EDITORIAL: Compulsory use of SGR will only hurt consumers

Saturday May 30 2020

KRA Commissioner General with Transport Cabinet Secretary James Macharia at off-loading of the first transshipment cargo load at Naivasha ICD. PHOTO | NMG

KRA Commissioner General with Transport Cabinet Secretary James Macharia at off-loading of the first transshipment cargo load at Naivasha ICD. PHOTO | NMG 

The EastAfrican
By The EastAfrican
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Kenya should reconsider its directive requiring shippers along the northern corridor to use the Standard Gauge Railway. The directive, effective June 1, makes it compulsory for importers to move all hinterland-bound transit cargo on the SGR from Mombasa to the Naivasha inland port.

The decision is meant to implement a resolution from a May 12 meeting between the presidents of Kenya, Uganda, Tanzania and South Sudan.

The Heads of State decisions came in the wake of Covid-19 testing statistics that showed cross-border long distance drivers had become key in transmission of the pandemic.

There are a few problems with the Kenyan Transport Cabinet Secretary James Macharia’s directive. The minister’s communication is mute on the aspect of a digital tracking system, which was to be developed and applied as per the presidential directive.

Creating a monopoly for the SGR between Mombasa and Navaisha undermines the basic ethos of free markets. Competition is an essential element of any market system because it sets prices at the most cost-efficient point for both providers and consumers of goods and services across a wide range of operating environments.

Putting an important segment of the regional transport system in peril aside, in the final analysis, protecting the SGR does not do it any favours. It might help it get essential revenues to meet its commitments in the short term. In the long run, however, it takes away any incentive for its operators to address the factors that make it economically inefficient. That will ultimately lead it to exactly where the metre-gauge that it is replacing finds itself today.

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With the possible exception of Tanzania, long-distance truck drivers have become the focus of Covid-19 testing in East Africa. Using Uganda as a case study, samples from drivers make up anywhere between three fifth to three quarters of Covid-19 tests conducted on any given day.

This fixation with drivers ignores a basic question: Where are the truckers picking their infections if not from within the community? Until that question is answered, shifting cargo truck drivers from Mombasa to Naivasha is treating symptoms. It is unlikely to achieve little more than shifting the epicentre from one point to another or actually creating a satellite.

It is an indisputable fact that shifting cargo transhipment from Mombasa to Naivasha will take nearly 600 kilometres out of the equation. It is also true that truckers have their sins—they accelerate tear and wear of roads and can be vectors of deadly diseases.

The only misnomer here is that SGR is not delivering any significant cost benefit. That is partly because of the additional layers of bureaucracy in the system. But it is also a function of distance. Rail gains efficiency with each additional mile of track.

Accelerating the development of the SGR to its ultimate termination points in the hinterland is what will make it competitive against road, not political edicts.

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