The encyclopedia · Strategy & Leadership · Strategic decision · 1999–2015
Cameroon leased its dying railway to Camrail; freight grew 40% and the state got paid
Instead of subsidizing a loss-making state railway, Cameroon gave Bolloré's Camrail a concession; freight grew 40% and the World Bank rated it Satisfactory.
Camrail
The solution
Cameroon's national railway was a fiscal drain: the state owned and ran it, covered its losses, and watched traffic and maintenance decline. The naive fix would have been another round of loans for new equipment while leaving the same operator in charge.
In 1999 the government granted Camrail — a company led by the Bolloré group — a concession to operate the whole railway, track, freight and passengers. The World Bank backed the transaction with an IDA credit, and the concession required the operator to invest while paying fees and taxes to the state, ending the railway's burden on public finance.
The results: freight tonnage rose 40% and passenger numbers 15% between 1999 and 2015, with Camrail carrying about 1.65 million tonnes of freight and 1.6 million passengers a year; in 2015 it commissioned nine 3,000 horsepower locomotives in a 13.5 billion FCFA investment round. The concessionaire paid the government about 6 billion FCFA a year in fees plus 1.5 billion in taxes.
The World Bank's 2009 implementation completion report rated the outcome Satisfactory with moderate risk to development outcome, and praised the concessionaire's performance and the stability of the institutional arrangements.
Why it worked
- Private operation brought commercial discipline without new state borrowing.
- Investment obligations made the operator repair what its own revenues depended on.
- Fees and taxes turned a subsidy line into a revenue line for the state.
- One operator of track and trains removed the split incentives of the old railway.
What can be applied
If a state operator cannot be fixed, stop funding it: lease the asset to a private operator with investment obligations and performance targets, and turn an annual subsidy into a stream of fees.
Aftermath
Camrail kept operating and investing under the concession through the 2010s: in 2015 it commissioned nine 3,000 hp locomotives in a 13.5 billion FCFA investment round while carrying about 1.65 million tonnes of freight and 1.6 million passengers a year. The World Bank's later Cameroon–Chad transport corridor program still routes rail investment through the Camrail concession, which the Bank's 2009 ICR had rated Satisfactory.
Sources
- Cameroon - Railway Concession Project (Project Appraisal Document)
- Cameroon - Railway Concession Project (Implementation Completion and Results Report)
- Cameroon Railways commissions 9 new locomotives to boost towing capacity
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