Miriam K. Tumukunde
NewVision Reporter
Journalist @NewVision

By Miriam K. Tumukunde

Uganda’s freight transportation situation is quite dire with only about 3% of its cargo transported through railway compared to 15% for developing economies and about 20%-40% for developed economies.

Today, the development of the Standard Gauge Railway (SGR) is the most transformative infrastructure agenda across the developing world. Most of the developed world constructed their SGR several decades ago and they continue to reap the benefits.

Uganda, together with her EAC partner states started discussions about SGR in 2006. Sixteen years down, Kenya has 592km of SGR, which are operational while Tanzania has built about 600km of SGR; 300km of which are complete and are set to start operating. 

Uganda, even after completing SGR feasibility studies 10 years ago and signing a contract seven years ago, has no single SGR rail laid despite the Government calling it its flagship project.

The Uganda Vision 2040 highlights the potential of a transformed Uganda into a prosperous middle-income country with a per capita income of $9,500 by 2040 from the current $1,046. This will be a phenomenal occurrence for our people and for it to be achieved, the Government will have to take deliberate and bold decisions in fast-tracking pro-development actions like reliable railway transport.

Uganda’s successive National Development Plans (I, II, and III) have been geared towards a multi-disciplinary approach that fosters efficiency and effectiveness in the use of the factors of production. This has been purposed to enhance the country’s competitiveness by among others reducing the cost of doing business.  One wonders, therefore, how, for over 10 years since the first NDP was launched, why hasn’t Uganda’s economy transformed with such good sounding development plans?

The Global Competitiveness Report 2012-2013 indicated that limited and non-functional infrastructure is one of the biggest challenges to the development of Uganda. The same report emphasises that for factor-driven economies, infrastructure is a critical pillar for competitiveness.

For the case of Uganda, infrastructure development is the most limiting factor for production, productivity and competitiveness among the four basic requirements of competitiveness (i.e. strong institutions, good infrastructure, sound macroeconomic environment as well as health and primary education). The above four contribute over 60% of the total competitiveness factors. 

Generally, in Sub-Saharan Africa, transport costs account for over 40% of the cost of doing business and they are said to be four times higher than those in developed countries (IGC, 2017). Studies have shown that for countries far away from the coastal ports, rail transport is a necessity if transport costs are to be reduced.

The transport sector is very crucial because it either directly or indirectly adds value to the productivity of every other sector. The 2017 Global Competitiveness Report ranked Uganda 114th out of 137 economies assessed on productivity growth. This is not healthy and does not reflect the targets in the successive NDPs and Uganda’s Vision 2040. 

This could, partly, be a result of government neglecting rail transport even on major corridors and instead concentrating its investment on road transport alone.

Today, the performance of railways in Uganda is assessed on a century-old Metre Gauge Railway (MGR) that was built by colonialists for their own strategic reasons.  They wanted it as an extractive corridor to feed the economic pattern of their industries, but also to have effective control of events around the Nile as Charles Miller stated in his book: The Lunatic Express, “Whatever power dominates Uganda masters the Nile, the master of the Nile rules Egypt, the ruler of Egypt holds the Suez Canal...”

After 100 years of a system that was built with low carrying capacity, we still hope and depend on it to satisfy Uganda’s needs today.

The dilapidated MGR network of 1,266 kms (within Uganda) has largely served its purpose. Uganda Railways Corporation (URC) has for the last so many years struggled to attract customers to use the rail.  They have, however, failed to generate adequate revenues to sustainably manage the MGR.  For over, 40 years now, the service level of MGR has been very poor leading to ever-reducing freight going onto the rail to the extent that by mid 2000s, less than 5% of total cargo between Mombasa and Kampala was being carried by rail and less than 2% of the available cargo on the northern and western routes.

The Government’s target in concessioning the MGR to Rift Valley Railways (RVR) in 2006 with the intention to increase freight volumes on the rail so as to enhance revenue generation failed. The contract was terminated.

For the last four years, since termination of the concession and the resumption of rail services by URC, the service level has still not improved and rail freight volumes are at their lowest ever. The rail infrastructure is too dilapidated, the equipment is too obsolete and does not fit today’s demands, among other challenges. The trains move at snail’s speed of less than 25km/h, which increases cargo transit times to and from Mombasa, taking about 14 days. Additionally, the cargo carried per train is too small as most short trains are run on the network.

 As a result of near-total absence of rail, road transportation has remained the main mode of freight transport to and from Mombasa Port at a high cost to the detriment of economic growth.

Currently, Uganda is attracting less Foreign Direct Investment (FDI) compared to our coastal neighbours mainly because of the high cost of doing business. The high cost of doing business in the country is also a disincentive to mobilisation of local investment. The current cost of rail transport from Mombasa to Kampala is about $0.16 per ton-km which is five times higher than the world average of about $0.03 per ton-km of rail transport. This is in addition to being very unreliable, inefficient and very slow (7–14 days). The roads are not charging any less and are not that efficient either. Consequently, the economy currently loses an estimated $1.5b in only transport-related costs per annum.

The railway remains the cheapest and most transformative means of hauling large freight for an evolving economy like Uganda.

For example, one SGR train can haul 216 containers, moving them to and from Mombasa within one day at a cost of about $1,600 per container. This is in contrast with the current MGR which carries less than 50 containers taking about 14 days to move to and from Mombasa at a much higher cost. By removing more cargo from roads, the SGR will contribute to a reduction in road wear and tear as well as the resultant road maintenance costs. This will stimulate industrialisation and catapult the country into middle-income status as envisaged in the Uganda Vision 2040.

However, despite its numerous benefits, SGR has not been given much-needed priority by some decision-makers. Instead, the Government is investing more than necessary in rehabilitating the existing MGR system which will not be able to carry much cargo even when fully rehabilitated.

The initial plan as recommended by various studies conducted by URC, was to have minimal cost (about $22-100m) incurred in the rehabilitation of the MGR as the SGR is being developed. Instead, hundreds of millions are being spent and/or proposed to be spent on rehabilitation of MGR. 

The Government recently partnered with various development partners, including the European Union (EU), the Spanish Government and the African Development Bank (ADB) respectively to procure various financing facilities for rehabilitating MGR lines to Tororo-Gulu (€47.6 million) and Malaba – Kampala ($330m) and emergency repairs of about $50m by GoU.  These measures, however, are not without serious loopholes, which topic is outside the scope and ambit of this article.

Our coastal neighbours of Kenya and Tanzania have done minimal rehabilitation of their MGR systems alongside developing their SGR systems.  Kenya has, for example, spent approx. $100m to rehabilitate 490 km (including an MGR section between connecting SGR Naivasha to Longonot, 24.4km).

In rehabilitating MGR, the Government needs to consider the inherent technical limitations of the system. A fully rehabilitated MGR system cannot carry more than 3.6 million tonnes per annum.  Currently, there are over 18 million tonnes of cargo on the Malaba-Kampala route today, and projected to be about 30 million tonnes by 2028 when the rehabilitation will be completed yet it will not be able to move even 10% of the available cargo onto the rail by then.  One then asks, what is the purpose of the Government spending over $500m to haul less than 10% of available cargo?

The Government should, therefore, commit modest investment into MGR rehabilitation and mobilise part of these funds for kick-starting SGR construction like it was done in Tanzania. In Tanzania, after facing challenges in securing financing from development partners, the government put aside its own money amounting to $500m at the beginning to commence construction of their Dar es Salaam to Morogoro SGR section of 300km. This resulted into several development partners flocking Tanzania with requests to finance the other SGR sections. From this, Tanzania as been able to negotiate much better financing terms.

This approach was also used in Ethiopia, where the loan was secured after the government had invested about 30% of the required capital.

Some people have suggested that SGR be interconnected with Kenya and Tanzania SGR through water transport on Lake Victoria. Whereas this is possible, there are inevitable transhipment challenges between rail and water. Additionally, the SGR has a much higher capacity (about 30 million tonner p.a.) compared to the Ports on Lake Victoria that are planned for less than two million tonnes per annum in Kenya and Tanzania. Directly interconnecting Uganda’s SGR with that of Kenya on land is the best option given the advantages of seamlessness.

Based on the foregoing, if Uganda is to achieve its Vision 2040, SGR construction should start immediately so that it makes the envisaged contribution.

Any further delay is likely to lead to a failure to hit the Vision 2040 targets and therefore another shifting timeline.

The writer is familiar with SGR activities


Related Articles

No Comment

(adsbygoogle = window.adsbygoogle || []).push({});