Online Reporter
The debate over how to revive the National Railways of Zimbabwe (NRZ) is increasingly shifting from the size of the funding gap to a more fundamental question: where should scarce capital be deployed first?
NRZ requires about $400 million in the short to medium term to rehabilitate ageing track, obsolete signalling systems, inadequate rolling stock and outdated information technology. Yet freight volumes have fallen from 12,4 million tonnes in 1998 to about 2,03 million tonnes last year, leaving the railway with a weak revenue base from which to finance a network-wide overhaul.
That is why, as we reported yesterday, the emerging corridor-based financing model deserves serious attention. Instead of attempting to rehabilitate the entire network at once, NRZ should begin with commercially viable routes backed by identifiable cargo, committed customers and predictable revenues.
Transport infrastructure expert Mr Fradreck Podzo captured the logic clearly: “Revitalisation should start with bankable corridors and credible institutions, not network-wide borrowing without clear traffic and repayment assumptions.”
The numbers suggest there is sufficient freight to anchor such a strategy. Infrastructure and Development Bank of Zimbabwe representative Engineer Farai Madondo estimates local cargo at 8,2 million tonnes, imports at between 6,5 million and 6,6 million tonnes and export freight at about 5,6 million tonnes.
“We are looking at 20 million tonnes of cargo to be moved,” Eng Madondo said, describing that potential traffic as a possible source of steady income and revenues for NRZ.
The challenge is converting that potential into contracted traffic.
Long-term off-take agreements with mining houses, manufacturers, fuel companies and other bulk-freight users could provide the predictable revenue streams needed to make individual corridors bankable. Such agreements would also give lenders and private investors greater confidence that money committed to track, signalling and rolling stock can generate returns.
Mining corridors offer an obvious starting point. Minerals are moved in large volumes and are well suited to rail, while dependable mine output can underpin longer-term freight contracts.
Mr Podzo said the mining sector had particularly strong transport demand and therefore justified prioritising investment in relevant corridors.
A corridor approach should not, however, be confused with abandoning the wider railway network. NRZ itself says cautions affecting about 10% of the system are contributing to lengthy transit times, while signalling, workshops, training facilities and rolling stock also require rehabilitation.
The issue is sequencing. Rebuilding everything simultaneously risks spreading scarce capital too thinly and producing improvements that are difficult to monetise. Starting with routes where cargo already exists can generate cash flow, demonstrate operational credibility and create a stronger foundation for subsequent network-wide investment.
That principle should also guide the recapitalisation initiatives already under way. Mutapa Investment Fund is negotiating a $115 million Afreximbank facility to acquire 10 locomotives and 315 wagons and rehabilitate critical infrastructure, while a separate $6-million package is expected to support refurbishment of 520 wagons and maintenance equipment.
For NRZ, capital alone will not solve the problem. Service reliability, cargo security, turnaround times and institutional credibility will determine whether freight customers return from road to rail.
The railway therefore needs to rebuild itself from the foundation of commercially viable corridors. If it can first prove that selected routes can move cargo reliably and generate predictable revenue, the case for financing the rest of the network becomes significantly stronger.
