Kenya: The importance of the SGR to Kenya

It is presently well known that the Standard Gauge Railway (SGR) is being developed under the leadership of the Kenyan government and will connect Mombasa to Malaba (with a branch line to Kisumu) onward to Kampala, Kigali (with a branch line to Kasese) and Juba (with a branch line to Pakwach). What is as well well known is that Ethiopia is developing Ethiopia Rail (ER) which will link Addis Ababa to Djibouti.

The importance of the SGR to Kenya is, yes, the potential dividend that will arise from bolstering infrastructure in the country; indeed the government expects the project to reduce freight costs from $0.20 per tn/km to $0.08 per tn/km. But importance as well lies in the fact that the SGR is expensive. Indeed, last week Treasury made the point that the SGR has caused an upwards revision of the fiscal deficit from the initial 7.4% of GDP to 12.2%.

So is the approach towards the construction of the SGR the majority cost effective possible? A comparison with the ER would be useful. As early as 2013, experts raised questions about the costing of Kenya’s SGR; Kenya is being charged $6.6 million per kilometer compared to $4.9 million per kilometre for Ethiopia’s ER. This is particularly a concern because, as experts have pointed out, there are no major rivers or lakes or large hills to justify the high cost of the SGR. In addition, parts of the ER will be a double track, not a single track as the SGR will be in its entirety.

The SGR freight will have an average speed of 80KPH while the ER will go up to 120KPH; experts national that 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 120 KPH while the ER will have an average speed of 160 KPH with next provision for 225KPH. Questions as well arise because Kenya is spending additional to buy its trains and rolling stock than Ethiopia. Why?

Ethiopia has as well been smarter with regards to reaping human development dividends from rail construction, specifically the Light Rail Transit System (LRT). Ethiopia has been using the development of the LRT 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 all other rail network projects inclunding ER will be carried out by Ethiopian enterprises. Are there such plans and activities going on with regards to Kenya’s SGR?

The basic sense one gets at the same time as comparing Kenya and Ethiopia is that the latter has been able to get a better transaction in general and is leveraging all experience to build domestic capacity and reduce next dependence on external contractors for rail construction. Kenya on the other hand has agreed to a plan that appears to not be the majority cost effective and there have been no plans announced indicating intentions by the Kenyan government to use SGR construction to build domestic capacity. I have long argued that if Kenya does 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 of the country. The prudence of such a strategy is questionable. Kenya is in a position to learn from Ethiopia; pressure ought to be applied to ensure such learning happens.