Rwanda's exit casts doubts on viability of SGR

The decision by Rwanda to opt out of the shared standard gauge railway (SGR) deal with Kenya has cast doubt on the economic viability of the regional project.

Last week, Rwanda’s Finance minister Claver Gatete announced that the country would develop its rail through Tanzania, Rwanda and Burundi because it is a more affordable option.

Rwanda together with Uganda and South Sudan are key pillars in the Kenyan SGR, which links the port of Mombasa to Nairobi.

Kenya and Uganda are now alone in plans to construct the railway, with South Sudan expected to join in later.

Economics analyst Karithi Murimi sees Rwanda’s planned exit from the project as a big loss to Kenya because “imports by both Rwanda and Uganda through SGR via Kilindini have a big economic impact both in jobs and transport.”

“The SGR requires a return load to become economically viable, it should lower the cost of goods and increase competitiveness, allowing Kenya Ports Authority (KPA) to increase turnaround,” Mr Murimi told Daily Nation by telephone on Sunday.

Kenya Railway Corporation Managing Director Athanas Maina, however, said Rwanda’s decision was expected since it is part of the EAC railway masterplan, which interconnects member countries from either Mombasa or Dar es Salaam.

“If Rwanda officially opts out of the Kenya SGR project, then cargo volumes between Mombasa and Uganda will be lower,” a Kenyan official privy to the SGR developments said.

ALL IS NOT LOST
Rwanda has the option of using Kampala as a connection to the SGR then transporting goods onwards to Kenya. It could also opt for the shorter Dar rail, which makes economic sense to its government.

Kenya could still gain economically, even with Rwanda’s withdrawal from the project, since South Sudan and Uganda have the bulk of cargo passing through Mombasa.

Mombasa port statistics show that South Sudan accounts for the second largest volume of transit cargo after Uganda.

Figures for the five years to 2014 show that Uganda-bound traffic through the port averaged 77 per cent of gross transit volumes, followed by South Sudan at 11.5 per cent and Rwanda at 3.9 per cent.

However, Rwanda has to consult Uganda, Kenya and South Sudan at the 14th Northern Corridor Integration Projects (NCIP) Summit to make the plan official.

This is because the negotiations, funding and pace of planning the Kenyan SGR are part of the ongoing annual talks within the NCIP bloc aimed at fostering the spirit of integration within member countries.

At the previous summit in Kampala, Uganda, the leaders had agreed that “the heads of State directed that the bankable feasibility studies for the remaining Northern, Western, Southern and Mirama-Kigali sections be expedited”.