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September 19, 2017

Nairobi-Naivasha SGR’S promise

The economic benefits of the Standard Gauge Railway are set to soar with the ongoing extension from Nairobi to Naivasha, and eventually to Kisumu and Malaba.

A railway corridor of this type will create works as a system and its full potential can only be realised when the component parts have been fully laid out, constructed and commissioned.

The Mombasa-Nairobi is up and running, with a scheduled passenger service being the first offering. The end-game will easily East Africa’s most ambitious infrastructural project ever, eventually linking Kampala and onward to Kigali under the East African Railway Master Plan.

Zeroing in on the Kenyan component of the project, the Nairobi-Naivasha phase, especially, holds great socioeconomic promise, considering some of the SGR-dependant infrastructure being planned for this segment.

This phase marks the first component of the Nairobi-Malaba-Kampala SGR and is being constructed by China Communication and Construction Company as the engineering, procurement and construction contractor.

Due to the topographical challenges of putting together the SGR in the expansive Rift Valley and the financial implications of this, the 505km stretch is being implemented in three sub-phases: Phase 2A (Nairobi - Naivasha), Phase 2B (Naivasha to Kisumu) and Phase 2C (Kisumu to Malaba). Phases 2A and 2B and the Malaba-Kampala section, are currently at the financing identification stages.

A centrepiece of the Nairobi-Naivasha line is the proposed mega industrial park that will be established near the Mai Mahiu Freight Exchange Centre. The dry port will be critical in capturing and aggregating freight to and from Naivasha, and later Nakuru, Eldoret, Bungoma and eventually Uganda. Similar dry ports are planned for Voi and Mariakani, along the SGR corridor.

The Mai Mahiu Freight Exchange Centre will greatly boost the freight traffic from the SGR corridor’s expansive hinterland to the port city of Mombasa. It will also nullify a challenge that critics have often levelled against the entire SGR enterprise and its long-term viability – the alleged lack of outbound freight traffic in the near term.

Contrary to a patent falsehood peddled by some ill-informed political quarters, an inland container aggregation centre such as this one can never replace the Port of Mombasa. It can only complement it and actually make it 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.

In any case, the government has already shown its long-term commitment to the Port of Mombasa through a Sh34 billion investment in a new container terminal. Significantly, two more berths are also under consideration and negotiation.

Equally critical to the socioeconomic potential of the Nairobi-Naivasha line is the proposed Special Economic Zone at Naivasha. Conceptualised to promote industrialisation through the establishment of factories in a specific area under a set of incentives buttressed in law to serve the export market, SEZs are expected to be a major draw for investors.

Once the CCCC completes the project, the SGR 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 the Mombasa port to their factories and transport the finished product to the coastal town for exportation to overseas markets. It goes without saying that the Mai Mahiu Freight Exchange Centre and the Naivasha SEZ are also likely to be major employers, during construction and when they finally start operations.

And as the Mombasa-Nairobi phase of the SGR has shown, the project in itself is a major generator of jobs, both during construction and actual operation. The message that needs to go out to local leaders in the host counties of Kajiado, Narok and Nakuru is that these jobs, through the contractor CCCC, will be secured based on the skill-sets of the local populations and not by inciting blind, communal agitation targetted at project instalations and staff.

Besides the National Exchequer, county governments also stand to benefit from higher revenue collections, spurred by increased commercial activity in their jurisdictions, especially by small and medium enterprises feeding off the SGR. Property investors, 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 can also expect to benefit from attendant amenities that would ordinarily come with such a project. These include electricity, sewerage, water and better access roads to act as feeders to the SGR line. Given the inter-nodal nature of any transport network, the SGR’s socioeconomic dividend will eventually be dependent on the size of the hinterland it serves.

The Nairobi-Naivasha, Naivasha-Kisumu, Kisumu-Malaba and Ugandan components are thus key to stretching the SGR’s catchment area into Western Kenya and Uganda. The socioeconomic prospects become especially salient when one considers the government’s ongoing plans to position Kisumu into a freight transport hub for East and Central Africa.

The author is the Cabinet Secretary for Transport, Infrastructure, Housing and Urban Development

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