Citadel Capital, an Egyptian private equity company has said that it is willing to connect Rwanda to the existing railway network from Kenya and Uganda, in a move that would greatly reduce the high transport costs incurred in trade.
The 1,400 kilometer (870-mile) railway connects Uganda to the Indian Ocean Port of Mombasa in Kenya.
“What we would be interested to look at in Rwanda and Burundi is basically rail and lake transportation system and how we could invest in that to reduce costs of goods coming into Rwanda,” Karim Sadek , the managing director of Citadel Capital told a press briefing on Thursday.
This was after the opening ceremony of the two day “Africa Roads and Rail Infrastructure Summit” in Kigali.
Sadek said that given the exiting financing gaps in infrastructure development in the region, connecting Rwanda to the exiting railway is cost effective.
“We think we can look into propositions that can bring results without having to spend the amount required in new railway...that is basically combining the extension line.”
While the railway has a section that is in “bad shape” between Kampala and Kasese in Uganda, the possible route of extension to Kigali, Citadel Capital would focus on investing in this particular section, Sadek said.
The announcement follows the firm’s recent acquisition of 49 percent stake in Sheltam Railways Company, the largest single shareholder and lead investor in Rift Valley Railways of Kenya and Uganda.
Citadel Capital and its partners agreed to invest $ 250m to upgrade the Kenya –Uganda railway network and the line’s rolling stock.
In his key note address to participants, Sadek also underlined that on a continent with 15 landlocked countries dominated by a number of smaller, often overlapping regional trading blocks, investment infrastructure is a fundamental growth driver.
“The challenge, particular in East African markets now pushing for regional economic integration, is to get the rail system up to speed,” he noted.
In her presentation Vivian Kayitesi , the official in charge of Investor Servicing and Aftercare at Rwanda Development Board, noted that infrastructure development is critical not only for Rwanda’s economic growth but also in the easing of trade within the region.
With the development of rail and road infrastructure, Kayitesi said Rwanda would significantly reduce the current high costs incurred during trade as a landlocked country.
“ Rwanda imports majority of inputs and therefore reduction of import costs would eventually translate into lower export prices making our products competitive globally,” she said.
Kayitesi also observed that the Isaka- railway project will reduce heavy dependence on the Northern Corridor, which is the transportation route for 95 percent of Rwanda’s imports and exports.
The corridor, which is used by Kenya, Rwanda, Burundi, Uganda and DR Congo has dilapidated infrastructure, several weighbridges as well as corrupt officials.