A CASE FOR EFFICIENT LEGAL AND INSTITUTIONAL FRAMEWORKS FOR

A CASE FOR EFFICIENT LEGAL AND INSTITUTIONAL FRAMEWORKS FOR
A CASE FOR EFFICIENT LEGAL AND INSTITUTIONAL FRAMEWORKS FOR
CROSS-BORDER RAILWAY DEVELOPMENT IN THE EAST AFRICAN
COMMUNITY
BY
GEORGE TEBAGANA
SUBMITTED IN FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF
THE
DEGREE OF
MASTERS OF LAWS
IN THE SUBJECT
INTERNATIONAL TRADE AND INVESTMENT LAW IN AFRICA
AT THE
UNIVERSITY OF PRETORIA
SUPERVISOR: DR. FEMI SOYEJU
MAY 2014
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Title of dissertation
A CASE FOR EFFICIENT LEGAL AND INSTITUTIONAL FRAMEWORKS
FOR CROSS-BORDER RAILWAY DEVELOPMENT IN THE EAST AFRICAN
COMMUNITY
BY
GEORGE TEBAGANA
14201144
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Declaration
I declare that this Mini-Dissertation which is hereby submitted for the award of Master of
Laws (LL.M) in International Trade and Investment Law in Africa at International
Development Law Unit, Centre for Human Rights, Faculty of Law, University of Pretoria, is
my original work and it has not been previously submitted for the award of a degree at this or
any other tertiary institution.
……………………………………………
George Tebagana (14201144)
………………………………………….
Date
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Dedication
I dedicate this work to my parents, Stephen Lumbuye and Eve Tusubira who have believed
in my strength and encouraged me, with enduring patience through all stages of my life thus
far. To you, I shall forever be grateful.
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Acknowledgements
This minis-dissertation would not have been possible without the enduring support, patience
and guidance of my supervisor Dr Femi Soyeju. I would like to express my sincere and
deepest appreciation for his inspiration to me to take pride in my research.
I would especially thank professors Patricia Lenaghan and Rieke Wandrag for your guidance
during the defense of my research. You made my defense an enjoyable experience, and your
brilliant comments and suggestions, gave me greater vision towards my final goal.
I also thank the tutors, administrators and librarians in the Law School. All of you were always
there to support whenever I needed your assistance.
I am deeply indebted to my colleagues Noreen, M., Kate, M., Olayiwola, A., Sacre, G., Caleb,
B., Sylvester, M., Kuda, T., Joshua, W., Zwelethu, S., Tigist, D., Ikeagwich, A., Wonderr, F.,
Winifred, S., Magalie, M., Emma, C., Abena, D., Cynthia, C., Jacob, S., and Mutiat, A. Your
academic engagement and social support made my school life easier. Thank you.
Finally, I appreciate the support of the course funders; Carnegie Corporation of New York,
ACP-EU Trade, The Rockefeller Foundation, World Bank and AusAID.
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Abstract
The East African Community (EAC) suffers from a critical lack of cross-border railway
networks that, if remedied, could improve regional connectivity and boost intraregional trade.
The region would also become more investor friendly. Cross-border railway connectivity is
particularly important owing to the challenging geographical location and small,
uncompetitive and inefficient Partner States. The EAC Partner States have embarked on an
ambitious programme to jointly revamp the region’s railways to address the transport deficits.
Joint implementation of transport infrastructure projects offers economies of scale. However,
joint efforts are constrained by inefficiencies of the region’s legal and institutional
frameworks. The region is characterised by inefficient legal and institutional frameworks. This
research argues that it is critical to first address the legal and institutional bottlenecks which
will in turn constitute the backbone to support EAC’s efforts towards development and
sustainable management of cross-border railways in the EAC. The research reviews
effectiveness of the existing legal and institutional frameworks, identifies gaps and, using
Southern African Development Community (SADC) as a benchmark proposes solutions for
improvement.
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List of Acronyms
AfDB
African Development Bank
AU
African Union
COMESA
Common Market for East and Southern African
CTTCA
Corridor Transit Transportation Coordination Authority
DRC
Democratic Republic of the Congo
EAC
East African Community
EARA
East African Railways Authority
EACJ
East African Court of Justice
EARHC
East African Railways and Harbours Corporation
EU
European Union
FDI
Foreign Direct Investment
GDP
Gross Domestic Product
KRC
Kenya Railways Corporation
NCTTCA
Northern Corridor Transit and Transport Coordination Authority
NEPAD
New Partnership for Africa’s Development
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PIDA
Programme for Infrastructure Development in Africa
PPP
Public Private Partnership
PTCM
Protocol on Transport, Communications and Meteorology
RECS
Regional Economic Communities
RDF
Regional Development Fund
RISDP
Regional Indicative Strategic Development Plan 2003
RIDMP
Regional Infrastructure Development Master Plan
RVR
Rift Valley Railways
SADC
Southern African Development Community
SATCC
Southern Africa Transport and Communications Commission.
SATCC-TU
Southern Africa Transport and Communications Commission Technical Unit
SDIs
Spatial Development Initiatives
UNCTAD
United Nations Conference on Trade and Development
USAID
United States Agency for International Development
URC
Uganda Railways Corporation
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Case reference
East African Law Society and others –vs- Attorney General of the Republic of Kenya and others,
In the East African Court of Justice Reference No. 3 of 2007. Judgment of 8 September 2008.
List of Treaties and Instruments
Constitution of the Republic of Kenya 2010
Constitution of the Republic of Uganda 1995
East African Community Development Strategies (2001-2006. 2006-20011, 2011-2016)
East African Community Model Investment Code 2006
East African Community Railways Master Plan Study 2009
Kenya Land Policy 2007.
Kenya Railways Corporation Act (Cap 397) (Laws of Kenya)
Kenya Railways Corporation Act Cap 397 (as amended)
Kenya Railways Corporation (Vesting of Lands) Orders 1986
Land (Amendment) Act, 2010 (Laws of Uganda)
Northern Corridor Transit and Transport Agreement 2007
Procurement Law of Burundi No. 1/01 of 4 September 2008
Procurement law of Rwanda No 63/2007 of 30/12/2007
Protocol for the Establishment of the East African Common Market 2010
Protocol for the Establishment of the East African Customs Union 2005
Protocol for the Establishment of the East African Monetary Union 2013
Public Enterprises Reform and Divestiture Act Cap 98 (Laws of Uganda)
Public Private Partnership Act, 2010 (Laws of Tanzania)
Public Private Partnership Act of Kenya, 2013 (Laws of Kenya).
Public Procurement and Disposal Act (Revised Edition) 2010 (Laws of Kenya)
Public Procurement and Disposal of Public Assets (Amendment) Act, Act No. 11 of 2011
Railway Concessions Interface Agreement between Kenya and Uganda 2006
Regional Indicative Strategic Development Plan (RISDP) 2003
SADC Protocol on Transport, Communications and Meteorology 1996
SADC Regional Indicative Strategic Development Plan 2009
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SADC Regional Infrastructure Master Plan (2012 -2027)
SADC Protocol on Transport, Communications and Meteorology 1996
SADC Regional Infrastructure Development Master Plan 2012 -2027
Standard Gauge Railway Agreement between Uganda and Kenya 2012
Treaty for the Establishment of the East African Community 1999
Treaty of the Southern African Development Community, 1992.
Tanzania Railways Corporation Act, 1977
Uganda Land Regulations, 2004
Uganda Railways Corporation Act (Cap 331), of 1992 (Laws of Uganda)
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Table of Contents
CHAPTER ONE
GENERAL BACKGROUND AND INTRODUCTION TO THE STUDY
1.1 History of Integration in the East African Community ………………….………..…..….1
1.2 Geographical disadvantage of Burundi, Rwanda and Uganda……………..………..……4
1.3 Research problem………………………………………………………………..………...6
1.4 Research questions……………………………………………………………….………..7
1.5 Thesis statement……………………………………………………………………….…..8
1.6 Significance of the study…………………………………………………………………..8
1.7 Literature review…………………………………………………………………………..9
1.8 Research methodology…………………………………………………………………...10
1.9 Limitation of the research…………...……………………………………………...........11
1.10 Overview of chapters…………………………………………………………………...12
CHAPTER TWO
ASESSMENT OF THE EFFICACY OF LEGAL AND INSTITUTIONAL
FRAMEWORKS GOVERNING RAILWAY DEVELOPMENT IN THE EAC
2.1 Introduction ………………………………………………..…………………………….13
2.2 Initiatives for regional railway development in the EAC………….…………………….13
2.3 Institutional and legal constraints to EAC railway initiatives ………..……….….……..15
2.4 Concluding remarks…………………………………………………….………………..36
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CHAPTER THREE
BENCHMARKING SADC’S LEGAL AND INSTITUTIONAL FRAMEWORKS
GOVERNING RAILWAY DEVELOPMENT
3.1 Introduction ……………………………………………………………...…..…………..37
3.2 Rationale for benchmarking SADC…………………………………..……..……………37
3.3 SADC’s Legal framework for railway development………….……..……………………45
3.4 Lessons from SADC region………………………………………..…………....………..60
3.5 Challenges that the EAC may face in implementing the best practices from SADC.…....63
3.6 Concluding remarks…………………………………………..……….………………….65
CHAPTER FOUR
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
4.1 Introduction………………………………………………………..……………………..67
4.2 Summary of findings…………………………………………….………………….……67
4.3 Conclusions of the research………………………...…………….………………….…...72
4.4 Recommendations………………………………………………………………………...73
4.5 Concluding remarks……………………………………………………………………….76
BIBLIOGRAPHY …...………………………………………………………………………77
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CHAPTER ONE
GENERAL BACKGROUND AND INTRODUCTION TO THE RESEARCH
1.1 History of Integration in the East African Community
Regional integration of the East African Community - EAC (comprising Uganda, Kenya,
Tanzania, Rwanda and Burundi herein 'Partner States') started with the construction of the
Kenya-Uganda Railway between 1897and 1901.1 This resulted in the establishment of the first
EAC, which had been regarded as a model for regional economic integration on the continent.2
However, it collapsed in 1977 due to, among other things, political differences and unequal
distribution of benefits.3 Its revival was sealed in 1999 with the signing of the Treaty for the
Establishment of the EAC4 (herein 'the EAC Treaty') by Kenya, Tanzania and Uganda. The EAC
Treaty came into force in 2000.5 Membership of the EAC was enlarged when Burundi and
Rwanda acceded to the EAC Treaty in 2007.6
The vision of the EAC is to create inter alia, a competitive and prosperous unified region.7 Its
mission is aimed at widening and deepening socio-economic and political unity to improve the
welfare of its citizens. These are to be achieved through producing competitive products, adding
value on production and increasing cross-border trade and investment. Similarly, objective of the
1
Preamble to the Treaty for the Establishment of the East African Community 1999. Available at:
http://www.worldtradelaw.net/fta/agreements/eacfta.pdf (accessed 9 November 2013).
2
Institute for Global Dialogue. Available online at:
http://www.igd.org.za/index.php?option=com_content&task=view&id=66&Itemid=92 (accessed 17th November
2013)
3
AU Secretariat. http://www.africa-union.org/root/au/RECs/EAC.htm. (accessed 10 November 2013)
4
Official website of the East African Community intergovernmental organisation. http://www.eac.int/ (accessed 10
November 2013)
5
Oluoch, W. ‘Legitimacy of the East African Community’ (2009) 53 Journal of African Law 2, 194-221, at 194
Cambridge Journals, http://journals.cambridge.org (accessed on 10th November 2013).
6
Membership of Rwanda and Burundi was accepted in 2006 but they acceded to the EAC Treaty in 2007. See
Braude, W. 2008 “Regional Integration in Africa – Lessons from the East African Community” at 63 Southern
African Institute of International Affairs (SAIIA)
7
See http://www.eac.int/index.php?option=com_content&id=Itemid=53 (accessed 10 November 2013)
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EAC is to widen and deepen co-operation among the Partner States for their mutual benefit.8
Thus far, the EAC has established a Customs Union9 and the Common Market is being
implemented.10 The Protocol for the Establishment of the EAC Monetary Union has also been
signed to introduce the use of a common currency across the region. But, it will only come into
force upon ratification and implementation of the roadmap for a single currency, over a ten year
period (following its signature) by the Partner States.11
The principal objectives of the EAC Customs Union are inter alia: enhancement of economic
gains through tariffs liberalisation and elimination of non-tariff barriers (NTBs) in the Partner
States; improving conditions of investment within the region and promoting economic growth
and development.12 Similarly, the objective of the Common Market is to promote trade and
investments within the region to make it more productive and prosperous.13
The EAC has since made tremendous progress in implementing the objectives of the Customs
Union. The Customs Union Protocol established among the Partner States; a duty-free trade
regime (with the successful reduction of intra-regional tariffs), common customs procedures
among the Partner States and a common external tariff.14 However, the implementation of the
Common Market protocol is still taking effect. As such, freedoms for movement of goods,
people, and capital across all Partner States are yet to be fully realised for many EAC citizens.15
The EAC’s objectives will only be achieved through guaranteeing and operationalising these
8
Article 5 of the Treaty for the Establishment of the EAC. See also
http://www.eac.int/index.php?option=com_content&id=1&Itemid=53 (accessed 10 November 2013)
9
The Protocol for the Establishment of the East African Customs Union; entered into force on January 1, 2005.
Available: www.eac.int (accessed 7 February 2014)
10
The Treaty for the establishment of the East African Community came into force in 2000. The Treaty was
followed by the signing of the EAC Customs Union Protocol in 2004 which came into force in 2005 and the
Protocol on the Establishment of the EAC Common market in 2010 respectively.
11
Source: Official website of the Ministry of East African Community of the Republic of Rwanda.
http://www.mineac.gov.rw/index.php?id=37 (accessed: 7th February 2014)
12
Articles 2 (2) and 5(2) of the Protocol for the Establishment of the East African Customs Union 2005. The
Customs Union was created pursuant to Article 75 of the Treaty for the Establishment of the East African
Community 1999.
13
Article 4 (2) of the Protocol on the Establishment of the EAC Common Market 2010. See also EAC Secretariat
2014 http://www.eac.int/commonmarket/objectives.html
14
Kiraso, B. 2009. 'EAC Integration Process and the Enabling Peace and Security Architecture'. A paper presented
at the EAC Peace and Security Conference - Kampala, Uganda, 5th October, 2009. See official website of the EAC,
http://www.eac.int/news/index.php?option=com_docman&Itemid=78&limitstart=5
15
Ibid
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freedoms.16
As a result of market integration, the past two decades have witnessed tremendous increase in
intraregional trade and foreign direct investment. For instance, a study has found that:
‘…when the EAC Treaty came into force in 2000, the region received a total of US$574
million worth of foreign direct investment... With the signing of the Protocol for the
Establishment of the East African Customs Union in 2005, the amount increased significantly
to USD$895 million. By 2009, investments had reached US$1585 million. The region
received an average of US$1242.65 million worth of FDI between 1990 and 2009, the
minimum being US$90 million while the maximum received was US$4030 million…’17
Despite the tremendous progress achieved through market integration and trade liberalisation, the
EAC is yet to optimally achieve its desired objectives.18 The region has concentrated primarily
on elimination of tariff barriers to trade and dedicated less effort to addressing supply side
factors. Yet, market integration alone will not propel the region to the desired levels of economic
development.19 This is because the region still grapples with various supply side constraints
which derail full enjoyment of all the benefits of integration.20 Most of the constraints to crossborder trade and investment are considered to be related to the limited development of
transport.21 The surface transport bottlenecks are exacerbated by geographical disadvantage
facing some Partner States.
16
Article 2 of the Protocol for the Establishment of the East African Common Market. The EAC Common Market
was established pursuant to Article 76 of the Treaty for the Establishment of the East African Community.
17
Otieno, M., Moyi, E., Khainga, D & Biwott, P. ‘Regional Integration and Foreign Direct Investment in East
African Countries’ (2013) 2 No.4 Journal of World Economic Research, pp. 67-74. doi:
10.11648/j.jwer.20130204.11 Available at:
http://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20130204.11.pdf (Accessed 17 January 2014)
18
Mwapachu, J. 2011. 'The EAC Experience: Achievements, Challenges and Prospects’. A paper presented at the
2nd EAC Symposium, Arusha -Tanzania, 28th-29th April 2011. Source: official website of the EAC,
http://www.eac.int/news/index.php?option=com_docman&task=doc_view&gid=183&Itemid=78. (Accessed: 25th
November 2013)
19
Mbundu, F. 'The Non-Tariff Barriers in Trading within the East African Community (EAC)’ BIEAC No. 3/2010,
CUTS Geneva Resource Centre, 37-39, Rue de Vermont, 1202 Geneva, Switzerland. Source: http://www.cutsgrc.org/pdf/BIEAC-The_Non-Tariff_Barriers_in_Trading_Within_the_EAC.pdf (accessed 20th January 2014).
20
20EAC Development Strategy (2011/12 – 2015/16). ‘Deepening and Accelerating Integration’. Available at:
http://mineac.gov.rw/index.php?id=106 (Accessed 24 February 2014)
21
Tanzania Transport Sector Overview on the Institutional, Legal Regulatory Framework. Available at:
http://www.un.org/esa/dsd/dsd_aofw_ni/ni_pdfs/NationalReports/tanzania/transport.pdf (accessed 10 November
2013)
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1.2 Geographical disadvantage of Burundi, Rwanda and Uganda.
The EAC’s transport deficits are exacerbated by the geographical disadvantage of Burundi,
Rwanda and Uganda, which are landlocked.22 Moreover, these countries are also designated as
Least Developed Countries (LDCs).23 Despite railway transport being cheaper than road
transport, the region’s railway capacity has declined due to infrastructure deterioration and
unreliable operations caused by fragmentation of rails and sluggishness.24
The collapse of the regional railways increased the burden on the regional road networks as all
traditional railway freight shifted to roads. Road transportation constitutes approximately 70% of
transit movements for these countries.25 This has resulted in limited competition for roads and
has helped to keep road transport costs very high.26 Yet road networks remain in poor shape with
severe missing links along national borders. A connection built up to one country’s border
without extending into another country’s side causes transport problems, for example, diversion
of traffic to longer routes which increases costs and delays.27
The combination of poor transport infrastructure, and the fact of being landlocked by neighbours
with inefficient transport infrastructure, can make transport costs many times higher for
developing countries than for developed countries.28 For example, transport costs are higher in
the EAC than other regions of Africa where, costs average 14% of the value of exports compared
22
Source: About.com Geography, Available: http://geography.about.com/library/faq/blqzafricalandlocked.htm
(Accessed 20 September 2013)
23
World Bank (2014). Least developed countries: UN classification. Available at:
http://data.worldbank.org/region/LDC (Accessed 10 January 2014)
24
See http://eac.int/infrastructure/index.php?option=com_content&id=110&Itemid=130 (Accessed 10 January
2014)
25
InfraAfrica. ‘Review of Progress in the Development of Transit Transport Systems in Eastern and Southern
Africa’. Report of the Fifth Meeting of Governmental Experts from Land-locked and Transit Developing Countries
and Representatives of Donor Countries and Financial and Development Institutions’30 July - 3 August 2001.
UNCTAD New York, UNCTAD/LDC/115 Available at: http://unctad.org/en/docs/poldcd115.en.pdf (Accessed 10
May 2014)
26
UNCTAD. (2007). ‘Improving Transit Transport in East Africa: Challenges and Opportunities’ Report by Mbuli,
E.V. ‘Contribution to the Mid-term Review of the Almaty Programme of Action’ UNCTAD/LDC/2007/2.
Available: http://unctad.org/en/docs/ldc20033_en.pdf (Accessed 20 January 2014)
27
Supra note 20
28
Venables, A. and Limao, N. 1999. 'Infrastructure, Geographical Disadvantage, and Transport Costs'. Policy
Research Working Paper no. 2257. The World Bank, Washington, D.C. Available at:
http://siteresources.worldbank.org/EXTEXPCOMNET/Resources/2463593-1213975515123/09_Limao.pdf
(Accessed 10 October 2013)
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to 8.6% for all developing countries.29 For landlocked countries, transport costs can rise, on
average, to 58% higher than their coastal neighbours.30 Yet, since most exports from the EAC are
suffer from price fluctuations because they are not processed,31 transport costs should be kept as
low as possible. This would enable the region to sell its products at lower prices and therefore
compete favourably on the world market.
In order to ameliorate the transport deficits on a regional level, the EAC recently intensified
integration of cross-border transport infrastructure development into its plan of action. Five
transport corridors have been earmarked for rehabilitation and upgrading.32 There are also
concerted efforts to revive the East African Railways. The East African Railways Master Plan
(EARMP) has been adopted.33 The EARMP provides a framework for rejuvenating existing
railways serving Kenya, Tanzania, and Uganda, and eventually, extending them to Burundi,
Ethiopia, Rwanda and South Sudan.34
Despite all the efforts, there exists challenges which if not addressed will invariably constrain the
development of sustainable cross-border transport infrastructure. This research argues that
maximum gains from EAC integration will only be fully harnessed if the supply side constraints,
inter alia transport bottlenecks are surmounted. Importantly, developing cross-border
infrastructure transportation projects usually presents several legal and institutional challenges.35
29
Biau, C., Dahou, K. and Toru, H. (2008). ‘How to increase sound private investment in Africa’s road
infrastructure: Building on country successes and OECD policy tools. Available at:
http://www.oecd.org/investment/investmentfordevelopment/42380108.pdf (Accessed 12th November 2013)
30
See Supra note 25
31
Berger, L. (2011). ‘Northern Corridor Infrastructure Master Plan Study: Final Report'. Available at:
http://www.ttcanc.org/documents/The%20Northern%20Corridor%20Infrastructure%20Master%20Plan.pdf
(Accessed 13 December 2013)
32
EAC Secretariat http://infrastructure.eac.int/index.php?option=com_content&view=article&id=109&Itemid=129
See also Final report (2003) “Transport and Trade Facilitation: East and Southern Africa.” Available at:
http://www4.worldbank.org/afr/ssatp/Resources/RegionalDocuments/Corridor_Coetzee_vol1.pdf (Accessed on 14
November, 2013) Some of the Corridors mapped out include; Dar es Salaam – Kigoma – Bujumbura – Bukavu, Dar
es Salaam – Isaka – Kigali-Goma, Dar es Salaam – Mwanza – Kampala and Mombasa – Kampala – Kigali –
Bujumbura.
33
EAC Secretariat (2011).
http://www.eac.int/infrastructure/index.php?option=com_content&view=article&id=113&Itemid=134 (Accessed 12
November 2013)
34
‘East Africa: Countries move to upgrade railway network’, Business Daily (South Africa) Tuesday, 29 April
2008. Available online at: http://www.afrika.no/Detailed/16610.html (accessed on 12th November 2013)
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1.3 Research problem
This research argues that the EAC's legal and institutional frameworks governing railway
development, may not, in their current form, promote the development of regional railways. Yet,
a robust legal and institutional framework is an essential condition for developing sustainable
and efficient railways. The smooth operation of the laws and institutions governing railway
development in the EAC is affected by various factors, inherent within them. These include inter
alia; weak institutional capacity, inefficient legal frameworks and disparate legal systems.
This research identifies inefficient legal frameworks as the major constraint to the EAC’s efforts
to develop and manage cross-border railways. The problem is in two-fold:
First, in some cases, there is hardly any law on a regional level, to regulate certain aspects of
joint cross-border transport projects which are not regulated by national laws of the individual
Partner States; and where such laws exist on a regional level, there are manifest significant gaps
which render them inefficient. Both situations leave regulatory gaps which cause problems to
infrastructure developers.
Secondly, in other instances, the laws lack clarity regarding rights and obligations of different
players in the implementation of cross-border transport infrastructure projects. The EAC Treaty
which is the basis for cooperation in infrastructure development does not provide clearly, how
cooperation in infrastructure development should be executed in practice, nor, how breach of
obligations by partners involved in the development of joint cross-border infrastructure projects
should be sanctioned.36 It is common for a country to violate its regional obligations and not be
sanctioned.37 Yet, successful implementation of cross-border transport infrastructures requires
countries to observe commonly agreed positions.
35
Ibid
Article 89(a) of the Treaty for the Establishment of the East African Community. See also Article 91 which
requires partner states to develop their railway networks.
37
Ioannis, N. K. and Nancy, C. 2012. 'Regionalizing Infrastructure for Deepening Market Integration: The Case of
East Africa ' World Bank Policy Research Working Paper 6113, Available online: http://wwwwds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2012/06/29/000158349_20120629161416/Render
ed/INDEX/WPS6113.txt (Accessed 17 November 2013)
36
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The above legal inefficiencies are exacerbated by disparities in legal systems applied in the EAC.
Kenya, Tanzania and Uganda operate a common law system, while Burundi and Rwanda operate
the civil law system.38 These legal systems contain conflicting procedures and legislative
practices which invariably constrain the development of regional infrastructure. A developer of a
project which transcends more than one national border has to contend with a plethora of
conflicting procedures, standards, rights as well as obligations from country-to-country.
Weak institutional capacities coupled with fragmented operations also constrain transport
infrastructure development on a regional level. Regional institutions governing cross-border
transport railways in the EAC lack sufficient authority and independence to execute their
objective. Moreover, national railways of each State operate independently of others without
proper cross-border linkages. Moreover, the national institutions are characterised by inadequate
human resources inadequate funding rendering them inefficient.39
1.4 Research questions
This research gives answers to questions regarding the nature of legal and institutional
framework that should be designed to govern the development and management of cross-border
railway infrastructure in the East African Community. The research addresses the following
questions:
1. To what extent are the current legal frameworks regulating cross-border railway
development in the EAC effective?
2. How can the legal frameworks be strengthened?
3. What lessons can the EAC draw from the Southern African Development Community
(SADC) in developing seamless and efficient cross-border railways?
4. What legal difficulties is the EAC likely to encounter in designing a legal framework for
cross-border transport infrastructure development? How can they be addressed?
38
Kosar, W ‘Rwanda’s Transition from Civil to Common Law’ (2013) 16 The Global Trotter, International Law
Section. No. 3. Available online: http://www.oba.org/en/pdf/sec_news_int_jul13_Rwanda_Kosar.pdf at p2.
(Accessed 12 November 2013)
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1.5 Thesis statement
The lack of efficient legal and institutional framework critically constrains the efforts of the East
Africa Community in addressing deficits in cross-border transport infrastructure. This research is
premised on the assumption that creating efficient legal and institutional frameworks to regulate
cross-border transport infrastructure projects will enable the EAC to surmount these deficits.
1.6 Significance of the research
Owing to the dismal performance and continued deterioration of railway infrastructures in the
EAC; and in view of various previous studies indicating the gravity of transport infrastructure
bottlenecks on trade and development in the EAC, and in view of the EAC’s realisation that
regional railway development is a major catalyst to regional trade and development, it became
pertinent to assess the role of efficient legal and institutional frameworks for railway
development in the EAC.
The research is significant because it establishes why despite enormous donor funding of
infrastructure projects, and the renewed efforts by the EAC to revamp its infrastructure; the EAC
still grapples with acute transport infrastructure bottlenecks particularly those that national cross
borders..
The research also contributes to existing literature on the subject particularly, the factors
constraining the development of cross-border railways in the EAC. It will help future researchers
in this field of study.
The findings in this research apply to other infrastructure projects of a cross-border nature. The
research is not only exclusive to the railways subsector. Scholars in other fields regarding crossborder infrastructures can use principles generated in this research as benchmark to engage in
further studies in those subsectors.
It also guides policy makers on the role legal and institutional frameworks can play to stimulate
39
See http://www.transportworldafrica.co.za/2012/08/13/high-transport-costs-cargo-theft-east-africa-headed-forruins/ (Accessed 17 December 2013)
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cross-border railway development in the EAC. The research benchmarks SADC to provide
useful lessons to the EAC to use legal and institutional frameworks to develop its railways.
1.7 Literature review
This paper emerges amidst scanty literature regarding the role of legal and institutional
frameworks for cross-border railway development in the EAC. It therefore represents a real value
addition to scholarship in this area of study.
Recent studies on the topic have concentrated on regionalising transport infrastructure but little
on the role that efficient laws and institutions can play to support the development of seamless
and efficient cross-border railways in the EAC.
The most direct literature on the subject is by Ioannis, N. et al.40 The authors argue that the
existence of technical, regulatory, institutional, and legal obstacles constrain the development of
regional transport infrastructure projects in the EAC. They contend that achieving a policy
framework at the national level and/or, wherever necessary, at the regional level that can support
the development of such projects and ensure that they operate properly and reliably, requires,
inter alia, well-functioning institutional and legislative/legal frameworks with clear lines of
oversight. The authors correctly identify the EAC’s problem in efforts to develop efficient and
integrated regional transport networks, and also propose credible solutions. But, they fall short of
providing steps on how the proposed solutions can be achieved. This research builds on their
study by indicating how strong legal and institutional framework governing cross-border
railways in EAC can be created.
The other important literature on the subject is by Arnold, J.41 The author argues that the
performance of a transport corridor is often determined by the standards and these pertain to: i)
the physical infrastructure, among other things; ii) regulations on their use; and iii) the
40
Ioannis. N. K. and Nancy C. op cit
Arnold, J. (2006). ‘Best Practices In Management of International Trade Corridors’ The World Bank, Transport
Papers TP-13. Available: http://siteresources.worldbank.org/INTTRANSPORT/Resources/3362911227561426235/5611053-1229359963828/itc-1-11-07.pdf (Accessed 28th January 2014)
41
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procedures followed for enforcing these standards. He argues that it is at border crossings that
standards are mostly needed because of complex procedures resulting from persistent disparities
in standard and regulations of different countries. He vouches for creation of a corridor
management authority if the duties include coordinating activities of public agencies, for
example, for upgrading infrastructure, contracting for construction and/or concessioning. The
author clearly identifies the key elements to achieving an efficient transportation corridor.
However, he does not provide criteria for achieving these results.
The study by Mattli, W42 discusses the formation and role of strong institutions which can be
vested with sufficient authority to enforce countries’ obligations on a regional level. The research
argues that regional blocks should create supranational Institutions. That through these
institutions, members may learn to share and cooperate to gain consensus on their otherwise
different positions that would prevent implementation of regional objectives on a national level.
H argues that the institution should be granted sufficient authority over states. The study properly
advances creation of supranational institutions as a solution to regulatory failure on a regional
level. However, it is restricted to the European Union. It does not draw comparison with other
regional economic communities which may be operating in different circumstances, and
therefore render it inapplicable to them. Furthermore, the research does not draw a clear link
between this theory to any particular sector to test its applicability. This research draws lessons
from and also builds on his writing by showing the role supranational laws and Institutions can
play in promoting sustainable cross-border transport infrastructure development in the EAC.
1.8 Research methodology
This research is both desk and Library based. It reviews primary and secondary sources of
literature related to railway development. The Treaty for the Establishment of the East African
Community is analysed as the key legal text. Other protocols and agreements relating to railways
in the EAC are also examined. Text books, scholarly articles and publications of recognised
authors and those of International organisations are used as secondary resources. The internet is
42
Mattli, W ‘The Vertical and Horizontal Dimensions of Regional Integration: A Concluding Note’ in Laursen F.
(ed) (2003) ‘Comparative Regional Integration: Theoretical Perspectives’ Ashgate: London
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also widely used as a source of information.
The research carries out a comparative analysis of SADC’s legal and institutional frameworks
governing railways with those of the EAC for purposes of benchmarking. Although SADC
region is faced with its own weaknesses in the regional railways subsector (for example
members’ inequalities in terms of railway distribution, dilapidated railways in some Partner
States and delayed crossings along some borders),43 it is nevertheless used as a benchmark for
EAC for various reasons.
The SADC is chosen as a benchmark for EAC's cross-border railways development for three
major reasons namely: i) despite SADC’s railways being poor when compared with those of the
developed world, they are considerably superior to the EAC’ railways; ii) SADC's geopolitics
are similar to those of the EAC; and iii) despite SADC’s railway subsector facing challenges
relative to those faced by the EAC, it has managed to achieve better levels of railway
development and inter-country connectivity than the EAC.44
1.9 Limitations of the research
The research analysed the legal and institutional framework governing railway development in
the EAC. It studies the SADC’s legal and institutional framework governing railway
development as a benchmark for the EAC. The major constraint to the study was limited timely
access to the laws and policy documents needed for the research on time. Save for SADC and
EAC secretariats, most government agencies with custody of the legal texts and instruments
needed for the research do not operate websites. Moreover, some countries’ laws (for example
Burundi and Rwanda) were not in the English language in which this research was conducted.
Furthermore, the research did not analyse the non-legal aspects that also have some bearing on
43
See chapter three for a detailed discussion of SADC’s challenges in the railways subsector.
See chapter three for a detailed discussion of the rationale for choosing SADC as a benchmark for EAC's railways
development.
44
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the development of railways in the EAC. This is because the research mainly focussed on legal
and institutional framework. In addition, Burundi and Rwanda which do not operate any railway
lines were not studied. There is therefore a need for a comprehensive study of conditions that
prevented the development of railways in those countries.
1.10
Overview of chapters
The paper has four chapters. Chapter one gives a brief historical development and successes of
regional integration of the EAC. It explains the problem (i.e. lack of a legal framework for crossborder infrastructure development in the EAC) which has made this research necessary. It
explains the significance of the study, the questions that the research seeks to answer and an
overall review of selected literature which is relevant to the problem.
Chapter two which is the main theme of the research assesses the efficacy of the current legal
and institutional framework in facilitating sustainable cross-border railway development in the
EAC. With specific reference to the railway subsector, the chapter explains that the lack of sound
legal and institutional framework has constrained the development of sustainable cross-border
railway networks in the EAC.
Chapter three draws lessons from the SADC. It explains the rationale for benchmarking SADC.
The legal and institutional frameworks for railway development in SADC region are examined to
determine whether they can be adapted to the circumstances of the EAC. Mistakes that have
constrained SADC’s progress are also studied to enable EAC to be better prepared to avoid them.
Challenges that the EAC may face in benchmarking best practices from SADC are studied and
possible solutions to the challenges are proposed.
Chapter four which is the last chapter concludes by providing a summary of the main findings,
conclusions and policy recommendations from the research.
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CHAPTER TWO
CRITICAL ANALYSIS OF THE EFFICACY OF LEGAL AND INSTITUTIONAL
FRAMEWORKS GOVERNING RAILWAY DEVELOPMENT IN THE EAC
2.1 Introduction
This chapter first analyses the efficacy of ongoing initiatives to address the cross-border railway
deficits in the EAC is discussed. It analyses the efficacy of the legal and institutional frameworks
governing railway development of efficient and sustainable cross-border railways in the EAC. It
argues that the prevailing legal and institutional frameworks are inefficient and therefore
constrain the ongoing initiatives for railway development in the EAC. It underpins the need to
benchmark best practices from the SADC region which has been more successful in developing
integrated railways.
2.2 Initiatives for regional railway development in the EAC.
The consolidation of the EAC Customs Union and the ongoing implementation of a Common
Market have rendered development of integrated regional transport systems necessary. 45 The
EAC has realised the significance of efficient transport infrastructures as a backbone for a
successful regional integration process.46 This research argues that cross-border transport is
particularly important. This is because cross-border transport-links affect the movement of
factors of production, people and goods on a regional level.47 Having realised this, the EAC
established various initiatives to address its cross-border transport deficits.
45
Sezibera, R. (2011). ‘The Future of East African Integration: Priorities over the Next five years.’ Address to the
16th Biennial Ambassadors/ High Commissioners’ Conference. Mombasa 2011. Available at:
http://www.eac.int/news/index.php?searchword=The+Future+of+East+A&ordering=&searchphrase=all&Itemid=70
&option=com_search (Accessed 18th January 2014)
46
EAC Secretariat (2012) ‘EAC and Infrastructure. Available at:
http://infrastructure.eac.int/index.php?option=com_content&view=article&id=116&Itemid=78 (Accessed 18th
January 2014)
47
Srinivasan, P.V. (2012). ‘Regional Cooperation and Integration through Cross-Border Infrastructure Development
in South Asia: Impact on Poverty’ ADB South Asia Working Paper Series. No. 14. Asian Development Bank, Metro
Manila Philippines. Available at: http://www10.iadb.org/intal/intalcdi/PE/2012/10683.pdf (Accessed 18th January
2014)
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Initiatives for regional infrastructure development are not new phenomena in the EAC. Since the
establishment of the EAC in 1999, development of integrated regional transport infrastructure
has been at the heart of the EAC’s development agenda, at least on paper.48 In recent years, there
have been renewed efforts towards co-operation in developing seamless, efficient and integrated
transport systems in the EAC. For instance, three joint infrastructure Summits of Heads of State
and Government of EAC Partner States (except Tanzania) and Sudan have been held. All these
are geared towards accelerating joint infrastructure development.49 More efforts to improve
performance of transport infrastructure are seen in proposals to rehabilitate and upgrade five
existing transport corridors on a regional level.50 Revamping of regional railways is core in all
these efforts.
Furthermore, various regional treaties, protocols, agreements51 as well as policy documents52
have long identified regional transport infrastructure as a strong pillar for achieving deeper
integration in the EAC.
Those treaties, agreements, protocols and policies place the regional transport infrastructure
agenda at the heart of the region's development programmes. 53 For example, in its 2nd, 3rd and 4th
development strategies for the years 2001 to 2005, 2006 to 2011 and 2012 to 2016 respectively,
48
Article 89 of the Treaty for the Establishment of the East African Community enjoins Partner States of the EAC to
cooperate in development of regional transport infrastructures.
49
See the Joint Communiqué of the Second Infrastructure Summit, 2013. Available at:
http://www.scribd.com/doc/163903818/JOINT-COMMUNIQUE-2nd-Infrastructure-Summit-of-Heads-of-Stateand-Government See also Joint Communiqué, 3rd Integration Projects Summit of Heads of State and Government.
Available at: http://www.scribd.com/doc/179655014/Joint-Communique-%E2%80%93-Integration-ProjectsSummit (Accessed 14th February 2014)
50
The East African Community Secretariat. ‘Road and Railway sectors’. Available at:
http://infrastructure.eac.int/index.php?option=com_content&view=article&id=109&Itemid=129 (Accessed 18th
January 2014)
51
The Treaties, Protocols and Agreements include, but are not limited to: the EAC Treaty 1999, the Northern
Corridor Transit and Transport Agreement 1985 and Protocols thereto and the Concession Agreements.
52
The Policy documents include, inter alia: the East African Railways Master plan Study 2009 and the East African
Community Development Strategies (1996-2001. 2001-2006, 2006-2011 and 2011-2016).
53
The first 5-year Development Strategy (1997-2000) for the EAC was enacted in 1997. See ‘Implementation of
Projects and Programme in EAC’. Available at: http://www.tpdctz.com/eapc07/pdfs/IMPLEMENTATION%20OF%20PROJECTS%20AND%20PROGRAMME%20IN%20EAC.p
df (Accessed 24th March 2014)
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the EAC underpins completion and rehabilitation of existing regional transport infrastructure.54
New transport infrastructure is also earmarked for development in a sequential manner.55
Similarly, the EARMP places the revamping of railways on the EAC agenda.56
There have been similar efforts on an international level, with various programmes designed to
boost infrastructure development as well as to improve performance in the EAC's transport
corridors. Several development partners (for example the African Development Bank – AfDB,
the European Union – EU, the United States Agency for International Development - USAID,
and the World Bank) have sunk funds into the development of infrastructures. These efforts have
also yielded minimal results.57 For instance, one of the studies which reviewed the progress of
transport infrastructure development in Eastern and Southern Africa concluded that despite
increased funding to revamp the railways in those regions, they remain in poor state of repair.58
The question to be answered here is: why have all those efforts not enabled the EAC to surmount
the transport infrastructure bottlenecks, especially in the railways subsector? Various
institutional and legal constraints account for this. These are discussed in detail below.
2.3 Institutional and legal constraints to EAC railway development
This research argues that the development of efficient and sustainable railway transport systems
in the EAC requires efficient legal and institutional frameworks. However, various legal and
institutional factors have combined to constrain the effectiveness of the EAC’s initiatives to
54
EAC Development Strategies are five-year regional plans intended to direct the systematic development of the
region, in order to achieve the goals of regional integration. Available at:
http://www.eac.int/index.php?option=com_docman&task=cat_view&gid=155&Itemid=163 (Accessed 1o January
2014)
55
55See for example, the Second EAC Development Strategy 2001 – 2005 pp 21-22, Available at:
http://www.eac.int/index.php?option=com_docman&task=cat_view&gid=155&Itemid=163 (Accessed 18th January
2014)
56
The East African Railways Master Plan Study: Final Report 2009. Available at:
http://www.eac.int/infrastructure/index.php?option=com_docman&task=doc... (Accessed 18th January 2014)
57
See the 3rd EAC Development Strategy (2006-2011) and the 4th EAC Development Strategy (2011-2016).
Available at: http://www.eac.int/index.php?option=com_docman&task=cat_view&gid=155&Itemid=163 (Accessed
18th January 2014)
58
UNCTAD (2001). ‘Review of Progress in the Development of transit transport systems in Eastern and Southern
Africa.’ UNCTAD/LDC/115 20. Available: http://unctad.org/en/docs/poldcd115.en.pdf (Accessed 18th January
2014)
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develop seamless and sustainable cross-border railways in the EAC. Various studies have
identified different factors. For instance, as seen earlier, one study which reviewed various
donors’ investment in railways in the East and Southern Africa found that more concentration
was on logistics, with less attention towards measures for efficient and sustainable usage and
maintenance.59
In addition, a study by Ioannis et al60 found that divergent country attitudes towards regional
integration, inefficient laws and weak institutions also, invariably, constrain EAC’s efforts to
revamp its cross-border railways.
The objective of this study therefore is, to explore ways in which the various efforts both on a
regional and international level can be creatively linked to promote development of seamless and
integrated cross-border railways in the East African Community. But, first, the factors which
constrain the renewed efforts towards integrated railway development (as identified in the
preceding chapter) are discussed. These factors mainly include: i) Weak institutional capacity; ii)
lack of judicial enforcement and iii) inefficient laws.
2.3.1.
Weak institutional capacity
This research argues that weak institutional capacity in the EAC has grossly affected the overall
implementation of railway projects. Weak institutions cannot adequately neither execute their
regional mandates; enforce laws; sanction violations, nor integrate their operations.
This study concentrates on institutions governing cross-border railways in the EAC. The
institutions can be classified into regional and national institutions. It is important to note that
under the EAC Treaty, organs are separate and distinct from institutions. The organs include,
inter alia, the Summit of Heads of State and Government,61 the Council of Ministers,62 the East
59
Ibid
Supra note 37
61
Established under Article 10 of the Treaty for the Establishment of the East African Community 1999
62
Established under Article 23 of the Treaty for the Establishment of the East African Community
60
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African Legislative Assembly, the East African Court of Justice63 and the Secretariat.64
Institutions are created under various agreements and protocols and their specific mandates are
conferred by the incorporating instruments. The capacity of these institutions is discussed below.
The EAC has a rich history of regional institutions. The original EAC (1967 – 1977)65 had made
tremendous progress in establishing strong regional institutions. Those institutions included,
among others, the East African High Commission; the East African Railways and Harbours
Corporation (EARHC); the East African Common Services Organisation and the East African
community.66 Moreover, important service facilities, for instance the EARHC and East African
railways were decentralised.67 The breakup of the original EAC, culminated in the dissolution of
those institutions due to lack of capitalisation.68
The EARHC was one of the casualties of the breakup of the EAC. The dissolution of the
EARHC resulted in fragmented railway systems governed by three distinct national institutions
(Uganda Railways Corporation, Kenya Railways Corporation and Tanzania Railways
Corporation).69 However, all the states (Kenya, Tanzania and Uganda) failed to operate an
efficient and commercially viable railway network.
The prevailing political will for railway development and integration on a regional level 70 is yet
to be turned into concrete action. Goals and objectives have been set to revamp regional
63
Established under Article 9(1) of the Treaty for the Establishment of the East African Community
Established under Article 66 of the Treaty for the Establishment of the East African Community 1999
65
The EAC was originally founded in 1967 but it collapsed in 1977
64
66
See the Preamble to the Treaty for the Establishment of the East African Community 1999.
Busse, M and Shams, R. ‘ Trade Effects of the East African Community’ (2005) 6 The Estey Centre Journal of
International Law and Trade Policy No. 1, p.62-83. Available at:
http://www.tzonline.org/pdf/tradeeffectsoftheeastafricancommunity.pdf (Accessed 20 January 2014)
68
Maruping, M. 2005. ‘Challenges for Regional Integration in Sub-Saharan Africa: Macroeconomic Convergence
and Monetary Coordination’ In 'Africa in the World Economy - The National, Regional and International
Challenges' Fondad, The Hague, December 2005, www.fondad.org (Accessed 17 December 2013)
69
Ibid
70
Three Joint Infrastructure Summits of Heads of State and Government of the EAC have been held with the
objective of fast tracking implementation of joint infrastructure projects. These summits held on 25 June 2013 in
Entebbe; 28 August 2013 in Mombasa and 25 October 2013 in Kigali.
67
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railways.71 But the various institutions created to execute the infrastructure agenda lack the
requisite capacities.
The factors account for the failure of the EAC’s institutions to execute their mandates. These
include inter alia: a) inadequate enforcement authority; b) disparate legal and operational
frameworks; c) inadequate technical capacity; and d) inadequate funding. These are discussed in
detail below.
a) Insufficient decision making powers
Insufficient decision making authority by institutions mandated to govern cross-border transport
infrastructure development in the EAC constrains their ability to execute their mandates. For
example, the EAC Treaty vests all decision making powers on the Council of Ministers. The
Council of Ministers is empowered to make all policy decisions for the efficient and harmonious
functioning and development of the Community.72 Yet, the main institutions charged with
execution of the goals of the EAC do not have powers to independently make decisions. The lack
of decision making authority is exacerbated by the fact that the EAC lacks supranational
institutions to enforce commonly agreed decisions.73
It is therefore not uncommon for countries to violate commonly agreed positions and remain
unsanctioned.74 Although the EAC Treaty provides for the sanction of expulsion of a Partner
State that is in breach of its provisions,75 the sanction of ‘expulsion’ leaves room for political
manipulation due to lack of strong independent institutions to enforce it.
In order to make provisions of the EAC Treaty enforceable, and ameliorate the inefficiencies of
their institutions, Partner States provided for supremacy of regional laws (passed by the EAC
Legislative Assembly) over Partner States' national laws regarding the similar subject matter.
Accordingly, such regional laws would have the force of law in the respective Partner States
71
Ibid
Article 14(3) (a) of the Treaty for the Establishment of the East African Community 1999
73
Ioannis N. K. and Nancy C. 2012 op cit note 37
74
Ibid
75
Articles 146 and 147 of the Treaty for the Establishment of the East African Community 1999
72
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once published in the EAC Gazette.76 The EAC Treaty further provides that decisions of the
EACJ must also be adopted and applied by partner States.77
The importance of supranational powers of the EAC organs has been emphasised by the EAC
Court of justice. In the case of The East African Law Society and others –vs- The Attorney
General of the Republic of Kenya and others.78 While recognising the principle of sovereign
independence of states envisaged in the EAC Treaty, court observed that the EAC’s organs
should be allowed some powers over the states if they are to effectively execute their mandates.
This way, the court observed, the collective objectives of the EAC which Partner States set out to
achieve, would be realised. Court therefore called upon states to cede some of their independence
to the EAC and its organs.79
Although the foregoing decision refers to ‘organs’ and not ‘institutions’ of the EAC, this study
argues that the principle it establishes applies to EAC institutions. Therefore, EAC Partner States
ought to observe the supremacy of regional institutions if they are to effectively enforce its laws
and as well as fulfil its objectives.
From the foregoing discussion, it has been established that EAC institutions are not possessed of
enough powers to enforce regionally agreed positions. This also gives rise to a lack of
enforcement of regional laws. Although the EAC Treaty creates the EACJ, the court is yet to
entertain matters particularly in actions pitying one Partner State against another. Similarly, it is
not clear whether violations arising out of actions not regulated by the EAC Treaty (albeit falling
within the overall objectives of the Community) may be entertained by the court. A plausible
conclusion in the circumstances would be that a Partners State in violation of its obligations
which are not covered by the EAC Treaty would not be sanctioned.
76
Art 8 (4) of the Treaty for the Establishment of the East African Community 1999
Article 38 of the Treaty for the Establishment of the East African Community 1999
78
The East African Law Society and others –vs- The Attorney General of the Republic of Kenya and others, In the
East African Court of Justice Reference No. 3 of 2007 Judgment of 8 September 2008. Available at:
http://www.saflii.org/ea/cases/EACJ/2008/1.pdf (Accessed 11 March 2014)
79
Ibid
77
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b) Legislative and operational disjointedness
The capacity of EAC institutions to execute their mandates is also constrained by disparate laws
and the disjointed operation of institutions. These two are espoused below.
First, with regards to disjointed laws, as indicated in the preceding chapter, EAC Partner States
operate under disparate legal systems.80 There is a lack of harmonisation of laws that govern
development of cross-border railways. A fragmented legal framework leads to delays and
conflicting interpretations which in turn increases the cost of doing business due to lengthy legal
research, legal enquiries and comparisons.81 For instance, dispute settlement mechanisms applied
under the common law system are different from those applied under the civil law system.
Different institutions charged with enforcement of these judgments will face difficulties, if a
developer obtains judgment from one country in a different legal system which requires
enforcement in another country with a different legal system.
Therefore, whereas, the EAC Treaty enjoins Partner States to undertake necessary measures for
implementation of the judgment of the EACJ,82 this will lead to disparate results due to legal
disparities.
Another example of disparate legal frameworks which gravely affect the capacity of institutions
to execute their mandates is in the area of public procurements. EAC Partner States operate
disparate public procurement practices and standards. Disparities in procurement practices could
prove a nightmare for jointly implemented projects, which could see projects slowed down by
different states’ bureaucratic procedures, disparate procurement periods or lengthy appeal
processes arising from tendering disputes.
Public procurement processes in Kenya, Tanzania and Uganda are governed by the Public
80
Supra note 37
UNCTAD. (2003). ‘Multimodal Transport: The Feasibility of an International Legal Instrument’. Available at:
http://unctad.org/en/pages/PublicationArchive.aspx?publicationid=1818 (Accessed 23 November 2013)
82
Article 38 (3) of the Treaty for the Establishment of the East African Community 1999
81
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Procurement and Disposal Act;83 the Public Procurement and Disposal of Public Assets Act84
and Public Procurement and Disposal of Public Assets Act85 respectively. Public procurement
processes in Rwanda and Burundi are governed by the law N° 63/2007 of 30/12/2007 and Law
No. 1/01 of 4 September 2008 Establishing the Investment Code of Burundi, respectively.
Major areas of conflict among the procurement laws include: threshold levels; technical
specifications; administrative specifications such as time limits, contract splits and the number of
bidders treatment of local companies. Whereas Kenya and Tanzania provide a 15% preferential
treatment for local companies, Burundi and Rwanda are yet to make such provisions. On its part,
Uganda amended its Public Procurement and Disposal of Public Assets (PPDA) law in 2014 to
provide for promotion of local businesses under the preference and reservation schemes,86 and
efficiency to fast track public procurement.87 The new law will bring in harmony Uganda’s
public procurement practice with those of Kenya and Tanzania. However, disparities with
Burundi and Rwanda persist.
Secondly, fragmented institutional operations equally account for the inefficiency of institutions
that govern railway development in the EAC. EAC’s institutions governing railways continue to
operate as distinct national systems despite their intended regional perspective.
As indicated earlier, the existing railway systems namely; Kenya Railways Corporation (KRC),
Tanzania Railways Corporation (TRC) and
independently and distinct from each other.
Uganda Railways Corporation (URC) operate
88
Consequently, proposals to operate them as a
single integrated network tend to fail to achieve the desired impact because they continue to be
enforced with independent national biases rather than focussing on the overall collective goal of
83
Chapter 412 C, of the Public Procurement and Disposal Act Revised Edition 2010 (2005) (Laws of Kenya)
Available at:
http://www.kenyalaw.org/kl/fileadmin/pdfdownloads/Acts/PublicProcurementandDisposalAct_Cap412C_.pdf
(Accessed 14 February 2014)
84
Act No. 9 of 2011. Available at:
http://www.unpcdc.org/media/389145/tanzania_public_procurement_act_2011.pdf (Accessed 10 January 2014)
85
Act No. 1 of 2003 as Amended. (The Amendment Act, No. 11 of 2011 came into force on the 3rd day of March,
2014. Available at: http://www.ppda.go.ug/ (Accessed 12 May 2014)
86
See S. 59 B (2) (a) of the PPDA Act No. 1 of 2003 (Amended) (Laws of Uganda)
87
S. 48 of the PPDA Act No. 1 of 2003 (Amended) (Laws of Uganda)
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the region as a whole.89
The fragmentation of operations has been exacerbated by the uncoordinated nature of donor
funded programmes. Donor supported work in transport infrastructure development in East and
Central Africa has predominantly focused on national efforts (rather than collective regional
efforts).90 The result has been regionally fragmented systems that are unfortunately unable to
neither operate seamlessly nor effectively share information.91
Institutional fragmentation results in wasteful competition for resources. It can also result in
different approaches for different railway networks along the same transport route, thereby
constraining railway connectivity. In order to achieve greater levels of cross-border railway
development, coordinated institutional operations which look at the transport in a sufficiently
broad way to avoid inconsistencies, are needed.92 This has also been the view of the World Bank
- that interconnectedness is needed if railways are to compete effectively with the road sector.93
In order to try to address the problem of disjointed operations, the Governments of Kenya and
Uganda after concessioning their railways concluded a bilateral agreement for the KenyaUganda standard gauge railway in 2012 (herein ‘the Standard Gauge Railway Agreement’).
Under the agreement the governments agreed to jointly develop and operate a standard gage
railway between Kampala and the coastal city of Mombasa.94 The Republic of South Sudan has
88
The collapse of the East African Railways and Harbours Corporation let to disintegration into three separate
national railways.
89
Arnold, J. (2006). ‘Best practices in management of International Trade corridors.’ Transport Papers TP-13.
World Bank, Washington, D.C. Available: http://siteresources.worldbank.org/INTTRANSPORT/Resources/3362911227561426235/5611053-1229359963828/itc-1-11-07.pdf (Accessed 18th January 2014)
90
USAID, Transport Corridor Efficiency. Available at:
http://www.competeafrica.org/components/reducing_barriers_to_trade/transit/index.php (Accessed 22 January
2014)
91
Ibid
92
European Conference of Ministers of Transport. 2003. ‘Fifty years of Transport Policy: Successes, Failures and
New Challenges.’ Pp. 16. Available at: http://www.internationaltransportforum.org/Pub/pdf/0350YrsTrPol.pdf
(Accessed 01 April 2014)
93
Olievschi, V.N. (2013). Railway Transport: Framework for improving railway sector performance in sub-Saharan
Africa. SSATP Working Paper No. 94. The World Bank, Washington D.C. Available at:
http://www4.worldbank.org/afr/ssatp/Resources/SSATPWP94-Railway-Performance.pdf (Accessed 14 February
2014)
94
Bilateral Agreement between the Government of the Republic of Kenya and the Government of the Republic of
Uganda for the Development and operation of a Standard Gauge Railway between Mombasa and Kampala with
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also agreed to accede to the Agreement.95
The objective of the agreement is to provide a legal framework under which Kenya and Uganda
can promote joint development of an integrated, modern, and efficient railway network as a
seamless single railway operation in their territories.96 This agreement will be operationalised
with the adoption of a Protocol drafted to set out modalities for operationalising it. 97 The
Protocol was yet to be finalised as of May 2014.
This study argues that the Standard Gauge Railway Agreement is a move in the right direction
since it provides for a framework integrating different railway networks since it provides for
adoption of a common gauge in the territories of the signatories. However, the fact that the
agreement is only operational between the signatories (Kenya and Uganda) further complicates
the problem of fragmented railway development. Other Partner States may need to accede to the
agreement or conclude similar arrangements if they are to synergise their operations.
More importantly, the agreement does not impose mandatory obligations on the signatories to
harmonise their policies and laws. It merely requires them to endeavour to maximally harmonise
laws, policies, designs and construction.98 This creates problems of enforcement as a country in
breach may simply claim that they endeavoured to comply with the agreement, yet in practice
little was done. Furthermore the agreement does not provide a framework for private sector
participation especially in the proposed administrative body, the Standard Gauge Railway
Commission.99
branch lines to Kisumu (Kenya) and Pakwach/Gulu-Nimule (Uganda). 2012. (Retrieved from Uganda railways
Corporation head offices in Kampala, Uganda)
95
See Joint Communiqué, 3rd Integration Projects Summit of Heads of State and Government of the EAC (except
Tanzania) and South Sudan, October 2013, Kigali. Available at: http://www.scribd.com/doc/179655014/JointCommunique-%E2%80%93-Integration-Projects-Summit (Accessed: 13th January 2014)
96
Article 1 of the Standard Gauge Railway Agreement 2012
97
Uganda was mandated to draft a Protocol to operationalise the Agreement .See Joint Communiqué of the 3rd
Integration Projects Summit of Heads of State and Government, October 2013, Kigali. Available at:
http://www.scribd.com/doc/179655014/Joint-Communique-%E2%80%93-Integration-Projects-Summit (Accessed
10 January 2014)
98
Article 4 (a) of the Standard Gauge Railway Agreement 2012
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Suffice to note that the EAC Treaty identifies as one of the reasons for the collapse of the
original EAC in 1977, ‘the lack of adequate private sector participation in the cooperation
activities’ as one of reasons why the 1967 EAC collapsed in 1977.100 There is therefore a need to
encourage and promote private sector participation in railway development in the EAC. The
private sector can be a good partner in efforts aimed at mobilising resources.
c) Inadequate technical capacity
The EAC’s institutions grapple with inadequate technical capacity to undertake thorough policy
analysis and to negotiate favourable deals on the international level.101 The EAC lacks in
experienced specialists to execute complex legal and policy documents involved in infrastructure
financing, concessioning and contracting. The community usually relies on expensive
expatriates, which affects progress since countries are usually unable to meet the expatriates’
charges.
d) Inadequate funding for institution
Without sufficient financial resources, institutions cannot adequately execute their mandates. The
EAC lacks sufficient financial resources to establish new or maintain existing regional
institutions. The reason for this, it has been argued, is the fact that Partner States’ contributions
to the EAC budget arrive late, yet, they also fall far short of EAC’s demands.102
Similarly, donor financing for regional institutions is also becoming inadequate. For example,
despite receiving funds for the establishment and operation of the East African Railways
Authority (EARA) - which is mandated to implement the EARMP,103 the Authority is yet to
99
Article 2 of the Standard Gauge Railway Agreement 2012
See the Preamble of the Treaty for the Establishment of the EAC 1999
101
AfDB (2010) op cit
102
Kamala, D.B. (2006). ‘The Achievements and Challenges of the New East African Community Co-operation’.
Research Memorandum No. 58. University of Hull United Kingdom. Available at:
http://www2.hull.ac.uk/hubs/pdf/memorandum58.pdf (Accessed 12 May 2014)
103
Mbogo, S., Kabona, E., and Kahoho, T. Trade Mark Southern Africa, 14 January 2014. Available at:
http://www.trademarksa.org/news/eac-railway-network-will-plans-restore-decades-old-facility-finally-take
(Accessed 14 March 2014)
100
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commence operations because it still faces funding shortages and this has been its major
bottleneck.104 In other instances where donor funding arrives on time, some institutions lack
absorptive capacities in terms of utilisation due to inadequate human resources and technical
know-how.105
Various methods of mobilising resources on a regional level have been devised but with minimal
results. For instance, under the Northern Corridor Transit Transport Agreement (NCTTA), the
methods envisaged to raise resources for the Northern Corridor Coordination Authority (NCCA)
include, contributions from members states and donors as well as duty levies at ports of entry.106
Contributions from member states have not always been prioritised because of political
considerations.107 Moreover, the establishment of a partnership fund in 2006 to pool resources
from development partners is yet to meet its objectives.108 The result of all these has been failure
by the EAC to raise the resources required to execute improvements in infrastructure along the
northern corridor.
2.3.2.
Weak and inefficient legal frameworks
The principal legal frameworks governing cross-border railway development and operations in
the EAC comprise of treaties, protocols, agreements and national laws of each Partner State.
These include, inter alia: the Treaty for the Establishment of the East African Community; the
East African Model Investment Code;109 the Northern Corridor Transit Transport Agreement;110
104
Ibid
Unpublished: Akoth, MO ‘Organisational Effectiveness of Regional Integration Institutions: A case Study of the
East African Community' unpublished MA dissertation, University of South Africa, 2008. Available at:
http://uir.unisa.ac.za/bitstream/handle/10500/1325/dissertation.pdf?sequence=1 (Accessed 14 February 2014)
106
Article 11 of the Northern Corridor Transit and Transport Agreement 1985 (amended 2007)
107
Adzigbey, Y., Kunaka, C., and Mitiku, TM. (2007). 'Institutional Arrangements for Transport Corridor
Management in Sub-Saharan Africa' SSATP Working Paper No. 86 World Bank, Washington D.C. Available at:
http://siteresources.worldbank.org/EXTAFRSUBSAHTRA/Resources/SSATPWP86-Corridor-Management.pdf
(Accessed 24th February 2014)
108
The Partnership Fund is a basket of annual contributions from Development Partners aimed at supporting the
EAC projects and programmes that are geared towards regional integration. See EAC Secretariat.(2012)
http://www.eac.int/rmo/index.php?option=com_content&id=165&Itemid=233 (Accessed 14 February 2014)
109
The East African Community Model Investment Code, 2006. The East African Community Secretariat. Available
at: http://www.eac.int/invest/index.php?option=com_docman&task=cat_view&gid=38&Itemid=70 (Accessed 27
November 2013)
110
Available at: http://www.ttcanc.org/page.php?id=12
105
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the railway concessionaire agreements111 as well as the various transport-related national laws of
each Partner State.112
These legal frameworks are riddled with various inefficiencies which render them weak and
inefficient. A weak transport law is one which does not define: (a) the regulatory and licensing
controls which should be exercised over transport infrastructure and service operations; (b) clear
and respective roles, rights and duties of public and the private sectors in developing transport
infrastructure and services; and (c) the extent to which competitive markets in transport
infrastructure should be encouraged.113
This research argues that the major inefficiencies in EAC’s laws include: a) regulatory gaps in
some regional laws; b) lack of clarity of rights and duties of Partner States and/or private actors;
c) unfavourable railway concession arrangements and d) lack of enforceability of some laws.
These are discussed in detail below.
a) Regulatory gaps on the regional level
There are regulatory gaps on the regional level in the EAC. The gaps are manifest in different
ways. Firstly, on the regional level, there is a failure to regulate certain aspects of a cross-border
nature which are not covered by national laws. The national laws of each Partner State are
usually restricted to matters within their national boundaries. The result of this is a situation
where there is no clear guiding framework on matters originating from a Partner State, with
results that affect the development of cross-border railways along common borders.
The major issues that are not clearly regulated by existing EAC railway laws include:
environmental activities that have cross-border effects; public private partnerships and
displacement of people in ‘No-Mans-Land’ across shared borders. This research is restricted to
111
For example, the Standard Gauge Railway Agreement 2012 was signed by Kenya and Uganda. (a printed copy of
the agreement was accessed from the URC head office) and the Northern Corridor Transit Agreement (signed by
Burundi, DRC, Kenya, Rwanda and Uganda)
112
The Uganda Railways Corporation Act (Cap 331), of 1992 (Laws of Uganda), Kenya Railways Corporation Act
(Cap 397) of the Laws of Kenya and the Tanzania Railways Corporation Act, 1977
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the analysis of the two issues namely, those concerning displacement of people along shared
borders and public private partnerships.114
There are no laws on a regional level to govern displacement, compensation and resettlement of
people who illegally settle in railway reserves in ‘No-Mans-Land’ across shared borders. It is
noteworthy that the Partner States’ national constitutions and land Acts which regulate land
ownership, provide for rights of ownership and modalities for its confiscation from illegal
settlers (only within each Partner’s territories) by the national Governments.115 In the absence of
a clear legal framework on a regional level governing resettlement of people along common
borders, development of cross-border railways maybe disrupted.
Suffice to note that due to several years of neglect, most railway reserves in the EAC that have
been conceded to Rift Valley Railways (RVR) through concession arrangements were
encroached upon by illegal settlers, the operations of the concessionaire may be adversely
affected.116 In order for RVR to redevelop and smoothly operate the railways, it is pertinent that
the settlers are evicted. The resettlement exercise may involve destruction of their property
which may necessitate compensation. Without a clear law governing displacement of people
along shared borders, the operations of a developer may be constrained. For example, displaced
settlers may file civil suits for injunctions prohibiting the developer from evicting them, resulting
in considerable delays.
Furthermore, three of the Partner States (Burundi, Rwanda and Uganda) do not have public
private partnership (PPP) laws to govern private sector the participation in infrastructure
113
Batalia, J.C. (2001). ‘Enforcement of Laws and Regulations Governing Road Transport Industry in East Africa’
Available at: http://pdf.usaid.gov/pdf_docs/PNACM825.pdf (Accessed 22 January 2014)
114
The research chose displacement of people and public private partnerships because these were identified as the
major unregulated challenges. (An interview with the Ag. Managing Director of Uganda Railways Corporation, , at
Uganda Railways Corporation offices, 57 Nasser Road Kampala, in January 2014)
115
Legislation governing compensation and resettlement issues in Kenya include: The Constitution of Kenya 2010
(Article 40); Kenya Railways Corporation Act Cap 397 (as amended); Kenya Railways Corporation (Vesting of
Lands) Orders 1986 and The Kenya Land Policy (2007). Legislation governing compensation and resettlement
issues in Uganda include: The Constitution of the Republic of Uganda 1995 (Article237); Uganda Railways
Corporation Act, CAP 331 (S 34); Land Regulations, 2004 (S 24); and the Land (Amendment) Act, 2010 (S 74).
116
See http://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-SocialAssessments/RVR%20RAPs%20Exec%20Summary_English%20final.pdf (Accessed 24 February 2014)
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development. Only Kenya and Tanzania have PPP laws.117 With the EAC’s focus on
development of regional infrastructures, there is need to smoothen the use of PPPs as a funding
formula.118 Yet, without a regional legal framework for PPP projects, efforts to engage the
private sector in joint regional transport projects may be clogged with hefty legal challenges.
These will constrain the smooth operation of the projects.
The major existing law on a regional level providing a semblance of a legal framework for PPPs
is the NCTTA (discussed in detail below). Under its Article 8 (d), it establishes a Private
Partnership Committee to deal with matters of interstate and transit along the Northern Corridor.
Indeed the Northern Corridor Stakeholders Consultative Forum (a PPP initiative), for the
facilitation of the movement of goods along the corridor has been established.119 The
shortcoming with this law is that it is limited in scope. It regulates only those PPP projects along
the Northern Corridor. This leaves a regulatory gap in respect of railway developments occurring
outside the northern corridor since the agreement does not apply to other transport routes.
b) Lack of clarity of rights and obligations of Partner States
The principal laws governing regional railways development in the EAC are; the EAC Treaty120
and the NCTTA of 1985.121 These laws do not clearly set out the rights and obligations for the
Partner States. This affects their effectiveness. For a legislation to be effective, it must have clear
and effective enforcement mechanisms.122 The salient provisions regarding railway development
117
These include: the Public Private Partnership Act, 2010 (Laws of Tanzania) and the Public Private Partnership
Act of Kenya, 2013 (Laws of Kenya).
118
Tulya-Muhika, S. ‘PPPs - A Vehicle For Addressing Infrastructural Challenges in the East African Community’
A General Presentation at the “3rd EAC Investment Conference” Kampala, 28th -30th April 2010. Available at:
http://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Feacinvestmentconference.com%2F3rd%2Fdow
nloads%2Fpresentations%2Fdoc_download%2F34-ppps-a-vehicle-for-addressing-infrastructural-challenges-in-theeac.html (Accessed 8 January 2014)
119
See Northern Corridor Transit Transport Coordination Authority (NC-TTCA) ‘Baseline Survey of key Nonphysical barriers along the Northern Corridor and The Establishment of a database at the TTCA Secretariat: Final
Report' (2005). Available at: http://www.worldbank.org/transport/transportresults/regions/africa/ncttca-finalreport.pdf (Accessed 12th May 2014)
120
Supra note 1
121
Available at: http://www.ttcanc.org/documents.php (Accessed 22 December 2013)
122
Gleave S.D. (2009). ‘Final Report of Evaluation of the Common Transport Policy (CTP) of the EU from 2000 to
2008 and analysis of the evolution and structure of the European transport sector in the context of the long-term
development of the CTP’. Prepared for the European Commission. Available at:
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in these laws are discussed below.
First, the EAC Treaty imposes obligations on Partner States. The obligations are derived from
Article 1 which sets out the overall objectives of the EAC namely: developing policies and
programmes to widen and deepen co-operation frameworks among Partner States.
Furthermore, the EAC Treaty enjoins Partner States, among other things, to: harmonise their
laws, regulations and practise: construct and maintain their national and regional transport
infrastructure, and revamp with a view to integrating, their railway systems.123 Those obligations
are reinforced in Article 7 (b) which obliges Partner States to co-operate in providing basic
infrastructure within the EAC aimed at deepening connectivity, easing flow of trade, investment
and factors of production.
Similarly, Article 89 (g) of the EAC Treaty obliges Partner States to take proactive measures to
jointly use their existing national facilities and programmes to enhance human resource
capacities in the transport and communications sectors.124
In order to promote an inter-connected and efficient railway, the EAC Treaty provides a
framework for a common railway transport system. Under Article 91, Partner States are required
to under measures to harmonise transport by rail in the region, revamp the infrastructure as well
as restructure their railways to make them more commercially oriented.
From the foregoing discussion, it has been established that the EAC Treaty sets out the basic
framework for Partner States regarding integrated railway networks. If properly implemented,
regional infrastructures and connectivity would be improved. However, the Treaty provides little
guidance on how to bridge the gap between national interest and the overall regional goals. 125
http://ec.europa.eu/transport/themes/strategies/doc/2009_future_of_transport/20090617_common_transport_policy_
final_report.pdf (Accessed 14 February 2014)
123
Chapter 15, Article 89(a) of the Treaty for the Establishment of the East African Community.
124
Article 89(g) of the Treaty for the Establishment of the East African Community, 1999.
125
Ranganathan, R. and Foster, V. (2011). ‘East Africa’s Infrastructure: A Regional Perspective’ A publication of
the World Bank, Washington, D.C. Available at:
http://infrastructureafrica.org/system/files/library/2012/02/REC%20East%20Africa.pdf (Accessed 18th January
2014)
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Additionally, it does not indicate what type of institutional arrangement should facilitate the
harmonisation or cooperation processes for railway development on a regional level.126 The lack
of an instrument to operationalise the provisions of the EAC Treaty to set out clearly the role and
obligations of the Partner States complicates this problem.
Second, the NCTTA; - a multilateral treaty governing transit transport operations in the Northern
Corridor127 also imposes obligations on member states. The northern corridor constitutes the
transport routes from the port of Mombasa in Kenya to the landlocked countries: Burundi,
Eastern DRC, Rwanda and Uganda as well as Ethiopia, Northern Tanzania, Ethiopia and
Southern Sudan.128 The NCTTA was signed by Burundi, Kenya, Rwanda and Uganda, in
1985,129 and came into force in 1986. The DRC acceded to the NCTTA in 1987. It was originally
referred to as the 'Northern Corridor Transit Agreement' but a 2007 revision led to a change to
the current title 'Northern Corridor Transit Transport Agreement'.130
The principal objectives of the NCTTA are: to ensure freedom of transit among the member
states, and develop integrated regional transport facilities and services.131 To achieve its
objectives, the NCTTA enjoins member states to establish and manage transport systems that are
viable, reliable and efficient as well as cooperate in investment planning and development of
transport and transit facilities.132
Railway development in the NCTTA is governed by Article 36 which obliges the contracting
parties agreed to develop railways and rehabilitate existing ones as well as establish seamless
railway services with unbroken block trains. Furthermore, the NCTTA provides for application
126
East African Transport Strategy and Regional Road Sector Development Program: Final Report Part II
September 2011. Available at: http://www.eac.int/infrastructure/index.php?option=com_docman&task=doc...
(Accessed 18th January 2014)
127
Available at: http://www.ttcanc.org/documents.php (Accessed 05 January 2014)
128
OECD (2004) ‘Investment opportunities in the Northern Corridor with emphasis on infrastructure’ A Paper
Prepared by the TTCA Secretariat for presentation at the COMESA Business Summit Kampala, Uganda 7-8 June
2004. Available at: http://www.oecd.org/investment/investmentfordevelopment/34879173.pdf (Accessed 14th
February 2014)
129
See the Preamble to the Northern Corridor Transit and Transport Agreement 1985 (as amended)
130
A look at the title of the revised version of the agreement reveals that it added the word ‘transport’ after ‘transit’
to read, the Northern Corridor Transit Transport Agreement.
131
See Article 3 of the Northern Corridor Transit Transport Agreement 1985 (as amended)
132
Article 4 of the Northern Corridor Transit and Transport Agreement 1985 (as amended)
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of rules made under the Protocol on Transport by Rail of Goods in Transit (the railway Protocol),
which is annexed to the agreement.133 The railway Protocol stipulates that detailed rules
regarding the administration and operation of rail traffic would be laid down in a railway
working agreement between the rail carriers of Kenya and Uganda.134 Indeed in 2006, the
respective railway carriers of the Governments of Kenya and Uganda concluded an interface
working agreement within the framework of the NCTTA to streamline their joint operations.135
The agreement is expounded below.
Like the EAC Treaty, the NCTTA lacks provisions that compel member states to enforce
decisions through enactment of relevant national policies and legislation. Consequently, the
harmonisation of national transport policies, laws and enforcement mechanisms as well as
infrastructure development, may not be achieved. For instance, despite the existence of the
NCTTA since 1985, the increase in investments and efforts by the EAC to revamp railway
infrastructure has not yielded the required levels of railway development in the region.136
c) Unfavourable railway concession arrangements
Due to the need to improve performance and attract investment in their railways, Kenya,
Tanzania and Uganda restructured their national railways by concessioning them to different
private organisations/companies. Kenya and Uganda concessioned their respective railways to
the same company, RVR (herein ‘the concessionaire’) in 2006, although vide separate
concession agreements. Under the agreements, Kenya and Uganda handed over their railways to
be jointly managed and operated by RVR for a 25-year period.137
133
Article 36 of the Northern Corridor Transit and Transport Agreement 1985. See also Protocol No.5, Transport by
Rail of Goods in Transit. Available at:
http://www4.worldbank.org/afr/ssatp/Resources/HTML/legal_review/Annexes_fr/Annexes%20V_fr/Annexe%20V06.pdf (accessed 14rd February 2014)
134
Article 2 of Protocol No.5, Transport by Rail of Goods in Transit
135
The Railway Interface Agreement between the Government of the Republic of Kenya and the Government of the
Republic of Uganda, 2006. See detailed discussion of the agreement in the following sub-section (ii) of this section.
136
UNCTAD (2001) Review of Progress in the Development of Transit Transport Systems in Eastern and Southern
Africa UNCTAD/LDC/115 20 July 2001. Available: http://unctad.org/en/docs/poldcd115.en.pdf (Accessed 22
December 2013)
137
The Government of the Republic of Uganda and Nalukolongo Railway Workshop Limited and Rift Valley
Railways (Uganda) Limited 2006. See Also Mageria D. 2006. ‘Kenya, Uganda hand over railways to private firm’
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The agreements and deeds were signed through the respective legal entities: Rift Valley
Railways Kenya Ltd. (RVRK) and Rift Valley Railways Uganda Ltd. (RVRU). On its part,
Tanzania concessioned its railway operations and management to Rail India Technical and
Economic Services Ltd (Rites) in 2007 for a period of 25 years.138 Burundi and Rwanda did not
have any existing railways at the time of this study, and there had not been any privatisation of
their railway services.
This study concentrates on the Kenya and Uganda concession agreements. Tanzania’s
concession agreements are not studied because by the time of this study, Tanzania had already
terminated its concession agreements following failure by the concessionaire to fulfil its
contractual obligations.139
Under the Kenya and Uganda concession agreements, Kenya Railways Corporation (KRC) and
Uganda Railways Corporation (URC) conceded management, operational, maintenance and
investment obligations to the concessionaire.140 The key objectives of the concessions were to: standardise infrastructure maintenance and operations, and foster regional economic integration
and growth. Therefore, the concessionaire was mandated to rehabilitate,141 maintain142 and
jointly operate the railway networks as a single integrated railway system so as to improve
economic efficiency and profitability.
Reuters: Available at: http://www.rmtbristol.org.uk/2006/11/kenya_uganda_hand_over_railway.html (The
researcher did not obtain a copy of the concession agreement for Kenya railways)
138
Tito, M.B. ‘Revitalising the Railways for Enhanced Regional Integration and Economic Growth’ A paper
presented at a Regional Conference on East African Railways, Dar es Salam, 2010. Available at:
http://www.infrastructure.eac.int/index.php?option=com_docman&task=cat_view&gid=64&Itemid=143 (Accessed
22 December 2013)
139
Nyangweso, H. 'East African Community: Lessons from Railways Concessions in East Africa' (2010). Available
at:
http://www.icafrica.org/fileadmin/documents/ICA_2010_Annual_Meeting_Tunis/session_5/EAC_Hosea_Nyangwe
so_Privatization_of_railways.pdf (Accessed 24 February 2014)
140
Section B.1 of the Concession Agreement between Uganda and RVR. See also Babbar. S. (2006). Partial Risk
Guarantees for Kenya-Uganda Joint Railway Concession, Transport Forum. Available at:
http://siteresources.worldbank.org/INTTRANSPORT/Resources/336291-1152714163458/27448961152794646430/fmazhard-babbar.pdf (Accessed 21 January 2014)
141
Section J:9 of the Concession Agreement between Uganda and RVR 2006
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As a step towards regional harmonisation of railway operations and development, Uganda and
Kenya signed a joint railway interface agreement aimed at bringing their separate concession
agreements together as one business.143 As earlier indicated, this agreement had been envisaged
by the NCTTA.144 The joint railway interface agreement was aimed at enabling the
concessionaire to optimise efficiency by initiating common strategies and actions to harmonise
the operation of the two railways.145 It also sought to indicate the areas and levels of cross-border
rationalisation146 and provide for establishment of a Joint Railway Commission.147 The joint
Railway Commission was to be established within six months from the date of the agreement.148
However, the Commission was yet to be established by May 2014.
It is important to note that the introduction of concessions (which was a new phenomenon in the
EAC) would require that the legal and regulatory framework for railways had to be substantially
changed to facilitate economic management of the railways. Kenya amended its railway law. 149
On its part, Uganda carried out the concessioning under the law that governs privatisation,
namely, the Public Enterprises Reform and Divestiture (PERD) Act.150 This study argues that
whereas the PERD Act could successfully govern the privatisation of railways, it does not
govern the post privatisation exercise. The operational mandate of the concession is governed by
the national railway laws. But these laws were not updated to reflect the changed circumstances
of ownership and operation of the Uganda railways, from the public sector to the private sector.
142
Section H:1 of the Concession Agreement between Uganda and RVR 2006
The Agreement between the Governments of the Republic of Kenya and the Republic of Uganda relating to
matters common to the Kenya Freight and Passenger Concession and the Uganda Freight Concession, 2006 (herein
‘the Interface Agreement’)
144
Supra note 142
145
Section D of the Interface Agreement
146
Section A.3 of the Interface Agreement
147
Section E.2 of the Interface Agreement
148
Ibid
149
Kenya Railways Corporation Act Cap 397(as amended) was amended inter alia, to formally confer powers on the
Kenya Railways Corporation to enter into the Concession agreement with the concessionaire.
150
A criterion for divestiture of public enterprises is set out in S 22 of The Public Enterprises Reform and
Divestiture Act Cap 98 (Laws of Uganda). The Act was available at:
http://www.opm.go.ug/assets/media/resources/315/PUBLIC%20ENTERPRISES%20REFORM%20%26DIVESTIT
URE%20ACT.pdf (accessed 12 May 2014)
143
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A review of the performance of the railways since the conclusion of the concession agreements
reveals minimal improvements. Today in Kenya and Uganda, repair and restoration works are
being undertaken by the concessionaire for the Kenya-Uganda railway.151 Despite some
achievements, no significant infrastructure improvement has been undertaken by the
concessionaire.152 Several factors emanating from the structure of the agreements have stalled
concrete progress. These are discussed below.
The concession agreements conferred monopoly along the concede railway trunks in Kenya and
Uganda on RVR.153 The agreements prohibit the Governments of Kenya and Uganda from
introducing measures (including introduction on new players along the conceded railway trunks)
which may affect the profitability of the concessionaire.154 As a result, even where the
concessionaire had failed to comply with its obligations under the agreement the governments
would neither terminate the concessions nor allow new service investors along the conceded
trunks.155 The result of this has been creation of an inefficient private monopoly. The study
argues that the concessioning processes has since resulted in transfer of ownership and
management of railways from inefficient government monopolies to private monopolies.
Furthermore, this study contends, that no thorough feasibility study regarding the capacity of the
concessionaire to deliver its obligations under the agreements, was undertaken. A few years after
winning the concession, it was discovered that the concessionaire lacked the necessary resources
to implement its obligations.156 For example, at the commencement of the contract period, it was
151
Mbogo S., Kabona E., Kahoho T., Trade Mark Southern Africa, 14 January 2014. Available at:
http://www.trademarksa.org/news/eac-railway-network-will-plans-restore-decades-old-facility-finally-take
NCTTCA. ‘Northern Corridor Infrastructure Master Plan Study: Final Report’ 2011 pp 4. Available at:
http://www.ttcanc.org/documents/The%20Northern%20Corridor%20Infrastructure%20Master%20Plan.pdf
(accessed 24 February 2014)
152
NCTTCA. ‘Northern Corridor Infrastructure Master Plan Study: Final Report’ 2011 pp 4. Available at:
http://www.ttcanc.org/documents/The%20Northern%20Corridor%20Infrastructure%20Master%20Plan.pdf
(accessed 24 February 2014)
153
See for example Section B of the Concession Agreement between Uganda and Rift Valley Railways Ltd.
Ibid
155
PPIAF ‘A PPP against the Odds: The Kenya-Uganda Rail Concession fights for survival’
http://www.ppiaf.org/sites/ppiaf.org/files/images/4.Case_Study_on_Kenya-Uganda_Railway_Concession.pdf
(Accessed 24 February 2014)
156
Railway Gazette. 2009. ‘Struggling concessions under review’. Available at:
http://www.railwaygazette.com/news/single-view/view/struggling-concessions-under-review.htmi (Accessed 24
February 2014)
154
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discovered that RVR did not to have sufficient expertise in running a railway operation and they
(the concessionaire) did not bring in technical expertise to manage the operation as the
governments had expected.157
There has been no significant improvement in infrastructure because the concessionaire is yet to
invest in infrastructure and rolling stock.158 Additionally, freight volumes have gone down and
payment of concession fees has not been effected.159
d) Weak regional investment law
The principle legal framework governing investment on a regional level in the EAC is the East
African Model Investment Code (herein ‘the Code’).160 The objective of Code is to guide Partner
States in pursuing open, liberal and transparent investment policies that provide, inter alia,
predictability, stability and transparency in their foreign investment regimes.161 Partner States are
encouraged to put in place measures that will ensure systematic application of procedures and
policies with a view to achieving the overall goal of deeper regional integration.162
However, the Code does not impose binding legal obligations on Partner States. Partner States
are not obliged to domesticate the Code’s provisions. The Code simply states that Partner States
‘may’ adopt the Code into their national investment policies. To that extent, it remains a guiding
instrument without any binding effect on Partner States.163 As such the EAC Partner States have
not made significant progress in the harmonising their investment laws.164
157
Supra note 165
Supra note 31
159
Nyangweso H. East African Community: Lessons from Railways Concessions in East Africa. Available at:
http://www.icafrica.org/fileadmin/documents/ICA_2010_Annual_Meeting_Tunis/session_5/EAC_Hosea_Nyangwe
so_Privatization_of_railways.pdf (Accessed 2 April 2014)
160
The East African Community Model Investment Code 2006. A publication of the EAC Secretariat. Available at:
http://www.eac.int/invest/index.php?option=com_docman&task=cat_view&gid=38&Itemid=70 (accessed 24
February 2014)
161
Preamble of the East African Community Model Investment Code 2006
162
Ibid
163
Section 3 of the East African Community Model Investment Code 2006
164
Kitonsa, E. ‘The Status of the EAC Legal Harmonisation Process in Uganda’ A paper presented at a conference
on creating a predictable and facilitative legal environment for business in the East African Community,
158
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By and large, the national investment laws and policies of each partner state are generally
applied in regulation of investments including in cross-border infrastructure projects (authors
own). A developer will still have to grapple with disparate investment laws and policy
requirements of each Partner State.
2.4 Concluding remarks
Rail transport remains underutilised in the East African Community. Due to low cargo volumes,
railway companies make less profits resulting in limited resources to reinvestment in
infrastructure. This has led to its deterioration over the years. Efforts to revamp the railway
networks are hampered by significant soft infrastructure challenges. The prevailing legal and
institutional frameworks in the EAC remain inefficient to support sustainable cross-border
railway development. The research therefore argues for benchmarking from a more successful
region (SADC) which has attained greater success in building and maintaining sustainable
regional railway systems.
6th – 7th August 2012 in Arusha Tanzania. Available at: https://www.wbginvestmentclimate.org/advisoryservices/regulatory-simplification/business-regulation/upload/Paper-on-Status-of-Legal-Harmonisation-Process-in-
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CHAPTER THREE
BENCHMARKING SADC’S LEGAL AND INSTITUTIONAL FRAMEWORKS
GOVERNING RAILWAY DEVELOPMENT
3.1 Introduction
This chapter draws key lessons from SADC by assessing its legal and institutional frameworks
that govern regional railway development. The rationale for benchmarking the SADC is
discussed. The research takes cognisance of the fact that there is no-one-size fits all in matters of
legal and policy formulation. Therefore, only the legal and institutional frameworks suitable to
EAC’s circumstances are benchmarked. Similarly, challenges that the SADC faces and how it
overcame them were studied to ensure that the EAC is better prepared to overcome them, if
encountered. It concludes that due to differences in social, political and economic landscapes
between the EAC and the SADC, there may be some challenges that the EAC may face in
adapting certain SADC laws and institutions to its circumstances. Proposals for overcoming
those challenges are discussed.
3.2 Rationale for benchmarking SADC
The main motivation for benchmarking is to improve the performance of a process. 165 This
research uses the ‘Best Practice’ benchmarking model. Best Practice Benchmarking involves
inter alia, studying similar processes or activities of best performing organisations and
identifying, adapting, as well as implementing the practices that reveal the best performance
results.166 It focuses on learning why other organisations are achieving higher levels of
performance and putting into practice the lessons learnt.167
Uganda_Edward-Kitonsa.pdf (Accessed 12 May 2014)
165
Global Benchmarking Network. 2008. 'Global Survey on Business Improvement and Benchmarking'. Available
at:
http://www.globalbenchmarking.ipk.fraunhofer.de/fileadmin/user_upload/GBN/PDF/2010_gbn_survey_business_i
mprovement_and_benchmarking_web.pdf (Accessed 28 February 2014)
166
Ibid
167
Ibid
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It is important to note from the outset that SADC and the EAC are heterogeneous when looked at
in terms of: economic size, levels of regional railway development and the initiatives established
to develop their railways. But there are compelling reasons why the SADC region can provide
useful lessons to the EAC. As already observed in chapter one,168 the two regional economic
communities share some common characteristics which may impact their railway programmes in
a similar way. Problems faced by member countries of both regions, in their railway subsectors,
are of a similar nature. Hence, this research’s argument that similar approaches undertaken in
SADC’s railways can also be undertaken in the EAC.
Furthermore, the two regional economic communities are already engaged in a cooperation
framework under the auspices of the Tripartite Free Trade Area regional infrastructure
programme.169 A key objective of the tripartite infrastructure programme amongst the COMESA,
the EAC and the SADC is to harmonise and coordinate efforts between national, regional,
continental and global stakeholders in infrastructure development.170 Through negotiations, the
COMESA, the EAC and the SADC are able to jointly plan and implement infrastructure
programmes and facilitate sharing of information, experiences and best practices. 171 Therefore,
initiatives employed by the SADC in developing its regional railways can also be easily adapted
to the circumstances of the EAC.
This study focused on the various initiatives namely: regulatory, coordination and funding
employed by the SADC to achieve greater infrastructure development relative to the EAC.
Common factors which affect both the EAC’s and the SADC’s railway initiatives are also
examined. This is intended to guide policy makers in the EAC to creatively apply workable
initiatives that were employed by SADC to surmount the infrastructure deficits in the region.
168
See discussion in subsection 1.8 of chapter one
See http://www.sadc.int/about-sadc/continental-interregional-integration/tripartite-cooperation/
170
SADC RIIC. (2013). ‘COMESA-EAC-SADC Tripartite Regional Infrastructure Projects Database (TRIPDA)’.
Version Number: 2013.01. Trade Mark South Africa. Available at: http://invest-tripartite.org/wpcontent/uploads/2013/06/20-TRIPDA-List-of-Projects-2013-06-20.pdf (Accessed 12 May 2014)
171
UNECA. (2011). Study on the Establishment of Inter-RECs’ Free Trade Areas in Africa: Drawing on lessons
from the COMESA-SADC-EAC FTA Experience, Final Report 2011. Addis Ababa, Ethiopia. Available at:
http://www.uneca.org/sites/default/files/uploaded-documents/CTRCI-VII/tripartite_comesa_eac_sadc_ftaresearchresearch-final-report.pdf (Accessed 14 February 2014)
169
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3.2.1
Economic size and geographical disadvantages
In terms of disparities in economic sizes of their Member/Partner States and geographical
location (from world markets), SADC and the EAC have several similarities. The SADC
regional economic community comprises 15 Member States172 of varying economic sizes and
land masses.173 SADC has a mix of low- and middle-income countries.174 In terms of population
size, some countries have large populations while others have small populations.175 SADC
Member States include large countries with large land masses, small isolated economies and
island states. SADC is also home to six landlocked countries namely; Botswana, Lesotho,
Malawi, Swaziland, Zambia and Zimbabwe.176
By comparison, the EAC comprises five Partner States also of varying land masses, economic
sizes as well as different geographical locations from world markets. The economies are also at
varying levels of development. Kenya and Tanzania are coastal-developing countries177 and they
also have the largest land masses and populations compared to other EAC Partner States. 178 As
already seen in chapter one, Burundi, Rwanda, and Uganda are landlocked LDCs.179
SADC's small economies are unlikely to single-handedly develop their portions of regional
infrastructure backbone unless some external or regional collective funding arrangements are in
place.180 For instance, it has been estimated that the DRC’s spending requirement is
172
Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique,
Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe
173
Supra note 125
174
Examples of high income countries include; South Africa and Botswana, and some of the low income countries
are DRC and Swaziland
175
Example of countries with the largest populations include among others, DRC and South Africa; while those with
smallest populations include Swaziland and Lesotho.
176
Bingandadi L. (2013). 'Southern African Development Community Infrastructure and Trade Facilitation
Initiatives.' A Presentation at the African Regional Review Meeting on the Implementation of the ALMATY
PROGRAMME OF ACTION, 16-18 July 2013, Addis Ababa, Ethiopia. Available at:
http://www.uneca.org/sites/default/files/page_attachments/lldc2013_bingandadi-sadc-report-almaty-ten-yearreview-conference.pdf (Accessed 16 April 2014)
177
United Nations Statistics Division, October 2013. Available at:
http://unstats.un.org/unsd/methods/m49/m49regin.htm (accessed 2nd March 2014)
178
See http://en.wikipedia.org/wiki/East_African_Community (accessed 1 May 2014)
179
Supra note 22
180
Ranganathan, R and Foster, V. 2011. "The SADC’s Infrastructure: A Regional Perspective." Policy Research
Working Paper No. 5898, World Bank, Washington, D.C. Available at: http://wwwwds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2011/12/05/000158349_20111205143855/Rendered/PDF
/WPS5898.pdf (Accessed 27th February 2014
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approximately 14 percent of its gross domestic product (GDP), which is beyond what the
national economy could manage on its own unless assisted by external development partners.181
This research argues that this problem equally applies to the EAC’s small and poor landlocked
economies.
Given the identical geographical and economic factors of both the EAC and the SADC regional
economic communities, cooperation particularly through information sharing in the development
and operation of their respective regional transport infrastructures is a practical thing to do. 182
More importantly, the landlocked countries of the respective regions ought to seize the
opportunity to encourage concerted regional efforts in infrastructure development. The UN
Almaty Programme of Action183 already recognises the need for landlocked developing countries
and their coastal-transit neighbours to ensure regional cooperation or integration initiatives to
facilitate the latter’s participation in the global economy.
3.2.2
A comparison between railways in EAC and SADC
SADC’s railway infrastructure is superior (in terms of development, efficiency and integration),
to that of the EAC.184 Railways in SADC cover almost all transport corridors.185 For example
one of the most significant international networks on the continent is centred in South Africa and
stretches north to Zimbabwe, Zambia, and the DRC.186
181
Ibid
Byiers, B. and Vanheukelom, J. 2014. ‘What drives regional economic integration? Lessons from the Maputo
Development Corridor and the North-South Corridor.’ Discussion Paper No. 157. European Centre for Development
Policy Management. Available at:
http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf/0/C589C0CD785BB059C1257C78003281CD/$
FILE/DP157_PERISA%20Corridors.pdf (Accessed 27th April 2014)
183
United Nations. (2001). Almaty Programme of Action: Addressing the Special Needs of Landlocked Developing
Countries within a New Global Framework for Transit Transport Cooperation for Landlocked and Transit
Developing Countries. Available at:
http://www.unohrlls.org/UserFiles/File/LLDC%20Documents/almaty_programme.pdf (Accessed 12 January 2014)
184
Dube, M. (2013). Analysing the development process for infrastructure projects in SADC. (PERISA Case
Research 3: Infrastructure). Johannesburg: SAIIA, ECDPM. Available at:
http://www.saiia.org.za/expertise/memory-dube (Accessed 14 February 2014)
185
Bingandadi, L. op. cit.
186
AfDB (2010). Restructuring and Recovery in Railway Services. Zimbabwe Report, Chapter ten. Available at:
http://www.afdb.org/fileadmin/uploads/afdb/Documents/GenericDocuments/12.%20Zimbabwe%20Report_Chapter%2010.pdf (Accessed 13 March 2014)
182
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In addition, there are approximately 12 operational, mainly government-owned, railways within
SADC member states. Eleven of those railways form the Interconnected Regional Rail Network
(IRRN) in the mainland SADC countries.187 This accounts for approximately 43% of the total
Railway network in Africa.188
Although some SADC Member States namely: Lesotho, Mauritius and the Seychelles are not
connected to railway networks, the regional network transcends half a dozen countries.189 This
represents a far higher level of regional rail interconnection than can be found in the EAC and
other regional economic communities of Africa. As seen in chapter one, in the EAC few
binational, fragmented and dilapidated railway systems are what exists specifically, in Kenya,
Tanzania and Uganda.190
In the EAC, railways transcend neither the entire region nor all transport corridors. For example,
Burundi and Rwanda are not linked to their neighbours by railway nor do they operate any
railways within their territories.191 Though, plans are underway to extend railways to these
countries.192
In terms of freight volumes, railways in SADC carry more cargo than all other African regional
economic communities combined.193 They handle approximately 74 percent of Sub-Saharan
187
Kritzinger-van, L. N and Moreira, E. (2002). ‘Regional Integration in Southern Africa: Overview of Recent
Developments’ Discussion Paper 33107. The World Bank, Washington, DC. Available: http://wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2005/07/26/000160016_20050726093932/Rend
ered/PDF/33107a10PAPER0AFR0Regional1Integration.pdf (Accessed 1st April 2014)
188
UNECA. (2009). ‘Africa Review Report on Transport: Final Draft’ Available at:
http://www.uneca.org/sites/default/files/publications/africanreviewreport-on-transport.pdf (Accessed 2nd May
2014)
189
SADC. (2010). ‘Formulation of SADC Regional Infrastructure Development Master Plan: Sector Diagnostic
Report, Rail Sector’. Available at: http://www.sararail.org/wp-content/uploads/2010/07/Rail-Diagnostic-Preview.pdf
(Accessed 14th February 2014)
190
Since the collapse of the East African Railways and Harbour Corporation in 1977, the different national railways
in the EAC namely Kenya Railways Corporation, Tanzania Railways Corporation and Uganda Railways
Corporation independently and isolation of each other. See
http://en.wikipedia.org/wiki/East_African_Railways_and_Harbours_Corporation
191
EAC Secretariat. 2011. The East African Railways Master Plan Research: Final Report 2009. Pp.33. Available at:
http://www.eac.int/infrastructure/index.php?option=com_content&view=article&id=116&Itemid=68
192
Ibid
193
Foster V., and Briceño-Garmendia, C. (2010). ‘Africa’s Infrastructure: A Time for Transformation.’ The World
Bank, Washing D.C. Available at:
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Africa’s total freight traffic and more than 80 percent of the total net tonne-kilometres.194
SADC’s railways also have a superior passenger turnover of more than 70% of the total in SubSaharan Africa, with significantly lower freight tariffs than in East and West Africa.195 SADC is
also home to Mauritius, the best performing African country with regards to state of its transport
infrastructure.196 This makes SADC particularly very important for best practice benchmarking.
Additionally, SADC’s transport policies are more harmonised than those of the EAC. The
cooperation framework under the SADC Protocol on Transport, Communications and
Meteorology (herein ‘the transport protocol’) legally binds member States to harmonise all their
policies, institutions, standards, and practices in transport.197 Through the transport protocol,
SADC member states have rolled out a comprehensive railway programme to: separate railway
operations from regulations; promote commercialisation of operations and allow enhanced
operational synergy, and allow participation of the private sector.198
As indicated in the introduction to this chapter, challenges faced by the SADC are also studied to
better prepare the EAC to avoid or surmount them when they arise. Thus, one of the major
challenging facing the SADC is the prevailing country differences regarding the state of railways
in the SADC region.
3.2.3
Railway differences among SADC member states
Although commonly cited as an example of a successful story in regional infrastructure
http://infrastructureafrica.org/system/files/Africa%27s%20Infrastructure%20A%20Time%20for%20Transformation
%20FULL%20TEXT.pdf (Accessed 14 February 2014)
194
Ibid
195
Logistics Performance Index (LPI) 2010: Southern and Eastern Africa. World Bank, Washington D.C. Available
at: http://siteresources.worldbank.org/INTTLF/Resources/5150031276029788910/LPI_Brochure_SADC_East_AFR.pdf (The Logistics Performance Index is a tool used by the
World Bank to measure the perceptions of a country's logistics based on inter alia, efficiency of customs clearance
process, quality of trade- and transport-related infrastructure. It is measured on a scale of 1 – 5 (1being the worst and
five being the best)
196
Supra note 125
197
Chapter 7 of the SADC Protocol on Transport, Communications and Meteorology in the Southern African
Development Community (SADC) Region. Available at:
http://www.unctadxi.org/sections/DITC/SADC/docs/SADC%20Regional/SADCPROTOCOLONTRANSPORT.pdf
(Accessed 26 April 2014)
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development on the continent, the aggregates for the SADC as a whole do not reflect a clear
picture of individual country variations. Over the years, railway networks in some SADC
member state for instance Angola, DRC and Madagascar, have been deteriorating as a result of
devastating wars, poor maintenance and lack of funding.199 Yet, railway conditions in other
members, for example, Malawi, Mozambique and Tanzania have been improving due to the
construction, rehabilitation and maintenance of inter-country regional corridors.200
In addition, almost half of the sub-region’s rail network is in South Africa. As a result, more
benefits accrue to South Africa. For instance, a study of the benefits of the Maputo Development
Corridor to firms operating there has concluded that most benefits accrue to large South African
firms and large inward investors in Mozambique.201
SADC has faced and continues to face several challenges some of which are similar to those
faced by the EAC, For example, there is delayed inter-connection along some Member States’
borders due to poor coordination and disparities in railway gauges used among different national
rail systems.202 This is caused by human weaknesses such as distrust, fear of ceding national
sovereignty and failure to incorporate regionally agreed plans into national development plans.203
Despite all the challenges, SADC has still managed to achieve better levels of regional
infrastructure development than the EAC. This leads to the question: How has SADC managed
to attain better levels of railway development and integration of the different national railway
networks than the EAC?
198
SADC Secretariat https://tis.sadc.int/english/tis/documents-and-resources/resources-by-sector-andtopic/transport-services/ (Accessed 28 April 2014)
199
Mutambara, T 'Regional transport challenges within the Southern African Development Community and their
implications for economic integration and development'. In Anton Bösl., Willie Breytenbach., Trudi Hartzenberg.,
Colin McCarthy and Klaus Schade (Eds.) ' Monitoring Regional Integration in Southern Africa Yearbook Volume 8
(2008). Available at: http://www.tralac.org/wp-content/blogs.dir/12/files/2011/uploads/MRI2008IntroBiosOther.pdf
(Accessed 30 April 2014)
200
Ibid
201
Byiers, B and Vanheukelom , J. Supra note 182
202
Supra note 23.
203
Hagerman, E. (2012). ‘Challenges to Regional Infrastructure Development.’ A Paper prepared for the
Development Bank of Southern Africa. Available at:
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The answer lies in the fact that the SADC has a better legal and institutional framework as well
as its enforcement. Similarly, SADC has for long recognised that development of integrated
transport systems is a major stimulus for regional economic development.204 To this end, it has
earmarked regional infrastructure development as a key pillar of its development agenda. 205
Indeed the transport sector has the largest number of projects that have been earmarked for
implementation.206
In order to ensure efficient execution of its programmes, SADC established various legal and
institutional frameworks to govern the development of its railways. These are discussed in detail
below.
http://www.tips.org.za/files/report_on_regional_infrastructure_development_in_africa_tips_-_ellen_hagerman.pdf
(Accessed 1st April 2014)
204
See Article 21 (1) and (3) (b) of the Treaty of the Southern African Community 1992. Available at:
http://www.sadc.int/files/9113/5292/9434/SADC_Treaty.pdf (Accessed 16 March 2014)
205
Ngwawi, J. ‘Infrastructure development top priority for regional integration’ (2006) 9 SADC TODAY, No. 1.
Available at: http://www.sardc.net/editorial/sadctoday/documents/v9n1.pdf (Accessed 1 May 2014)
206
Ngwawi, J. ‘Infrastructure investment SADC seeks US$64 billion’ (2005) 15 SADC TODAY No 5. Available at:
http://www.sardc.net/editorial/sadctoday/documents/v15n5.pdf (Accessed 1 May 2014)
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3.3 SADC’s legal and institutional frameworks governing railway development
3.3.1.
The SADC Protocol on Transport, Communications and Meteorology 1996
The SADC Protocol on Transport, Communications and Meteorology (PTCM)207 is an offshoot of
the SADC Treaty of 1992.208 Articles 22 and 23 of the SADC Treaty enjoin Member States to
conclude a Protocol to facilitate the expansion and deepening of their co-operation, among
others, in the areas of infrastructure to establish viable and sustainable transport systems.
Pursuant to this duty, SADC Members States enacted the Protocol on Transport,
Communications and Meteorology (herein ‘the transport protocol’).
The transport protocol is a legally binding multilateral cooperation framework governing among
others, transport infrastructure development in each SADC Member State and the region. 209 Its
major goal is establishing economically viable and efficient transport operations and systems. 210
In order to achieve the objective, the Protocol enjoins Member states to cooperate, harmonise and
integrate policies and strategies on both national and regional levels. 211 It identifies areas where
cooperation and integration are needed to include: policy, legal and regulatory frameworks;
institutional frameworks;212 operations, logistics,213 technical designs, investment regimes,
administrative, financial, and human resources in the transport sector.214 It also underpins the
development of integrated transport corridors.215 The Transport Protocol covers all modes of
transport. However, this research is limited to an examination of the railway subsector.
207
The SADC Protocol on Transport, Communications and Meteorology (PTCM) was signed by the Heads of State
and Governments of the 15 Member states of SADC in August 1996 and entered into force upon ratification, in
accordance with its article 14.2. Available at:
http://www.sadc.int/files/7613/5292/8370/Protocol_on_Transport_Communications_and_Meteorology_1996.pdf
(Accessed 14 February 2014)
208
See Treaty of the Southern African Development Community, 1992. Available at:
http://www.chr.up.ac.za/undp/subregional/docs/sadc8.pdf (Accessed 14 February 2014)
209
Article 2.1 PTCM.
210
Article 2.3 PTCM
211
Article 3.3 PTCM
212
Ibid
213
Article 3.4 PTCM
214
Article 2.1 (a) PTCM
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The Transport Protocol lays down a practicable cooperation framework on a regional level in the
railway subsector.216 It is aimed at facilitating the provision of interconnected, efficient and a
cost effective railway service which is also responsive to environmental and market needs. To
this end, the Protocol requires Members to: establish a harmonised regional railway policy; coordinate economic and institutional restructuring of railways by granting the autonomy and
reforming management; monitor the adequacy of rail infrastructure required to meet the region’s
developmental needs; co-operate on operational matters and human resource development; as
well as develop and implement compatible technical standards in respect of infrastructure and
operational equipment.217
To operationalise the objectives of the Protocol, various tools and strategies have been devised
by SADC. These include: a Regional Indicative Strategic Development Plan (RISDP); the SADC
Regional Infrastructure Master Plan; the SADC transport corridor concept; and railway
concessioning. The tools and/or initiatives are discussed in detail below.
3.3.2.
The Regional Indicative Strategic Development Plan (RISDP) 2003
The RISDP218 is a 15 year programme framework broken into five-year RISDP strategic plans
to be implemented in phases between 2005 and 2020). The strategic plans provide targets and
out puts to be achieved in the medium-term.219 It is intended to guide Members States, SADC
Institutions, stakeholders and development partners on SADC programmes, projects and
activities in line with the SADC agenda and strategic priorities, as contained in the SADC
Treaty.220 The ultimate objective of the RISDP is to deepen integration in the region.221
215
Article 2 PTCM
Articles 7.2 and 7.4 of the SADC Protocol on Transport Communications and Meteorology 1996
217
Article 7.2 of the SADC Protocol on Transport Communications and Meteorology 1996.
218
SADC Secretariat, Summary of the Regional Indicative Strategic Development Plan 2003. Available at:
http://www.sadc.int/about-sadc/overview/strategic-pl/regional-indicative-strategic-development-plan/ (Accessed 14
February 2014)
219
Ibid
220
Chapter 1, paragraph 1.2.1 of RISDP. See also Article 5A,of the Treaty of the Southern African Development
Community 1992 Available at: http://www1.chr.up.ac.za/undp/subregional/docs/sadc8.pdf (Accessed 14 February
2014)
216
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Although the RISDP is not a legally binding instrument but a guiding document which has been
largely successful because it enjoys significant political support in SADC.222 It was developed
in the context of reviewing and restructuring SADC institutions.223 The restructuring was aimed
at increasing the efficiency and effectiveness of SADC programmes and policies in a
coordinated and harmonised way.224
The RISDP identifies the existing gaps and the coordination-challenges which SADC faces in
implementing its Programmes. Then Member States are able to prioritise areas for joint
implementation, based on a particular areas’ significance to achieving SADC’s objectives. 225 The
RISDP also guides members to set up a logical implementation programme necessary for
achieving the region's broader goals, taking into account their feasibility and the region's
resources.226 For example, it was on the basis of the strategic framework in the RISDP, upon
which the SADC Secretariat prepared a comprehensive implementation framework for the 20052020 period.227
Suffice to note that before RISDP was conceived, SADC programmes, policies and strategies
were not properly co-ordinated. There were poor inter-sectoral linkages because most of them
were designed in isolation by individual sector-coordinating units.228 RISD has therefore
provided a backbone for effective implementation of SADC programmes.
221
SADC. (2005). SADC Major Achievements and Challenges: 25 years of Regional Co-operation and Integration.
Gaborone: SADC. Available at: http://www.sadc.int/files/7713/5826/4978/Achievements_booklet.pdf (Accessed 22
January 2014)
222
Hartzenberg, T. (2011). ‘Regional Integration in Africa’ Staff Working Paper ERSD-2011-14, World Trade
Organisation. Geneva. Pp. 6. Available at: http://www.wto.org/english/res_e/reser_e/ersd201114_e.pdf (Accessed 2
May 2014)
223
Trade Law Centre. (2012). The Regional Indicative Development Plan: SADC's trade-led integration agenda.
How is SADC doing? Stellenbosch: tralac. Available at: http://www.tralac.org/files/2012/04/S12TB022012-SADCRISDP-SADC-agenda-20120418.pdf (Accessed 27 January 2014)
224
See http://www.dfa.gov.za/foreign/Multilateral/africa/sadc.htm
225
Chapter 1 of the Regional Indicative Strategic Development Plan 2003
226
Chapter 4 of the Regional Indicative Strategic Development Plan 2003
227
SADC Secretariat. 2011. Desk assessment of the Regional Indicative Strategic Development Plan 2005-2010.
Final report approved by SADC Council, November 2011. Gaborone. Available at: http://www.sadc.int/aboutsadc/overview/strategic-pl/desk-assessment-risdp/ (Accessed 2nd May 2014)
228
Chapter 1 of the Regional Indicative Strategic Development Plan 2003
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A desk review of the impact of SADC programmes that have been facilitated by the RISDP since
its implementation in 2005229 revealed tremendous progress.230 The review concluded that the
RISDP has facilitated the adoption of efficient protocols and policies.231
However, the achievements of RISDP have not been without challenges. Actual implementation
of the RISDP has not been overly successful. It has been found for instance that commitments
taken by Member States are often not realised in a timely fashion, leading to delays in project
implementation.232 Furthermore, Member States’ implementation of regional programmes is still
behind schedule largely because, majority of the states did not dedicate resources in their
national budgets, for RISDP programmes within their territories.233 The desk review also found
that where Member States established national structures to implement SADC programmes, such
national structures were not conferred with the requisite capacity to execute their coordination
mandates. The result has been failure to implement agreements according to set targets.
The key lesson for the EAC arising from the analysis of SADC’s RISDP is to set up a clear
roadmap for railway development. The existing five-year Development Strategies of the EAC
should be re-aligned to reflect genuine targets and out puts to be achieved, taking into account
the EAC’s available resources. They should guide not only the Partner States but also EAC
Institutions, stakeholders and development partners on EAC programmes, projects and activities
in line with the EAC objectives and strategic priorities, as contained in the EAC Treaty. The
EAC also needs to carry out a periodic and comprehensive assessment of its Development
Strategies to inform what needs to be re-aligned in order to achieve better results.
229
This review was sanctioned by the SADC Summit of Heads of State in 2011- See SADC Secretariat. 2011.
'Communiqué of the 31st Summit of Heads of State and Government of the Southern African Development
Community (SADC)' which was held in Luanda, Republic of Angola from August 17 to 18, 2011. Available at:
http://www.trademarksa.org/news/communique-sadc-summit (Accessed 3 January 2014)
230
Trade Law Centre (tralac). Op cit
231
SADC Secretariat. (2011). ‘Desk Assessment of the Regional Indicative Strategic Development Plan (2005 –
2010)’ Final Report Approved by SADC Council, Gaborone. November 2011. Available at:
http://www.sadc.int/files/4413/5292/8372/Regional_Indicative_Strategic_Development_Plan_Desk_Assessment.pdf
(Accessed 14 February 2014)
232
Ibid
233
Ibid
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The EAC should also set up National Structures with the requisite capacity to coordinate the
implementation of its Development Strategies. Otherwise, the result may be failure to implement
set targets. This has been the case with RISDP because SADC members did not have such
structures in place to ensure compliance.
3.3.3. SADC Regional Infrastructure Development Master Plan (RIDMP) (2012 -2027)
Building on the success of the RISDP, SADC launched the RIDMP 234 in 2012. The RIDMP
provides a framework for cooperation among Member States and with development partners as
well as all stakeholders, in the joint implementation of infrastructure development.235 It ensures
that regional infrastructure development is systemic and that projects are prioritised towards
achieving regional integration. It guides the processes from selection of regional infrastructure
projects through preparation for bankability and investment, to implementation.
The RIDMP defines SADC’s infrastructure development strategy and constitute basis for
prioritisation of projects, as well as the modus operandi for implementation. The Strategic
Framework forecasts both requirements and implementation roadmap over a duration of fifteen
(15), in three phases of five (5) years each. The three phases are as follows; Short-term 20132017, Medium-term 2017-2022 and long-term 2022-2027.
Although the EAC also has a railway master plan (the EARMP)236 relative to SADC’s RIDMP,
the edge that the SADC has over the EAC is implementation of the RIDMP. The EARMP
recommends what the region needs to do to revamp the railways system in the short, medium
and long terms. But, these have still remained on paper.
3.3.4.
SADC transport corridor concept
SADC adopted the transport corridor development concept to promote joint operations,
connectivity and pooling of resources. Corridors in SADC have evolved over a long period of
234
SADC Secretariat. (2012). SADC Regional Infrastructure Development Master Plan (Executive Summary) 2012.
Available online at: http://invest-tripartite.org/wp-content/uploads/2013/06/SADC-RIDMP-Executive-Summary.pdf
(Accessed 1 March 2014)
235
Ibid
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time.237 Transport infrastructure development has traditionally occurred along corridors that
connect areas of industry with areas of trade.238
Corridors are seen as a regional policy tool to focus on improvement of both physical and ‘soft’
infrastructure.239 The transport protocol enjoins members to designate, inter alia, transport
corridors which may be intermodal or multimodal in nature.240 This mandate was re-echoed by
the heads of state of SADC Member States at their 2007 SADC Summit at which they directed
the SADC secretariat to fast-track a corridor Strategy.241 SADC has since made considerable
progress in this area.
On the regional level, sixteen development corridors have been designated in Southern Africa in
conjunction with the Member States.242 These corridors include but are not limited to; Beira and
Zambezi Development Corridors;243 the North-South Corridor;244 Tazara Development Corridor
(Dar es Salaam Corridor);245 and Walvis Bay Corridor.246
236
See chapter two
De Beer GRM. (2001). 'Regional Development Corridors and Spatial Development Initiatives – Some Current
Perspectives on Potentials and Progress'. A prepared for the 20th South African Transport Conference, July 2001.
South Africa. Available
at: http://repository.up.ac.za/bitstream/handle/2263/8129/3a11.pdf?sequence=1 (Accessed 15 April 2014)
238
See SADC Secretariat. http://www.sadc.int/themes/infrastructure/transport/transport-corridors-spatialdevelopment-initiatives/ (Accessed 15 April 2014)
239
SADC Secretariat. (2003). Regional Indicative Strategic Development Plan 2003.
240
Article 3.5 (2) of the SADC Protocol on Transport Communications and Meteorology 1996
241
SADC Secretariat. (2007). 'Communiqué of the summit of Heads of State and Government of SADC'. Lusaka,
2007. Available at: http://www.sadc.int/files/4113/5292/8387/SADC_Summit_Communique_-Aug_2007.pdf
242
The corridors include: the Dar es Salaam Corridor, Mtwara Development Corridor, Nacala Development
Corridor, Shire- Zambezi Waterway, Beira Corridor, Limpopo Corridor, Maputo Corridor, Libombo Development
Corridor, Lesotho Railway, Trans-Kalahari Corridor, Walvis Bay Corridor, Trans-Caprivi Corridor, North-South
Corridor, Trans-Kunene Corridor, Lobito Corridor, and the Malanje Corridor
243
It links Malawi, Mozambique, Zambia and Zimbabwe. It comprises a road network and a railway system. The
Sena Railway Line was concessioned in 2004.
244
It links South Africa to the countries to its north and is the busiest transit transport link in Eastern and Southern
Africa. It connects Botswana, DRC, Malawi, Mozambique, Zambia, Zimbabwe and South Africa. It also interlinks
with other Corridors including the Trans-Kalahari, Beira, Lobito, Nacala, and Tazara Corridors. The Port of Durban
has the largest capacity in the region. Rail traffic handles a significant amount of cross-border freight traffic.
245
It links Southern Africa with East Africa and Central Africa. The Corridor links Zambia and Tanzania. The
Corridor interlinks with the Nacala Corridor, the North South Corridor and the Great Lake Area. The Corridor
comprises a trunk road and a railway line.
246
The Corridor serves the Central and southern SADC region: a) via the Trans-Kalahari Corridor linking Botswana,
Namibia and South Africa; b) via the Trans- Caprivi Corridor connecting Namibia and Zambia to DRC and
Zimbabwe; and c) via the Trans-Cunene Corridor connecting Angola and Namibia.
237
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However, over the years, the operations of some corridors have been hampered to varying
degrees by ‘hard’ and ‘soft’ infrastructure constraints such as poor infrastructure, inefficiency
(due to monopolistic practices) and high transportation costs.247
In order to ensure operationalisation of the corridor strategy, the transport protocol, as seen
earlier, obliges members to carry out a restructuring of their railways with the aim of creating
efficient institutional frameworks.248 As such, various SADC Member States restructured their
railways either through concessioning or ceding ownership and management to strong national
institutions. The salient features (which are applicable to the EAC) of the restructured railways in
SADC are discussed in detail below.
3.3.5.
Railway concessioning
By 1996, ownership of railways in SADC had been predominantly by the State. All railways’
governing boards and chief executives were government appointees.249 However, there were a lot
of inefficiencies in operations. SADC’s railways had been declining until few years ago.
Successful implementation of the regional railway objective had been hampered by lack of
investment and maintenance.250
In order to reverse this trend, SADC initiated a Railway Revitalisation Programme which sought
to bring the railways back to life.251 This programme sought to attract more investment through
private sector participation (through concessioning), and improvement of the regulatory
environment.
247
SADC Secretariat. (2008). ' Towards seamless infrastructure corridors.' SADC Today Volume 11 No.1, August
2008. Available at: http://www.sardc.net/editorial/sadctoday/view.asp?vol=666&pubno=v11n1
248
Article 3.5 of the Protocol of the Protocol on Transport, Communication and Meteorology 1996
249
Nathan Associates. (1997). ‘SADC Railways Restructuring and Policy Options: An Overview’ Maputo.
Available at: http://pdf.usaid.gov/pdf_docs/PNACD459.pdf (Accessed 7 January 2014)
250
SADC. (2010). ‘Formulation of SADC Regional Infrastructure Development Master Plan: Sector Diagnostic
Report, Rail Sector. Preview Version’. Available at: http://www.sararail.org/wp-content/uploads/2010/07/RailDiagnostic-Preview.pdf (Accessed 15 April 2014)
251
Makumbe, R. (2012). ‘SADC Perspectives on the Regional Transport Sector and Opportunities within the
Regional Transport Master Plan.’ A presentation to the SADC Summit at its Brainstorming Session on the Scaling
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As a result several SADC States restructured their railways through privatisation.252 Some
Member States namely: Malawi, Mozambique, Tanzania, Swaziland, Zambia and Zimbabwe
concessioned their railways to private players through concessioning. Others whose railways
were performing well for instance, South Africa (Spoornet railways), Swaziland Railways (SR),
Botswana (Botswana Railways) and Namibia (Trans Namib) retained state ownership. However,
they moved ownership to corporate independent state owned enterprises.253
Although railway concessions in SADC have not operated to the required levels (just like the
case of the EAC),254 there has been considerable improvement in several areas. For example, the
Beit bridge Bulawayo Railway concession improved service through the corridor and a reduction
in transit time. Zambia’s concession of Zambia Railways limited was successful in terms of
relieving the Zambian Government of the burden to invest in the infrastructure. In the case of
Mozambique’s concession, Beira Railway system (the concessionaire) has helped to free the
Government of major capital investment. At the same time it receives fees from the
concessionaire.255 Several factors account for these improvements. These include: existence of
enabling law; elaborate institutional and monitoring mechanism and a SADC regional
infrastructure fund
3.3.6.
Factors contributing to the success of railway concessions in SADC
a) Existence of an enabling regional law
The need for restructuring had long been recognised by SADC’s transport protocol, As discussed
earlier, the transport protocol obliges Members States, inter alia to: restructure institutional
arrangements for railways (which includes creating autonomous railways) in order to enable
Up of the Implementation and package projects package projects up to bankability. Available at:
http://www.ebandla.co.za/uploads/AfricanR2012/SADC_african_R.pdf (Accessed 15 April 2014)
252
Sondhi, J. and Phipps, L. (2008) ‘The process of rail concessioning in SADC states’ Available at:
http://pdf.usaid.gov/pdf_docs/PNACT634.pdf (Accessed 24th February 2014)
253
Phipps, L. (2011). ‘Technical Report: SADC Railways Revitalization Policy Dialogue’. Available at:
https://tis.sadc.int/files/6613/3069/3579/sadc_railways_revitalization_policy_dialogue.pdf (Accessed 24th February
2014)
254
As discussed in chapter two
255
Ibid
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them to operate on a commercial basis by reforming management, streamlining coordination
procedures and harmonising operations.256 Members were also required to enact enabling
national laws to govern concessions done on a national level.
Indeed, some SADC Member States257 which restructured their railways after putting place
enabling laws were able to streamline the operations of their railways. Other members for
instance, Malawi and Zambia, which proceeded with concessioning their railways without an
enabling law faced difficulties. They never achieved progress after concessioning. 258 A similar
problem was highlighted in chapter two whereby, Uganda concessioned its railway without first
enacting a specific law that would govern the post concessioning process.259
b) Elaborate institutional and monitoring framework
Building infrastructures alone cannot bring about economic development. Institutional reforms
are equally needed to ensure efficient implementation of programmes. 260 Failure to implement
the programmes will grossly affect the envisaged results. This, coupled with disjointed
institutional operations as discussed in chapter two has been one of EAC’s undoing. The SADC
region on its part, implementation of programmes has been more successful that the EAC giving
it an edge in infrastructure development.
The success of regional infrastructure programmes depends on sustainable and effective
institutional coordination at all levels not only between member states’ governments but also
with the private sector and development partners. As such SADC’s RIDMP and the various
players involved in the SADC infrastructure programme are intrinsically interconnected. 261 It has
also been able to establish strong institutions to execute its infrastructure agenda.
256
Article 7.2 (a) (i) PTCM
For example South Africa, Botswana and Namibia
258
Sondhi, J. and Phipps, L op cit
259
Supra note 152
260
Scholvin, S and Struver, G. 'Tying the Region together or tearing it apart? China and transport infrastructure
projects in SADC region'. In André du Pisani., Gerhard Erasmus and Trudi Hartzernberg (Eds) Monitoring Regional
Integration in in Southern Africa Yearbook (2012). Available at: http://www.tralac.org/files/2013/09/Final-2012MRI-for-web_Part-1.pdf (Accessed 12 April 2014)
261
Mwanza, W. (2013). 'Operationalising the SADC Regional Infrastructure Development Master Plan'. Trade law
centre. Available at: http://www.tralac.org/2013/07/31/operationalising-the-sadc-regional-infrastructuredevelopment-master-plan/ (Accessed 16 April 2014)
257
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As discussed earlier, the SADC transport protocol, imposes a duty on Member States to create
regional and national institutions, where required, to collaborate and provide a platform for
collaboration among stakeholders in implementing the transport protocol.262 It also encourages
creation of institutions by private sector players. To this end, various regional and national
institutions have been established. These are discussed in detail below.
c) Regional Institutions
The regional institutional frameworks and mechanisms for implementing the transport protocol
include: Sub-sectoral Committees (SCOMs) comprising public and private sector partners from
government, regulators, service providers, users and labour. Some of the most important
institutional mechanisms in SADC include the following.
i.
Southern Africa Transport and Communications Commission (SATCC)
SADC established a regional body, the SATCC to facilitate coordination of all railways in the
region. The SATCC263 comprises of a Committee of Ministers which is the supreme body of the
SATCC. SATCC’s role is to guide and coordinate operations and the preparation of the policy of
the region and strategy in the transport sector, among other things. Through this coordination, it
is able to establish uniform standards of operation. This is a different operational model from the
EAC where there is no regional body to set common standards and later develop common
strategies and policy for railway operations on a regional level. The proposed EARA was yet to
commence operations by the date of this study.
ii.
Association of service providers
SADC encourages private sector actors to get involved in transport infrastructure development
through various ways. The most viable way is through the associations of service providers. It
has been largely effective and this research uses the associations as a case study. Article 13.13 of
262
263
Article 13.13 of PTCM
Article 13.3 of PTCM
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the transport protocol enjoins members to promote formation of associations of service providers
in the various modes of transport. The associations comprise operators, regulators and any other
entity with an interest in or who are directly affected by transport activities.264 Therefore, SADC
has encouraged creation of associations.
The most active Association is the Southern African Railways Association (SARA).
Associations have played a fundamental role of assisting SADC a member states with
implementation of the SADC transport protocol. For instance, one study has found that the
private sector has tremendously contributed to the success of the Maputo Development
Corridor.265 The advantage with the associations is continued dialogue and coordination, which
in effect promotes joint operations. Through these joint operations, common rules and policies
can be developed and applied to promote seamless connectivity of railways.
d) National Institutions
Most SADC members have accomplished initial establishment of national railway regulators.266
Established national institutions include: National Protocol Implementation Teams (N-PICTs)
comprising national and sub-sectoral coordinators and their deputies; Core (sub-sectoral) groups,
which bring together the national public and private sector stakeholders from government,
regulators, service providers, users/consumers and labour led or driven by the sub-sectoral
coordinators; National Protocol Implementation workshops (NIPWs) or coordination meetings
combining key stakeholders from all sub-sectors; Micro Action Plans (MICAPs) establishment,
implementation, monitoring and progress reporting; and National legal reform teams and other
mechanisms. The institutions coordinate the implementation of members’ commitments on a
regional level.
However, most Member States have are yet to provide for private sector participation. The
private sector is this not organised in strong national associations to enable it to participate
effectively. The public sector has also suffered from lack of capacity to carry out the necessary
264
265
Makumbe R. (2001) Supra note 251
Supra note 182
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reforms on its own, to enable establishment of a conducive environment for enhanced private
sector development and involvement in the transport sector. Furthermore, domestic political and
economic priorities tend to overrule countries’ commitments to regional integration agendas as
agreed within formal regional institutions.267
e) SADC Regional Development Fund (RDF)
SADC Governments are naturally the first point of reference for infrastructure financing.268
However, most face budgetary challenges due to scarcity of resources. Additionally, the political
economy considerations that accompany the lengthy periods for developing of hard
infrastructure projects affect choices of governments. Without regional collaboration or external
assistance, small economies will not be able to develop their own infrastructures.269
SADC has therefore embarked on a programme of joint preparation and implementation of
projects under the framework of the RIDMP. This will enable SADC governments to harness
their efforts, including pooling potential sources of finance. Members also agreed to establish a
joint Regional infrastructure Fund (RDF).
The RDF was proposed by the Conference in Maputo in 2012.270 The Fund would have an
infrastructure window that would provide financial support for regional infrastructure projects.
The objective of the SADC Regional Development Fund is to create a financial mechanism to
mobilise resources from Member States, Development Partners and Private Sector to support
regional development and deepening of regional integration.271
Despite the supremacy of railway networks in SADC relative to the EAC, there are several
challenges. Some of these largely contributed to the dismal performance of railway concessions
266
SADC Secretariat. (2011). Desk Assessment of the RISDP supra note 231
Ibid
268
This is acknowledged in the SADC Regional Infrastructure Development Master plan
269
Supra note 177
270
SADC Regional Development Fund Operationalisation: An update.' Presentation to the SADC Dfi Subcommittee
Biannual Meeting Stuart Kufeni, Ceo, Dfrc 14th June 2013, Lusaka, Zambia. Available online at: http://www.sadcdfrc.org/assets/files/publications/forum_zambia_2013/kufeni_forum_zambia2013.pdf (Accessed 12 may 2014)
271
Ibid
267
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in the region.
3.3.7.
Challenges to railway concessioning in SADC
Despite SADC achieving better results from its concession processes relative to the EAC,
concessioning processes in the region were not without challenges. An assessment of
performance of concessioned railways in SADC concluded that a number of challenges followed
the concessioning of some railways.272 These challenges include: under-performance of the
concessioned entities, declining state of infrastructure, and reduced business cooperation
amongst railways in certain areas.273 The assessment identified several factors which were
responsible for the dismal performance of railway concessions in SADC. These factors discussed
in detail below included, inter alia: lack of enabling legislation in some states, lack of regulator
prior to concessioning, grant of monopolies to some concessionaires and financing challenges.
a) Lack of an enabling national legislations
As discussed earlier, SADC Member States were required to establish supportive regulatory and
legislative frameworks to support restructuring of their railways.274 However, some members did
not enact enabling laws but proceeded with concessioning their railways. Failure by those
countries for example Malawi, Mozambique, Zambia and to a lesser extent in Zimbabwe, to
enact enabling legislation resulted in problems that affected operations. In Malawi for instance,
the concessionaire was under the impression that everything would be sufficiently agreed upon
and governed by the concession contract. However, some clauses were couched in ambiguous
language, which led to conflicting interpretations and this disputes.
Similarly, Zambia’s concession agreement did not have a clear distinction between what
monetary expenditure amounted to ‘investment’ or ‘maintenance’ in terms of railways. This
272
Phipps, L. 2011. Technical Report: SADC Railways Revitalization Policy Dialogue’. Submitted to:
USAID/Southern Africa. Available online at:
https://tis.sadc.int/files/6613/3069/3579/sadc_railways_revitalization_policy_dialogue.pdf (Accessed 3 March
2014)
273
Phipps, L. 2008. Technical Report: Review of the Effectiveness of Rail Concessions in the SADC Region’
Gaborone. Available at: http://pdf.usaid.gov/pdf_docs/PNADU391.pdf (Accessed 3 March 2014)
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became a source of dispute which invariably slowed the operations of the concession. 275 In the
absence of an enabling law, all rights and obligations, performance requirements and targets
must be laid out in concession agreement. The language of the agreement must also be
sufficiently unambiguous to leave no room for conflicting interpretations.
b) Lack of a regulators prior to concessioning
Some Member states namely: Malawi, Mozambique and Zambia which failed to establish a
national regulator prior to concessioning their railways faced considerable regulatory
deficiencies. Without a regional regulatory body, enforcement of the rights and obligations in the
concessions became difficult. It has been argued that if there is no independent regulator as well
as enabling legislation, each concession depends on the language of its contract to govern
concession obligations. Yet, not all concessions regulate similar circumstances. 276 This leads to
fragmentation of rules, operations, practices and unfair competition.
c) Granting monopolies to some concessionaries
There were instances where a national concessionaire with cross-border linkages for example, in
Zimbabwe, was granted monopoly powers unilaterally. This severely affected other competing
players in the region’s railway sector. Monopolistic tendencies resulted in distortion of freight
charges thereby affecting overall traffic movement along railways. For example, due to
monopoly practices in the DRC, there has been transfer of predominantly railway cargo to roads
in an attempt by shippers to avoid unpredictable railway charges.277
d) Financing challenges
Funding for projects in SADC is the biggest challenge constraining implementation of railway
projects. SADC requires enormous funds if it is to achieve its infrastructure agenda. For
274
Article 2.4 (I) of the Protocol on Transport, Communications and Meteorology 1996
Ibid
276
As discussed in chapter two
277
Ranganathan, R. and Foster, V. 2011 Supra note 125
275
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example, the RIDMP has indicated that the transport sector requires $100 billion for the various
infrastructures, including railways. However, SADC faces several constraints in trying to raise
these funds. The major constraints to financing are risks associated with regulatory gaps,
political interventions (nationalisation and expropriation), coordination failure and frontier costs
and risks.278
Suffice to note that investment in infrastructure in SADC done by national government. But,
national governments are usually faced by competing interests which result in governments not
being able to address all the infrastructure needs due to shortage of resources. Therefore the
governments need to fully engage the private while at the same time; governments should
harness their efforts on a regional level.279
278
Kharas H & K Sierra, 'Time for a Big Push on Infrastructure in Africa: What the G-20 Can Do' Policy Paper,
2011-08. Washington, DC: Brookings Institution, (2011). Available at:
http://www.brookings.edu/~/media/research/files/papers/2011/8/infrastructure%20africa%20kharas%20sierra/08_afr
ica_infrastructure_kharas_sierra.pdf (Accessed 14 April 2014)
279
Dube, M. ‘Donors Versus Investors in Southern African Infrastructure Development’ PERISA Case Research 1
Infrastructure. ECDPM, (2013). Available at: http://ecdpm.org/wp-content/uploads/2013-PERISACaseResearchResearch1-Donors-Versus-Investors-Southern-African-Infrastructure-Development.pdf (Accessed 12
April 2014)
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3.4 Lessons from the SADC region
This study has thus far established that despite the SADC facing similar challenges relative to
those of the EAC in developing its railways, it has attained better railway development and
connectivity than the EAC. The foregoing discussion has assessed features of SADC’s legal and
institutional frameworks governing railway development which can provide useful lessons to the
EAC. These include; a protocols for operationalising regional treaties, private sector
participation in infrastructure development, a robust framework for coordinated institutional
operations, a regional infrastructure fund, coordinated corridor development and that efficiently
nationally managed railways can perform better than concessioned ones.
3.4.1.
Operationalisation/enforcement treaty provisions
SADC operationalised the provisions of the SADC Treaty and its transport objectives by creating
the SADC transport protocol. Under the transport protocol, Member States have undertaken
institutional and economic restructuring of their railways. This has, inter alia, accorded
autonomy to railways; increased private sector involvement in railway development; enhanced
operational synergy amongst the various railway service providers in the region; and promoted
the establishment of an integrated railway transport system.
On its part, the EAC is yet to operationalise the salient provisions of the EAC Treaty which deal
with railway development in an integrated manner. The EAC has enacted various treaties and
agreements in order to operationalise the provisions of the EAC Treaty but this has instead left a
fragmented legal framework with lots of gaps. The EAC needs to follow SADC’s example by
operationalising its EAC Treaty with a unified legal framework.
3.4.2.
Framework for participation of private sector in infrastructure development
Participation of the private sector in SADC’s infrastructure development plans is streamlined. A
number of private sector associations for example, the Southern African Railways Association –
(SARA), have been formed. The associations help coordinate efforts, mobilising resources and
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implementation of joint infrastructures. It is easier to attract private firms if the regulatory
environment is predictable and can guarantee profitable investment.280 For the EAC, its policies
are not well streamlined with regards to private sector participation in railway development.
Without a clear regulatory framework, private sector contribution to infrastructure development
cannot easily be harnessed.
3.4.3.
Joint institutional operations
SADC has an elaborate and more coordinated institutional and monitoring mechanism on both
regional and national levels. SATCC-TU focuses on transport sector policy issues while SARA
focuses on issues related with operational efficiency of rail corridors, interchange and fair
competition between rail and road transport. Both play an important role in policy development
and implementation at regional level and promoting and obtaining an integrated and efficient rail
transport system for the region.
Furthermore, SADC’s programmes are implemented in a more coordinated and phased manner
through the RISDP framework. The RISDP provides a platform for coordinating Member States,
the private sector and development partners towards fulfilling a common agenda. Through
RISDP, SADC is able to draw up logical and achievable implementation plans premised on
availability of resources. Most importantly, SADC prioritises the most critical infrastructures.
SADC has a review mechanism for its programmes aimed reorienting unworkable ones due to
changing circumstances and needs of the region. This is not clearly laid out in EAC’s legal and
institutional framework.
3.4.4.
Regional infrastructure development fund
SADC also established the RDF with a pillar on transport infrastructure. The RDF provides a
platform for members, the private sector and development partners to make targeted
contributions. This helps pool resources in a more coordinated manner towards an agreed
280
United States International Trade Commission Investigation No. 332-477 USITC Publication 4071 April 2009
Sub-Saharan Africa: Effects of Infrastructure Conditions on Export Competitiveness, Third Annual Report USITC
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common cause. EAC has a regional partnership fund which is yet to come realise the regional
agenda.
3.4.5.
Better coordinated corridor development concept
SADC’s transport-corridor development concept also provides lessons for the EAC. The
transport corridor concept provides for a mechanism to coordinate Member States’ efforts. Most
importantly, it provides for development of infrastructure in the entire SADC region. Yet in the
EAC the transport corridor concept has concentrated more on trade facilitation aspects with less
emphasis on revamping the region’s physical transport infrastructure. Again, as discussed in
chapter one, transport infrastructure development is mainly addressed in the joint infrastructure
Summits of Heads of State and Government. The EAC should have an all-inclusive corridor
development strategy. Furthermore, Special corridor management groups were set up to ensure
smooth operations throughout different corridors.
3.4.6.
Nationally operated railways can also perform efficiently
SADC has provided the lesson that not all governments should concession their railways if a
country has or is capable of establishing strong and efficient national institutions and/or
authorities that can manage railways better than private concessionaires. For example, the
countries which never concessioned their railways to private sector players seem to perform
better than those that concessioned. The example of Spoornet of South Africa and Botswana
Railways of Botswana are clear lessons that EAC partners needed to do a thorough feasibility
research before deciding whether to concession or merely revamp their railways.
Investigation No. 332-477 Publication 4071, 2009
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3.5 Challenges that the EAC may face in implementing the best practices from SADC
The research discusses challenges that the EAC may face as well as how to overcome them.
During the implementation of lessons from the SADC region, the EAC is likely to face several
challenges which maybe political, social or economic. This is because, despite the similarities
discussed earlier in this chapter,281 SADC and EAC are not homogeneous. They may face similar
challenges but in different magnitudes. These challenges including: financing, multiple
memberships, conflicting regional priorities and fear of loss of sovereignty. These are discussed
in detail below.
3.5.1.
Financial constraints
EAC Partner States vary in their level of development, resources at their disposal and success at
establishing effective institutions. For examples, the LDCs 282 are incapable of generating
additional revenues from their budgets to fund additional responsibilities of the region or setting
up new institutions that a review may require them to. As discussed in chapter two, their budgets
are often in deficits and are supported by external development partners.
The EAC’s current account deficit as percentage of GDP in 2012 remained quite high, at 11.1
percent compared to an average of 3.5 percent in Sub Saharan Africa.283 The EAC’s financial
resources mostly emanate from the Treaty provisions. The EAC Treaty requires Partner States to
contribute equally to the budget of the EAC in addition to contributions from development
partners.284 It is common for some Partner States to delay remitting their contributions due to
scarcity of resources. Moreover, sometimes, some of these Partner States request for waivers
from their obligation to contribute.285 SADC faces similar challenges but, through concerted
regional efforts, it manages to surmount them. If the EAC adopted SADC’s model, this research
281
See subsection 3.2
Burundi, Rwanda and Uganda. Supra note 23
283
Bageine, S. Presentation of the budget of the East African Community for the Financial Year 2013/2014 to the
East African Legislative Assembly.’ EAC Secretariat (2013). Available at:
http://www.news.eac.int/index.php?option=com_docman&task=doc_view&gid=338&Itemid=152 (Accessed 1
May 2014)
284
Article 132(4) of the Treaty for the Establishment of the East African Community 1999.
285
In 2008 Burundi requested to pay only US$ 1.7 million as budget contribution for Financial Years 2007/08 and
2008/09 due to unfavourable economic conditions (EAC Summit of Heads of State, 2008:3).
282
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argues that it would also be able to surmount its financial deficits.
The EAC can surmount this challenge by improving financial management of resources within
their territories. This will create more savings and enable them pool resources. The pooled
resources can then be saved in a dedicated regional infrastructure fund. Furthermore, partners
should engage more with the private sector and their diaspora to finance projects. Bankable PPPs
and diaspora bonds can be used to raise funds. The cost of setting up new institutions can be
reduced by sharing human resources in the region and setting up joint institutions or one-stopservice centres. Furthermore, the EAC should engage more with development partners by
showing concrete results for previous funding. This way, the donor community can build
confidence by showing value for money.
3.5.2.
Multiple memberships
Each of the Partner States in the EAC belongs to at least two RECs. The most common
groupings are; EAC, COMESA, IGAD and SADC. Moreover, the different RECs have
conflicting programmes, targets and timelines. These create a strain on Partners’ resources as
well as implementation difficulties. SADC region also faces a similar problem of multiplememberships whereby majority of its members, for example, Angola, DRC, South Africa, and
Zambia also belong to the COMESA economic grouping. But it has still achieved better
infrastructure developments. It appears that multiple groupings have not had a very big negative
impact on SADC’s infrastructure plans. Therefore, the EAC can also overcome this by
eliminating inconsistencies created. Partner States should maximally exploit opportunities
offered by the ongoing tripartite negotiations in the context of the Tripartite Free Trade Area
among the COMESA, the EAC and the SADC. Partners should work towards harmonisation of
programmes, policies and targets.
3.5.3.
Conflicting priorities
EAC Partner State in the EAC is often faced with more pressing and urgent domestic challenges
which directly compete with regionally agreed goals for the limited resources. The challenges
consume a big chunk of their financial and human resources that would be expended on regional
activities. This can be surmounted by Partner States pooling resources and sharing
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responsibilities depending on capacity and need thereby exploit economics of scale.
Furthermore, Partner States should agree to set achievable targets and sequence their projects
from most critical to less. This is one of the principles envisaged in SADC’s RISDP which has
helped SADC Member States to surmount their individual financial challenges.
3.5.4.
Fear of loss of national sovereignty
As discussed in chapter two, establishment of supranational institutions and laws, has meant that
EAC Partner States feel threatened to lose national sovereignty over critical sectors of their
economies. Therefore, institutions created may not be accorded the necessary authority to
achieve the objectives of the EAC. A similar scenario has already manifested itself in SADC
where the Zimbabwe Government ignored rulings of the SADC tribunal court. This eventually
resulted in suspension of the Tribunal by the SADC Summit. To allay these fears, research by
Arnold, J286 provides useful lessons. The author proposes a phased process of ceding some state
powers to the supranational authorities through consensus. The process, he argues, should start
with those areas that provide mutual benefit to all Partner States.
This research argues that since EAC Partners are already negotiating a political federation which
will require ceding some powers to the EAC,287 ceding some degree of national sovereignty to
supranational authorities should be seen as a step towards the ultimate goal. Furthermore, the
process for making the supranational laws ought to be fully consultative involving representation
from all Partner States and interested stakeholders. This will ensure ownership of the process and
the resultant legal framework which will offer better chances of enforceability of its
enforceability.
3.6 Concluding remarks
Despite the SADC having similar policies, laws and institutions and, facing challenges relative to
those of the EAC in the railways subsector, it has achieved better levels of railway development
and integration. This is primarily attributed to building stronger institutions and ensuring more
286
Arnold, J. (2006) Supra note 41
Article 5(2) of the EAC Treaty sets political federation as the ultimate goal of EAC integration processes. See
also EAC Secretariat.
287
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efficient enforcement of its policies and laws. The EAC therefore has valuable lessons to learn
from SADC’s best practices. At the same time, the EAC should not merely transplant SADC’s
best practices to the community. The best practices could have worked in a different Southern
African environment but not compatible to the circumstances of the EAC. Therefore, great care
should be taken to modify them to adapt to EAC’s peculiar circumstances while at the same time
putting in place safeguards to avoid similar mistakes that have slowed progress in the SADC.
http://www.eac.int/federation/index.php?option=com_content&view=article&id=191&Itemid=138 (Accessed 14
February 2014)
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CHAPTER FOUR
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
4.1 Introduction
This chapter presents a summary of the findings and conclusions from the study. It identifies the
problem that made this study necessary; and the main research methods that were used to find
solutions to the problem. It also discusses the implications of the chosen methodology on the
research. Following the findings and conclusions, the research makes recommendations.
4.2 Summary of findings
The findings of this research mirror the principle objectives of the research which was to show
the significance of efficient legal and institutional frameworks in facilitating cross-border
railway development in the EAC. Therefore the findings respond to the research questions that
were posed in chapter one. The questions were instigated by the researcher’s a general
observance of a failure by the EAC to surmount its transport infrastructure bottlenecks.
The research was premised on the assumption that creating efficient legal and institutional
frameworks to regulate cross-border transport infrastructure projects will enable the EAC to
surmount deficits in its regional railway networks.
In chapter two, the research sought to determine the validity of the assumption in the preceding
paragraph by carrying out a desk assessment of the legal and institutional framework governing
cross-border railway development in the EAC. It also reviewed the institutional frameworks
mandated to enforce those laws and policies in the EAC. Major treaties, agreements and national
laws of partner states which govern railway development were reviewed.
In chapter three, a comparative study of the SADC’s legal and institutional frameworks that
govern cross-border railway development was also undertaken. The purpose of comparing
SADC’s legal and institutional frameworks governing railways to those of the EAC was to prove
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that establishment of an efficient legal and institutional framework coupled with effective
implementation can actually promote the development of efficient, integrated and sustainable
cross-border railways.
Suffice to note that preliminary background information discussed in chapter one indicated that
following the EAC's attainment of greater market integration, trade and investment increased in
the region. This resulted in increased growth and production. Increased growth and production
resulted in increased movement of goods, people and other factors of production. However,
progress in market integration was not matched in the transport infrastructure sector. Therefore
the transport infrastructures remained insufficient to satisfy demand. This resulted in increased
pressures on EAC’s surface transport infrastructure. EAC therefore set out to address the
transport infrastructure bottlenecks.
The concerted efforts by EAC Partner States and their development partners to improve the
railway situation have not yielded desired results. This is because much effort has been exerted
on addressing the ‘hard’ infrastructures bottlenecks without corresponding improvement of the
‘soft’ infrastructure bottlenecks. Yet, the research argued, 'soft’ infrastructure bottlenecks are the
major impediments to the success of hard infrastructures. This research identified the major soft
infrastructures bottlenecks in EAC railways to be inefficient legal and institutional frameworks.
Following a critical evaluation of the efficacy of legal and institutional frameworks, the major
findings from the research are summarised below.
4.2.1
Lack of clarity of rights and duties
The research found that there is lack of clarity of rights and duties of states in the EAC’s
principal law, the EAC Treaty, which governs cross-border railway development. The EAC
Treaty does not clearly define the rights and duties of Partner State in jointly implemented
infrastructure projects. Much as the treaty provides a basis for Partner States’ cooperation in
infrastructure development, the provisions in their form are not legally enforceable against
Partner States. Therefore, judicial enforcement of violations is very difficult. State to state
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dispute settlement is not provided for by the Treaty. States that violate Treaty provisions are
seldom sanctioned. Moreover, no dedicated protocol or law exists to operationalise the transportinfrastructure-related provisions of the Treaty. By comparison, the SADC passed a dedicated and
legally binding Protocol on Transport which sets clear rights and obligations of partners in
infrastructure development.
4.2.2
Regulatory gaps
There are regulatory gaps for some critical aspects of railway revitalisation in the EAC. Burundi,
Rwanda and Uganda have not enacted proper laws to streamline the participation of the private
sector in infrastructure development and govern PPPs as a policy tool for resource mobilisation.
In addition, some railway reserves are occupied by illegal settlers. These have to be resettled if
work is to proceed. However, resettlement especially on No-Mans-Lands along shared borders
are not clearly regulated which may make evictions difficult and expensive. SADC region on its
part has an elaborate framework for participation of the private sector in railway development.
4.2.3
Lack of legal harmonisation
Lack of harmonised laws was also identified as a constraint to development of integrated
regional railways. EAC partners have two conflicting operational legal systems. Kenya, Tanzania
and Uganda operate a common law system while, Burundi and Rwanda operate a civil law
system. The legal systems contain disparate procedures and standards which constrain smooth
implementation of projects. For Partners operating a similar legal system, disparities within their
national laws were identified. For instance, the procurement laws of Kenya, Tanzania and
Uganda are different in terms of threshold levels; technical specifications; administrative
specifications such as time limits, contract splits, number of bidders, and treatment of local
companies. For instance while Kenya and Tanzania provide a 15% preferential treatment for
local companies. Burundi, Rwanda and Uganda are yet to streamline this provision in their laws.
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4.2.4
Weak institutional capacity
Weak institutional capacity was identified as the major institutional challenge. Weakness of
institutions is caused mainly by three factors namely: lack of decision making authority; poor
funding and lack of technical capacity. The institutions created are not granted enough powers to
make decisions to implement their mandates. Most decisions are reserved for the Ministerial
Committees, but these are most often driven by political considerations of their governments.
Additionally, shortage of funding is a perennial problem. The major source of funding is member
states contributions but, these usually come late. The LDC Partners are usually faced with
budgetary deficits which affect their ability to meet their contributory obligations. Lack of
technical capacity on the other hand results from low levels of specialists on technical details of
project implementation.
4.2.5
Disparate operations
The research also found that disparate operations by the different railways in the region constrain
the development of integrated cross-border railways. Despite their regional outlook, the KRC,
TRC and URC operate distinct of each other. Moreover, two incompatible railway gauges exist
in the region. Efforts to develop a harmonised standard gauge through the Standard Gauge
Railway Agreement are yet to be embraced by all the partner states. The agreement is only
enforceable between Kenya and Uganda. Moreover, there is no single regional railway regulator.
The proposed East African Railways Authority is yet to be established. For SADC region, the
SATCC and SARA act as umbrella bodies to coordinate joint operations of different railways in
the region. It is therefore easy to develop common understanding and set common standards
which ensure seamless operations.
4.2.6
Unfavourable concessioning arrangements
The research also found that the concession processes as a policy tool for funding and efficient
management of the EAC’s railways resulted in unfavourable positions for EAC Partner States. It
seemed that there were no thorough feasibility studies regarding the capacity of the
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concessionaires (RVR) for the Kenya and Uganda railways as well as that of Tanzania, to
execute their mandates. Additionally, the concession agreements for Kenya and Uganda granted
enormous monopoly powers for the concessionaire in the railway sectors. This continues to
constrain the capacity of the governments to introduce other players, despite the dismal
performance of the concessionaires. Moreover, whereas other countries reviewed their railwayrelated laws, Uganda relied on the PERD Act to accomplish the concessioning process. Yet, the
PERD Act does not govern concession operations. Similarly, those countries in SADC which did
not enact enabling law prior to concessioning their railways face similar challenges faced in the
EAC.
4.2.7
Inefficient funding mechanisms
The research further found that EAC is affected by inadequate funding mechanisms for railway
development. There is no coordinated joint infrastructure fund where Partner States,
development partners and the private sector can pool and dedicate funds specifically for
infrastructure development. Contributions by countries and their development partners usually
come late. Moreover, funding from donors does not sometimes mirror the needs of the recipient
countries. This has constrained the effective and timely implementation of infrastructure
projects. In contrast, SADC established a dedicated regional development fund where Member
States, their development partners and the private sector can pool dedicated resources for railway
development.
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4.3 Conclusions of the research
On the strength of the findings in the preceding chapters, it suffices to say that EAC's legal and
institutional frameworks fall short in facilitation of development of integrated and seamless
cross-border railways in the region. Unless the EAC addresses these legal and institutional
bottlenecks, development and operation of sustainable, integrated and seamless railways will not
be achieved in the region.
Various initiatives to address infrastructure bottlenecks in the EAC have thus far failed to enable
the EAC to surmount these problems because of a weak legal and institutional framework. Weak
legal and institutional framework has led to disjointed operations, resulting in lack of
enforcement of laws and lack of execution of mandates of the EAC. As a result, there is wastage
of resources and the continuation of deterioration of regional infrastructures.
From the analysis of SADC's progress, the research concludes that efficient legal and
institutional frameworks are a pre-requisite for efficient implementation of railway infrastructure
programmes. Credible private investors can be attracted if legal and institutional frameworks are
sufficient and can guarantee profit. It also gives confidence to international financing institutions
as well as other development partners.
Weak legal and institutional frameworks may perpetuate laxity among Partner States if the
enforcement mechanisms are not strong enough. And if the laws do not clearly spell out the
rights and obligations of members, all members may fail to perform a function that benefit others
on the presumption that another member state will perform it.
If laws and institutional operations are not harmonised, disparate implementation of regional
projects will result. This will lead to disintegrated railway systems, thereby cause further
difficulties in crossing borders by railways.
EAC's efforts to develop its railways are not only affected by legal factors. Other political and
economic factors equally affect its efforts. Nevertheless, an efficient legal framework may help
address other challenges that would otherwise arise in a lawless environment.
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4.4 Recommendations of the research
From the conclusions of this research, it is imperative that the problems identified by this
research be addressed to overcome the transport infrastructure bottlenecks. The research
therefore makes the following recommends for improvement.
4.4.1
Legal review
The EAC should carry out a legal review of the existing legal frameworks to provide for clarity
of rights and obligations of states, clear enforcement mechanisms and fill the missing gaps.
Environmental issues with cross-border effects and resettlement along No-Mans-Lands should be
addressed. Burundi, Rwanda and Uganda should fast track the enactment of their PPP laws to
provide for a clear framework to regulate private sector participation in infrastructure projects.
Furthermore, countries without updated laws to regulate execution of concessions should update
those laws to provide for clear rights and obligations of the concessionaire as well as the
governments.
4.4.2
Harmonisation of legal frameworks
EAC Partner States should harmonize their laws to create uniform standards governing various
processes in railway development. Procurement standards and processes should be harmonised
and simplified with a view to providing for joint procurements in the event of a joint project. The
EACT Treaty under its Article 126 mandates Partner States to harmonise their laws.
4.4.3
Harmonise railway operations
EAC should harmonise railway operations. Other Partner States ought to accede to the Standard
Gauge Railway Agreement, operate one gauge and share resources to benefit from economies of
scale. Partner States should share resources to benefit from economies of scale. The EAC should
set up a logical implementation program necessary for achieving the region's broader goals.
Common technical, operating and safety standards need to be established and enforced in order
for railways to operate across borders. The formulation of a multilateral regional business
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agreement between railways needs to be negotiated to facilitate migration from the existing
constraints of bilateral agreements.
4.4.4
Establish supranational institutions
The operation of the established EAC Railways Authority (EARA) should be fast-tracked. The
EARA should be clothed with sufficient supranational powers to enable it issue binding rules and
regulations on Partner States or their national railway regulators. Partner States should
particularly confer decision making powers to the EARA in matters of common regional benefit
The EARA should handle especially matters that are are often beyond the jurisdiction of Partner
States’ national railway regulators. The national railway authorities should be affiliates to this
organisation and should derive their mandate from this organisation. But most importantly,
Partner States should be willing to comply with the EARA’s decisions.
4.4.5
Establish a dedicated regional infrastructure fund
There is a need for a dedicated regional infrastructure fund particularly dedicated for transport
infrastructure development. The infrastructure fund should be contributory and also open to
donor contributions as well as private sector actors. The infrastructure fund needs to be managed
by independent auditors who can guarantee safe custody and accountability. Currently,
contributions and user fees collected from members go into the general pool of revenues for the
Community. Similarly, on a national level, revenues collected from user fees are also deposited
with the respective Partner States' Revenue Authorities. The commingling of revenues makes it
difficult to align revenue and expenditure. In the alternative, the existing road funds should be
given more mandates to source funds for railway development, on top of those for roads
development.
4.4.6
Address issues of multiplicity of memberships
EAC Partners should address the issue of multiplicity of Members under the framework of the
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Tripartite Free Trade Area negotiations. Partners should agree on common interests relative to
infrastructure development within all their groupings and concentrate on those.
4.4.7
Human capital development.
Partner States should increase joint training programmes for staffs employed in institutions that
implement regional projects. Alternatively, establishing one-stop-centres where individuals can
offer services across a section of institutions may help bridge the human resource gaps that may
be affecting one of the partner states.
4.4.8
Explore multimodal transport development
The EAC should promote initiatives that encourage interconnection between roads and railways
to benefit from economies of scale. This would mean setting up joint institutions to manage both
road and railway transport. In the alternative, there should be cross-linkage between railway
operators and roads operators. This may alleviate the problem of wasteful competition and
monopolistic tendencies.
4.4.9
Renegotiate or terminate failing concessions
Finally, concessionaires that have failed to fulfil their obligations should have their agreements
re-negotiated or terminated. The renegotiated agreements should clearly define the roles and
responsibilities of the concessionaire and government in relation to infrastructure rehabilitation
and investment. The agreements should provide for clear avenues when governments can be
allowed, at least, limited introduction of other private players on the same trunks being operated
by the concessionaire. This should be so especially when national or international obligations so
dictate. Article 91 (1) (m) of the EAC enjoins Partner States to “take measures to facilitate
thorough working of trains within the Community”. If the concessionaire persistently fails to
perform, the concession should be terminated. For any new concession to be concluded,
comprehensive feasibility research be carried out.
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4.5 Concluding remarks
With the increased tariff liberalisation in the world today, it is only practical that for EAC
region's products to be competitive on the world market they are produced at lower cost, reach
the world markets on time and in good shape. Since the EAC has achieved much of the tariff
liberalization, the region still has enormous potential in reducing its transport deficits which will
help cut down transport costs, resulting in reduction in the cost of goods as well as timely access
of world markets. Constructing efficient, integrated and seamless railways will go a long way in
connecting the landlocked countries of the region to world markets.
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