Rail lines are among African nations’ most valuable assets, but many countries cannot afford their upkeep. Privatisation has been the preferred method of shifting the maintenance burden from the transportation sector to the investment sector, raising infrastructure standards that, in turn, spur trade-related revenue and employment.

Twenty years have passed since the first comprehensive study of the degree of improvement in Africa’s rail transportation systems by the privatisation of state-owned railways. The privatisation had been accomplished primarily through concession agreements. At the time of the 2005 World Bank study, 20 state-owned rail lines were either undergoing privatisation or had concessions granted by governments. The study found that progress varied: Some deals were cancelled, others were delayed by wars, and some suffered from weather-related disasters or other calamities. On the whole, the bank found, “The railways (that have been privatised) are performing better than if they had not been concessioned.”

This World Bank study fuelled African governments’ desire to privatise their rail systems. The trend continues in 2025, nearly a century after some of Africa’s major rail lines were built, with other lines dating back to the 19th century. Nearly all were financed by European colonial powers to transport African natural resources to ships destined for Europe. Once independent, African nations became responsible for maintaining their own rail systems, a task many countries failed to accomplish. Rail safety consultants indicate that train accidents are rare, but the decaying rail systems take their toll on the efficient movement of goods, resulting in long transit times for freight.

In theory, bulk cargo is more economically transported by rail than by road, which should provide enough incentive to keep rail systems in good condition. Swifter and more reliable trains mean increased cargo volumes carried and, ultimately, more intra-Africa trade. However, limited state resources spread thin have meant insufficient spending on rail rehabilitation. Private firms recognise the value of rail lines, if they are made efficient and reliable, and are willing to invest in their improvement. While train operators must adhere to government regulations, they work on the rail lines they purchase for governments with the aim of making a profit.

Challenges that threaten to disrupt rail concessions

Rail infrastructure is among the most vulnerable assets for both private or public companies but are subject to vandalism and theft. It is impossible to police every rail line that spans hundreds of kilometres, making security an expensive challenge for companies running privatised lines. In South Africa, for example, entire commuter trains have been set alight, seriously disrupting services on which tens of thousands rely. Additionally, theft of equipment, electronic cables and various metal components that can be sold as scrap creates financial opportunity for thieves, leaving rail operators with the cost burden of replacement and repair.

Rail regulations mandate infrastructure maintenance, which privatised rail lines must comply with. This makes good business sense because well-maintained infrastructure ensures smooth operations. Yet, the cost of sustaining railways is high, and for this reason, many rail lines have deteriorated to extremely low speeds or require entire lines to be rebuilt. Malawi’s rail system made a deal with Mozambique in April 2025 to facilitate the movement of goods from landlocked Malawi to Mozambique’s port. However, to make this arrangement a reality, Malawi had to commit to refurbishing hundreds of kilometres of dilapidated Mozambican rail lines so that trains could safely make the journey.

South Africa presents the most complicated rail privatisation situation

South Africa is Africa’s most industrialised country and is one of the foremost proponents of capitalism on the continent, citing the efficiencies that come with privatisation. Ironically, dozens of less-developed nations have privatised their state-owned railway systems before South Africa. One explanation is the complexity stemming from the magnitude of the country’s rail network.

The South African government authority that manages rail transportation, Transnet, has three divisions. The first is Transnet Freight Rail, which operates the country’s immense rail system. Next, Transnet Engineering maintains the transportation fleet. The third is Transnet National Ports Authority that oversees the country’s rail ports and all rail-related infrastructure, such as lines, warehouses and loading mechanisms like cranes on the docks. Transnet’s 21,232-km rail network comprises 85% of all railways on the continent. Such extensive assets account for a privatisation effort that spans several years, making it the most complicated process of its kind in Africa but one with immense financial benefits for any private rail management firm.

Another challenge facing companies wishing to invest and operate state railway systems is governments’ slow pace in implementing global transportation agreements that govern rail use. In January 2025, private transport companies welcomed the news that South Africa finally ratified and adopted the Luxembourg Rail Protocol, complementing the Cape Town Convention on International Interests in Mobile Equipment. This 2007 protocol specifically addresses railway rolling stock, such as carriages and locomotives, and aims to reform rail regulation. With its adoption, South Africa’s rail network is expected to be privatised. However, the nearly quarter-century-long wait since the Cape Town Convention is compounded by further delays while government looks for private companies to take over Transnet’s operations. Additionally, legislation must be promulgated to create a regulatory agency to fulfil the requirements of the Luxembourg Rail Protocol. This could add many more years to the realisation of Transnet’s privatisation.

Privatisation is a reality throughout Africa

The basic infrastructure and operating expenses incurred by rail transport investors are high compared to other transportation modes. Running an airline does not require building an airport, and ships dock at ports built by cities or, more commonly in Africa, national governments. Historically, state-owned rail companies used public funds, but such financing is not available to private firms, which must build new lines and other infrastructure themselves. Nonetheless, such private investment is crucial across the continent because railways provide the most economical means of transport. Consequently, investors have not lost their appetite for rail opportunities, with South Africa’s being the largest prize.

The critical points:

• The privatisation of rail systems has been embraced by state-owned rail companies throughout Africa, recognising the economic gains that functioning rail systems bring
• Private businesses must make large financial investments to rehabilitate and operate rail lines but believe the resulting profits make the effort worthwhile
• Privatisation in South Africa is slow, largely due to the country’s immense rail system, but recent progress has been made to create the necessary regulatory framework

Written by In On Africa