3.3.1 For the literature reviewed, data was mainly collected from the nationallibraries, University of Zambia (main campus) library, the key transportsector stakeholders identified above (3.1.1) and other documents weredownloaded from the worldwide web.3.3.2 The qualitative primary data was collected using the structurequestionnaire attached as Annex 1. In some instances, the questionnairewas administered via one-one interviews with the respondents, while
27others were sent and responded to via e-mail. Some responses were mailedback with additional information whereas other (2) respondents justremitted their own structured response.3.3.3 The secondary financial data and employment numbers used in the ChowTest for structural stability was obtained from the Zambia Railwaysheadquarters found in Kabwe town of the Central Province.3.4 Data AnalysisData analysis conducted in this research was distinctly done in respect of the three formsof data collection procedures above.3.4.1 With respect to the literature review data, the data was skimmed throughfor the most relevant information. This involved identification ofinformation with respect to Railway projects appraisal guideline, Costbenefit analysis for railways, policy relevant information, legal andstatutory obligations for the railway sector, transport institutionalframeworks, and transport theoretical authorities so as to rationally guideour arguments and analysis. This was mainly desk review of data.3.4.2 The qualitative information generated from the questionnaire datainvolved questionnaire coding, data entry into computer softwareapplication-Microsoft Excel, data analysis and interpretation - Statisticalpackage for Social Scientists-SPSS and reporting-Microsoft Word)3.4.3 For the primary financial data collected from ZRL, I appliedeconometrics: Chow Test of Structural Stability using the E-vies statisticalpackage after extracting this data from the Microsoft excel where I hadinitially entered it.
284.0 ResultsThe results to be presented are threefold:4.1 Responses to the questionnaire:The questionnaire was submitted to a total of 21 purposively sampled respondents ofwhich thirteen responded.The questionnaire was structure in four parts. Below are the results for each part.Part A: This section was probing for preliminary information of the respondentsincluding: Name of institution, Designation of respondent, sex, age and type of institutionthey work for. The following are the results:Table 4: Respondents: Institution, Designation, Age, experience in organizationName of Institution * Designation? * What type of institution do you work for? Age*ExperienceWhat type of institution doyou work for?Name ofInstitution Designation AgeYearsin org1 GOVERNMENT MINISTRY MCTI ECONOMIST 28 2MOFNP CHIEF ECONOMIST1 41 4MOFNP CHIEF ECONOMIST2 40 5MTWSC DIRECTOR PLANNING 47 5MTWSC GOVERNMENT INSPECTOR OF RAILWAYS 54 9NCC CEO 49 132 EMBASSY DANIDAROAD SECTOR PROGRAMMECOORDINATOR 45 73 INTERNATIONALCOOPERATION AGENCY AFDB TRANSPORT INFRASTRUCTURE SPECIAL 50 3.5EU ENGINEERING ADVISOR 36 8JICA PROGRAM OFFICER- INFRASTRUCTURE 29 0.75WB SENIOR TRANSPORT SPECIALIST 50 85 TRANSPORT OPERATOR TAZARA MANAGING DIRECTOR 646 PROFESSIONAL BODY CILT TRANSPORT EXPERT 57 33TOTAL 13 13All the respondents were male.Part B: This part was essentially to confirm if the respondents consider the transportsector in their work and the main area of responsibility in respective to transport. The partalso probes if railways are an area of support for the respondents’ institutions and itconcludes with an investigation of whether the respondents’ institution have anyappraisal guidelines for railways and what the main considerations for cost benefitanalysis for railways. From the table below we note that all respondents focus on thetransport sector and only four out of the thirteen institutions do not support railways inZambia.
29Table 5: Frequency of Respondents support; Transport focus; Railway SupportName of Institution * Is the transport sector an area of focus for your institution? * Does your institution supportthe railway sector in Zambia? CrosstabulationDoes your institution support the railway sector inZambia?No. of Respondents Is the transport sectoran area of focus foryour institution?1.00 YES 2.00 NO 1.00 YESTotal1.00 YES 9 9 92.00 NO 4 4 4Total 13 13For the institutions who currently supporting railways,: 3 respondent said that their maintype of support is Finance and resource mobilization, whilst 1 said they advocate for therailway sector development. Another alluded to their transport service provision whilst 2embraced all the reasons given by the other respondents and added that it is their mandateto support and develop the railway sector.Type of support to Railway development sectorSupport to railways development sectorType of Support offered Frequency PercentMINISTRY MANDATE 1 7.7FINANCE 3 23.1ADVOCACY 1 7.7RESOURCE MOBILIZATION 1 7.7TRANSPORT SERVICE 1 7.7ALL ABOVE 1 7.7Total (99) 8 61.5Missing 5 38.5Total 13 100020406080Frequency Percent9.0069.23431Institutional Support for railway sector developmentYESNO
30Table 6: Respondents Institution: Appraisal guidelines for railways, CBA considerationsDoes your institution havean appraisal guidance forrailway projects?No. ofInstitutions1.00 YES 2.00 NO What are the main considerations for cost benefit analysis forrailways?11CBA is done but not necessarily for economic/financial viability but overnational development tool3 3No idea11economic activities through the link areas - volume of expected trafficexisting alternative transport and cost effectiveness comparison2 2 economic impact to the nation1 1 Return of investment and cost benefit1 1 Development, rehabilitation, maintenance and operational costs; timesavings, user cost savings, environmental and social benefits wherepossible1 1 Impact on poverty reduction; economic rate of return; sustainability1 1 rail moves more tonnage per litre of diesel, cost of rail maintenance perkm is cheaper than road, more traffic by rail results into less roadmaintenance costs1 1 Covering operational costs and meeting demand for railway services1 1 It is cheap yet carries bulky cargoTOTAL 4 9Cost benefit Considerations in railway projectsDoes your institution have appraisal guidance for railway projects?Frequency PercentYES 4 30.8NO 9 69.2Total 13 100.0Doesyourinstitutionhav…0%YES31%NO69%Existing appraisal guidance forrailway projects
31Part C: This part of the questionnaire assesses the respondents’ insight on how railwayprojects are appraised in Zambia, the value of their efficiency, and their relevance to thesouthern region and entire African continent. This is also compounded by aninvestigation on whether the railway sector institutional setup attunes with the railwaypolicy. The results are presented below:Of the 13 respondents, 4 said that GRZ intentions to develop the railway sector are notbased on any appraisal guides, 2 said they are, 3 said they don’t know whilst the rest didnot respond to this question. It was also revealed by 6 respondents feel that railwayprojects in Zambia are developed on political directives whilst only 1 respondent said thatthey are based on standard appraisal guidance for transport infrastructure developmentand cost benefit analysis, respectively. 2 respondents said they did not know the basiswhilst the rest reserved their opinions.The specific responses are shown in Table 7 below.Table 7:Name of Institution * How are railway projects appraised in Zambia? * Are the GRZintentions to develop the railway sector based on any appraisal guidelines?Are the GRZ intentions to develop therailway sector based on any appraisalguidelines?No. ofInstitutionHow are railway projects appraised in Zambia?Total1.00 SAG FORTRANSPORTINFRASTRUCTUREDEVELOPMENT3.00 COSTBESTANALYSIS4.00POLITICALDIRECTION5.00OTHER1.00 YES21 11 12.00 NO 4 4 49.00 DON’T KNOW31 11 11 1Missing 4 4TOTAL 13 13YES30%NO50%DON’T KNOW20%Are GRZ intentions to develop the railway sectorbased on any appraisal guidelines?
32With respect to value of railway efficiency to the Zambian economy: 2 respondents feltthat this is in terms of freight carriage for trade; 3 considered regional trade facilitation; 2said freight carriage and passenger transportation; 2 said freight carriage and regionaltrade facilitation; and 4 said freight, passenger and trade facilitation.Table 8: Name of Institution * What is the value of railway efficiency to the Zambian economy?What is the value of railway efficiency to the Zambian economy?Total1.00 FREIGHTCARRIAGE FORTRADE3.00 REGIONALTRADEFACILITATION4.00 FREIGHTCARRIAGE &PASSENGERTRANSPORTATION5.00 FREIGHTCARRIAGE ®IONAL TRADEFACILITATION7.00 FREIGHT,PASSENGER &TRADEFACILITATIONFrequency 2 3 2 2 4 13I also considered the responses to the consideration of regional and/or African market inappraising railway developments.Table 9: Respondent Institution; regional significance of Zambia railway networkNumber of Institutions * Are there benefits to Zambia if railways are developed with view to capture the regional and notonly national traffic demand. * If YES to (14) above, please explainIf YES to (14) above, please explainNo. ofInstitutionAre there benefits to Zambia if railways aredeveloped with view to capture the regional andnot only national traffic demand.Total1.00 YESMONOPOLIZE DRC TRANSIT TRAFFIC 1 1 1MINING SECTOR TRADE FACILITATION 1 1 1REDUCE DAMAGE & CONGESTION OF ROADS 1 1 1CHEAPER BULK CARGO TRANSPORT 2 2 2REGIONAL TRADE & GROWTH OF EXTERNAL SECTOR 1 1 1ALL ABOVE 1 1 18.00 REVENUE & SERVICE PROVISION 2 2 277%15%Is the Zambian railway network important to the African continent?YESNOMissing
33The respondents prioritized the following transport corridors, for Zambia’s development. Wenote the frequency of appearance of North South and Dar es Salaam corridors. The scalar inthese responses is one stakeholder who does not understand what transport corridors are.Table 10: Respondents’ prioritized transport corridorsWhich transport sector corridors should be prioritized for railway developments inZambia? According to priority.Name of InstitutionLobito-WalvisBay-Great lakes 1Railway-Road-Air 1Currently None 1NorthSouth-Nacala 2NorthSouth 1NorthSouth-DaresSalaam-Nacala 1DaresSalaam-WalvisBay-NorthSouth 1NorthSouth-DaresSalaam-WalvisBay 1Lobito-Beira-Great Lakes 1All Corridors 1This can only be answered after a careful analysis 2It is interesting to note that only 1 respondent said the current railway policy wassufficient for the sector. The other respondents to this question qualified their responsesas shown below:Table 11: Number of Institution * Is the current railway policy framework sufficient and relevant for the sector’sdevelopment?If NO to (16) above explain. *Is the current railwaypolicy framework sufficientand relevant for thesector’s development?No. ofInstitutionsIf NO to (16) above explain.Total1.00 PRIVATESECTOR LEDDEVELOPMENTNOT WORKING2.00 DOESNTPROVIDE FORMODERNCOMPETITIVEWAYS OFDOINGBUSINESS4.00 NO CLEARDIVISION FORRESPONSIBILITIES OFSTAKEHOLDERS6.00 PRIVATESECTOR LEDDEVELOPMENTNOT WORKING& NOFINANCIALFRAMEWORK9.00ALLABOVE1.00 YES 1 1 12.00 NO 1 1 11 1 11 1 12 1 1 21 1 13.00 Missing 6 6Total 13 2 1 2 1 13
34Further, it is advisable that every policy gets to have its respective strategic implementationframework. In this regard, I queried the sampled respondents on whether or not the institutionalsetup in the railway sector was structured in line with the railway policy. Table 12 belowpresents their responses:Table 12: Respondent Institution: Strategic nature of the railway sector institutions in ZambiaValidate your response to questionNo. ofInstitutionsIs the railway sector institutional setupstructured in line with the railway policy?Total1.00 YES 2.00 NO 9.00 DON’T KNOWZambia Railways Limited (ZRL) needs to be restructured totake up new role of railway asset investment company; Need tore-align functions between MTWSC and ZRL111The institutional setup to support railway policy implementationis not sufficient111There is no specific and detailed policy in place for the railwaysector111The current Railway Act Cap 453 does not allow ZambiaRailways assets to be placed under a privately ownedcompany and the safety regulation of railway operators needsto be detached from the ministry for it to be effective111The institutional setup is according to legislation (TAZARAACT) which is an integral part of railway policy. However, itmay need change to enhance inter territorial rail serviceintegration1 1 1Not Sure 4 1 13 3Missing4 4TOTAL13 13
35Part D: In the last part of the questionnaire we begin with an inquest of who owns and maintainsrailway infrastructure. Secondly, we drift to check if the railway policy promotescompetitiveness for the operators. This is meant to prelude our investigation on the perceivedideal goods for railway transportation and to what extent, if any, the government influences orensures that such goods are transported by railways, and the probable repercussions thereof.Table 13: Name of Institution * Who maintains the railway infrastructure in Zambia? * Who owns the railwayinfrastructure in Zambia?Who owns the railway infrastructure in Zambia?Response Frequency PercentValid GOVERNMENT 10 76.9PRIVATE SECTOR 1 7.7Total 11 84.6No response 2 15.4Total 13 100.0Maintenance of railway infrastructure10 out of 11 respondents who answered this question said railway infrastructure areowned by government whilst 1 said they are privately owned. Of the 10 who are saidGovernment owns the infrastructure, 5 said government maintains the infrastructure, 4said the infrastructure maintained under PPP and 1 said it is maintained by the privatesector. The respondent who said railway infrastructure is privately owned is of theopinion that it is maintained under PPP.As regards policy provisions to promote competition among operations, the followingwere the responses:0102030405060708090FrequencyPercent
36Table 14: Number of Institutions * Does the railway policy promote competition for railway operators? If YESexplain how? *Does the railway policy promotecompetition for railway operators?If YES explain how?TotalCurrent policy notclear but therevised bill doesprovide forcompetitionThe currentrailway policygives a monopolyto the mainrailway operatorwho can imposeany charges onany would-beoperatorIt should in anycase promotecooperationrather thancompetitionNot SureYES No. of Institution 1 1 1NO No. of Institution 9 7 71 11 1Total 1 1 7 9From the table we see that only one respondent said that the railway policy promotescompetition, and he argues that the current policy is not clear but the revised bill doesprovide for competition. The other nine respondents to this said the policy is notprecompetitive for operators. Of these respondents one argues that the current railwaypolicy gives a monopoly to the main railway operator who can impose any charges onany would-be operator; another said it should in any case promote cooperation rather thancompetition. The rest said they were not sure or did not provide any reason.According to the respondents, the following were their prioritized goods which aresuitable for railway transportation in Zambia.Table15: Goods fit for Railway TransportationName of Institution Priority good for railway transportationDANIDA Copper concentrates & cathodes; Heavy construction machinery; IndustrialchemicalsMTWSC DIRP Copper ore; manganese, cement; fertilizer; crude oil; motor vehicles; heavymachinery & equipmentAfDB Mineral(e.g. Copper); Cement; Agric produce; steel; other construction materialsMoFNP1 Bulk commodities (Copper; Cobalt; Maize; Coal; Fertilizer; FuelMoFNP2 Mineral cargo(copper, cobalt, zinc); Abnormal cargo(mining equipment);Dangerous cargo(acids & inflammables);Maize; Miscellaneous bulk cargoCILT Metals; Grains; Fertilizers; Machinery; Petroleum productsNCC Heavy goods (Copper); Heavy machineryWB Mining products & inputs; agricultural inputs; construction industry material;
37hyrdro-carbons; non perishable agricultural goodsEU Fuel; Mining products;Heavy equipment for mines & construction; agriculturalproducts; car importedMTWSC GIR Copper cathodes; copper concentrates; fuel; coal; acidsJICA Metal Cathodes(Copper); CementTAZARA Large volumes; heavy weight; continuation rather than one-off; bulk; longdistanceMCTI Copper; crude; fertilizers/chemicals; mine materials/machineryThe respondents’ position on whether or not there is government regulation on goods to betransported by railways if presented below:Table 16: Railway traffic regulatory policy in ZambiaNumber of Institutions * Does the Government have any deliberate policy to ensure that such goods are transported byrailway? * If NO what is the impact of this non state regulation?If NO what is the impact of this non state regulation?No. ofInstitutionDoes the Government have anydeliberate policy to ensure that suchgoods are transported by railway?Total1.00 YES 2.00 NO9.00 DON’TKNOW1 Government has intentions, but cannot at the moment legislate due tosupply side constraints; Impact: Higher cost of road rehabilitation andmaintenance; high transportation cost to business community1 1 12 The deterioration and damage to the existing road network; Lack ofinvestment and incentive for railway investment5 4 41 14 More bulk and heavy cargo moving by road instead of by rail 2 2 25 Railway sector is not competitive versus road sector meaning that roadsare overused with major impact on the road condition network (+ safety andenvironmental issues)1 1 16 By intention based on practicality of capacity to transport 1 1 17 Dont KnowName of Institution2 1 11 1Out of 12 respondents to these two questions, 3 said that the Government does havedeliberate policy to ensure that such goods are transported by railway, 8 said no and feelthat this causes deterioration and damage to the existing road network, Lack ofinvestment and incentive for railway investment plus bulk and heavy cargo gets to bemoved by road. 1 respondent said they do not know.
38On the question: Has your institution financed any railway projects in Zambia? YES/NOExplain, the following table presents the responses:Table 17: Respondent’s financial support to railwaysName of Institution * Does your institution support railway sector development? * Has your institution financedany railway projects in Zambia?Has your institution financed any railway projects in Zambia?No. ofInstitutionDoes your institution supportrailway sector development?Total1.00 YES 2.00 NO1 YES:CMRL & Mulobezi Railway Line 3 1 12 22 YES: Planning to support railway sector based of GRZ selectedpriorities2 1 0 10 1 13 YES: Advocacy for more resources to be allocated to railways 1 1 14 YES: Financed the ZRL restructuring project 2000-2005 1 1 15 NO: not part of our mandate 3 0 1 11 0 11 0 16 NO: Absence of realistic specific policy and related investment plan;impact on poverty reduction not demonstrated; Economic rate of returnnot calculated or too low to justify investment; weak institutional capacity1 1 1
39As regards the questions to do with availability of railway experts in the respondinginstitutions, the responses were as follows:Do you have any railway experts in your institution?Frequency PercentYES 6 46.2NO 5 38.5No response 2 15.4Total 13 100.0I concluded the questionnaire with a request for 3 options on how the railway sector canbe developed. The table below presents the responses.Table 18: Options on how the railway sector can be revamped in ZambiaHow can the performance of the railway sector be improved in Zambia? Briefly propose at least 3precise interventions.No. ofInstitutions1 It is difficult to reasonably justify any investments in railways under the current economic levels oftrade and requirement for fast and more efficient movements of goods and services110 Not certain and would not want to make unfounded suggestions 111 coming up with good transport policy; opening up new areas with economic activity; cheapfinancial access to banks32 Policy shift on transport infrastructure development- focus and balance for surface transport;increase funding to railway sector; legislate against movement of bulk freight on roads13 define the policy in railway development; balance railway and road transportation benefit analysis;provide incentives for railways investment and transportation14 Government recapitalization 35 Implement policy reforms aimed at enhancing competition and better regulation; More targetedfinancing to the railways sector; More capacity building of railways experts16 Investment to upgrade infrastructure, introduce open concessions, create railway fund fordevelopment of infrastructure17 Its role clearly articulated in the Transport Policy; Increased oversight at policy level (ministryresponsible); capacity building within parastals involved in the railway management18 Establishment of a national Transport master plan taking into account regional context,establishment of a specific national sector policy and investment plan coherent with19 To separate railway infrastructure from operations, and Government to invest in the railways as itdoes for the roads, To recapitalize Zambia Railways Limited and allow it to operate on commerciallines with an independent board of Directors;146.2%38.5%15.4%Do you have railway expertsYESNONo response
404.2 Regression analysis resultsThe results were generated to assess the performance of the railway sector undergovernment control (1994-2003) verses under private sector management Concession(2004-2011). Data was obtained from Zambia Railways Limited and Ministry ofFinance and National Planning. The data used is attached as Annex 2.Since the number of observation were few i.e., 17 (1994-2011), I applied the LismanSandee Matrix to the data so as to transform it into quarterly data, hence increasing thenumber of observations for a more meaningful analysis.Lisman and Sandee Matrix:0.0729 0.1982 -0.0211-0.0103 0.3018 -0.0415-0.0415 0.3018 -0.0103-0.0211 0.1982 0.0729Secondly, considering that the data used is time series data, I applied the unit test root ofstationarity using E-views application and made the data set stationary. The results forthis process are attached as Annex 3The results of the regression were as follows (also attached as Annex 4):RESULT 1: Assuming no structural break1. Period 1995-2010 Government and RSZ combined operation assessmentEstimation Command:=====================LS (REV(-1)) C (PSNGERS(-1)) (CARGO(-1)) (CAPITAL(-1)) (EMPLYEE(-1),2) (GDP(-1))Estimation Equation:=====================REV(-1) = C(1) + C(2)*PSNGERS(-1) + C(3)*CARGO(-1) + C(4)*CAPITAL(-1) +C(5)*EMPLYEE(-1) + C(6)*GDP(-1)Substituted Coefficients:=====================REV(-1) = 2989.7736 + 2.670481383*PSNGERS(-1) + 0.7237714377*CARGO(-1) +0.2549622512*CAPITAL(-1) - 0.4238110695*EMPLYEE(-1) + 0.000123625037*GDP(-1)
41Dependent Variable: REV(-1)Method: Least SquaresDate: 09/13/12 Time: 17:45Sample(adjusted): 1995:2 2010:4Included observations: 63 after adjusting endpointsVariable Coefficient Std. Error t-Statistic Prob.C 2989.774 3903.515 0.765918 0.4469PSNGERS(-1) 2.670481 1.122918 2.378162 0.0208CARGO(-1) 0.723771 0.128620 5.627201 0.0000CAPITAL(-1) 0.254962 0.029782 8.560910 0.0000EMPLYEE(-1) -0.423811 1.318892 -0.321339 0.7491GDP(-1) 0.000124 0.007196 0.017179 0.9864R-squared 0.965773 Mean dependent var 28415.60Adjusted R-squared 0.962771 S.D. dependent var 12845.97S.E. of regression 2478.602 Akaike info criterion 18.55917Sum squared resid 3.50E+08 Schwarz criterion 18.76328Log likelihood -578.6139 F-statistic 321.6750Durbin-Watson stat 0.276746 Prob(F-statistic) 0.000000Where: REV= Railway Revenue; PSNGERS= revenues from passenger service;CARGO= Revenues from Cargo transported; CAPTIAL= Amount of capital invested,EMPLYEE= Number of employees; and GDP= Gross Domestic ProductFrom the given results, we interpreted as follows:Revenue for the railway sector is significantly influenced by cargo transported and theamounted of capital invested at 1% confidence level. For every K1,000,000 worth ofcargo transported, the revenue increases by K700,000, where as for every K1,000,000invested in capital, the revenue increases by K250,000.The variables in this regression explain 96% of the variation in railway revenue. From theF-statistic given, we conclude that overall, the model is good.Regression 1 assumes that there is no difference between the two time periods andtherefore estimates the relationship between Revenues and passenger returns, cargoreturns, capital invested, number of employees and the GDP for the entire time periodconsisting of 63 observations after adjusting points.Regressions (2) and (3) below assume that the regressions in the two time periods: (i) Period1995-2003 Government Control 9 years before concession and (ii) Period 2004-2010Under Concession (Private Sector) for 7 years; are different; that is, the intercept and theslope coefficients are different.RESULT 2: Railway performance under Government Control 1994-20032. Period 1995-2003 Government Control 9 years before concessionEstimation Command:=====================LS (REV(-1)) C (PSNGERS(-1)) (CARGO(-1)) (CAPITAL(-1)) (EMPLYEE(-1),2) (GDP(-1))
42Estimation Equation:=====================REV(-1) = C(1) + C(2)*PSNGERS(-1) + C(3)*CARGO(-1) + C(4)*CAPITAL(-1) +C(5)*EMPLYEE(-1) + C(6)*GDP(-1)Substituted Coefficients:=====================REV(-1) = -111914.4105 + 0.9541018346*PSNGERS(-1) + 0.35740554*CARGO(-1) -0.2150118214*CAPITAL(-1) - 8.758467961*EMPLYEE(-1) + 0.2255638798*GDP(-1)Dependent Variable: REV(-1)Method: Least SquaresDate: 09/22/12 Time: 16:15Sample(adjusted): 1995:2 2003:4Included observations: 35 after adjusting endpointsVariable Coefficient Std. Error t-Statistic Prob.C -111914.4 7551.069 -14.82100 0.0000PSNGERS(-1) 0.954102 0.729894 1.307179 0.2014CARGO(-1) 0.357406 0.091071 3.924490 0.0005CAPITAL(-1) -0.215012 0.031988 -6.721627 0.0000EMPLYEE(-1) -8.758468 0.792265 -11.05498 0.0000GDP(-1) 0.225564 0.014813 15.22740 0.0000R-squared 0.994001 Mean dependent var 20888.94Adjusted R-squared 0.992966 S.D. dependent var 11839.39S.E. of regression 992.9280 Akaike info criterion 16.79400Sum squared resid 28591275 Schwarz criterion 17.06063Log likelihood -287.8950 F-statistic 960.9891Durbin-Watson stat 1.168160 Prob(F-statistic) 0.000000Interpretation:- The explanatory variables in the model explain 99% of the variation in the railwayrevenue.- All the variables significantly influence revenue at below 1 percent confidence levelexcept for passenger revenues- There is a significant negative relationship between Railway revenues and number ofemployees and Capital invested.RESULT 3: Railway performance under Concession (RSZ) 2004-20113. Period 2004-2010 Under Concession (Private Sector) for 7 yearsEstimation Command:=====================LS (REV(-1)) C (PSNGERS(-1)) (CARGO(-1)) (CAPITAL(-1)) (EMPLYEE(-1),2) (GDP(-1))Estimation Equation:=====================REV(-1) = C(1) + C(2)*PSNGERS(-1) + C(3)*CARGO(-1) + C(4)*CAPITAL(-1) +C(5)*EMPLYEE(-1) + C(6)*GDP(-1)Substituted Coefficients:=====================REV(-1) = -5741.272333 + 2.582371932*PSNGERS(-1) + 0.6971907831*CARGO(-1) +0.2255404181*CAPITAL(-1) + 22.39085802*EMPLYEE(-1) + 0.005545400925*GDP(-1)
43Interpretation:- The explanatory variables explain 98% of the variation in the railway revenues- Passenger service revenues, Cargo revenues, capital invested and number ofemployees significantly influence railway revenues at 5% confidence level.- GDP influences the railway revenues at 10% confidence level of considerationA look at the estimated regressions suggests that the relationship between Revenue andthe explanatory variables is not the same in the two sub-periods. The slopes in thepreceding regressions seem different. In the period 1950–2003 the Revenue generated issignificantly influenced by amount of capital investment, number of employees and GDP,with Capital invested having a negative influence, whereas in the period 2004–2010Revenues generated were significantly influenced by returns from passenger services,cargo freight, capital invested, employee numbers and GDP. From the regressionparameters generated we can see that the GDP had more influence in the Governmentoperations period (i.e.0.225564) than during the concession period (0.005545). Capitalinvested during the concession period had a positive significant influence on Revenues.Returns from passenger services had significant influence on Revenue in the Concessionperiod as seen from the P-values at 10% confidence level. Whether this change was dueto the economic policies or the change from state controlled to private control of the mainrailway system under a concession; is hard to say. This further suggests that the pooledregression (1)—that is, the one that pools all the 63 adjusted observations and runs acommon regression, disregarding possible differences in the two sub-periods may not beappropriate.Of course, the preceding statements need to be supported by appropriate statistical test(s).Now the possible differences, that is, structural changes, may be caused by differences inthe intercept or the slope coefficient or both.Dependent Variable: REV(-1)Method: Least SquaresDate: 09/14/12 Time: 06:07Sample(adjusted): 2004:2 2010:4Included observations: 27 after adjusting endpointsVariable Coefficient Std. Error t-Statistic Prob.C -5741.272 3762.516 -1.525913 0.1420PSNGERS(-1) 2.582372 0.505512 5.108431 0.0000CARGO(-1) 0.697191 0.064984 10.72861 0.0000CAPITAL(-1) 0.225540 0.045677 4.937777 0.0001EMPLYEE(-1) 22.39086 8.481345 2.640013 0.0153GDP(-1) 0.005545 0.003275 1.693140 0.1052R-squared 0.988229 Mean dependent var 37779.67Adjusted R-squared 0.985426 S.D. dependent var 6209.928S.E. of regression 749.6794 Akaike info criterion 16.27030Sum squared resid 11802404 Schwarz criterion 16.55826Log likelihood -213.6490 F-statistic 352.6003Durbin-Watson stat 0.411369 Prob(F-statistic) 0.000000
44We thus apply a formal test, the Chow test to achieve this. This test assumes that:1. That is, the error terms in the sub-period regressions are normally distributed with thesame (homoscedastic) variance σ2.2. The two error terms for regression 2 and regression 3 are independently distributed.The mechanics of the Chow test are as follows:1. Estimate regression (1), which is appropriate if there is no parameter instability, andobtain RSS3 with df = (n2 + n3 – k), where k is the number of parameters estimated,6 in the present case. For our regression RSS1 =350,000,000 with df = 56. We callRSS1 the restricted residual sum of squares (RSSR) because it is obtained byimposing the restrictions that the sub-period regressions are not different.2. Estimate (2) and obtain its residual sum of squares, RSS2, with df = (35 − 6). In ourregression, RSS2 = 28,591,275 and df = 29.3. Estimate (3) and obtain its residual sum of squares, RSS3, with df = (27 − 6). In ourregression RSS3= 11,802,404 with df = 21.4. Since the two sets of samples are deemed independent, we can add RSS2 and RSS3 toobtain what may be called the unrestricted residual sum of squares (RSSUR), that is,obtain:RSSUR = RSS2 + RSS3 with df = (n2 + n3 − 2k)In the present case, RSSUR = (28,591,275+ 11,802,404) = 40,393,679, with df = 405. Now the idea behind the Chow test is that if in fact there is no structural change [i.e.,regressions (2) and (3) are essentially the same], then the RSSR and RSSUR should notbe statistically different. Therefore, if we form the following ratio:F = (RSSR − RSSUR)/k(RSSUR)/(n2 + n3 − 2k) ~F[k,(n2+n3−2k)]Therefore we are testing the hypothesis:- Null Hypothesis, Ho: Regression 2= Regression 3 (i.e. No structural change or break)Alternative Hypothesis, H1: Regression 2 is not equal to Regression 3. (there is astructural break)- Test statistic: We use the F-statistic as shown above, with 6 parameters and 40degrees of freedom. Critical values = 1.37, 2.0, 2.45 and 3.51We undertake our test considering 25%, 10%, 5% and 1% significant levelrespectively.Therefore, we do not reject the null hypothesis of parameter stability (i.e., no structuralchange) if the computed F value in an application does not exceed the critical F valueobtained from the F table at the chosen level of significance (or the p value). In this casewe may be justified in using the pooled (restricted?) regression (1). Contrarily, if thecomputed F value exceeds the critical F value, we reject the hypothesis of parameterstability and conclude that the regressions (2) and (3) are different, in which case thepooled regression (1) is of doubtful or uncertain value, to say the least.
45Computing our F-statistic from the F ratio given above, we getF = (350000000 − 40393679)/6(40393679)/(40) ~F(6,40)= 51.09815Conclusion and Decision: The computed F-statistic (51.09815) is higher than the criticalvalues at all considered significant levels: 25%, 10%, 5% and 1%.We thus reject the Null Hypothesis and conclude that statistically, there is a structuralbreak. That is to say, the economic policies and the concessioning of the main railwayline to a private operator, caused significant changes on the performance of the railwaysin terms of revenues that were being generated as influenced by differences in: returnsfrom passenger train services; cargo freight; capital invested; number of employees; andthe economic performance of the country as represented by Gross Domestic Product,between the two respective periods.4.3 Other structured responses for RSZ and JICAThese responses were in terms of written submissions from the respondents(Including Railway Systems of Zambia and the Embassy of Japan)1. Railway Systems of Zambia, in their submission argue that:“ ..before major investments are injected to the industry, there is a need to addresssome concerns and develop a proper mechanism to maximize utilization of theexisting infrastructure. Once this is done, a significant improvement will be seenwithout the need for any Government expense; the Dar es Salaam corridor and theNorth-South Corridor will be able to increase volumes drastically with almostimmediate effect.” (Benjamin Even, RSZ, 2012)2. The Japanese Embassy submitted that:In an excerpt from a recent speech read on behalf of the Ambassador, it was said that, “In the past 20 years, Japan has supported 126 km of roads in Lusaka alone. And another15km will be added with Ring Road” (Embassy of Japan, 27 July 2012)
475.0 Discussion5.1 Research ChallengesThe main challenge faced with this research was the lack of time for effective one to oneinterview administration of the questionnaires. I was in most instances inclined to e-mailing and/or submitting the questionnaires to the offices of the respective respondentsfor them to attend to them at their convenience and revert back once completedpreferably on or before the 24thof August 2012. Other hurdles were in terms of nonresponses due to confidentiality or other undisclosed reasons; financial constraints for meto travel to the Copperbelt Province to meet with the main railway customers- the mines;and the time demand from the EPM program taught courses which were running inparallel to this research exercise.As regards, the financial data collected from ZRL headquarters, the only data availablewas from 1994 to 2011. Other data prior to 1994 would have been very useful and couldhave avoided me from transforming the annual data into quarterly data using the Lismanand Sandee Matrix.In the initial work plan (attached the detailed work plan Annex 7), there was a scheduledvalidation workshop for the draft report. This was not undertaken due to time constraintrealizing that responses to the questionnaire were submitted later than the required dates.This in turn affected the time schedule for data entry and analysis.5.2 Discussion of resultsDespite the above challenges, the research yielded great insight into the key stakeholder’sperceptions of the railway sector in terms of its Policy framework, implementationstructures and development prospects.Initially it is interesting to note that the Transport Infrastructure sector is dominated mymale employees. In fact, for all our respondents were male with ages ranging from 28- 64years. Apart from the Ministry responsible for transport and the railway transportoperator, other stakeholders do not have specific training in railway transport butessentially have an opportunity to consult their technical railway experts though notstationed in Zambia (especially the cooperating partners)All the purposively sampled respondents confirmed their support of the transport sectorbut not all of them currently support the railway sector in particular. Judging from theresearch results, there is lack of confidence in the sufficiency and implementationstructure of the railway policy. In certain instances, the policy is not even recognized as arepresentative policy to guide such a strategic transport sector which mainly serves theprimary economic contributor of the country-mines. There is no deliberate financingframework and no directed stakeholder responsibility for the railway policy. Thissuggests an ambiguity in the conduct of business in the sector. As such, even theoperations of the private sector are deemed to be inefficient. Further, the railway policy isspecifically identified as not having an institutional implementation framework. This
48challenge is also attributed to the non appraisal nor revision of the relevant railwaypolicies and statutes.Appraisal guidelines are important is not a pre-requisite for any infrastructuredevelopment. Railway infrastructure development is not an exception to this standard.Cost Benefit analysis is the usual government tool employed for this purpose. Drawingfrom the research results, there is varied understanding of the considerations for costbenefit analysis. In the extreme cases, I tend appreciate some respondents who simplyadmitted to not having an idea as to what the CBA considerations are for railway sectordevelopment in Zambia. Most respondents opted to speculate on their perceived idealconsiderations which did not necessary tally though could be used as elements of acomprehensive railway CBA tool for railway infrastructure development. The absence ofstandard railway appraisal guidelines probably induced the perception that most if not allrailway developments are politically motivated.However, from the responses given, common is the attributed value to freight carriageand regional trade facilitation. Over 70% of the respondents realize railway efficiency inthese two areas.In addition, it is interesting to note that as prioritized in the JICA study (2010), therespondents consistently prioritized, in most instances, the North South Corridor, Dar esSalaam Corridor and the Lobito Corridor. But, it was alarming to note that somestakeholders should very little knowledge on the development corridor initiatives, nonewas actually able to acknowledge and appreciate the JICA study of 2010.Ownership of any property has significance on its maintenance. It is very important toclarify on the responsibilities and obligations of stakeholders and/or shareholders to anyownership agreement. I realize that there has been uncertainty with regard to who mustmaintain the existing railway network, under concession, in Zambia. Realizing themagnitude of the required resources for this task, all the parties have resorted to takingadvantage of the ownership ambiguity and given limited attention to maintenance andrehabilitation of the railway infrastructure. This is evidenced by the current poor state ofthe railways.Engagement of the private sector into the operations of the railways in Zambia was notonly meant to bring efficiency but competitiveness. However, there are lacunae in theguiding policy to achieve this. In as much as the private sector was engaged policy wasnot reviewed to guide their operations, this resulted in enabling the private operator tomonopolize the industry whilst optimizing on the redundancies of the orthodox archaicpolicies and statutes guiding the sector.As noted in the study by Whitworth and Raballand (2011) our researcher confirms thatstakeholders in the transport sector blame the large annual road sector maintenance costson the diverted transportation of bulk and heavy cargo from the railways to the roads. Thegovernment has even permitted transportation of relatively abnormal loads on roads
49instead of them being carried via railways. This attests to the non regulation of what typeof goods should be transported by railways.We note from the responses with respect to railway sector support and financing that theplausible financiers have a challenge of putting their money where there is no bankabledocument. However, their willingness to finance the sector is undoubted as they havefinanced railway sector reviews, RoadSIP, and recently an independent review of theperformance of the RSZ/ZRL Concession. What they require is an affirmed railwaysector development agenda, with clear targets and commitment from Government. Thisas evidenced by the lack of confidence and uncertainty in the current railway policy and,lack of an policy institutional implementation frame. Worse still, there is no evidence of arailway sector financing framework for investors to buy in.From our regression results we concluded that there is a structural break in theperformance of the railway under concession and before concession, due to the economicpolicies and the concessioning of the main railway line to a private operator.Comparing the performance pre and post concession periods capital investment underconcession had significantly improved performance of the railways even impactingpassenger service delivery as seen in the significance of the passenger revenues underconcession period unlike prior to the concession. However, the value of railways inZambia is dependent on the freight cargo and this is the major sector revenue contributor.Overall economic performance as measure my GDP was more influential on the railwaysector before the concession, we may loosely be inclined to state this was as a result ofgovernment ensuring that most mining products and other bulk cargo and dangeroussubstances (acids and fuel) were transported by railway.A regional perspective of the impetus of Zambian railway network exacerbates the abovearguments. Zambia has more to gain if it consolidates its infrastructure plans attune to theCOMESA and SADC infrastructure development plans.6.0 ConclusionBefore my completion of this report, it was interesting to realize that the GRZ has terminated theconcession agreement with RSZ and restored ZRL as the interim operator and manager of themain Zambia railway line.My arguments and carefully selected literature therefore now serve as the vital instrument toprecise the strategic planning for the revitalization of not only former RSZ railway but the entirerailway sector in the country.Ethically, it is not enough to argue that it depends on the context (i.e. what is wrong in onecontext may be right in the other). Account should be taken of the larger/more unifying moralprinciples (what is the most professional way to manage the railway sector, a proactive railwaypolicy must be sector sensitive and dynamic to promote efficient and competitive operations)
50Railway sector development has a strong case but it needs Government realization of its rolesand responsibilities and most importantly stakeholder ‘invitation to treat’ on an informed railwaysector strategic plan and bankable document.7.0 RecommendationsAs per research proposal prospects my research recommends the following road map for therailway infrastructure and sector performance development:NO. RECOMMENDATION RATIONALEPART A: Railway Sector focus1 Establish clear role of Government Mandate of government towards railways2. Enhance stakeholder commitment andparticipation in the sectorAdvocate for deliberate development of thesector with informed bankable documents &deliverablesPART B: Strategic Level1. Revise railway policy and respective acts To be relevant and guide railway sectordevelopment2. Identification of railway stakeholder profilein revised policyStakeholders should know theirresponsibilities and what is expected fromthem3. Re-structure the Railway SectorInstitutional structures attune to revisedpolicy and actsTo have an affirmed policy implementationstrategy with accountable implementers/institutions4. Railway Sector Human resource audit atpolicy, strategic & implementation levelsTo identify the required human resource toimplement the revised railway policy5. Develop pre-requisite training curriculumfor specific staffA railway authority to ensure that the railwaysector is managed by competent staff (ZRL &NCC to ponder on this)PART C: Implementation Level1. Consider performance contracts for ZRL,TAZARA and other operators as may beapplicableTo encourage competition under a governmentenabled environment.2. Develop appraisal guidelines for railwayinfrastructure development (CBA, NPV,SMB, e.t.c.)Structure cost benefit analysis considerations forZambian railways relative to regional andinternational respective benchmarks so as toinform plausible financiers3. Establish a technical steering committeeof key stakeholders (including donors)To advise the sector on interests of allstakeholders and their expectations with regardto policy relevance, institutional structures andimplementation, service provision4. Railway Sector Communication policydevelopmentTo comprehensively sensitize all stakeholdersand the general public on the railway sector:Structures, responsibilities, operations &services
51There is need for a cost benefit analysis to be objectively undertaken on all proposes railwaysector projects so as to inform government and the plausible sector financiers. The financingframework for the railway sector needs to be presented by government and should based on aclear road map and desired deliverable as proposed by the one given above. The willingness ofcooperating partners to finance the railway sector will then actualized.Government has taken the bold step of terminating the main railway concession agreement, thismove needs strategic and objective ensuing measures, as proposed above to rekindle railwayperformance in Zambia.Time is of the essence, an integrated transport master plan needs to be developed. The AfricanDevelopment Bank have explicitly declared their full support for this initiative and the othercooperating partners have not negated it, the onus is on Government present its case in aconsistent and logical manner. Accessibility and demand infrastructure, transport as may bedefined, serves to facilitate development of the economic and social sectors of this country. Thetime to realize this is not tomorrow.