Johannesburg – African countries have been urged to sign the Luxembourg Protocol by Soteri Gatera, the Chief of Industrialisation and Infrastructure at the Economic Commission for Africa (ECA).
Gatera made the call during his presentation titled, ‘The Luxembourg Rail Protocol: Railway Rolling Stock Financing – A new solution for Africa’ at the Programme for Industrial Development in Africa (PIDA) Week 2018 in Victoria Falls in Zimbabwe, which began on Monday and concludes on Wednesday.
The Luxembourg Protocol, which was adopted in 2007 but is still not in force, creates a new global legal regime for securing creditors, facilitating more and cheaper asset-based financing of railway equipment without state support, African Business Communities reported on Tuesday.
Entry into force needs four ratifications and an international registry ready to begin operations. The European Union, Gabon, Luxembourg and Sweden are the only ones who have ratified the protocol so far.
Italy, Germany, France, Mozambique, Switzerland and UK have signed but are yet to ratify. Finland and Malta have signalled that they would be signing shortly.
“Lack of integrated African rail networks is holding back African growth and intra-continental trade,” said Gatera, adding moving passengers and freight onto high-speed rail networks was vital for environmental, social and economic reasons.
This will all require billions of dollars in investment infrastructure and rolling stock. However, the resources of African governments are limited.
“There is an urgent need for more rolling stock. It is clear that states cannot carry this burden alone and private entrepreneurs and private capital is needed to ensure the dream comes true,” said Gatera.
According to Gatera ratifying the protocol would remove significant financial burden from governments and liberate public and private operators to obtain private sector financing for rolling stock when needed thereby placing no budgetary constraints on states.
The protocol is expected to be in force in contracting states by late 2019.