The meaning of SI No.7 of 2018 to Regional Railway and Logistics Industry

Zambia Railways Limited - ZRL train shunts on the Livingstone Mulobezi route. Zambia's SI.No.7 of 2018 will ensure 30% of bulk cargo moves onto rail from road to increase lifespan on roads and this move is expected to improve railway business generally.

Lubinda Mufalo Sakanga

HARARE – On 26th January 2018, the Zambian Government issued S.I. No.7 which provides for freight quota to railways. Specifically, a list of Zambia’s primary bulk exports was prescribed as goods to be captured under this quota system. This being: copper and cobalt concentrates, sugar​, local and imported coal, cement, sulphur, local and imported fuels

What are the implications and impact on regional railway and logistics industry? Below are 10 pointers highlighting benefits of the SI No.7 of 2018:

Indirect capitalization of railways and the logistic industry.

Zambia Railways Limited – ZRL and its sister regional railway companies operating in Southern Africa Development Community – SADC on the Southern African Railways Association – SARA – Corridors (Dar – es – Salaam, Beira, Nacala and the North South Corridor) all have the opportunity to mobilize resources for capitalization of their operations based on the project cash flows from guaranteed freight traffic resultant from the issued SI. What is required is getting the numbers right. What quantities of the target commodities are to be produced in the next 5 to 10 years? What operational resources are required per SARA corridor to move a minimum of 30% of the freight to be produced for export and also for import? What is the best financing option for operational capital and for equipment and infrastructure investment? Who are the best suppliers for the products and what terms terms can we offer them so that they do not only supplier but become stakeholders for a considerable time period? The answers to these questions will determine the capitalization solutions required for this Southern African dream to become reality.

Treating each customer and commodity as a SARA corridor business project

The Southern African railway network has immense potential to deliver. They have the competencies and the equipment to do the job. One could argue from the end of the railway customers that they have given railways ‘just enough of what they manage to chew’. With the issuance of the SI. No.7 of 2018, there is need to be firm commitment on timely delivery of the products to the coastal ports. In this regard, ZRL and its sister railway companies on all SARA corridors need to apt their integrated operations and present concise verifiable logistics plans on how they will transport each of the commodities from source to port and vice versa. The Railways should confidently invite the commodity suppliers to verify the logistics strategies in detail with risk management plans on hand. Safety and security of all customer freight should be priority and timely delivery a must.

Enhanced domestic revenue from exports 

Getting the number correct, is the primary exercise for all government departments and related authorities in this exercise. Once this is realized, the correct production numbers, the tax system being applied on these industries shall be more enhanced. Both the railways and the commodity producers can be captured more efficiently.

Opportunities for large and small – railway and logistics industry suppliers

There has not been such an opportunity in a long time. There are a number of registered suppliers who primarily serve the railways and logistics industry. This is the correct time to structure business agreements with the railway and logistics companies over and above traditional supply contracts. Be a stakeholder for the long haul and not just a one-off supplier. The opportunity is beyond your national borders, be a corridor supplier. This is the time to engage strategic partners of international repute with quality products for the railway and logistics industry.

Learning and development in railway and logistics

Efficient Institutional systems and procedures coupled with competent human resource teams will ensure delivery of this SI. No. 7 of 2018 and more importantly, they will guarantee sustained railway revival. The Zambia Chartered Institute of Logistics and Transport Act needs to be applied in full relative to the railway industry. There should be deliberate steps taken to provide continuous learning, development and also enhancement of management and operational systems in railway. TAZARA and ZRL have the colleges and workshops with the requisite learning aids though will require additional capacitation. SARA members in the region are available to complement each other on this cause. Universities and colleges can also take advantage of this opportunity and support the railways and logistics industry. SARA/SADC technical standards are available for referencing and so is the SARA Secretariat.

Reviving industrial branch lines

There has been no better time than now to revive industrial branch lines. These are the tributaries to the rail main lines. The Zambezi river is tenacious only because of the consistency and strength of its tributaries. There is need to re-claim, clean up and rehabilitate the industrial rail branch lines and let them feed the main river -the rail line. The SI. No.7 of 2018 was a bold step by the Zambian government. Successive, bold measures and actions need to be taken to ensure the industrial branch lines are re-claimed and rehabilitated. This is an action which the industries can actively participate in and partner with the primary stakeholders to put things in the right accord.

Non- railway revenue business opportunities

Most, if not all SADC railways have non – railway core business assets which can be utilized or exploited to broaden/diversify the revenue base for the railway industry. These include land, buildings and others facilities. Realizing that the railways will better/enhance their book balances as a result of this SI. No. 7 of 2018, it is therefore an opportune time to partner with them in investments off of the rail core business such as farming, real estate development and other initiatives as may be possibly conceived. With their “healthy status”, they will be credible to support business ventures with the private sector with economic spill overs in all areas along the line of rail. Private sector innovation is required here, and the railways need to have “investment experts” to consider all such proposals to guarantee safety of investments.

The environment and pollution

Railway business has always been argued to be a greener mode of transport than the other modes. With increased traffic and operations, it is expected that the railways will generate more waste. It is therefore prudent that the railway industry applies appropriate waste disposal measures of discarded fuels and oils plus all other litter that could be exuded into the environment or ecosystem. There must be deliberate action to ensure this.

Deliberate labor based methods application for employment creation

Railway companies have in no doubt been given an olive branch by the Zambian government. They too can extend the same to a significant number of unemployed citizens by employing, as much as possible, labour based methods of maintenance, rehabilitation and development of their industry. This will provide job opportunities for communities along the line of rail.

Government inspector of railways

As the compliance and monitory office constitutionally representing Zambian people’s safety and security in terms of passenger and freight, there should be no tolerance to non-compliance. Working conditions of all railway men and women need to be sound and compliant to the relevant legislation’s. Rail crossings should be and have, what they ought to have. Railways should not operate if they do not meet the requisite standards. Civil Society, the Zambia Institute of Logistics and Transport need to engage the railways compliance and monitoring office- Government Inspector of Railways and complement and support efforts of this office in ensuring the railway operating permits are deservingly issued.

Lubinda Mufalo Sakanga is Director Technical Operations at the Southern Africa Railway Association based in Harare, Zimbabwe. He has vast Railway experience in the Southern African space having served in a wide spectrum of Senior capacities as a road, rail, water and air transport. His experience spans a period of 15 years in the industry. Lubinda has spent the bulk of his career managing Africa Development Bank, World Bank funded projects in addition to working under the Transport and Communications, Finance and Works and Supply Ministries. He holds a B. Arts Degree with Economics, Master of Arts in Economic Policy Management with University of Zambia in addition to a Master of Science in Project Management with Salford University – Manchester.

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1 COMMENT

  1. Great and sound comments indeed. Additionally the railway sector will attract capable private investors thereby making it more viable

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