WITH THE STANDARD GAUGE RAILWAY; LOOK BEYOND COST

The region’s leaders emboldened by their growing economies and a helping hand from China have gone on an infrastructure building spree unprecedented in the region’s history.

"Years of unfocussed politics means that these massive developments are in fact attempts at playing catch up, as our infrastructure has not kept up with the region’s population growth...

On Wednesday President Yoweri Museveni and his counterparts Paul Kagame from Rwanda and Salvar Kiir from South Sudan launched the Ugandan phase of the region’s standard gauge project.

The standard gauge railway line will be wider than our old line, a fact which its champions say means trains on this line will be able to carry heavier loads and travel faster.

Railways are critical for our ambitions to rise to a high income nation. Railway transport is the most cost effective means of transport over land, allowing for bulk transportation of raw materials for industry and manufactured goods to market.

History shows that railway transport was the key driver of the industrial revolution during the 19^th century. 

It slashed travel times by up to 90%, did the same for freight costs, made settlement and development of the interior possible – previously populations tended to huddle along coastal areas and waterways, farmers shifted away from subsistence farming to supply the huge populations of non-farmers in the new cities and since food was able to reach previously famine prone areas it lowered deaths due to starvation significantly, leading to population increases across Europe.

The benefits of rail transport continue to accrue.

In the US it is estimated that for every dollar of rail there is a two dollar return to the economy. In addition for every railway freight job supports about five jobs in factories, power plants, distribution and other sectors of the economy.

"To illustrate how far we have to go, the UK with a land area as big as Uganda’s had 20,000 miles of rail by the end of the 19^th century, we barely have 200 miles of usable track...

The task ahead is enormous and speed is of the essence. 

But we should guard against being stampeded into projects without a care for the rationale or eventual cost.

For example the first phase of the standard gauge in Kenya from Lamu to Nairobi is set to cost $3.7b. On the surface a reasonable figure,  but when examined against the international average spent on similar railway tracks per km there seems to be cause for alarm. The international average is between $3.5m and $5m per kilometre, a figure affected by cost of materials and terrain. But the Kenyan 480 km track will cost $7.7m per kilometre!

Using the highly inflated Kenyan number Uganda’s 238km Malaba-Kampala line should come in at under $2b.

It is important that this project comes in as cheaply as possible because the cost benefits of rail transport maybe lost as the eventual operator of the railway will raise his charges to recover the initial cost.

With high construction costs the concession may become unfeasible for a private operator and government maybe force to take on the loan itself. An added cost to the tax payer we did not ask for.

We need to think very carefully about who will run the new railway line, especially in light of the above concerns.

The potential benefits to the economy of an effective and extensive railway network cannot be overestimated but these benefits may be lost if the initial planning, financing and construction of the project produces a railway line that cannot be run profitably.