Standard Gauge Railway means big business to local construction firms

Wednesday September 23 2015

A new World Bank report predicts Kenya's economy will be the best performing in sub-Saharan Africa in the next 15 years growing at a steady 6.2 per cent.

The Standard Gauge Railway (SGR) line between Mombasa and Nairobi under construction. A new World Bank report predicts Kenya's economy will be the best performing in sub-Saharan Africa in the next 15 years growing at a steady 6.2 per cent. PHOTO | FILE 

A year since work started on the first phase of the Standard Gauge Railway (SGR) line between Mombasa and Nairobi, the project has evolved into a virtual and pervasive support system, providing livelihoods and incomes to several Kenyan families and entire communities.

It is indeed telling that of the 25,000-strong workforce working on the project, a sizeable portion are those who are employed by sub-contractors and other suppliers on the assignment.

A constellation of several factors have conspired to create what can only be described as a much-prized windfall for these firms. First, in drafting the eventual contract between the Government and the contractor, China Road and Bridge Corporation (CRBC), planners put in a clause that expressly requires the latter to use “local content” in the project. This local content quota can come in several forms, including labour and, most importantly, raw materials.

There is also the provision of unrelated but critical support services like security, transportation, accommodation and catering, among others.

Numbers take up the rest of the story, as told by Pei Yan, Assistant Manager for the contractor, China Road and Bridge Corporation (CRBC) on the project.


“Since the preparation stage, we have been working with local companies in purchasing materials, vehicles and hiring equipment. To date, we have worked with over 400 local suppliers and manufacturers and over 40 local engineering and construction companies in various fields. These include procurement of construction materials, fuel, equipment, vehicles, sub-contracting works and consulting services, among others.”

But more important to Mr Yan are the “broad and long-term” partnerships that CRBC has built with local companies and industry players, based on the stable economic foundation and the great potential currently obtaining in Kenya. In his view, the attainment of local content on the SGR project is not only beneficial to Kenyans but also the contractor.

“It enables us to achieve the target of ‘localisation’ in procurement, management, operations and development, factors which make us competitive in the local market,” he argues.

According to Mr Yan, the quest for the all-important “local content” is not just the responsibility of the contractor, acting in isolation. It requires the input and commitment of all stakeholders: local manufacturers, suppliers, industry players and even Government and puts the burden of responsibility on all of them.

“True, our most important mission is to deliver a satisfactory engineering and construction project with requisite quality and within timelines. This not only requires the correct deployment of advanced technology and a well-organised team directly working for this project, but also calls for the availability of ‘quality local content’ which meets the specifications and requirements of the project.

“It takes the entire industry chain from manufacturing to supply and service; and equally significantly, a supportive business environment with a conducive policy framework.”

Among the materials that CRBC sources from local Kenyan firms, and which are mandatory in the SGR project, are cement, sand, gravel, wood, diesel and even explosives.

The SGR is being built based on Chinese railway building standards. This means that every material used in the project has to meet the specifications spelt out by these standards.

Mr Yan says this is one of the reasons why some of the more advanced materials and precision equipment required for the execution of the project have to be imported from China and other countries.


The other reason is that some of the required materials are simply not available locally, an indication of what is lacking in our often-vaunted industrialisation, and the truism that no country ever industrialises without a viable steel industry.

Among the materials that the contractor has had to import from China are steel rails, steel strands, pre-stressed wires, geo-textiles and geo-grids, among others.

Mr Yan says that as a standard procedure, Kenyan suppliers and manufacturers who wish to sell their materials to the SGR project have to be ready for stringent quality tests before the same can be approved.

“The project has a strict quality control process, starting with the mandatory testing of raw materials….these are things we can never compromise on,” he stresses.

He cites the case of a certain local cement manufacturer which thought it had been overlooked in the SGR supply stakes. Such sentiments were expressed while the CRBC awaited the results of certain mandatory tests and analyses on the product. The firm has since been allowed to supply the SGR product, but only after the relevant tests turned out to be satisfactory to the required standards and specifications.

A lot has been achieved in the actual 500 km-long construction works, which CRBC has divided into nine zones to ensure simultaneous implementation and linkage between the various aspects of the project.