The SGR train will get here, but we should be ready

The media served us with cool photos and stories of Rwandan President, Paul Kagame meeting with his Tanzanian counterpart John Pombe Magufuli. I particularly loved the photo that graced The New Times showing both presidents smiling and facing in the same direction.

The media served us with cool photos and stories of Rwandan President, Paul Kagame meeting with his Tanzanian counterpart John Pombe Magufuli. I particularly loved the photo that graced The New Times showing both presidents smiling and facing in the same direction. Is it not interesting to note that both of them wear glasses and have greying beards?

On a more serious note, these two leaders met and agreed on the joint construction of the Standard Gauge Railway (SGR) connecting Kigali to the north western Tanzanian town of Isaka. This will connect Kigali to the port city of Dar es Salaam. It is a logical step given that Dar es Salaam is a little closer to Kigali than Kenya’s Mombasa port.

The excitement around the SGR in East Africa is totally understandable given the troubles we all go through to see a container moving from Mombasa or Dar port to the hinterland. Then we have the troubles of passengers moving in a region that had not done much to improve on the old railway system that was built to move minerals and other raw materials from the hinterland to the sea ports for export.

The prospect of a new railway system that offers much more capacity  and speed is one that  gets travellers and business people rubbing their hands with glee. It is almost too good to be true.

The train is expected to cut down the cost of transporting cargo to and from the ports and do this at a much faster pace. Ultimately this reduced cost of moving cargo should result in reduced prices (although this rarely happens) and more importantly it will speed up development in the region.

The same good news will occur to the passenger travel side which some people have never actually experienced. There are so many East Africans who had never been on a passenger train including yours truly.

With a faster train the temptation is too hard to resist. Kenya has a functional SGR train from Mombasa to Nairobi. The passenger service is booming beyond expectation during the festive season it was nearly impossible to get a ticket as they had been sold out days before.

At the beginning of the year the cargo service of the same train was launched but it has been plagued by some hitches. The business people seem not to be embracing it just yet arguing that the Internal Container Depot in Nairobi is not efficient and so putting their cargo on the train and then struggling to have it cleared from the ICD in Nairobi is not worth it. So they are still using the trucks.

As I wrote this, the freight charges on the SGR had been cut by half to further lure the business people to use it instead of the trucks. This may look like a smart move but it brings into question whether the service will remain profitable enough to service the loans acquired for its construction. And we all don’t want to think of what will happen if we (or our children) fail to pay for these huge loans.

Therefore we need to think of how ready we are to utilise this service instead of waiting for it to first get here then we start on the thinking part. Already there is the challenge that when the train brings a lot of cargo from the port, what will it be transporting on its way back? We already know that many times the trucks that bring cargo from Dar or Mombasa go back empty and this is an imbalance that we should fix.

The SGR will create opportunities and challenges. For the areas where it has not yet reached, now is the time to think about how to deal with these. Those in the transport industry must have a plan in case the train eats up their lunch. I see many of the bus companies on the Mombasa Nairobi route have expanded their footprint to cover areas where the train does not serve and improved their buses to offer luxury travel.

Our investment strategists should now be having busy afternoons thinking of our how best we shall exploit this cool infrastructure when it eventually gets here. We should not be going for knee-jerk reactions like a 50% discount on cargo freight even before a week of cargo service. Now is the time to make and refine our projections so that we can be ready instead of being surprised.

Views, expressed in this article are those of the author and do not necessarily represent those of the New Times Publications.

 

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