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Ideas & Debate

Why the standard gauge railway is not cost-effective

The standard gauge railway (SGR) being developed by the Kenyan Government will connect Mombasa to Malaba—with a branch line to Kisumu—onward to Kampala, Kigali (with a line to Kasese) and Juba, with a line to Pakwach.

Ethiopia is also developing Ethiopia Rail (ER) which will link Addis Ababa to Djibouti.

The importance of the SGR to Kenya is the potential dividend that will arise from bolstering infrastructure in the country. The government expects the project to reduce freight costs from $0.20 per tonne/km to $0.08 per tonne/km. But the SGR is expensive.

Last week, the Treasury said the SGR has caused an upward revision of the fiscal deficit from the initial 7.4 per cent of GDP to 12.2 per cent.
Is the approach in the construction of the SGR the most cost effective? A comparison with the ER would be useful.

As early as 2013, experts raised questions about the costing of the SGR—Kenyans are being charged $6.6 million per kilometre compared to $4.9 million per kilometre for Ethiopia’s ER.

This is a concern for as experts have pointed out, there are no major rivers or lakes or big hills to justify the high cost of the SGR.

In addition, parts of the ER will be a double track, and not a single track as the SGR is in its entirety. The SGR freight will have an average speed of 80kph while the ER will go up to 120kph.

Experts say it is doubtful those speeds will be reached by the SGR because it is a single track and stoppages will be needed to allow other trains to pass.

The SGR passenger train will have an average speed of 120kph while the ER will have an average speed of 160kph with future provision for 225kph.

Questions also arise as Kenya is spending more to buy its trains and rolling stock than Ethiopia.  

Ethiopia has also been smarter in regard to reaping human development dividends from rail construction. It has been using the development to build domestic technical capacity.

Reports indicate that foreign contractors conduct training for local staff at the Institute of Technology in Addis Ababa University.

Further, the Ethiopian government is sending promising undergraduates to Russia, India and China to continue their education.

Indeed, the Ethiopian government is doing all it can to ensure that the next phases of the ER and other rail network projects will be carried out entirely by Ethiopian enterprises. Are there such plans and activities going on in regard to Kenya’s SGR?

The basic sense one gets when comparing the SGR to the ER is that Ethiopia has been able to get a better deal overall and is leveraging the experience to build domestic capacity and reduce future dependence on external contractors for rail construction.

Kenya, on the other hand, has agreed to a plan that appears not to be cost effective and there have been no indications Kenya will use SGR construction to build domestic capacity.

In short, the ER is cost-effective and it will transform domestic capacity while the SGR is expensive with no marked improvement in domestic capacity.

I have long argued that if we do not leverage all infrastructure development projects to build domestic technical capacity, Kenya will be relegated to eternal dependence on others to do the basics of building infrastructure. The prudence of such a strategy is questionable.

Kenya is in a position to learn from Ethiopia and pressure must be applied to ensure such learning happens. 

Anzetse is a development economist; email: [email protected]

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