30 November 2012

East Africa: Poor Rail, Water Transport Slows Down EAC Growth

Calls to revamp rail and water transport in the region are getting louder. This according to experts is against the background that only a fully functional railway and water transport systems will enable the region harness its full international trade potential.

It should allow for full optimisation of the two key ports of Mombasa and Dar es Salaam.

Mombasa, the largest sea port in east and central Africa is building a new tax free container terminal that will not only increase its capacity but also provide opportunity for increased trade in the tax free zone.

The port of Dar Es Salaam is also aggressively courting Uganda to develop smaller inland infrastructure that will make the port much cheaper to use.

But this is just half the story. Overall development of transport infrastructure that would facilitate onward movement of goods beyond the ports is being developed at snail pace.

Gichiri Ndua, the managing director of Kenya Ports Authority observes that 85% of all the goods that come through the ports move a distance of over 500km to their final destination. This makes road transport expensive and uncompetitive. This leaves water and rail.

The region has both the water (Lake Victoria) and a great terrain to facilitate the development of the two modes of transport, but no meaningful effort has been dedicated to this for decades now.

"The roads should only be used when they are economically feasible and that is short distance," said Ndua speaking at a meeting at Mombasa port on transport logistics along the northern corridor.

Africa's share of global trade is less than 5%. But more significantly, maritime trade accounts for 92% of Africa's international trade which highlights the need for developing both the port and the corresponding rail and water infrastructure.

"The infrastructural support to the hinterland poses transport challenges, slowing the pace at which people and goods travel to and from the port. The strategic role of maritime cannot be underplayed because there is a strong link between maritime growth and growth of the economy," Ndua said.

Across Africa, it is agreed that railway is the cheapest means of transport that would drastically reduce the cost of doing business. But is still not clear why individual states and regional blocs have given it very little priority.

In East Africa, there is both an energy and railway master plan developed years ago, yet to be fully rolled out.

COMESA member states meeting in Kampala recently resolved to fast track the implementation of the joint infrastructure projects of rail, energy and road.

Traffic through Mombasa has continued to grow rising from 9.13 million tonnes in 2000 to 19.93 million tonnes in 2011. This is almost double the capacity of Dar, yet the two facilities still have room for expansion.

Experts contend that the financial obligations needed to kickstart the projects is probably the biggest challenge.

But other funding options like Public Private Partnership (PPP) have been slow at taking off. Even regional initiatives have varying levels of legislation that would allow for a smooth joint PPP undertaking. Uganda is yet to pass PPP legislation.

The good news out of the COMESA meet was that a financer, PTA Bank was involved, which gives some financial teeth to the cause. Because of the financial scope of these projects, Ndua advises that most of them should be addressed regionally and not left to one state.

"International trade is bigger than EAC, the region must be more competitive and the railway system is core to maritime business," said Ndua.

Antony Hughes from Trade- Mark East Africa, a trade facilitating agency says it is important that the facilities are not only available but reliable and predictable too.

"A well run efficient port can help shape economic growth and performance of the economies," said Hughes.

There are several initiatives in reviving the rail, especially the RVR Uganda-Kenya railway concession, but again observers it will take several years for the railway to be fully functional given the pace of development.

The other is building smaller inland ports to access the sea via the lake side ports of Bukasa in Uganda and Musoma in Tanzania, connected by railway to Arusha in the Tanzanian interior and to the port of Tanga on the Indian Ocean.

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