Economic benefits of SGR project to increase

By CS JAMES MACHARIA

The economic benefits of the standard gauge railway project will increase with its extension from Nairobi to Naivasha and eventually to Kisumu and Malaba. A railway corridor of the type that the project will create works as a system and its full potential can only be realised when all the components have been fully laid out, constructed and commissioned.

While the Mombasa-Nairobi line is already up and running, with a scheduled passenger service being the first offering, the endgame of what is easily East Africa’s most ambitious infrastructural project, is eventually, a link to Kampala, Uganda and on to Kigali, under the East African Railway Master Plan.

GREAT PROMISE

The Nairobi-Naivasha phase, especially, holds great socioeconomic promise, considering some of the SGR-dependent infrastructure that is being planned for this segment. This phase marks the first component of the planned Nairobi-Malaba-Kampala line and is being constructed by China Communication and Construction Company as the EPC (Engineering, Procurement and Construction) contractor. Due to the topographical challenges in the expansive Rift Valley and the financial implications of this, the 505km stretch is being implemented in three sub-phases. These are Phase 2A (Nairobi-Naivasha), Phase 2B (Naivasha-Kisumu) and Phase 2C (Kisumu to Malaba). Phases 2A and 2B and the Malaba-Kampala section, are at the financing identification stages. A centrepiece of the Nairobi-Naivasha line is the proposed industrial park to be established near the Maai Mahiu Freight Exchange Centre. Most importantly, the latter, also referred to as a dry port, will be critical in capturing and aggregating freight to and from Naivasha and later Nakuru, Eldoret, Bungoma and eventually to Uganda. Similar dry ports are planned for Voi and Mariakani, along the SGR Corridor 2.

The Maai Mahiu Freight Exchange Centre will greatly boost the freight traffic to Mombasa. It will also nullify a challenge that critics have often levelled against the entire SGR and its long-term viability: The alleged lack of outbound freight traffic in the near term. The Maai Mahiu facility is a game-changer. Contrary to claims peddled by some ill-informed people, an inland container aggregation centre can never replace the Port of Mombasa. It can only complement it and actually make the port more efficient. These two facilities play different but complementary roles as already seen with the Embakasi Inland Container Depot, which is being expanded in anticipation of increased freight capacity from the SGR. The government has shown its long-term commitment to Mombasa Port through a Sh34 billion investment in a new container terminal. Two more berths are also under consideration. Equally critical to the socioeconomic potential of the Nairobi-Naivasha line is the proposed special economic zone in Naivasha. Conceptualised to promote industrialisation through the establishment of factories, SEZs are expected to be a major draw for investors.

Once the contractor completes the project, the line is expected to turn Naivasha into a magnet for SEZ investors and their tenants, who will require a reliable freight service to haul raw materials from Mombasa Port to their factories and transport the finished product to the coast for exportation to overseas markets. The Maai Mahiu Freight Exchange Centre and the Naivasha SEZ are likely to be major employers, during construction and when they finally start operations. The message that needs to go out to leaders in the counties of Kajiado, Narok and Nakuru is that these jobs through the contractor will be secured based on skill sets and not by inciting blind, communal agitation.

County governments also stand to benefit from higher revenue collections, spurred by increased commerce, especially by small and medium-sized enterprises. Property developers, as the Mombasa-Nairobi line is actively proving, are all but assured of great value appreciation and with it, better returns on their investment. Local communities will benefit from amenities such as electricity, sewerage, water and access roads.

The socioeconomic dividend will eventually be dependent on the size of the hinterland it serves. The prospects become especially salient when one considers the plans to turn Kisumu into a freight transport hub for East and Central Africa.

James Macharia is the Cabinet Secretary for Transport, Infrastructure, Housing and Urban Development.