Dr. Sakanga Lubinda Mufalo OPERATIONS MANAGEMENT & TRANSPORT ECONOMIC REGULATION EXPERT
Absolute Advantage and Comparative Advantage are concepts which some have used interchangeably, yet they are distinct and significant terms describing different vantage positions. According to Segal (2025) Absolute and Comparative advantage are economic concepts that help companies and nations decide how best to use their resources in producing goods for trade internationally.
IB Economics (2024) asserts that the concepts explain why countries engage in trade and how they can benefit from it, even if one country is more efficient in producing all goods compared to another.
The Indeed Editorial Team (2025) has three (3) conclusions on the concepts, that the concepts of absolute and comparative advantage help countries and business assess product values and determine international trade options. Secondly, that absolute advantage evaluates how efficiently a single product can be produced for quality, quantity and profits and thirdly, that Comparative advantage helps an entity select between several products to determine which has the greater return. TRANSNOMICS in Effect has appreciated the concepts relative to Transport Policy action and strategy.
In this article, rail policy action as observed in the Southern Africa Development Community (SADC) region is used, in general terms, for illustration.
The choice of the rail transport sector in SADC, for illustration purposes, is based on the following facts:
- SADC has the densest regional rail network totalling 50,000km, amongst the African regional economic communities.
- The SADC Regional network is connected to all the member states primary freight trade hubs and major cities.
- The SADC regional railway network is all on the same gauge 1067mm (cape gauge).
- Post colonial era, all railway operations were state owned: infrastructure management, regulation and operators. All were under government parastatal management and control. Mostly under a single self-regulating entity.
Initially, post-colonial period, the SADC railway industry was run under rail monopolistic national setups. The state-owned railways had no rail competitors. For some countries, they were the sole transport mode delivering freight to and from the ports, whilst in some countries, they were the sole transport mode delivering inputs and outputs to and from the mining, agricultural and other production centres.
With time, however, road freight transportation emerged as a fast-paced competitor and its lessons, and experience has motivated radical changes in the SADC rail transport operations, birthing competition tendencies and reforms which now necessitate the consideration and application of absolute and comparative advantage in the conduct of business in the SADC railways.
Policy reforms and other undertakings in the SADC railway industry present a clear application and exploitation of the areas of absolute and comparative advantage as regards to who enjoys the profits of the rail absolute and comparative advantage.
The Association of American Railroads (AAR) applauds the Staggers Act of 1980 and its subsequent revisions, as it is current said to promote balanced and sustainable economic development. According to the AAR (2019), owing to the Staggers Act, “America’s freight railroads are the envy of the world, providing an enormous competitive advantage for U.S. businesses, huge savings for consumers, and strong support for our nation’s economy”. Since the Staggers Act was passed, average rail rates have fallen 44 percent, train accident rates are down 77 percent, rail traffic volume is up 90 percent, and railroads have poured more than $685 billion — their own funds, not taxpayer funds — back into their systems.
To what extent are the SADC Member States rail policy actions yielding such balanced returns?
TRANSNOMICS in effect, has researched the transitional processes in Africa’s transport sector relative to its importance as an enabler of growth and development with other economic sectors. Whilst some countries have taken the risk of introducing transport policy and regulatory reforms such as concessions, vertical separation, open access, third party-access amongst other variations, the strategic use of Absolute and Comparative advantage of sectors such as the railway and its infrastructure and services can be maximised on.
Transportation as a significant part of the regional and international trade logistic chains contributes a significant component of the cost of trade imports and exports. Some SADC countries, like Zambia, have stated that transport costs currently contribute to over 30% of the cost of their inputs and exports. Who is enjoying the profits from these costs?
What is obvious is that once upon a time, post colonial era, all these profits were accrued to governments through their monopolistic rail entities. Today, the landscape has changed. Without effective implementation of Transnomics Advisory services on transport economic regulation, imbalances and system exploitation occurs. The end consumers suffer high prices, infrastructure condition suffers degradation, safety and security is compromised, trade competitiveness is compromised due to high commodity prices, reinvestment in sectors such as railway becomes a mirage of all these ills affect domestic demand and your national balance of payments.
Introduction of transport policy and regulatory reforms as it affects trade, requires comprehensive consideration of the absolute and comparative advantage factors. Today’s business environment is strongly influenced by profit seeking forces, which, at the expense of the state or governments, do not promote balanced growth. Providing and managing the interests State agents versus private sector agents, especially for strategic sectors such as the railway industry, needs candid attention and regulation. Informed policies and regulations are very important for attaining the balance based on modern business informatics.
Note: Absolute advantage may change over time as technology, resource availability, or production methods evolve. Comparative advantage can change based on shifts in resource availability, technology, or changes in production costs.
What are the absolute and comparative advantage consideration of your Concession, vertical separation, open access, third party-access, amongst other variations of economic regulatory reforms you are undertaking? How are the economic rents (to be) distributed? How balanced is your transport policy and regulation?
Dr. Lubinda Mufalo Sakanga is a transport economist specialised in economic regulation, project and operations management. He has over 17 years of progressive transport sector experience gained at national and international levels. He worked in the public sector from 2006 to 2017 (Zambia) as a Senior Transport Economist position and progressively promoted to Assistant Director for Road and Rail. From 2017 to date, he serves the SADC region as Southern African Railways Association- Director Technical and Operations in charge of Programmes Coordination (Rail transport corridor development, policy, projects coordination and resource mobilisation). Dr. Sakanga also provides transport, infrastructure, economic policy and operations management.
TRANSNOMICS consultancy services. His professional experience is complemented by astute academic qualifications: PhD degree in Operations Management under the Faculty of Engineering and the Built Environment of the University of Johannesburg in South Africa. He has developed a regional railway corridor economic regulatory framework for sustainable economic development in SADC. He has a Master of Science degree in Project Management from the University of Salford, a Master of Arts Degree in Economic Policy Management and a Bachelor of Arts Degree in Economics from the University of Zambia. In addition, he holds professional certificates in Infrastructure and Public Private Partnership Financing, Road Management & Transport Technology, Business Accounting, amongst others. He champions the TRANSNOMICS philosophy.
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