Thursday, 31 August 2017

Five years of Uhuru- How will Kenya look like in 2022?

The SGR Railway Phase 2 has already begun
 Since we don’t see any threat to his Presidency, we can preview a Kenya under Kenyatta in the next five years.
He came to office on a transformation agenda. So we ask: What should we expect from him? How will Kenya be in 2022 when he leaves office? Will it be a prosperous and progressive nation or will it be poor and reactionary?

The odds appear stacked in favor of his transformation agenda.  Good luck, his personality, political environment and motivation combined favor the expectation of a positively transformed Kenya.

 President Kenyatta inherited a robust economy from his predecessor, Mwai Kibaki. 

And despite, a tough environment during his first term, he managed to keep the economy robust.  He inherited a US$60 billion economy and had driven it to a $72 billion economy by the end of last year.

He also inherited a robust 30 year economic blue print “christened Vision2030” whose mantra is a transformed and industrializing Kenya by 2030. So far he has kept to it.

 He has supported the completion of infrastructure projects that were began by his predecessor. He presided over the completion and/or launch of a number of the key projects envisaged in the blue print.
His first term was tumultuous and the learning curve was steep, yet he executed himself impressively. He came to office on a transformation agenda, making Kenya a better place to live and prosper.

He has kept a number of his pre-election promises such as free maternity for expectant mothers, delivered laptops to primary school children despite some major hiccups.  He has set up a number of “one- shop stop e-centres bringing government services closer to the people.
Galana Kulalu: Likely to attract his undivided attention

Kenyatta’s first term was defined by big spending on eye-catching infrastructure and impressive economic growth which ranged above 5 per cent, in a tough climate.

His resolute handling of sensitive matters stunned both friend and foe alike. He borrowed large amounts of money to invest in infrastructure; fought drugs cartels- sinking two ships caught ferrying drugs and allowed drug Lords to be repatriated to the US to face the law.

 He weathered storms at home including Somalia based militant attacks on: School children, shoppers at a mall, a military base in Al Ade in Somalia and civilians in Lamu, Wajir and Mandera counties; dismantled “tenderprenuer” cartels and shrugged off their flack.   “Tenderprenuers” are characters who make their living from fronting bidders for government projects for a cut.

 His administration build the first Railway line in Kenya in 100 years completing the gigantic project with 18 months to spare. 

His administration is likely to focus on completing the SGR line to Kisumu and Malaba, ensure Galana Kulalu is operational, complete some of the on-going mega projects in water, roads, electricity, ensure free education from primary through secondary, built a few thousand more kilometres of tarmacked roads and Start the construction of LAPSSET.

To be fair, many of the projects completed in his first term were began by previous administration. In fact even those that will completed during his second term were initiated by the previous administrations.
We expect more electricity generation capacity to come on the grid adding to the 2234 MW already on the grid.
We also expect oil exports to begin during his watch. The contract for transportation are already in place. In fact the early oil exports programme should have commenced in June but was delayed by technical hiccups.
His uncompromising stand weeded out cheating cartels in the education sector restoring respectability to Kenyan education certificates.

He shrugged off allegations of massive corruption in his government and delivered leased medical equipment to referral hospitals in the 47 counties.  Now Kidney patients can get dialysis in their county Hospitals.

So do we expect President to deliver this time around? The omens point to that direction. For starters, this being his constitutionally authorized last term in office, he is likely to be keen on his legacy than politics. This means that he shall have to deliver on his promises.

He has a large majority in Parliament and even in the counties.  That ensures that he has fewer saboteurs to deal with.  Even in Opposition dominated counties, opposition is likely to be muted given that their leader, the militant Raila Odinga, has been vanguished and is expected to quit politics.

 However, this overwhelming majority could also be exploited to pass legislation that will stifle Kenyans. NGOS that have been critical of him and those that helped sabotage his pet projects and the press too, could find themselves under siege.

Already, two NGOs that were accused of fishing and coaching alleged witnesses against him at the ICC are beginning to feel his weight. For them, this could be payback time. They have sought refuge in the High court seeking orders to protect themselves against de-registration but it may not be long before they cease to exist.

 Alternatively, their freedoms could be severely curtailed. Either way, the omens do not look good for them and could soon follow “tenderprenuers” and other cartels into oblivion.

How will Kenya look like in 2022? Well, we leave that to the omens. But our view is,
it will be a transformed country with reduced unemployment rates, steady economic growth, perhaps above 6.00 per cent, lower corruption index, more industries, higher FDI inflow and for the ordinary Kenyan, more democratic space and wider economic opportunities.

Saturday, 5 August 2017

Museveni deals a death blow to Magufuli's dream on SGR

Northern Corridor is Robust
 compared to central Corridor
 PRESIDENT Yoweri Museveni has approved the borrowing of $2.9 billion for the construction of the standard gauge railway from the Malaba border with Kenya to Kampala. This deals a death blow to Tanzania’s dream of diverting Uganda’s Railway line south to the Central Corridor.

President Museveni authorized the loan on condition that concerns over the technical specifications and project costs raised by the Parliamentary Committee on Infrastructure in February would be addressed.
The parliamentary committee had demanded a complete review of the Uganda-Kenya Standard Gauge Railway Project. It was comparing the project’s costs with the Ethiopian SGR project which cost an estimated US$ 5 million per kilometer. The Malaba- Kampala line will cost an estimated $7.2 million per kilometre.

However, a technical paper, by the Uganda Ministry of Works and Transport ably answered such questions. It argues that the highest cost is in bridges, followed by the earthworks (embankment), followed by track, stations electrification and signaling among others.

For example, the paper argues, on Malaba- Kampala line, bridges will absorb 35% of the costs, earthworks 25 %, the track and station will absorb 10 % of the costs each, while electrification and signaling will absorb 5% of the costs each and 10% others.

The Ugandan line, the paper argues, will pass through 53 kilometers of swamps meaning the embankments or mounds of stone or concrete have to be built to carry the line across. The line will have an estimated 29.74 kilometres of bridges including a one kilometre bridge across the river Nile, it says. The Ethiopian line, on the other hand, has only one 150 metre bridge in the whole stretch. Even the Tanzanian line will have fewer bridges of the same magnitude.
Bridges form the largest Costs centre absorbing 35% of costs

The Paper demonstrates that the Naivasha- Kisumu section of the Kenyan SGR will cost an estimated US$13 million per Kilometer because of the many super bridges to be constructed on this section which traverses the rugged Rift valley.

The document, seen by this publication also defines the key factors in the decision to invest in a modern railway line.
Top of the agenda is savings in transit time, robustness, reliability, and maintenance costs in that order.
The paper, an analysis of the SGR projects in East Africa, demonstrates why the central Corridor is not an option for Uganda. It demonstrates that the Central line is three days slower than the Northern Corridor even if they are built of the same standard. Dar-Es-Salaam port is 1548 Km away from Kampala compared to Mombasa port, which is 1250 km away.

Of the 1548 Km, 1228Km are on land and 320Km are on water- across Lake Victoria. This in itself calls for investment in sea-going vessels and improvement of the Ports in both Mwanza in Tanzania and Port Bell in Uganda.

Even with these investments, the document demonstrates, the Tanzanian route is not an option for Uganda whose ambition is to be a middle-income country with a GDP per capita of $9500 a year by 2040.
 To get there, Uganda needs to attract investment into heavy industry producing “for high-end markets in Europe, North America, Asia and other developed countries.” Consequently, it needs fast, reliable, robust and efficient transport system.
Embankments are the second costs centre absorbing 25%
 In terms of robustness of the line, the paper demonstrates that the Northern corridor SGR, which is Class One Chinese standard, has a capacity of transporting more than 8000 containers per day in 40 trains each carrying 216 containers. The Tanzania route, on the other hand, is restricted to 216 containers due to vessel restrictions.

 It will take 5 ferries to carry the 216 containers on the 320 km trip across Lake Victoria. Each ferry has a capacity of 44 containers. To offload and load and transport the 216 containers across the Lake will take an additional 15 hours, says the paper.

This will raise the total transit time on the Tanzanian route to more than 72 hours. And, the report adds a caveat, “that is being optimistic.”  To the contrary, the Kenyan route will take 24 hours to transport freight from Mombasa to Kampala, it says.

Comparing the Ports capacity, the paper says that the Mombasa port is three times bigger than the Port of Dar-Es-salaam. The paper, though, was published before Tanzania inked the deal to expand the Dar- port.

The paper says that the central corridor is not popular with Ugandans who transport only 0.5 million tons of freight per year compared to the Northern Corridor which ships more than 10 million tones of freight a year.

In terms of reliability, the paper tears apart the Tanzanian and Ethiopian lines. Both are low quality compared to the Northern Corridor SGR. The Ethiopian line is Class 2 Chinese standard while Tanzania opted for AREMA (American Railways Maintenance Association) standard. Both are designed to carry a maximum of 20 million tons a year. The Northern corridor -which traverses Kenya-is designed to ship up to 35 million tons a year.

 The implication here, says the paper, is that should demand for railway services rise in both Tanzania and Ethiopia, they will have to build additional lines to meet demand.  The Northern Corridor line is sufficiently robust to accommodate future demand increases.

The paper advises that for projects designed to last 100 years, the initial sunk capital should not inform the decision to invest. It argues that the lifetime maintenance cost of a project should inform the decision. In the case of SGR says the paper, the Maintenance cost for the Class one line are lower than the other two