As the three east African countries, Uganda, Kenya and Tanzania move closer to integration, a good railway network to be introduced in is expected to enhance trade and movement within the region.

Five months from now, the Ugandan and Kenyan railway system will not be the same. Recently, the governments of Uganda and Kenya selected the Rift Valley Railway Consortium (RVRC) to manage their respective railway systems for the next 25 years.

Both the Uganda Railways Corporation (URC) and the Kenyan Railways Corporation (KRC) will be handed over through a joint concession process. The RVRC led by a South African company, Sheltam will take over the management on March 31 next year.

This brings to an end, a seven-year joint search for a private operator to take over from the cash-strapped corporations.

TO REVAMP AILING RAILWAY

Until the late 1980s, URC and KRC were the most reliable means of transportation especially for bulky goods. URC commanded over 90 percent of cargo transportation in Uganda, recorded booming business and posted huge profits.

Like KRC, URC's fortunes went down following the liberalization of the transport sector and improvement of the road network. URC faced challenges from long haul trucks that provided a competitive edge over rails.

In 1995, the passenger service from Kampala to Nairobi collapsed.

However, the revamping of the East African Community (EAC) brought a new light to the ailing railway corporation.

In 2003, the two countries signed a memorandum of understanding to move to the process of a joint concession. This was in line with the objectives of the EAC in providing safe efficient and reliable railway operation and recognition of mutual dependence on one another.

LONG-TERM BENEFITS

RVRC will invest 322 million US dollars in improving infrastructure and rolling stock and will pay 11 percent of annual gross revenue to the Ugandan and Kenya governments. Of the 322 million dollars, 80 million dollars is to be invested within the first 5 years.

Uganda's Works, Transport and Communication Minister, John Nasasira said he expected the privatization of the national railways will lead to greater sustainable investment and contribution to east Africa's economic development.

Both Kenya and Uganda are engaged in various cross border initiatives including the extension of the oil pipeline from Kenya to Uganda.

The joint concession has also set the stage for future regional cooperation in the East African region, which is in line with the commitments made under the East Africa Cooperation and the New Partnership for African Development.

RVRC's winning proposal includes a turn-around and development program expected to lead to significant growth and increase in freight traffic volume within the first five years, said a statement issued by the two governments.

Uganda stands out to benefit from the revamped railway system. Uganda's biggest handicap to long-term development is the cost of freight between Uganda and the nearest ocean port of Mombasa, Kenya.

Today most companies prefer road transport even if it is expensive because currently, railways are slow and inefficient. This pushes up the production cost. However, with this concession, the country is sure to benefit.

The governments of Kenya and Uganda also plan to reopen all closed railway lines across the country to facilitate easy traveling and transport of goods. In Uganda, currently there is an ongoing rehabilitation of the Tororo- Kampala railway line.

The two governments also anticipate extending the existing railway network to eastern Democratic Republic of the Congo (DRC) and southern Sudan.

"If these lines are extended to these areas, the business people will be able to tap the potential market there. This will in turn promote regional trade and integration," said Nasasira.

If the rail link to Mombasa and its eventual extension to eastern DRC and southern Sudan becomes efficient, cost of production will go down and manufacturers and exporters will be able to become more competitive and will be linked to international markets.

This will in turn enhance economic development and regional integration, according to the two governments.

Source: Xinhua