The launch of the standard gauge railway has generated a lot of excitement in the country. Every Kenyan is talking about it, and politicians are trading accusations over its cost and implementation.
But as the reality of its operations sinks in, bus owners are counting losses as passengers flee to the cheaper and faster train, and truckers fear they will suffer the same fate once freight services begin in December.
Elsewhere, enterprising youths are cashing in on the demand for tickets, which are yet to be digitised and inconvenience people into long queues to buy them.
However, the Kenya Railways Corporation says it is not competing with buses and truckers, and will address the demand for online ticketing “by the end of this coming week”.
BUSES SHUNNED
There are two trains plying the route, one from Mombasa to Nairobi and the other vice versa, each making one trip daily at exactly 9am. The trip takes 4 hours and 30 minutes and costs Sh700 for economy class and Sh3,000 for business class.
A bus takes 8-10 hours to cover the same distance and costs on average Sh1,000. Two weeks since the launch of Madaraka Express, bus companies at the Coast have started to feel the pinch, as many Kenyans are now opting for the train ride.
Madaraka Express carries an average of 1,000 passengers daily from Mombasa to Nairobi. This is the same capacity of 25 buses with a capacity of 40 passengers.
Lenox Shallo, Mash Bus Company operations manager, says each of their morning buses used to transport 40-42 passengers daily.
However, since the SGR began operations, they have been transporting 25-30 passengers with their morning buses. The night buses have not been affected because the SGR does not operate at night.
“Sincerely, the number of passengers using our morning buses to Nairobi has drastically dropped. However, we still have all our buses operational,” he says.
He says they will expand their trips to other parts of country, such as Meru and Kisii.
“We did not have buses plying these routes. We shall, therefore, minimise our Mombasa-Nairobi buses and launch new routes to other regions,” he says. As bus owners brace themselves for an oblique future of losses, bright Kenyan youth from the Coast have now tapped into the benefits of the SGR passenger services.
Kenya Railways Services is yet to launch an online platform where Kenyans can get their tickets, so a passenger has to go all the way to Miritini or Syokimau to get a ticket.
TICKET ENTREPRENEURS
John Ogutu, 35, saw an opportunity to bring services closer to residents who cannot access the Miritini station. Until his arrest on Saturday, he had been delivering Makadara Express tickets to travellers who don’t want the hassle of the Kibarani traffic, coupled with the long queues at the Miritini station.
His is one of the offshoots of the SGR, with another entrepreneur posting on Facebook that he will be dropping passengers to Miritini from North Coast, and also pick those who arrive from Nairobi, dropping them to town.
In North Coast, at Naivas centre, businessman Allan Okello has advertised that his company Orion will be connecting Mombasa passengers to Miritini at Sh500 and charge Sh400 for those leaving Miritini to town.
A National Youth Service (NYS) bus has been shuttling between the old Railway office in Mombasa town and Miritini with passengers. Passengers part with Sh100 each. The first bus leaves the railway station by 6.30am.
Ogutu, a father of two and a director and actor at Little Theatre Club, says he had to think of a way to reinvent himself and be creative.
“I’m doing this because there is that opportunity. It is an electioneering period, but unlike the previous ones, there’s not much revolving around civic education, and thus, less activity at the theatre, plus I have a family to feed,” says Ogutu, who has been in theatre for 15 years. He adds that he was prompted to start the venture a week ago, when he travelled to Nairobi but missed the Sunday train since it was full.
“I had to leave on Monday, and when I was planning to come back, we sent some cash to a friend’s brother, who switched off his phone and never booked. We had to use a bus and all along I told my friend how those in the train had arrived already. We got to Mombasa at 8pm, despite leaving at 9am,” he says.
Ogutu charges Sh200 service fee for the tickets, which go for Sh700.
“I told my friend Carter that when I get to Mombasa, I will open an agency so that we don’t rely on friends and relatives who at times disappoint,” he adds.
The interview was interrupted by phone calls on Ogutu’s line, with clients seeking bookings from him. He walks around with a notebook, pen, helmet, and bag, and his hands always have gloves, since he rides a motorbike to run his errands.
He has partnered with Eric Omollo in the venture, and has been trying to build clients’ trust.
“The guys at the station said what we are doing is illegal, and we have to pass the information through Nairobi. We told them we are just messengers, running errands, and again, we don’t take cash from people before we deliver. We said its worth taking the risk. We buy tickets, drop and get paid. It builds trust,” he explains.
They have some online presence and have been distributing their fliers to friends.
“At times, I pick tickets in advance, and deliver. Clients really feel good that they’ve secured the ticket without stress. We partner with Omollo, who takes different routes. Outside town, we charge Sh300-Sh400, depending on the distance,” he says.
Ogutu was arrested on Saturday, but later released on Sh20,000 cash bail. He will appear in court on Monday to answer charges of “acting as an SGR ticketing agent without a licence”.
GOING ONLINE
Asked about the challenges he’s faced, Ogutu said he got into the business spontaneously and never considered issues like marketing and pricing.
“Kenyans have been conned before, and that’s why we still have trust issues. Kenyans wait for assurance from Kenya Railways backing such an initiative, and since it’s not forthcoming, most don’t know and others are not sure if that’s the way to go,” says Ogutu, who is still doubling as an actor/director.
Per day, he uses about Sh300-Sh400 for fuel, and the highest profit so far has been Sh1,300, although last Thursday was his busiest day and he was optimistic it would improve.
He has a target of booking at least 500 people per day, making sure that at least 500 people don’t have to go to Miritini and back to work.
“We are in the process of registering now. We have already done the name search and want to go online in a week’s time. We are already talking to a developer,” he said.
Asked whether KR plans to also go online won’t push them out of business, he said, “We have Kenya Airways’ and bus companies’ online bookings but still, those travelling fill their offices to book tickets manually. It’s the same way we have online shopping but malls are always full,” he said.
Ogutu, who started the business with Sh2,000 for fuel, designing fliers and making calls, says they are not looking back and are ready for any challenges ahead.
FREIGHT FRIGHT
Clearing agents have welcomed the train freight services, but they are still in the dark regarding how they will be handled.
The SGR freight service was launched by President Uhuru Kenyatta on May 30 at the port of Mombasa, but operations are scheduled to start in December.
Through the Kenya International Freight and Warehouse Association (Kifwa), the agents want the Kenya Kenya Railways Corporation to clarify the cost, volumes to be handled and clearance modalities.
Last Thursday, officials from the KRC failed to honour an invitation to a meeting with Kifwa directors at the Royal Court Hotel, Mombasa.
Kifwa national chair William Ojonyo says the meeting was supposed to address their concerns.
“They did not give a reason for failing to attend. We are, however, going to do another official communication to them,” he said.
“We have been working with the Rift Valley Railways. We have also been working with the truckers. We now want the KRC to come and explain to us how different the SGR will be.”
Truckers have expressed fear that they might be kicked out of business once the SGR becomes fully operational, because the government is pushing to have over 80 per cent of cargo transported on rail.
Currently, only 15 per cent of cargo from Mombasa is transported on the Metre-Gauge Railway (lunatic rail), which was built over 100 years ago by the British colonial government.
DEBT DEBATE
Mombasa Governor Hassan Joho, who has vast interests in the export and import business, is one of the opposition leaders who have been on the forefront, bashing the SGR.
Joho says the Sh327 billion loan given to the Kenya government by the China Export and Import (Exim) Bank has been guaranteed by the Kenya Ports Authority and not the Kenya Railways Corporation.
The loan is supposed to be paid back in a 10-year period, Joho says, adding that it was taken as a commercial loan, and not a government-to-government loan, which has a longer repayment period and a small interest rate cap.
“Loans for such projects need a government-to-government agreement, but Jubilee went ahead and took a commercial bank loan, whose repayment period is short and has a higher interest rate,” he said.
The governor, who has openly clashed with the President, says the construction of the second container terminal at the port of Mombasa was financed by the Japanese government, which provided a loan of 0.2 per cent interest of a repayment period of 30 years.
“The SGR project is being undertaken by the Kenya Railways Corporation, why is the Kenyan Ports Authority was forced to guarantee the loan,” Joho said.
He says KPA was forced to sign a “take-or-pay contract”, which means that the port of Mombasa will have to forcefully move a certain percentage of cargo to Nairobi.
A take-or-pay contract is a rule structuring negotiations between companies and their suppliers. With this kind of contract, the company either takes the product from the supplier or pays the supplier a penalty.
“So if you were to go by the take-or-pay contract, this means 80 per cent or more of the cargo shall no longer be cleared at the port of Mombasa. This means you will kill the clearing and forwarding business in Mombasa,” Joho said.
“I have said before that I am not against the SGR, but I’m against the manner and business undertakings that the Jubilee government has had take to realise this project.”
The cost of transporting a 20-feet container to Nairobi on truck ranges from Sh65,000 to Sh80,000, depending on the weight of cargo, according to Kifwa.
The KRC has hinted that the cost of the transporting the 20-feet container by the SGR will be around Sh50,000, adding that it will be cheaper compared to trucks.
Kifwa, however, says the cost for transporting cargo on SGR may rise slightly because importers will have to transport their cargo on road from the Nairobi Internal Container Depot to their warehouses or premises, unlike the trucks, which deliver to the doorstep.
A 20-feet container costs between Sh15,000 and Sh20,000 to transport within Nairobi, Ojonyo says.
Currently, truckers charge an average of Sh70,000 for a 20-feet container from the port of Mombasa to the doorstep of the cargo owner. Trucks, however, take at least double the time the SGR is expected to take.
“Who will bear the additional charges of transporting a container from the ICD to the doorstep of the importer or cargo owner?” Ojonyo said, adding that the KRC needs to come out and explain all these issues.
He said the clearing agents work closely with the cargo owners and are better placed to advise them on the cost of doing business, hence the push for an engagement session.
BOOKING, CLEARANCE SOLUTIONS
Tourism players in the region are optimistic that the SGR passenger train will be a game changer in the industry, which has been struggling to survive.
However, Mohamed Hersi, the chairperson of the Kenya Coast Tourism Association (KCTA), says the KRC should fast-track the online booking.
“Online booking and payment via Mpesa should have started like yesterday,” he said.
Hersi says the SGR Mombasa terminus lacks access roads, making it difficult for passenger to access the station, especially when it rains.
“The SGR station was under construction for the past three years. Did we just wake up and realise that a road is needed for accessibility?” Hersi said.
Kenyans are excited and happy about these huge projects, but let us not allow few officials to sleep on the job, says Hersi, who is also the country CEO of Heritage Hotels.
Kenya Railways MD Atanas Maina says they got the Kifwa invitation letter on June 13 calling them for a meeting on June 15, which was a very short notice.
“I talked to their chairman and agreed that we can still arrange for another meeting. All their issues will be addressed,” he said.
Maina says the SGR freight services trials will start on August 1, before full rollout in December.
“The purpose of this trial programme is to resolve all the pending issues, including the last mile. We want to see how best we can work on this so that we can make the SGR more effective,” he said.
On the issue of ticketing, Maina said this coming week, they will be meeting with different online service providers to see how they can resolve the problem.
Currently, Kenyans are forced to go to either Miritini or Syokimau to book for a Mombasa or Nairobi train.
“By the end of this coming week, we would have find a solution for the ticketing issue,” he said.
Maina said bus companies should not freak out with the launch of SGR passenger train.
He says the SGR covers only 472km from Mombasa to Nairobi, whereas the country has over 10,000km road network.
“They (bus companies) cannot say we are in competition. They should take advantage of the last mile services and the routes not covered by SGR,” the MD said.