By: Vivian Chaplin – Director and Gabby Wesson, Associate in the Corporate and Commercial Practice at Cliff Decker Hofmeyr
At the government's inaugural Transport Conference, which opened on 16 March 2026 in Johannesburg, President Ramaphosa set the stage for a major transformation of South Africa's logistics sector. He highlighted the urgent need to address a serious imbalance in freight transport, noting that approximately 70% of goods currently move by road, resulting in significant pressure on infrastructure, compromised road safety and estimated economic losses of approximately R1 billion per day.
At the heart of the President's address was a commitment to revive rail as the backbone of the country's logistics network, based on the National Railway Policy 2022 and the National Freight Logistics Roadmap 2023. These reforms aim to attract private sector investment, while also ensuring that critical assets such as rail lines and ports remain in public ownership. With the launch of Transnet Rail Infrastructure Manager and the awarding of train slots to 11 train operating companies, President Ramaphosa announced that the first private rail operator is expected to commence operations in April 2027, with an ambitious target of moving 250 million tonnes of freight by rail by 2029.
Complementing these domestic reforms, the privatization of Africa's rail sector is being driven by a new international legal framework that streamlines and reduces the costs of financing railway rolling stock for private sector participants (PSPs).
The Luxembourg Rail Protocol (the Protocol), which entered into force on 8 March 2024, establishes a harmonized system for identifying and enforcing creditor rights in rolling stock through a global unique identification number under the Unique Rail Vehicle Identification System (URVIS). As discussed in our alert here, South Africa's Export Credit Insurance Corporation (ECIC) has responded by announcing a risk premium rebate of up to 20% for protocol-compliant financing. Furthermore, the United Nations (UN) has adopted Amendment 3 of the Global Model Rules on Permanent Identification of Railway Rolling Stock (UN Model Rules), which enables real-time digital tracking solutions for railway rolling stock. Collectively, these developments provide attractive opportunities for financiers and PSPs to increase private sector investment in South Africa's rail network.
ECIC exemption
On 27 August 2025, the ECIC announced that it will apply a discount of up to 20% on its risk premium when underwriting rolling stock financing where the protocol is in force in the debtor's or lessee's state. This exemption is subject to compliance with ECIC minimum local South African content rules, protocols and other underwriting conditions. This is a positive step forward for competitiveness and may facilitate greater participation by PSPs in South Africa's rail sector network.
Etiquette
The Protocol creates, for the first time, an international registry for security interests in railway rolling stock, publicly accessible 24/7 via the Internet – covering rolling stock wherever it is manufactured, whether new or used and whatever gauge or operability standards apply. The definition of rolling stock is broad and applies to “vehicles running on a fixed railway track or directly over or under a guideway”, including inter-urban and urban rolling stock, specialist boring and other rail-mounted “yellow” rail equipment, metro and light rail trains and trams, monorail trains and cable cars, people movers/shuttles at airports, Hyperloop pods and cranes and gantries at ports. The protocol also allows the registration of notices of sale of rolling stock, which is an important protection against fraud for the industry.
The Protocol is currently ratified by six States (Gabon, Luxembourg, Paraguay, South Africa, Spain and Sweden) as well as the European Union in respect of its competences. British accession is currently moving through the UK Parliament and several other states are also considering adoption, including France, Germany, Italy, Mozambique, Botswana, Democratic Republic of the Congo, Eswatini, Mauritius and Zimbabwe. As the Protocol is adopted by other countries (regarded as “Contracting States”), the advantages of structuring finance deals in accordance with the Protocol will only increase, given that creditors can only enforce their remedies in the context of the Protocol where the debtor (usually the PSP) is domiciled in a contracting State.
Central to this framework is URVIS, where a unique 16-digit identification number is allocated to each item of rolling stock by the International Registry in Luxembourg. The URVIS number must be permanently imprinted on the equipment by means of a physical marker as per the UN Model Rules.
United Nations Model Rules and URVIS
In November 2025, the United Nations, through its Economic Commission for Europe, adopted the United Nations Model Rules which came into force in February 2026. Most importantly, this amendment introduced Appendix 3, which establishes a framework for creditors and others such as insurers to access digital platforms showing real-time status of rolling stock in terms of URVIS numbers.
It offers transformative benefits to financiers, including tracking of the location and use of financed assets; The ability to use geo-fencing agreements with alert systems if rolling stock moves out of approved areas; Easy repossession in the event of default or insolvency of the debtor; predictive maintenance based on usage rather than time; enabling 'pay-as-you-go' pricing structures in lease agreements based on per kilometer usage; And insurance premiums are likely to be lower given better tracking capabilities. Importantly, the adoption of digital solutions is voluntary and must be agreed upon in writing between the creditor and the debtor. However, the physical URVIS marker is mandatory in respect of any registration of security interests and enforcement of creditor rights, taking priority in the event of any conflict with the digital solution.
Protocol clauses to be included in financing agreements
Notwithstanding that the Protocol is not yet binding in the context of South African domestic law (but “domestication” is underway), given these developments, it is important for financiers to begin incorporating Protocol provisions into their security agreements. The key provisions required include obtaining a URVIS number for each item of rolling stock financed, recording the debtor's undertaking to comply with the United Nations Model Rules for Permanent Marking, and recording the debtor's agreement to the digital tracking requirements under the new Appendix 3. Where the debtor is not yet in a contracting state (i.e. not in South Africa), agreements should include obligations to register pre-existing security interests in the international registry and, at the option of the creditor, to re-execute the document upon entry into force of the Protocol. Applicable at local level.
practical implications
PSPs engaging with financiers on rolling stock financing should ensure that their funding arrangements are structured to comply with the protocol, and ensure that the manufacturer or supplier marks the rolling stock with the URVIS number upon delivery to the PSP so that it can benefit from ECIC exemption (where applicable) and enhanced creditor protection, thereby reducing funding costs. The transition rules in the UN Model Rules provide flexibility with respect to instruments already in use. Where the rolling stock is already marked with running numbers and the protocol has been adopted, the URVIS marker must be permanently affixed within 12 months of the signature of the relevant credit agreement. In exceptional circumstances, where the equipment is not physically accessible and where it may not be physically practical to immediately access the equipment, this period may be extended to three years.
Last, but not least, as a matter of domestic law it will usually be an advantage for parties to register security interests and notices of sale in respect of rolling stock (by reference URVIS numbers), even where the Protocol does not yet apply.