Keep lying to urself
The strange puzzle of Uganda’s sand and its new railway dream
CHARLES ONYANGO-OBBO
In Summary
Going forward. Manufacturers need to be pooling resources, and paying clever people in universities to find work on high value cutting-edge products. But they are not very many clever people out there, so the region’s universities need to be working on East African cooperation structures for research to make this worthwhile.
By CHARLES ONYANGO-OBBO
I was reading the Daily Monitor online the other day, and the story, ‘80-year-old man shoots 30-year-old wife dead,’ got me scratching my head.
After shooting his wife, Samuel Bariluno turned the gun on himself. However, he “survived with grave injuries”, the story said.
It was a tragic story, though I was wondering what business an 80-year-old man had marrying a 30-year-old woman. I was still bewildered when I drifted to the next story, ‘Ugandan firms could lose out on SGR opportunities’.
I decided to read it as part of my “boring, but potentially important story of the day” quota.
‘Local manufacturers risk exclusion from supplying raw materials for the Standard Gauge Railway (SGR) project if their products fail to meet required standards’, it said.
“Out of 19 reinforcement steel manufacturers, only three, including Roofings, Madhvani and Steel and Tube will produce raw materials for the project, after the others dropped out, citing inability to meet the required standards’, it reported. No surprises there.
It then quoted SGR project coordinator Kasingye Kyamugambi, saying in addition to local suppliers not meeting the standards for reinforcement steel, there were also issues with cement and sand! The project would require eight types of cement, it said, but only Hima Cement had reconfigured its plant to “produce one specific type [of cement] for the project”. Mercifully, the story said nothing about sand. Sand, of all things.
So we will end up possibly slightly worse than Kenya, where local manufacturers got only crumbs when its SGR from Mombasa to Nairobi was being built, for these same reasons.
To close, the story quoted Public Procurement and Disposal Authority’s (PPDA) Moses Ojambo, pleading with the “government to empower local manufacturers to boost their capacity instead of resorting to imports”.
But can it? The problems with finding suitable materials for SGR, speak to the difficulties Africa in general has had producing sophisticated industrial goods for this day and age. Virtually all local car manufacturers ended up making vehicles that couldn’t run and broke down at the first pothole.
Local manufacturers have made boots for the military and police that were too stiff to wear, or fell apart after the first parade. They have made uniforms that changed colour to that of a foreign army after the first wash. These are not problems that can be fixed by governments, if only because they are part of the problem.
Take sand. To begin with, the right kind of sand might not be there in Uganda. Indeed, there is actually very little good sand for building stuff in the world, which is why most of the sand that has been used to build all those massive structures in rich Middle East cities like Dubai is imported from Australia.
But if the sand is there in Uganda, we now learn that it takes some expertise to know it is the right one even if you are stepping on it. The problem is a technology and science one.
It all makes the bigger point for our industries that they do not spend on research and development (R&D), not primarily due to lack of State support. Government money, even a lot of it, does not necessarily buy imagination or give rise to creativity.
Some years ago, I visited a “factory” in Denmark that was a world leader in specialised landing beacons for airlifts and helipads in extreme places (the Arctic, mountain tops, etc). Turned out the place was not only small, but was run by about six guys, who put everything together. And they had the world’s big armies and other demanding customers queuing. The biggest advantage they had was that they were very clever.
A Ugandan, who works for the world’s second biggest agrochemical and agricultural biotechnology corporation, once asked me to lunch with his bosses. They were then in merger talks with the world’s largest agricultural biotechnology company. I was curious. Each of them had billions of dollars, why did they need to merge, I asked.
The strange puzzle of Uganda’s sand and its new railway dream
“What we are looking for is R&D money,” they told me. “The merger would give us at least $6 billion, which is not even close to what you need to be spending to find ways to feed more than eight billion mouths that the world will soon have”.
Manufacturers need to be pooling resources, and paying clever people in universities to find work on high value cutting-edge products. But they are not very many clever people out there, so the region’s universities need to be working on East African cooperation structures for research to make this worthwhile.
The sand conundrum is the perfect summation of our challenge. There is a lot of it around, but it takes a certain type to fine pebbles that will build a modern railway. Apparently not every Musoke, Okello or Were can do it.
Mr Onyango-Obbo is the publisher of Africa data visualiser Africapedia.com and explainer site Roguechiefs.com. Twitter@cobbo3
Local manufacturers bought new equipment and corrected their quality standards in line with Chinese expectations and got the tenders... about 7 steel firms supply steel for building bridges, culvets and sleeerd!
The projections for 2016 are largely positive, which is welcome news for a country that faced headwinds for the better part of 2015. Analysts expect the economy to grow at over 5 per cent this year on the back of on-going infrastructure projects.
Prominent among these projects is the standard gauge railway (SGR). The Sh350 billion high-capacity railway line is the largest project in Kenya in half a century, and is supposed to run from the port city of Mombasa to the border town of Malaba.
And while the project might have left a gaping hole in the country’s current account, analysts believe the project will make up for this once it starts running — or even before it is completed through the ‘multiplier effect’, as more people get employed and suppliers get paid.
Indeed, local suppliers of SGR hired by the project’s contractors, China Road and Bridge Corporation (CRBC), have started to cash in. They include manufacturers of cement and steel, sand harvesters and suppliers of explosives.
One such happy supplier is Nitro Chemicals. The firm was contracted in mid-2014 to supply explosives for all phases of the project.
Pratik Sanghrajka is a senior manager at Nitro Chemicals, and although he would not say the exact amount his company has made from the project, he admits that it is the best deal they have ever clinched.
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In fact, it is worth more than double the amount of business the firm has had to date, he said.
New hires
As a result, the company, which also supplies blasting materials to virtually all major cement manufacturers in the country, has had to double its imports of materials.
This has required the outsourcing of more trucks for transport, hiring of more personnel, and, due to the sensitivity of the products, hiring of more police officers to escort the explosives to SGR sites.
“Before, we only needed two officers for a simple delivery from Mombasa to Nairobi,” said Mr Pratik.
The railway project is also compelling local suppliers to re-align their business practices to those of the Chinese, which so far appears to be a good thing.
Daniel Muriithi Migwi, the founder of construction firm Techno Aid, said he has had to learn to keep up with the working rate and ethic of the Chinese.
Mr Migwi’s company was sub-contracted by CRBC to carry out stone pitching, that is, providing a hard-wearing surface for steep paths, as well as doing drainages.
He admits the margins are not very good, but the huge volume of work makes up for this.
“There is a lot of work, and you have to work very fast like the Chinese, otherwise you will delay the project. Your presence at the site is also very critical,” he said, adding that some sub-contractors have quit along the way as the work load was just too demanding for them.
In a recent interview with Business Beat, Bamburi Cement Country Manager Bruno Pescheux said his firm had to change its standards to clinch the deal to supply SGR with cement.
“[CRBC] wanted products that would comply with Chinese standards. Bamburi also has its standards. We were, therefore, forced to change our standards. We did not want to lose the market to imports, so we adopted their standards,” he said.
Steel Makers, one of the largest steel suppliers in the country and a major player in several high-profile infrastructure projects, is among five companies contracted to supply SGR with the structural alloy.
Bobby Johnson, a director at Steel Makers, said he is happy with the fact that other local steel companies have got an opportunity to participate in the project.
“A project of this magnitude cannot rely on one supplier,” he said, adding that multiple suppliers assure a contractor that there will be no disruptions in supply.
For Steel Makers, the contract may not have changed operations in a significant fashion, but it has added another enviable feather to its cap.
Mr Johnson added that Kenyan firms are not supplying all the steel for the project. For instance, steel rails are not produced locally. Local firms are, however, supplying steel for bridges and civil works such as culverts.
Further, the sleepers — rectangular support for the rails — for the SGR, unlike in the current gauge line, are made of concrete, reducing the amount of steel needed.
Migwi, who has about 140 employees, is also pleased with the fact that CRBC payments come on time.
The local contractors and their staff have also had an opportunity to get lessons on doing business with people from diverse cultures.
“One thing you learn when you work with the Chinese is that you have to be very hands on,” added Pratik.
To get the job, the companies that submitted bids underwent stringent quality control tests and background checks to ascertain their capability to handle large projects, said Johnson.
More opportunities
In the third quarter of 2015, all the companies that met the threshold of SGR requirement were invited to submit bids during an open tender process.
Johnson said Steel Makers has supplied steel for several infrastructure projects that demand high standards of quality, and SGR is no exception.
The project, which is 60 per cent complete, with 50 kilometres already under rail, also needs construction aggregate, timber and ballast, meaning there are more business opportunities for interested entrepreneurs.
But there is a catch.
“If you want to supply anything to the SGR, make sure you understand and meet the requirements of the project,” said Johnson, adding that the contractor has very specific standards.
Migwi added that it is also important that you are available and have the time to go to project sites.
Pratik thinks Nitro Chemicals was chosen to supply the project with explosives because of its superior supply chain. The firm gets its materials from India, France and China, which means it can be relied on to bring in goods every two weeks.
“You have to be really aggressive when you are working with the Chinese,” he said.