As part of their overall push to better integrate the region and ease trade barriers, East African leaders are spearheading a campaign for heavy transportation infrastructure investment into the region.

Yet ambitious projects like the Standard Gauge Railway (SGR)— proposed to link up Uganda, South Sudan, Rwanda and Burundi with Kenya’s Mombasa port—chug along slowly, particularly after controversy surrounding the project’s procurement contract has halted the rail’s progress into Uganda. The results of the Ugandan Government’s probe into the technical capacity of the China Civil Engineering Construction Corporation (CCECC) and China Harbour and Engineering Corporation (CHEC) are expected to be released soon, after a committee visited the contractors in China themselves and examined similar rail projects in Ethiopia.

Awkwardly for the project’s progress, Kenyan Government officials reportedly refused Uganda’s request for a similar examination—despite the Standard Gauge Railway project starting in Mombasa.

Meanwhile, a series of highway renewal projects in the region have picked up momentum, perhaps for their relative simplicity compared to the construction of a brand new railway. Speaking at a recent event in Dar es Salaam as part of the Central Corridor Initiative, Rwandan President Paul Kagame delivered an appealing sales pitch to roughly 350 investors.

“East Africa is a good bet for investors who have come to appreciate the good prospects before everyone else does,” Kagame said. The initiative is a multi-modal trade and transport pathway through Rwanda, Tanzania, DRC, Burundi and Uganda. Though he noted that “no investment is risk-free, all the positive trends and goodwill in the world do not guarantee success,” Kagame said that the multimodal initiative, linking Rwanda, Tanzania, DRC, Burundi and Uganda, would be a strategic investment.

It had been nearly two years since Kagame visited Dar es Salaam, as there has been some rumoured diplomatic tension between Kagame and Tanzania President Jakaya Kikwete, though Kikwete, as the current chairman of the EAC bloc, has attended all Northern Corridor meetings including the recent one in Rwanda. Kagame seemed to use the event as an opportunity to address the tension, saying that regional projects would not be successful without collaborative leadership.

“We need to set the agenda, communicate it and build the mutuallybeneficial public-private partnerships to get things done,” Kagame said. “We know what to do, we know who can do it.” Rwanda has particularly high stakes in these projects, considering that the land-locked country depends on the transport corridors to get goods to port in Tanzania and Kenya. Rwanda Trade Minister Francois Kanimba told state agency KT Press that an estimated total of 23,659 trucks crossed the Rusumo border of Eastern Rwanda carrying goods worth $1 billion annually, and 18,380 trucks carried goods worth $845 million through Gatuna, on the Northern Corridor, connecting Rwanda to Uganda. In a January 2015 consultation, the International Monetary Fund (IMF) also highlight the importance for transportation infrastructure in the country’s future.

“Infrastructure gaps continue to hold back the private sector from flourishing. In particular, key infrastructure projects in transportation, water and energy need to come on stream to unlock its full potential. And of course, all of this needs to be done within a reasonable resource envelope so as not to jeopardise hard-won debt sustainability,” the IMF said.

THE NORTHERN CORRIDOR

Investment inflows are also increasing a bit further north. The AfDB recently approved a $123 million loan to Kenya for the upgrade of the Mombasa-Mariakani Highway linking the critical Mombasa port to land-locked Uganda, Rwanda, Burundi and the Democratic Republic of Congo (DRC).

With increasingly constrained capacity due to traffic volumes largely dominated by heavy trucks, the road experiences persistent congestion that hinders access to the main sea port of Mombasa, AfDB said. The Project consists of the dualisation of a 41.7-kilometre stretch of the Mombasa-Mariakani Highway with flyovers, bus bays, service roads, truck parking, pedestrian foot bridges, walkways, street lighting and associated soft components. The project is co-financed by KfW of Germany, European Investment Bank and the Africa Infrastructure Trust Fund.

This intervention is in line with the Kenyan Government’s national strategies and the Bank’s Ten Year Strategy (2013-2022), which prioritises support to infrastructure development and promotion of regional integration as key areas of assistance. In addition, the project is well aligned with the regional infrastructure strategic pillar of the East African Regional Integration Strategy Paper (RISP 2011-2015), which focuses on Regional Transportation/Trade Facilitation Infrastructure to promote seamless connectivity within the East African Community (EAC) region. AfDB said in a statement that the project complements the Bank’s past operations in Kenya, in particular, and the region at large, and will spur economic development in the area and beyond.

TRANSPORT TO TRADE

On 20 March 2015, President Kikwete delivered a speech to the EAC Heads of State urging them to ‘spare no efforts’ in reducing trade barriers in the region, namely tariffs.

“The progress made so far, at the ports of Mombasa and Dar es Salaam and, on the Northern Corridor with regard to road blocks shows that it is possible to eliminate these non-tariff barriers. Measures are being taken in earnest to reduce road blocks on the Tanzania side of the Central Corridor. I am sure in the next few months we will notice a huge improvement,” President Kikwete said.

“I am told with the current improvements alone, for a container to move from the port of Dar es Salaam to Kigali takes three days from the previous eight days. It takes three and a half days to Bujumbura from the previous eight days,” the President said, noting that reduced check zones and weighbridges contributed to the efficiency.

He added that poor infrastructure and resulting transportation challenges had resulted a 30 to 40 per cent rise in the price of goods, particularly in land-locked countries. Kikwete urged the region to invest better on efficient ports, railways, roads, aviation services, energy and telecommunication.

According to the President, EAC trade now accounts for more than 23 per cent of the member states’ total trade, well above the intra-African trade rate of 12 per cent. He said that there has been a 300 per cent increase in the value of trade, from $200 billion in 2005 to $6 billion in 2014. These numbers “make our region a formidable trade and economic bloc in Africa,” Kikwete said. Daniel Kidega, Speaker of the East African Legislative Assembly (EALA) added that foreign direct investment into the region increased by 6.6 per cent from 2012 to 2013, or a $3.7 billion increase.

Source: CPI Financial

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