Tazara fails to meet its targets despite huge business potential

Thursday September 3 2020

 

By Josephine Christopher

Dar es Salaam. The Dar es Salaam-based Tanzania-Zambia Railway Authority (Tazara), which operates the 1,860-kilometre long railway running between Kapiri Mposhi in Zambia and Dar es Salaam in Tanzania, has adopted the principle of ‘break even point’ as a measure for operational success.

Construction of the railway line, which was formally commissioned in 1975, was started in 1970, with financial and other support provided by the People’s Republic of China.

At its completion, Tazara became the longest railway line in sub-Saharan Africa. It was also the largest single foreign-aid project undertaken by China at the time, at a total construction cost of $406 million (roughly $2.67 billion today).

Yet, roughly 45 years after the railway became operational, it is yet to achieve its goal of transporting 600,000 metric tonnes of freight a year.

The Authority is yet to achieve this target partly due to certain operational challenges. Speaking to The Citizen in an exclusive interview, the Zambian Tazara managing director and chief executive officer (CEO), Mr Bruno Ching’andu, said one of the major challenges that are plaguing the Authority is a lack of ways and means of adequate recapitalisation and operating capital.

“Generally, this tends to lead to lack of spare parts that are needed to repair or replace malfunctioning or broken parts and other equipment, as well as lack of materials that are required to repair damaged portions of the railway track,” he said.

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According to the CEO, as the result of financial and other inadequacies, Tazara is left with a rolling stock that is not available for continuous operations, or that which simply cannot be relied upon for functional and sustained operations.

“Equally, the poor condition of the railway track about 50 years down the line invariably leaves us with no choice but to run our trains at slower speeds. If nothing else, this limit the frequency and volumes of traffic in a year,” Mr Ching’andu said.

Revealing that Tazara has yet to break-even, he nonetheless said that its operations and general performance have been on a positive trend for the past six years.

“The last six years have seen to an average growth of 22 percent a year in freight traffic, and 9.9 percent per year in passenger traffic.”

During the financial year which ended on June 30, 2019, the Authority had moved in all a total of 362,710 metric tons, he said – adding that this was a gain in terms of the total net freight volumes taken off the roads.

However, the freight traffic had been nose-diving since 2007 – reaching the lowest level of 88,000 metric tons in 2015. Then the freight traffic started to show improvements from 2016, when it reached 130,000 metric tons.

“The performance in 2015-2016 was a consequence of acute limitation of working capital, which led to shortages of fuel and delayed payment of workers’ salaries, resulting in numerous incidents of work stoppages,” he virtually lamented.

Then in the 2016/2017 financial year, the freight volume increased to 171,000 metric tons – and then rose to 220,818 metric tons in 2017/2018.

Passengers traffic

Tazara operates three kinds of passenger trains, including cross-border or interstate trains.

In the 2018/2019 financial year, Tazara transported a total of 3,046,002 passengers as against a target of 3,400,000 passengers.

This was roughly 90 percent performance vis-à-vis the target that was set earlier.

However, that figure was nine (9) percent lower than the 3,355, 551 passengers transported in the previous financial year, namely: 2017/2018.

Role played by private operators

The Tazara CEO revealed that “the Authority recently entered into an agreement with a private operator to use the Tazara infrastructure on an ‘Open Access’ basis.

“This has enabled the Authority to earn revenues in the form of ‘Access Fees.’”

The private operator – namely ‘Calabash Freight Limited’ – was able to move 187,113 metric tons of freight under the agreement in 2018/2019, which boosted the total tonnage moved on the Tazara facility to 362,710 metric tons.

Private shareholders?

Tazara is binational railway jointly owned by the Governments of the United Republic of Tanzania and the Republic of Zambia on a 50-50 share holding basis.

Regarding the issue of allowing private operators to use the Tazara facility, the managing director said this has not substantially changed the current share-holding structure, which remains as it has always been from the beginning.

“The public will be informed should any changes occur in the share-holding structure,” he assured Zambians and Tanzanians as the ‘ultimate shareholders’ of Tazara.

Tazara’s contribution to Tanzania’s economy

The establishment of Tazara has been a catalyst for growth and expansion of small settlements along the line: settlements which have now become big communities as administrative districts and urban centers.

For instance: places like Mlimba, Makambako and Ifakara in Tanzania are some of towns that have developed tremendously in the last 45 years or so – and continue to grow through Tazara’s services and spin-off effects, to the benefit of the country, says Mr Ching’andu.

Tazara is the only means of transport and vehicle for poverty alleviation for most of the people living along the line.

If nothing else, this has effectively incorporated the communities in those areas into the mainstream economy of the country. And what is said for Tanzania can equally well be said for Zambia, the other partner in what amounts to a joint venture between the two Governments.

What is more, Tazara provides an opportunity to functionally decongest the roads and the Port of Dar es Salaam, thereby saving the resources which would otherwise be lost through frequent repairs of roads which ordinarily should not be transporting heavy and bulky cargo, as well as other logistical facilities in the region.

Tazara also contributes to tourism development, for example: transporting tourists to and from the Selous Game Reserve and other en route parts in the Southern regions of the country.

The Authority directly employs over 1,500 Tanzanians who earn their livelihoods from the railway system.

Given improved operations, the Authority indeed has the potential to positively impact even more Tanzanian lives.