The standard gauge railway (SGR) is a critical and strategic national infrastructure fully justified on many fronts, key among them transportation efficiency and synergy that adds value to the expanded port of Mombasa to support the Kenyan and regional economies. Rail is energy- and time-efficient, cost-effective, saves road maintenance costs, and reduces safety exposure on our roads. The SGR project is funded through public funds, debts and even special taxes on imports. Now that the Mombasa/Nairobi phase is in place and extension to the west ongoing, the public have vested interests in seeing the SGR promptly “enabled” to move into full capacity utilisation by shifting imports and exports from road to rail. This is a national obligation and priority to enable SGR create sufficient cash flows to pay its debts, fund ongoing expansion toward the western border while moving towards economic independence away from public subsidies and levies. The government has the fiscal and regulatory means to increase SGR cargo utilisation, and I believe that is exactly what they have been doing. The recent government orders on transfer of cargo from road to SGR are a correct effort to protect a critical public investment. All along, it was known that the SGR would result in “collateral damage” to road transport companies, clearing and forwarding companies, and also highway markets and towns that rely on patronage from truckers. These stakeholders have to adjust their businesses to fit a new national transport model which has the SGR as the main artery. On...

Shipping lines have joined the government campaign to transfer more cargo from the roads to the standard gauge railway (SGR). They are increasingly wooing importers to use a model where cargo terminates at the Nairobi Inland Container Depot as opposed to the port of Mombasa. Technically known as through bill of lading (TBL), the model has been in use but it is expected to go up after the upgrade of the ICD since it benefits both the shippers and importers, especially on return of empty containers. After a series of talks with the shippers, the Kenya Ports Authority (KPA) eventually got their nod. “We have been holding talks with shipping lines and they have agreed to aggressively market the through bill of lading model to importers for cargo destined to Nairobi. This will help us in ensuring that more containers are loaded onto the trains,” the KPA operations general manager William Ruto said on Tuesday. “This is a positive step towards increasing cargo transported using the trains. The challenge was on return of empty containers but if the destination of the goods is listed as the ICD, this will solve the problem,” Mr Ruto said in a telephone interview. The agreement between the shipping line and the importer using the bill of lading model is that the container deposits will be refunded once the equipment is returned to the ICD, he added. While under the bill of lading importers designate cargo directly to the Nairobi ICD, the model that is...

More than two years after the signing of the Sharm-el-Sheikh Tripartite Free Trade Area (TFTA) agreement in June 2015 – which brought together member states of the Southern African Development Community (SADC), East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA) – trade ministers from all of Africa’s 54 countries, including those of the Economic Community of West African States (ECOWAS), which already have a common external tariff, met in Niamey, the capital of Niger, in early December last year to agree final terms for the African Union’s Continental Free Trade Area (CFTA). By and large, they made good progress. However, there are still issues to iron out. Member states have yet to agree on tariffs on all goods, for instance although on services, they successfully closed the book. "Intra-African trade grew by 8% in the first nine months of 2017, with Guinea, Ethiopia, Burkina Faso, Equatorial Guinea, and Sierra Leone in the lead." In order to make a meaningful impact, the CFTA will have to improve the quality as well as the quantity of intra-African trade. The objective of the CFTA is primarily to engender more intra-African trade, which currently comprises just 15% of the continent’s total merchandise trade. When compared with intra-regional trade in other continents – 67% in Europe, 58% in Asia and 48% in North America – this is quite low. Efforts, thus far, at improving the low trade interactions within the continent, have clearly not been very effective. There are signs...

A walk around Nairobi’s streets may give an impression that Chinese merchandise may have been in the country for decades - virtually filling all aspects of the lives of many Kenyans. China has, however, not always been the leading source of imports for Kenya. The country became the leading source of goods into Kenya in 2015, following her aggressive marketing strategy as well as a focus on the close ties with the East in the initial years of the Jubilee administration. This saw imports from China grow faster. By 2017, they accounted for over a fifth or 22.6 per cent of all goods coming into Kenya. According to Kenya National Bureau of Statistics (KNBS), the value of imports from China in 2017 reached Sh390 billion, a 20 per cent jump from Sh337 billion in 2016. This is against the total imports of Sh1.7 trillion during the year. China as a source of imports for Kenya is in comparison to India that stood at Sh170 billion in 2017, a 17 per cent decline from Sh205 billion in 2016. India was the largest exporter to Kenya in 2014. The country has however sustained a declining trend since 2014 when the value of imports from India stood at Sh264.5 billion, which was in comparison to China’s Sh248.6 billion in the same year (2014). India has been a source of medicine, medical equipment and refined petroleum. Among the factors that have resulted in the rapid growth of imports from China include the cheap prices...

Regional and international partnerships will be crucial in ensuring that East African countries leave no one behind with respect to access to clean energy, a senior East African Community official said Monday. Speaking at the opening of the first Sustainable Energy Forum for East Africa 2018, in Kigali, Christophe Bazivamo, the EAC deputy secretary-general in charge of productive and social sectors, called for collaborations among sector players, including between governments, private sector and developing partners. Nearly 80 per cent of east Africans, he said, live in rural areas and their main source of energy is traditional biomass consisting of fuel wood, charcoal and agricultural waste. According to the East African Industrialisation Strategy (2012-2032), the EAC seeks to diversify the manufacturing base and raise local value-added content of resource-based exports to at least 40 percent by 2032. “To achieve our industrialisation targets, we need to accelerate access to sustainable energy and promote energy production for productive uses. We realise that we cannot do this single-handedly. We need to revitalise our regional cooperation and partnership with development partners around the globe,” Bazivamo said at the opening of the three-day forum. Energy is a key priority for the six-nation bloc, he said, adding that ensuring availability of sufficient, reliable, cost effective and environmentally friendly energy sources in the region would facilitate achievement of broader EAC objectives, including attracting investments and promoting regional competitiveness. In 2013, EAC government ministries in charge of energy directed the bloc’s secretariat to seek support from the United Nations...

East African governments are under pressure to resolve longstanding trade disputes and remove non-tariff barriers that have slowed economic integration. As the East African Business Council celebrates its 20th anniversary on March 22 and 23 in Nairobi with a series of high-level events, the spotlight is on the gains and hindrances to integration. Lilian Awinja, the EABC executive director, said the council seeks to address integration and industrialisation challenges. Regional businesses will convene at the Kenyatta International Convention Centre to showcase domestic value-added products that are set to transform the bloc into an upper-middle income economy by 2050. “The exhibition will feature products and services grown, developed or manufactured in East Africa,” Ms Awinja said. “Promotion of local industries to manufacture and offer more products and services is critical for the realisation of the Buy and Build East Africa campaign.” At the EAC Heads of State Summit in Kampala last month, regional leaders directed the secretariat to ensure that the Customs Union Protocol, the Common Market Protocol and the EAC Elimination of NTB Act, 2017 are implemented. Non-tariff barriers According to a report by the EAC Council of Ministers to the presidents, by August 30, last year there were 18 longstanding NTBs. Among them is Uganda’s restriction on imports of beef and beef products from Kenya. Although Uganda should have lifted the ban in accordance with the recommendations of the bilateral meeting held between Uganda and Kenya in October 2015 in Nairobi, Uganda says it is still in the process...

Tanzania is banking on the development of its vast gas find into electricity to increase its capacity and provide a dedicated electric line for the SGR network, once completed. Currently, the country’s available power generation capacity stands at about 1,500MW, against a demand of 1,352 MW. “Jointly with Ethiopia, Tanzania re-opened the bids in August last year for the Rufiji hydropower project at the Stiglers Gorge which we will inject more than 2200MW to the national grid once completed over the next two years. We will soon announce the tendering. We are also in the last stages of the Kinyerezi plant from our natural gas, which should now inject 240MW next month and reach a peak of 3,000MW by 2022. We expect these power projects to be used to power the railway line,” a senior government official told The EastAfrican in an earlier interview. The region has turned to electric powered rails in a bid to increase efficiency, but questions abound on how these lines will be powered given the energy deficits individual countries face. Kenya dropped plans for electrification of the SGR line between Mombasa and Nairobi, citing its high costs and irregular power supply. Kenya Railways managing director Atanas Maina said that the preliminary research had shown inadequate demand for electric trains in Kenya coupled by higher cost and intermittent electric supply. “Electrifying this line also depends on our ability as a country to finance that kind of infrastructure. It was something that we would love to have,...

When Eritrea gained its independence from Ethiopia in 1993, Ethiopia became landlocked and therefore dependent on its neighbours – especially Djibouti – for access to international markets. This dependency has hampered Ethiopia's aspiration to emerge as the uncontested regional power in the Horn of Africa. Recently, however, the ground has been shifting. As we point out in a recent article , Ethiopia has attempted to take advantage of the recent involvement of various Arab Gulf States in the Horn of Africa's coastal zone to reduce its dependency on Djibouti's port. The port currently accounts for 95% of Ethiopia's imports and exports. It has done so by actively trying to interest partners in the refurbishment and development of other ports in the region: Port Sudan in Sudan, Berbera in the Somaliland region of Somalia, and Mombasa in Kenya. But it is Berbera, in particular, that will prove the most radical in terms of challenging regional power dynamics as well as international law. This is because a port deal involving Somaliland will challenge Djibouti's virtual monopoly over maritime trade. In addition, it may entrench the de-facto Balkanization of Somalia and increase the prospects of Ethiopia becoming the regional hegemon. Ethiopia's regional policy Ethiopia's interest in Berbera certainly makes sense from a strategic perspective. It is closest to Ethiopia and will connect the eastern, primarily Somali region of Ethiopia to Addis Ababa. It will also provide a much needed outlet for trade, particularly the export of livestock and agriculture. The development and expansion...

After months of uncertainty, Kenyan President Uhuru Kenyatta and his rival Raila Odinga agreed to put aside their differences on 9th of March, for the good of the country, but also the economy. Their dispute has cost Kenya around €800,000 and seen some of its trade re-routed to Tanzania. "When Kenya sneezes, East Africa catches a cold." The saying, which is widely known in the region and was often quoted by commentators at the height of Kenya's 2007-08 violence to explain the impact of the fallout for Nairobi's neighbours. Fast forward ten years later and Kenya's latest crisis has instead sparked feverish activity in countries like Tanzania. "There’s talk of a railway connecting Rwanda with Tanzania, and President [John] Magufuli for all that people criticize him for, pried away the prized Total oil pipeline away from us that should have been coming through Kenya," Aly Khan Satchu, a financial and political analyst in Nairobi said. He is a very potent adversary Satchu said, in reference to Magafuli's ability to spot the opportunity created by Kenya's political crisis. "I think we’ve been caught napping," he said. The political crisis rattled investors and Kenya's business community, with the KEPSA Private Sector alliance warning that trade from Uganda and Rwanda was being diverted towards Tanzania. "That’s been damaging for Kenya," acknowledges Piers Dawson, a consultant with the London-based risk firm Africa Matters Limited, told RFI. Nontheless he said it is too soon for Dar Es Salam to overtake Nairobi as the economic capital...

Arusha — Fears of shaky financial status of the East African Community (EAC) were allayed on Tuesday evening when a Kenyan cabinet secretary declared it cannot run bankrupt. "The Community cannot run bankrupt due to delayed contributions by the member states", the newly appointed cabinet secretary for EAC and Northern Corridor Peter Munya affirmed. He told the East African Legislative Assembly (Eala) that the financial woes facing the regional organization were being addressed by relevant authorities. "There are challenges with some countries delaying payments but we have talked on how to tackle this", he said as the House debated the 'State of EAC' speech by current Chair President Museveni of Uganda recently. However, he said the long term solution to the crisis lay with the often touted sustainable financing mechanism which was also discussed during the recent Heads of State Summit in Kampala. He noted discussions were on advanced stage on how to sustainably raise funds through slapping tax on imports, slicing the GDP "or a combination of these". According to him, the Community was also weighing on the current system where each of the six partner states made equal contribution to its annual budget and equity option. Mr. Munya's remarks came only weeks after the Arusha-based secretariat announced that only 40 per cent of the 2017/2018 expenditure budget by the partner states had been remitted to Arusha. The EAC and its organs and institutions had budgeted to spend a total of $ 110 million during the 2017/2018 financial year...