Barriers to attracting direct and capital market investments for railway infrastructure in Brazil


With the objective of contributing to public policy discussions, this report seeks to identify the barriers that must be overcome in order to unlock private investments for the railway sector. Two types of challenges will be examined:

a. Barriers that hamper the attraction of domestic and foreign private companies (also called direct investors) to build and maintain railway infrastructure and/or operate freight transport services in Brazil;

b. Barriers that hinder the attraction of domestic and foreign investors to invest in railway projects and companies through the bond market in Brazil. This study makes academic and practical contributions.

Academically, this study helps to fill a gap in the literature on the main challenges related to increasing climate finance in developing nations. In practical terms, the report is particularly relevant in a context in which private investors are seeking investment opportunities with higher rates of return (in view of low global interest rates) and in which the State does not have resources to devote to infrastructure. Additionally, this is an opportunity for Brazil to develop infrastructure that is sustainable and aligned with the nation’s Paris Agreement commitments (by 2025, Brazil plans to reduce GHG emissions by 37% compared to 2005 levels, and by 43% by 2030).

This report is structured as follows. The first section reviews the literature and develops a number of research propositions on the barriers to private investments in the railway sector in Brazil. The second section describes the research methodology. Next, the interview findings are presented and discussed. The final section concludes and suggests areas for future research.

Executive Summary

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