The "Lunatic Express 2.0:_ A cost-benefit approach

 

A Passenger  SGR train: Five hours to
 Nairobi from Mombasa

Finally! Kenya and Uganda have tightened the first bolts on the construction of the “Lunatic Express 2.0.” This marks the end of a six-year hiatus on the project.

 The “Lunatic Express 2.0”, otherwise christened the Standard Gauge Railway, which had stalled on Kenya’s town of Naivasha will now extend to Kisumu and Malaba on the Kenya-Uganda border.

This is a section of the longer Mombasa-Kampala-Kigali railway, envisaged back in 2009 by the East Africa Community. The crossing into Kampala, Uganda is a major milestone on the project. The two countries are under pressure from other members of the community to complete this section so that they take it up from there.

The US$ 5 billion, 500KM section is a game-changer in transport logistics in this region. It cuts travel time from Mombasa Port on the Kenyan coast to Kampala, 1200KM inland, to 24 hours - down from the current four-days to a week.

The Northern Corridor, of which the SGR is an integral part, transports 90 percent of Uganda’s international trade and a similar proportion for Rwanda, South Sudan, and Eastern D R Congo.

The road network, though relatively serviceable, is congested due to heavy traffic. This slow movement also congests the Mombasa Port. The Kenyan section of the SGR, has provided some relief moving goods from the port to the Nairobi ICD in 8 hours.  But still congested roads are a bottleneck.

This is the hurdle the SGR is meant to remove.  It will cut travel time from Mombasa to Kampala, Uganda to 24 hours.

Currently, since the Railway line goes right up to the Port, freight offloading is ship-to-train. That ensures that freight reaches Nairobi ICD while the ship is still at the berth. The same feat will be repeated for freight destined for Kampala.

Such speeds have their massive invisible benefits. In theory, it cuts the cost of transport, reduces the supply Manager’s re-order period, eliminates or drastically reduces the finance Manager’s regular calls to the bank to seek overdrafts, and finally, the cost of local goods.  

For the local farmer and manufacturer, their produce will get to the market while still fresh, fetching better prices. All these reduced costs will attract further investment into the local economy.

These are not just textbook benefits. They are real.

And because some people can see these benefits, they oppose the project by selling fear to us. “The projects are expensive, some say. “Some people will pocket huge kickbacks,” say local critics. “China will dominate and control African resources,” say the Westerner.

That is naked hypocrisy. The Westerners admit they didn’t think the project was doable, so they shunned it. Now that China has shown it is doable, they want to sabotage it.

But Africa knows what it needs and has gone for it. The continent needs interconnectivity through transport infrastructure- and here, Rail is king,

Here is a cost-benefit analysis in numbers. A single train can carry 216 -20ft containers. That is more than 200 trucks off the road. Heavy container trucks are diesel-propelled. They pollute the environment. With 200 off the road, the environment recovers.

What’s more, trucks travel five days between Mombasa and Kampala. A single train will take 24 hours. Now do the math, Experts value freight travel cost at $0.02 per kilo meter ton. By truck, a 20ft container costs $30,000 per day on a five- day journey.  These costs include wages and subsistence, cost of fuel, cost of truck maintenance, idle time for the truck among other costs.

It could be more if the truck traveled empty on the journey to the port.  Assuming that each truck hauls one 20-foot container, the total cost of shipping 216 containers by truck between Mombasa and Kampala is US$6.45 million.

The freight travel time cost on a single train hauling 216 containers is US$3.11 million, which is 52 percent lower than hauling by truck.

These direct and indirect costs are the reason why local products cost more than imports, our manufacturing sector operates at suboptimal levels, and the market for local goods is slim.

Good and reliable transport infrastructure removes some of the bottlenecks to economic activity thus generating robustness in a domestic economy.

For those of us who observe the politics of infrastructure development in the region, we yawn and say de ja vu to the current round of criticism.