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Economy

Construction of high-speed rail line is launched

President  Uhuru Kenyatta, First Lady Margaret Kenyatta, Deputy President William  Ruto and Mombasa Governor  Hassan Joho (right) during the launch of the Sh1.2 trillion standard gauge railway line on Thursday. Photo. Kevin Odit
President Uhuru Kenyatta, First Lady Margaret Kenyatta, Deputy President William Ruto and Mombasa Governor Hassan Joho (right) during the launch of the Sh1.2 trillion standard gauge railway line on Thursday. Photo. Kevin Odit 

Kenya stepped up its battle for control of East Africa’s logistics and cargo transport business with the launch of construction of a high-speed railway line that will serve four countries.

President Kenyatta said the Sh609 billion standard gauge railway (SGR) would cut the cost of transporting goods between Mombasa and Malaba significantly, reducing the cost of locally-produced goods upon its completion in 2018.

“Improved infrastructure on the northern corridor will increase business volumes for our port and with bilateral help of China, Kenya will soon have a world class rail transport,” Mr Kenyatta said. China’s Exim Bank is financing up to 85 per cent of the 500km Mombasa-Nairobi track with the rest of the financing coming from the Kenyan government.

The line is being built by a Chinese firm under a bilateral agreement with the government.

“China is ready to share its technology and experience with Kenya to boost development,” said Chinese ambassador to Kenya Liu Guangyaun.

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Mombasa Port has traditionally served most of East Africa’s landlocked countries, including Uganda, Rwanda and South Sudan.

In recent years, however, most of the landlocked states have significantly reduced their reliance on the port citing delays on road transport that accounts for 93 per cent of the transit cargo hauled.

Kenya Ports Authority (KPA) data shows that Ugandan traders remain the most frequent users of Mombasa, accounting for 4.85 million tonnes or 73.1 per cent of last year’s total transit traffic.

South Sudan, which has lodged an application for EAC membership, was second with 766,656 tonnes or 11.6 per cent of the 2012 transit traffic followed by the Democratic Republic of Congo with 482,358 tonnes.

Rwanda (260,238 tonnes), Tanzania (186,169 tonnes) and Burundi (39,160 tonnes) also used Mombasa port to import and export goods.

Rwanda and Burundi have collectively slashed the share of cargo ordered through Kenya from an average of 60 per cent 10 years ago to just 20 per cent due to persistent inefficiencies.

“It is not just in Kenya, but all the landlocked countries can now see the possibility of reduced cost of production,” said industrialist Manu Chandaria.

Mr Chandaria is the chairman of Mabati Rolling Mills, one of the firms whose trucks traverse East Africa supplying building materials.

“We have to get this project off the ground and complete it on time,” he said.

On Thursday, President Kenyatta said the SGR together with projects such as the oil pipeline that have been lined up for the northern corridor would reduce costs and attract business to Mombasa Port.

“We have reduced the port turnaround time from 11 to six days and with two additional berths under construction and high-speed high-capacity trains, we are going to extend the benefits to our neighbours,” he said.

Mr Kenyatta, however, needs to mend the rift that has developed between the so-called Coalition of the Willing (Kenya, Uganda and Rwanda) on the one hand, and Tanzania and Burundi on the other.

On Saturday, Mr Kenyatta is expected to take over the leadership of the EAC from President Museveni of Uganda at the heads of state summit in Kampala.

When they met in September, the region’s council of ministers gave Uganda till this week to explain the apparent isolation of Tanzania by the informal grouping of Kenya, Uganda and Rwanda.

The ‘Coalition of the Willing’, which is also working on a single customs territory and single tourist visa, is held together by a trilateral pact signed in June.

At the SGR groundbreaking ceremony in Mombasa, President Kenyatta dismissed calls for reconciliation with Tanzania (and Burundi) as “cheap and useless politics”, saying the five countries remained united in purpose.

“We got together to launch northern corridor projects. Next month, we’ll be together with Tanzania to launch Voi-Taveta-Moshi Road. We also plan to rehabilitate the Mombasa-Lunga Lunga Road to ease movement of people between our two countries,” he said, adding that Kenya is for full regional integration with the ultimate goal of a political federation.

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