Kenya turns to South Africa in new railway deal
Thursday November 25 2021
Kenya has turned to South Africa to revamp its old railway network, as it seeks solutions within the continent to revamp its railroad networks.
During a three-day state visit to Pretoria, Kenyan President Uhuru Kenyatta invited South African state-owned engineering company to revamp and upgrade its railway system.
President Kenyatta is seeking solutions within the continent to improve its railway system countrywide after Kenya failed to sign an agreement with a French company in July this year to fund a light rail from Jomo Kenyatta International Airport (JKIA) to Nairobi’s city centre.
During President Kenyatta’s visit in Paris in July, Kenya failed to ink $144 million financial deal to fund the infrastructure plan.
Kenyan Transport Cabinet Secretary James Macharia told The EastAfrican that the French trip did not lead to the signing of the deal that was meant to fund the construction of the five-kilometre metre-gauge line linking the airport to the standard gauge rail (SGR) terminus in Syokimau.
Earlier agreements had provided for the signing of the loan pact by June 30 this year when President Kenyatta was in France.
The deferring of signing means that the rail project, whose construction was initially set for August this year following a deal agreed between French President Emmanuel Macron and his Kenyan counterpart in March 2019, faces further delays.
The loan was also meant to support the revamping of the old 17-kilometre railway track that links to the SGR line at Syokimau, construction of two airport stations, a terminal at Donholm and an automatic fare collection system.
In Pretoria, President Kenyatta was optimistic that Kenya partnering with Transnet Engineering Company, a manufacturer of railway components including freight wagons, locomotives and passenger coaches, will complete pending railway infrastructure project in the country.
“The advanced engineering that is taking place here is a clear indication that Transnet can be a leading partner in working together with other African countries to restore their rail-stock. We look forward to working with you as we move towards fast tracking the restoration of our railway system,” said the Kenyan President.
Transnet Engineering Company will be the first company in the continent to partner with Kenya to boost its rail system after the country contracted China to build Mombasa-Naivasha Standard Gauge Railway (SGR).
The request comes at a time when Kenya is at an advanced stage of connecting the SGR from Naivasha to the Kenya-Uganda border in Malaba.
Mr Kenyatta said the enhanced partnership in the improvement of railway systems would boost the economies of other countries in the East African Community and the Southern African Development Community.
Kenya Railways has already completed construction of the new SGR Phase 2A linking Nairobi and Naivasha extending rail connection from Mombasa to the Inland Container Depot (ICD) in Naivasha.
The new rail and depot facilities have enabled significant movement of freight to Naivasha ICD which helps in quick evacuations by both road and rail to the final destination. There was need to connect the new inland depot with the meter gauge rail system to Malaba.
President Kenyatta said that a robust railway system would help fast track the integration of the African continent by facilitating the movement of people, goods and services at affordable costs.
“We need this interconnectivity to be able to facilitate that movement and the only way we can do that is by bringing the corporations responsible for transport to partner and start developing these rails, roads, sea and air linkages in our respective countries,” he said.
During the visit, Nairobi and Pretoria signed eight trade agreements to boost bilateral trade and address trade imbalances between the two countries. They will partner in transport, health, diplomatic consultations and training as well as tourism and migration.
They also signed a bilateral air services agreement (Basa) as well as MoUs on government printing works, and the return of illegal entrants and nationals refused entry.
President Kenyatta sought to increase Kenyan exports to South Africa to bridge the trade gap between the two countries.
In 2020, Kenya’s exports to South Africa were approximately $33 million while Kenya’s imports from South Africa were about $430 million. Over the last 10 years, the Kenyan trade values have been relatively static.
Kenya imports iron and steel, mineral fuels, oils, distillation products, machinery, edible fruits, nuts, beverages and spirits among others while Kenya mainly exports coffee, tea, spices, edible vegetables and certain roots and tubers, machinery, nuclear reactors, boilers among others to South Africa.
With respect to investment, South Africa is a major source of Foreign Direct Investment (FDI) in Kenya. During 2016-2019, South Africa’s investment in Kenya rose sharply from $2,235 million to $ 3,106 million.
While in Pretoria, President Kenyatta noted that trade and investment remains one of the strongest pillars of the two countries' bilateral relations.
“In addition to strong bilateral relations which span a wide range of areas, Kenya and South Africa are close partners at the regional and global stage hence the two countries should used the existing technical teams to review the range of goods and services that South Africa imports from the rest of the world and identify those that South Africa could source from Kenya and vice versa,” he said.
“Kenya is working with South Africa and is keen to change imbalances through increasing manufacturing capacity and innovation and we are confident that we have a wide of range of products that would be beneficial to South Africa.”
President Ramaphosa said President Kenyatta’s visit had provided an opportunity to take stock of the current state of bilateral relations and explore new areas of mutual interest that will benefit the two countries.
“We have reaffirmed the strategic importance of bilateral relations between our two countries and reiterated our desire to elevate the nature of the relationship, which would include the conclusion of a Strategic Partnership Agreement,” the South African President said.