The effect of deregulation on the railway sectors in Sub-Saharan Africa

Over the last decade, African rail sectors have applied hybrid reform models to catch up with the sub-region’s lagging rail performance compared to other regions. With this in mind, this paper aims to study the effect of deregulation on rail transport demand. Following an abundant literature on deregulation in Europe and Asia, this study focuses on structural and regulatory reforms.

The investigation methodology is in line with the investigations of Mizutani (2019) and Smith, Benedetto, and Nash (2018). This paper uses a seemingly unrelated model (SURE) for general estimation and a random effect least square model for regional block estimation on a panel of 26 countries for 15 years between 2000 and 2015.

The main results show that structural reforms positively affect passenger transport demand, but negatively affect freight transport demand. The level of competition stimulates demand for freight transport. Privatization of operators positively affects freight transport demand, but has no significant effect on passenger transport demand. The introduction of a regulatory authority has a positive effect on demand for passenger transport, and in certain regional blocs, it affects demand for freight transport, with the existence of corridors shared between several countries.

This study is carried out in the sub-Saharan African sub-region. Indeed, the importance of the rail sector and the dilapidated state of many of its infrastructures should prompt a more abundant literature on the subject of the effectiveness of deregulation movements. We also evaluate the effect of vertical or horizontal separation and the introduction of an independent regulator in the rail sector on overall demand for transport service.