Why are they going back to their old railways after their agreement and ambitious plans for East Africa’s Standard Gauge Railway network.
In August 2013 the Presidents of Kenya, Rwanda and Uganda signed a Tripartite Agreement; for the development and operation of a 1,500km-long joint Standard Gauge Rail (SGR) system; that will connect Mombasa (Kenya) – Kampala (Uganda) – Kigali (Rwanda). In May 2014, the Republic of South Sudan also joined this agreement; in other to extend the rail line to Juba (South Sudan). This project is part of the Northern Corridor infrastructure project. There are also plans for the SGR to cut across Tanzania, Burundi, Ethiopia and the Democratic Republic of the Congo; so as to create a complete East African SGR network.
The expected date of completion for the joint SGR (Mombasa – Kampala – Kigali) was 2018; but the project is currently running behind schedule.
There have been several reasons for the delay of the project
Kenya have completed the initial phase of the project from Mombasa to Nairobi with funding from the Chinese government; but have failed to extend it to Malaba (border with Uganda). Although Kenya had allowed China to build, run and hand over the infrastructure after they recover their money. China have however withdrew its funding for the extension plan; stating that they needed a sufficient proof of viability on the project. This is because the Mombasa-Nairobi rail line which begun operations in June 2017; made a loss of Sh10 billion (US$100 million) in its first year of operations. But you see, that was not the only reason; as the loss can be expected since it is its first year of operation and public awareness of the railway usage was still low.
The next phase of the extension plan (Nairobi to Malaba) will cost about KSh700 billion (US$7 billion). This phase consists of three segments (Nairobi – Naivasha; Naivasha – Kisumu; and Kisumu to Malaba). With the help of a Ksh150 billion (US$1.5 billion) Chinese funding, the Nairobi – Naivasha line which currently under construction is almost complete.
Estimated cost for the next segment (Naivasha – Kisumu) is about Sh368 billion (US$3.6 billion). Kenya’s President Uhuru Kenyatta had requested that China give half of the cost as grants; under its Belt and Road Initiative and the balance as a loan with more relaxed conditions. Traditionally, the Chinese usually use grants and interest free loans to persuade least developed countries into its Belt and Road Initiative; That is why Kenya had come to meet them for the loan but in response the Chinese government is requesting for a collateral.
Maybe there is something the Chinese are seeing that we are not. Will the SGR really be profitable?
Also, Kenya currently has a ballooning debt that is comprised mostly of Chinese loans which are putting its national assets at risk of being seized by the Chinese government in the event of loan default.
Uganda versus Rwanda
Uganda on the other hand in October 2014 completed the feasibility and designs of its own 273km-long section (Malaba – Kampala); but have failed to start construction while attributing its failure to lack of financing; as it will cost about US$2.3 billion and also on the failure of Kenya to extend its section to Malaba. The funds for the Uganda section is also expected to come from the Exim Bank of China; but its approval can not take place until Kenya finalizes its own funding arrangement as they both embarked on a joint loan negotiation with China.
You see! some of the demerits of joint ventures. Know your partner!
It is also worthy to note that China had offered to finance the entire joint railway project connecting Kenya, Uganda and Rwanda. But Uganda changed its mind and rather gave priority to developing a railway link to South Sudan instead of the Kampala-Kigali line. So China withdrew the offer.
Rwanda who is also a part of this regional rail network, seem not to have interest in the project as they are rather focusing on on the Isaka-Kigali railway project which will link its capital Kigali to Tanzania; and is according to them about US$200 million cheaper when compared with Kampala-Kigali. The Isaka-Kigali railway is a 571-kilometre railway that will cost US$2.5 billion with Tanzania paying US$1.3 billion while Rwanda pays US$1.2 billion. But then Rwanda are also in talks with China’s Export-Import Bank to get a US$1.2 billion loan; for the Kampala-Kigali rail line as they have already completed the preliminary engineering design. Yet it is still uncertain that even if they get the loan, they will go on with the project unless Uganda gives them an assurance of completing its own part.
Diplomatic war between Uganda and Rwanda
This is not the first time both countries have dismissed infrastructures that would link them together. Remember the Uganda-Kenya oil pipeline which was also to extend to Rwanda; but was forfeited in favour of the Uganda-Tanzania Crude Oil Pipeline leaving out Rwanda.
The two countries (Rwanda and Uganda) for the past few years have been in a diplomatic feud which have also resulted in economic wars. Allegations have been flying from both ends and borders have been closed. Remember this countries presidents are intrinsically linked as they helped each other come to power through rebellions.
Here is an interesting opinion on the Uganda versus Rwanda feud. Click here
Revamping the old railways
Seeing the uncertainty of the Joint SGR project, Kenya and Uganda, have both announced plans to revamp its old rail lines. There is an already existing old Meter-Gauge Rail (MGR) line; built about a century ago by its colonial masters that connects Kenya and Uganda.
Kenya after the failure of getting funds from China for the second segment of its Nairobi – Malaba SGR (Naivasha – Kisumu); will now revamp its old MGR line from Nivaisha – Malaba. The idea is to connect the Nairobi – Naivasha SGR after its completion to the old but revamped Nivaisha – Malaba MGR. For seamless transition from the SGR – MGR, a new rail line of 43km will be laid; and this will cost about Sh6 billion (US$6 million). Already, a US$400 million loan from China have already been secured for the revamping of the old MGR.
Uganda is already upgrading its metre gauge railway line from Malaba to Kampala at a cost of US$170 million. It also plans to upgrade the Tororo-Gulu MGR line.
Tanzania recently followed suit. Even as its government continues with the construction of the standard gauge railway between itself and Rwanda; it has also embarked on revamping its old metre gauge railway networks. Phase one of this project which is the Sh5.7 billion (US$2.1 million), 353km Tanga port to Moshi railway station is complete.