Norther Corridor SGR: Truth triumphs!

At last, the truth has triumphed over propaganda. The East Africa Northern Corridor SGR is back on track. Preparations to start construction are in high gear in both Uganda and Kenya, we can report.

The work begins after a six-year hiatus due to sabotage masquerading as a fight for good governance. The project became a victim of a plethora of rivalries ranging from Geopolitical, regional rivalries, domestic politics, and business rivalries

Kenya's Madaraka Express

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At the regional level, Kenya’s southern Neighbor, Tanzania, shot first. She was also building her Central Corridor SGR targeting to serve the same destinations as Kenya, the landlocked countries, including Burundi, DR Congo, Uganda, and Rwanda. Trouble was, the line could not compete with the Northern Corridor. It was handicapped by distance, size of the Dar-Es-Salaam Port, and turnaround time.

More than 10 million tons of freight to these countries pass through the Mombasa Port in Kenya each year. Of these, 75 percent were destined for Uganda. And the freight to these destinations grows at three percent a year.  That is a mouthwatering business.

Second, the Mombasa Port is three times larger than the Port of Dar-Es-salaam in Tanzania.

Third, Mombasa is closer to Uganda than Dar-Es-Salaam. The former is 1,200Km km while the latter is 1,500 Km away, 380KM of which is across Lake Victoria. There were genuine fears that the Tanzanian investment could come a cropper.

Uganda was something of a Railway junction as the connections to Rwanda, Burundi, DR Congo, and South Sudan were to link from Uganda. Consequently, the then Tanzanian President, the Late John Pombe Magufuli, crafted a scheme to nip the Northern Corridor project in the bud.  He gunned for the junction. He persuaded Uganda’s President Yoweri Museveni that a link through Dar-es-Salaam was cheaper than Kenya, which was untrue.

If the scheme had succeeded, Tanzania would have split the Northern corridor into at least two junctions instead of one. One would be Rwanda Link to DR Congo, and the other somewhere in Kenya Linking to South Sudan.

That was a pipe dream, for Dar es Salaam is disadvantaged compared to the Mombasa Port. Kampala in Uganda is 1,200 KM from Mombasa Port. Dar-Es-Salaam, on the other hand, is 1,138 KM from Mwanza City on the shores of Lake Victoria. There are 380 Km of water across Lake Victoria between Mwanza Port and Port Bell in Uganda.

A nightmare logistics scenario for importers and exporters in Uganda was unfolding:  To transport a 216 container train load across Lake Victoria would require 5 ferries, each carrying 46 containers. Such ferries were not available on the Lake at the time, nor are they today.  The harbors were not even ready for such a huge activity; loading and offloading on both ends would add more time and costs to traders, considering that the trip from Dar-Es-Salaam to Mwanza was nearly 18 hours. 

The Northern Corridor, on the other hand, was seamless. A train runs from Mombasa to Kampala was only 24 hours. A report by the Ugandan Ministry of Transport declared the Dar-Es-salaam port “a low priority port” for Uganda, putting paid to the proposal. However, the damage had already been done. After Tanzania yanked the Oil transport pipeline from Kenya to Tanzania’s port of Tanga, Kenya lost faith in Uganda, for the two countries had an MOU to build the line from Hoima fields into Kenya’s Port of Lamu. 

Kenya, fearing that Uganda could also shift its SGR focus from the Northern Corridor to the Central Corridor, redesigned its Railway line to terminate at Kisumu, a port city on the shores of Lake Victoria, instead of Malaba on the Ugandan border.

This reduced the Northern Corridor SGR to a Kenyan affair, making it unviable, and the financier, China’s EXIM bank, grew cold feet. It refused to fund the remaining section.

At home in Kenya, opposition politicians, fearing that the completion of the project would be a winning ticket for Uhuru Kenyatta, began a misinformation campaign that demonized it, supported by  Road Transport Haulers who feared for their business.

Unsupported allegations of sleaze flew all over; the Media had a field day bashing the project, in the process, demonstrating its bias and naiveté. They never asked the hard questions, such as proof of corruption, nor did they research beyond critics' allegations.  Whenever challenged to prove their allegations, both the mainstream and Social media harped on the Western propaganda against the Chinese so-called “Check Book Diplomacy.”

Many swallowed it hook, line, and sinker. They labelled the acquisition of Sri Lanka’s Port of Habanitota by a Chinese Shipping merchant as an example of China seizing national assets over unpaid debts. Never mind that the Chinese firm paid US$1 billion for the asset.

Fueling the rumour were “official reports” or what was allegedly leaked from Government offices, specifically audit offices.  For instance, Kenya’s Controller and Auditor-General in 2017/18 audit on Kenya Ports Authority, said that the Authority’s assets, specifically the Mombasa Port, were mortgaged for the loan to build the SGR, and that Kenya risked losing the port to China in case of default.

That was wholly incorrect. The CAG referred to a clause in the contract which said ” We, the borrower, the Kenya Railways Corporation, and Kenya Port Authority… He interpreted this to mean KPA was a signatory to the loan contract. KPA was not. The borrower and only signatory was the National Treasury.

KPA had signed a Take-or-Pay contract with KRC to ensure that 40 percent of the freight landing at the port was ferried inland by the Railway line. In case of any shortfall, KPA was to pay KRC for the shortfall. 

Also see https://eaers.blogspot.com/2023/07/sgr-loan-did-former-controller-and.html

The contract, which was attached to the loan contract, was designed to protect the asset from being killed by road haulers who had deliberately killed the old Meter-Gauge Railway. The haulers were so abrasive that they could decide who would be the CEOs of both Corporations. The CEOs turned a blind eye to the destruction of Kenya Railways by truckers.

 Kenya’s CAG was not the only one to misinterpret such a clause or come up with such a false report. In Uganda, there outcry over the potential of losing Entebbe Airport for similar reasons.  It is noteworthy that such noise came years before the US$220 million loan was due for servicing. In Zambia, there was an outcry over the potential loss of its National Broadcaster in case of default on a Chinese loan. None of these properties has been realized by China, years later. The Noise makers also went mute. It was all a malicious rumour.

Once the falsehoods became apparent, there was a rethink about the SGR’s fate. However, trust among partners had been severely dented. It took a while for the politicians to mend the relations they had earlier damaged. Now that the politicians have placed national interest ahead of personal relations, the project is back on track. And financiers have taken note and have begun to loosen their purse strings.

And according to news reports, both Kenya and Uganda are under intense pressure by other members of the East African Common Market, that is, D R Congo, Rwanda, and South Sudan, to get on with it so that they begin preparations to extend the line to their countries.

According to both Kenya and Uganda, the project’s construction is set to begin soon. Ground preparations are already ongoing, reports say. 2026 could be the year of construction for the line.