Rates of Return for Railway Infrastructure Investments in Africa
This report compares Internal Rate of Return values found for railway projects in Africa.
Abstract
Internal Rate of Return (IRR), also known as Economic Internal Rate of Return (EIRR), is one of the economic appraisal methods for infrastructure projects which is widely used in Africa to indicate that the calculation includes externalities and to distinguish it from the financial internal rate of return (FIRR) which considers only costs and returns directly associated with the project. IRR is considered by the European Commission and by the World Bank for justification of capital investments, where values over 12% are normally accepted for developing countries (ECORYS, 2016; The Republic of Liberia, 2012). This report compares IRR values found for railway projects in Africa. IRRs estimated for rehabilitation projects averaged 12.2%, and 16.3% for new construction.
K4D helpdesk reports provide summaries of current research, evidence and lessons learned. This report was commissioned by the UK Department for International Development.
Citation
Luiu, C., Eskandari Torbaghan, M., & Burrow, M.P.N. (2017). Rates of return for railway infrastructure investments in Africa. K4D Helpdesk Report. Brighton, UK: Institute of Development Studies
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