FLAGSHIP PROJECT

SGR as a vital enabler of multi-billion county economic corridor

Its economic impact, cost, viability and potential has been the subject of intense debate.

In Summary

• When fully harnessed, it will catapult the economies of many counties and the country as a whole to a whole new level.

• SGR is also a Vision 2030 flagship project underlining its long-term role in the country’s social and economic development.

President Uhuru Kenyatta flags off the inaugural Nairobi-Suswa SGR trip on Wednesday, October, 16, 2019.
President Uhuru Kenyatta flags off the inaugural Nairobi-Suswa SGR trip on Wednesday, October, 16, 2019.
Image: DOUGLAS OKIDDY

Besides being the largest infrastructure project in post-independence Kenya, the Standard Gauge Railway, popularly known as SGR, is also one of the most controversial and misunderstood in the country’s history.

Its economic impact, cost, viability and potential has been the subject of intense debate over the years and most recently with the completion of the first two phases of the project. 

While some hail it as an economic game-changer, others term SGR a burden on the country citing the high level of debt used in financing it. 

Whatever the opinion, one thing is not in doubt – SGR is a highly transformational national enterprise.

When fully harnessed, it will catapult the economies of many counties and the country as a whole to a whole new level.

SGR is also a Vision 2030 flagship project underlining its long-term role in the country’s social and economic development.

Phase 1 completed in May 2017 is now fully operational with 14 freight and 4 passenger trains and hit most of its targets within one year, signalling demand for cargo and passenger traffic along the corridor.

For a project of this scale to be delivered within the schedule is a lesson that with proper planning, political goodwill and zero corruption, the country can achieve its goal of becoming a middle income, competitive economy within the next few years.

Of course, we have to do a lot more in terms of ensuring that resources allocated to projects are shielded from corruption cartels and political mischief.

Let’s now put SGR into context from a county economy perspective. With the completion of Phase 2 terminating in Suswa, Narok County, the SGR corridor now traverses several counties contributing a significant proportion of Kenya's GDP.

Three of these – Kajiado, Machakos and Kiambu - serve as the economic and social hinterland of the capital Nairobi. Machakos and Kiambu are major industrial centres and linking them with the port of Mombasa through SGR enhance their industrial and manufacturing potential by providing an efficient route for bulk commodities.

Others like Mombasa, Kilifi, Taita Taveta and Narok, constitute major tourism hubs.

The world-famous Masai Mara Game Reserve in Narok County attracts thousands of tourists each year. Apart from tourism, Narok has the ability to become a major livestock producer serving the local and international meat markets.

A large meat processing plant in Suswa, for instance, would be well served by the new railway connecting it to the port of Mombasa.

Besides unique tourist attractions, Nakuru County is also a major energy generation hub and home to the Olkaria geothermal complex, one of the largest renewable energy projects in the world.

The county also hosts the largest horticulture producing firms in Kenya supplying leading global flower markets.

An industrial park in Naivasha linking to Suswa would act as a large manufacturing hub and special economic zone attracting local and foreign investors especially energy-intensive enterprises utilising cheap geothermal power.

This is however just part of the story.

Providing an efficient transport corridor will have a significant impact not just on tourism, agriculture, manufacturing and trade but also forestry, fishing and mining especially in the counties through which it passes and in contiguous zones linked by a reliable road network.

Quite often, we view counties merely as political units of governance while ignoring the bigger role of the devolved units in development.

Yet one of the objects of devolution as per Article 174 of the Constitution is *interalia* promotion of social and economic development.

Article 175 on the principles of devolution envisages counties having reliable sources of revenue to enable them to govern and deliver services effectively.

Providing the right infrastructure, like the SGR, is a catalyst for economic transformation at the county level.

Counties especially those that are currently resource-challenged have to continuous explore and unlock economic opportunities to make them self-sufficient from a revenue perspective as opposed to over-relying on national government fiscal disbursements.

The impact of SGR on devolution will be most clearly visible when the county economic corridor stretching from Mombasa to Suswa is fully activated.

This can only happen when counties along the route leverage the new railway as an enabler of economic activity and route to markets for their goods.

However, the benefits of SGR may take years or even decades to materialise.

Projects of this magnitude rarely manifest their full impact and value in the short-term.

It is not until their economic and social ecosystems mature that their transformational impact and value are visible.

Incidentally, the Meter-Gauge Railway built by the colonialists at the turn of the nineteenth century was initially derided as a colossal waste of money and resources.

However, even historians acknowledge that the old railway line eventually became the lifeline of the colonial economy (and thus was able to repay itself!) and subsequently, a vital transport corridor.

Built at a cost of over Ksh 400 billion, SGR is no doubt one of the most expensive projects in Kenya’s history.

But that’s just a fraction of what the country loses to corruption each year, Sh800 billion by conservative estimates.

Unlike many similar projects that were never completed or simply used as conduits for looting public resources, SGR is a shining example of focused leadership can deliver.

The focus should be on the long-term value the country will ultimately derive from SGR while addressing valid concerns around financing and management of the project.

Any business person will tell you that capital investment is crucial in unlocking the value of an enterprise or the economy for that matter.

When we stop viewing SGR as an expensive stretch of metal but as a vital corridor and enabler of economic and social transformation, it's long –term value will be clear.

More importantly, the counties comprising this vital corridor should invest more in economic linkages that will enhance their revenue and ensure their long-term sustainability and ability to deliver services to the people.