Rail Infrastructure Connecting Internal Regions to Logistics Areas
Rail Infrastructure Connecting Internal Regions to Logistics Areas
Business Model Description
Invest in rail construction and maintenance to develop inland connectivity and optimize freight transportation
Expected Impact
Expand the railway network providing communities living in peripheral areas safe transportation with lower CO2 emissions compared to highway transport
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Tunisia: North-West
- Tunisia: Centre-West
- Tunisia: South-West
Sector Classification
Transportation
Development need
The insufficient and precarious transportation network impedes logistical and economic development in inland regions, which are unable to integrate into domestic corporate operations and global value chains. Inadequate transportation land use planning discourages private investment.
Policy priority
The government has implemented policies and regulations to help with the transition to a modernized transportation infrastructure, including PPP legislation enacted in 2015. To reduce regional inequalities, the National Sustainable Development Strategy promotes more balanced land use planning that prioritizes efficient and sustainable transportation (1).
Gender inequalities and marginalization issues
Men make up the majority of workers in the transportation sector. Inadequate public transportation and its predominance among women are associated with an increase in gender-based violence.
Due to a lack of transport infrastructure, communities in remote and rural areas are marginalized and isolated, preventing them from participating in the country's economic life (2).
Investment opportunities introduction
Tunisia benefits from a strategic location near the world's busiest maritime and aviation routes. The government is attempting to improve trade flows through strategic transportation decisions (3).
Key bottlenecks introduction
Transportation project execution is largely contingent on the country's ability to continue attracting multilateral financial institutions. The feeling of change in the industry has been exacerbated by labor conflicts over privatization, job losses, and increasing gasoline prices (1).
Land Transportation
Development need
Tunisia has 2,268 kilometers of rail line, with only 1,850 kilometers being operational, with many trains over 30 years old (1). Inadequate rail infrastructure throughout the country makes it difficult to link distant regions to logistical and industrial hubs and maximize freight transit.
Policy priority
Priority is given to developing rail lines for the movement of passengers and products, as well as linking remote regions to the port infrastructure required for export operations. (4) Rail is expected to absorb about 40% of the money allocated under the National Transport Master Plan for 2040, with the segment's 19 projects totaling billion TND (9.7 billion USD) (1).
Gender inequalities and marginalization issues
Males make up the majority of workers in the transportation sector. Inadequate public transportation and its predominance among women are associated with an increase in gender-based violence.
Due to a lack of transport infrastructure, communities in remote and rural areas are marginalized and isolated, preventing them from participating in the country's economic life (4).
Investment opportunities introduction
Tunisia has received a large number of loans from international financial institutions (IFIs) and foreign funds to invest in the development of land infrastructure during the past decade.
Key bottlenecks introduction
In the short term, the subsector requires substantial material and performance improvements, although full privatization is unlikely for the time being. Rather, the SNCFT will extend its network by collaborating with international donors and experts (1).
Rail Transportation
Pipeline Opportunity
Rail Infrastructure Connecting Internal Regions to Logistics Areas
Invest in rail construction and maintenance to develop inland connectivity and optimize freight transportation
Business Case
Market Size and Environment
> USD 1 billion
2,268 kilometers of railway line (1)
Experts in the market point to a market size around USD 5.5 billion for invesmtents in railway infrastructure in Tunisia. The country has 2,268 kilometers of railway network (1).
Indicative Return
20% - 25%
The Railway Infrastructure Modernization Project by African Development Bank in Tunisia calculated an IRR of 22% over 30 years (6).
Investment Timeframe
Long Term (10+ years)
The Railway Infrastructure Modernization Project by African Development Bank in Tunisia calculated an IRR of 22% over 30 years (6).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Impact Case
Sustainable Development Need
Regional disparities exists between urbanized and highly linked coastal areas compared to rural southern regions, which are associated with the greatest poverty concentration. The Center-West and North-West had rural populations of 65% and 56%, respectively (7).
Expected Development Outcome
The interconnectivity of regions through rails infrastructures allows a faster movement of people, goods or merchandise and will reduce the inequalities of poorly served or underserved regions.
Gender & Marginalisation
The strengthening of intra- and interregional integration, as well as the decrease of travel time and expenses, will have a positive effect especially on women and youth, such as enhanced access to facilities; and higher revenue for women farmers and merchants (8).
Primary SDGs addressed
9.1.2 Passenger and freight volumes, by mode of transport
9.3.1 Proportion of small-scale industries in total industry value added
9.b.1 Proportion of medium and high-tech industry value added in total value added
Passenger and freight volumes, by mode of transport: FRE AIR: 13092473 FRE RAI: 1323600000 FRE ROA: 13848000000 PAS AIR: 6408533460.0000 PAS RAI: 7491000000.0000 PAS ROA: 75327742857.1429
Proportion of medium and high-tech industry value added in total value added: 27.57%
11.a.1 Number of countries that have national urban policies or regional development plans that (a) respond to population dynamics; (b) ensure balanced territorial development; and (c) increase local fiscal space
Tunisia: YES
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Public sector
Outcome Risks
Railway construction may negatively impact biodiversity along the route, and disrupt natural habitats and rural landscapes.
Impact Risks
Overlooking the expectations and preferences of passengers and companies using rail transportation might result in not frequented rail lines, risking the impact creation.
External factors such as environmental conditions, local market for rail parts, and development of the industry may affect the investments' ability to deliver the expected impact.
Impact Classification
What
Railway networks with the potential to optimize freight transport by lowering risks and waste associated with inefficient transportation channels and delivery times.
Risk
While railway infrastructure model is proven, embracing the users' preferences and external factors require consideration.
Impact Thesis
Expand the railway network providing communities living in peripheral areas safe transportation with lower CO2 emissions compared to highway transport
Enabling Environment
Policy Environment
Under the National Transport Master Plan for 2040, which prioritizes network development, transportation is expected to dominate state expenditures over the next two decades.The plan commits 67 billion TND (USD 23.3 billion) to structural changes and long-term development (1).
Following the development of a PPP framework, the government convened the Tunisia 2020 conference in November 2016, during which over 50 public, private, and PPP projects totaling USD 60 billion were selected. PPPs were to fund USD 6.5 billion of these (9).
The land transport sector's strategic orientations for the 2016/2020 Development Plan are centered on three axes: promotion of public transportation; enhancement of transportation security; and promotion of rail freight transport (10).
Financial Environment
Financial incentives: Under Law n°2016-71, 65% of the total cost of infrastructure, up to 10% of the approved investment cost, and a maximum of 1 million TND for projects located in the first group of regional development areas; and 85% for the second group of areas are provided in grants (11).
Fiscal incentives: If a business operates in a regional development zone, it is allowed a complete tax exemption of benefits for up to 10 years (12).
Other incentives: Subsidies, including revolving capital, are limited to 10% of the project's cost. 30% maximum 3 million TND (USD 1 million) in second regional group; 15% maximum 1.5 million TND (USD 500,000) in first regional group (12).
Regulatory Environment
The Investment Law n°2016-71 on September 30, 2016 allows for two bonus and incentive programs. Article 20 of provides for a first regime for national interest projects, while Article 19 provides for projects including direct investment activities.
Government Decree 2017-389 defines projects of national interest as those contributing to a national economic priority (incl. railway industry) and satisfy one of the following criteria: investment of 50+ million dinars; creation of 500 new employment each year for three years (11).
Tunisia is gradually increasing the contribution of the private sector to infrastructure development. The PPP Law of 2015, the accompanying investment code, and a PPP conference in 2018 have all helped Tunisia create an enabling climate for PPPs.
The law n° 2004-33 of 19 April 2004 on the organization of land transport and its amendment Law No. 2006-55 of July 28, 2006 govern land transport of people and products and establishes the norms and conditions for conducting business in this field (13).
Marketplace Participants
Private Sector
Colas Rail, Siemens
Government
National Company of Tunisian Railways (SNCFT), Company of the Rapid Rail Network (RFR), TRANSTU, Investor Supervision Unit (Ministry of Transport), General Directorate of Regional Development (MDICI)
Multilaterals
Kuwait Fund for Arab Economic Development, EIB, AfDB, AFD, Arab Fund for Economic and Social Development, Africa Growing Together Fund, Japanese International Cooperation Agency, OECD, Middle Income Countries Technical Assistance Fund, IBRD, IFC (22)
Non-Profit
Tunisia-Africa Business Council (TABC), Association of Tunisian Women for Development Research
Public-Private Partnership
General Body of PPP (IGPPP)
Target Locations
Tunisia: North-West
Tunisia: Centre-West
Tunisia: South-West
References
- (1) Oxford Business Group. The Report: Tunisia 2019. https://oxfordbusinessgroup.com/overview/managing-transition-investment-infrastructure-aims-ease-congestion-and-improve-connectivity
- (2) The Republic of Tunisia, 2021. Voluntary National Review 2021. https://sustainabledevelopment.un.org/content/documents/279442021_VNR_Report_Tunisia.pdf
- (3) Invest in Tunisia. Maritime and airport infrastructure in Tunisia. http://www.investintunisia.tn/m/En/airport-and-marine-infrastructure_11_133 "4) World Bank, 2020. The Determinants of Regional Foreign Direct Investment and Its Spatial Dependence. https://openknowledge.worldbank.org/bitstream/handle/10986/34839/The-Determinants-of-Regional-Foreign-Direct-Investment-and-Its-Spatial-Dependence-Evidence-from-Tunisia.pdf?sequence=1&isAllowed=y"
- (1) Maxula Bourse. http://www.maxulabourse.com.tn/sites/default/files/note_valeur/FOCUS%20VALEUR%20ADWYA_0.pdf
- (2) The Republic of Tunisia, 2021. Voluntary National Review 2021. https://sustainabledevelopment.un.org/content/documents/279442021_VNR_Report_Tunisia.pdf
- (3) WHO, 2018. Tunisia: Health Systems Profile. https://rho.emro.who.int/sites/default/files/Profiles-briefs-files/TUN-Health-System-Profiles-2018.pdf
- (4) Tunisia Investment Authority. PHARMACEUTICAL SECTOR SECTOR PRESENTATION. https://tia.gov.tn/storage/app/media/ARGUMENTAIRES/TIA_TUNISIA_PHARMA/AG%20PHARMA%20ANG.pdf
- (5) Shops Plus and Health Finance&Governance, 2018. Trends in Health Financing and the Private Health Sector in the Middle East and North Africa. https://shopsplusproject.org/sites/default/files/resources/Trends%20in%20Health%20Financing%20and%20the%20Private%20Health%20Sector%20in%20the%20Middle%20East%20and%20North%20Africa.pdf
- (6) Tunisia Investment Authority, 2021. Pilotage des feuilles de route sectorielles, secteur Pharmaceutique.
- (7) CAE, 2019. http://www.cae.gov.tn/wp-content/uploads/2019/08/Plan-de-relance-V-Finale-12-oct.pdf
- (8) Vision Research Reports, 2021. Tunisia Pharmaceutical Market (By Formulation: Tablets, Capsules, Injectables, Sprays, Suspensions, Powders, Other Formulations) - Global Industry Analysis, Size, Share, Growth, Trends, Revenue, Regional Outlook 2021 – 2030. https://www.visionresearchreports.com/tunisia-pharmaceutical-market/38350
- (9) Grand View Research, 2021. Active Pharmaceutical Ingredients Market Size, Share & Trends Analysis Report By Type Of Synthesis (Biotech, Synthetic), By Type Of Manufacturer (Captive, Merchant), By Type, By Application, By Region, And Segment Forecasts, 2021 - 2028. https://www.grandviewresearch.com/industry-analysis/active-pharmaceutical-ingredients-market?utm_source=report_sample&utm_medium=referral&utm_campaign=sampletest_tunisia_pharmaceutical_market&utm_term=active_pharmaceutical_ingredients_market