EA to pool funds for new railway line

Each of the five East Afrcan Community partner state will equally contribute to the construction of a new railway system estimated to cost $25 billion.

Speaking to The EastAfrican at the the EAC’s 3rd Investment Conference in Kampala, EAC deputy Secretary General in charge of Planning and Infrastructure Alloys Mutabingwa said this was decided due of the urgency of the need to establish the required infrastructure to facilitate a better investment climate in the region — especially roads, railways and power.

Mr Mutabingwa said the region had ruled out the traditional approach of “begging our development partners” for fear of delaying its projects.

EAC is also exploring how it could offer infrastructure bonds to raise more resources.
“If Kenya has been able to succeed why not at the regional level. It is a question of commitment,” said Mr Mutabingwa.

Uganda on the other hand has proposed that its engineering section in the army should take over the construction.
“We should only seek foreign assistance to guide us,” said President Yoweri Museveni at the conference held under the theme “EAC Common Market: The Preferred Investment Destination.”

Even though the EAC seems to be ignoring foreign funding in this venture, more than 10 private firms have reportedly shown interest while the US and China have started lobbying to invest in the sector.

“They can come in but on our terms. This is a profitable venture that has attracted everybody’s attention but the private sector will participate under the public private partnership arrangement,” said Mr Mutabingwa.

The partner states’ contributions will be consolidated into a proposed railways fund to be managed by the East African Development Bank. Further, an infrastructure agency will be formed to co-ordinate both human and capital resources, a role taken away from the EAC Secretariat.

“As a matter of principle we have proposed an equal percentage across board. Each member state will contribute from its budget,” Mr Mutabingwa said.

The EAC says it will overhaul the entire railway system and build a modern one, which could be the reason a number of investors are competing to win the deal. The view from some sections that instead the existing but outdated railway line should be rehabilitated has also been rejected.

“Our latest position is that we should have a modern railway line that can benefit future generations even though it may not have immediate returns. We are looking at it purely from a business standpoint.”

Outdated system

According to experts, the current railway line cannot allow a wagon to move at more than 40km per hour. The capacity of the line from Mombasa would be over 10m tonnes per year if average speed could be increased to 50kph.

But according to CPCS Transcom consultants the demand for rail traffic will reach approximately 16 million tonnes by 2030. The EAC is however, considering constructing a railway line that can allow speeds of about 120kph.

A dysfunctional railway system, an inefficient road network and inadequate power supply have been the major bottlenecks to investment in East Africa, a market of about 130 million people with a domestic growth domestic product of $73 billion and an average GDP per capita of $506.