Geza Ulole
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Loans, trains and automobiles
Did Kenya get a loan to build a railway, or vice versa?
The Chinese-backed Nairobi-to-Mombasa line may never make money
Print edition | Middle East and Africa
Mar 22nd 2018| MOMBASA
WHEN Kenya launched its new railway last year, connecting the coastal city of Mombasa to the capital, Nairobi, passenger tickets sold out. Travelling between the country’s two biggest cities overland had meant crowding into a bus for 12 hours, or riding the old British-built railway, which might have taken 24 hours. The new line, run by Chinese engineers who wander up and down the carriages, has cut the journey to between four and six hours, depending on the number of stops. The seats are comfortable and, at just 700 shillings (about $7), affordable. Lucky passengers see elephants along the way.
Shuttling passengers, however, is not what the new line was built for. When Kenya borrowed $3.2bn from China for the railway in 2014, the aim was to move freight efficiently between the capital and the port at Mombasa, 484km (301 miles) apart. Unlike the passenger service, the cargo one has been a disaster. The second train out of Mombasa arrived a day late, because it didn’t have enough goods to leave the port. Passengers may find the biggest elephant on their journey is the white one they are riding.
In theory the line should move about 40% of the freight coming inland from Mombasa. The cargo is loaded straight from ships onto trains, which take it to a depot near Nairobi. There it is processed by customs officials. The goal is to relieve congestion on the roads and lower transport costs. One day, it is hoped, the railway will connect all of east Africa. For now, officials would settle for enough revenue to cover the running costs and repay the loans.
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But getting importers to use it is proving harder than expected. In its first month the line moved just 1,600 containers out of roughly 80,000 processed in Mombasa. Though the trains go faster than lorries, the line is far less efficient at moving cargo, says William Ojonyo of Keynote Logistics, a Nairobi-based cargo-clearing firm. There have been delays in loading trains. Customs processing at the inland depot is less reliable than in Mombasa. “We are more comfortable dealing with the devil we know, the container on a truck,” he says.
Fees were cut after the first slow month, but traffic did not improve much. On March 1st James Macharia, the transport secretary, sacked 14 out of 16 heads of department at the Kenyan Port Authority, alleging that “cartels” had been obstructing the new railway. Cargo that is not directed to a specific clearing depot in Mombasa has been ordered onto the railway automatically, regardless of its final destination. Importers have arrived in Mombasa to pick up containers, only to find that they have been sent to Nairobi.
Few in Mombasa are pleased by the idea of cargo being sent straight to the interior, bypassing the armies of agents based in the port city. Hassan Joho, Mombasa’s governor, a fierce critic of the new railway, has stakes in two container-storage depots in the city, which the railway could undermine. By moving freight straight to Nairobi, “you’re killing the economy down here,” says Mr Joho’s spokesman.
A bigger issue than cartels in Mombasa ought to be economics. Even if traffic increases, the line will probably not make enough money to repay its debts. In 2013 the World Bank said that a new railway would be feasible only if it were able to move at least 20m tonnes of cargo a year, just about everything that goes through the port. At best, the new line will transport half of that. Some fear that it may not make enough to cover its running costs. If the authorities then skimp on maintenance, the railway could deteriorate quickly.
Before the new line Kenya already had a functional railway—the old British one. In the 1980s it moved about 5m tonnes of cargo a year. It could have been refurbished for perhaps a quarter of the cost of building a new one. But that would not have come with a big Chinese loan or the cash that was splashed out on subcontracts and the land purchases needed for the new line. Some cynics in Nairobi say that building the railway was a way to get a loan, rather than the other way round.
This article appeared in the Middle East and Africa section of the print edition under the headline "Kenya’s white elephant"
Did Kenya get a loan to build a railway, or vice versa?
Did Kenya get a loan to build a railway, or vice versa?
The Chinese-backed Nairobi-to-Mombasa line may never make money
Print edition | Middle East and Africa
Mar 22nd 2018| MOMBASA
WHEN Kenya launched its new railway last year, connecting the coastal city of Mombasa to the capital, Nairobi, passenger tickets sold out. Travelling between the country’s two biggest cities overland had meant crowding into a bus for 12 hours, or riding the old British-built railway, which might have taken 24 hours. The new line, run by Chinese engineers who wander up and down the carriages, has cut the journey to between four and six hours, depending on the number of stops. The seats are comfortable and, at just 700 shillings (about $7), affordable. Lucky passengers see elephants along the way.
Shuttling passengers, however, is not what the new line was built for. When Kenya borrowed $3.2bn from China for the railway in 2014, the aim was to move freight efficiently between the capital and the port at Mombasa, 484km (301 miles) apart. Unlike the passenger service, the cargo one has been a disaster. The second train out of Mombasa arrived a day late, because it didn’t have enough goods to leave the port. Passengers may find the biggest elephant on their journey is the white one they are riding.
In theory the line should move about 40% of the freight coming inland from Mombasa. The cargo is loaded straight from ships onto trains, which take it to a depot near Nairobi. There it is processed by customs officials. The goal is to relieve congestion on the roads and lower transport costs. One day, it is hoped, the railway will connect all of east Africa. For now, officials would settle for enough revenue to cover the running costs and repay the loans.
Get our daily newsletter
Upgrade your inbox and get our Daily Dispatch and Editor's Picks.
But getting importers to use it is proving harder than expected. In its first month the line moved just 1,600 containers out of roughly 80,000 processed in Mombasa. Though the trains go faster than lorries, the line is far less efficient at moving cargo, says William Ojonyo of Keynote Logistics, a Nairobi-based cargo-clearing firm. There have been delays in loading trains. Customs processing at the inland depot is less reliable than in Mombasa. “We are more comfortable dealing with the devil we know, the container on a truck,” he says.
Fees were cut after the first slow month, but traffic did not improve much. On March 1st James Macharia, the transport secretary, sacked 14 out of 16 heads of department at the Kenyan Port Authority, alleging that “cartels” had been obstructing the new railway. Cargo that is not directed to a specific clearing depot in Mombasa has been ordered onto the railway automatically, regardless of its final destination. Importers have arrived in Mombasa to pick up containers, only to find that they have been sent to Nairobi.
Few in Mombasa are pleased by the idea of cargo being sent straight to the interior, bypassing the armies of agents based in the port city. Hassan Joho, Mombasa’s governor, a fierce critic of the new railway, has stakes in two container-storage depots in the city, which the railway could undermine. By moving freight straight to Nairobi, “you’re killing the economy down here,” says Mr Joho’s spokesman.
A bigger issue than cartels in Mombasa ought to be economics. Even if traffic increases, the line will probably not make enough money to repay its debts. In 2013 the World Bank said that a new railway would be feasible only if it were able to move at least 20m tonnes of cargo a year, just about everything that goes through the port. At best, the new line will transport half of that. Some fear that it may not make enough to cover its running costs. If the authorities then skimp on maintenance, the railway could deteriorate quickly.
Before the new line Kenya already had a functional railway—the old British one. In the 1980s it moved about 5m tonnes of cargo a year. It could have been refurbished for perhaps a quarter of the cost of building a new one. But that would not have come with a big Chinese loan or the cash that was splashed out on subcontracts and the land purchases needed for the new line. Some cynics in Nairobi say that building the railway was a way to get a loan, rather than the other way round.
This article appeared in the Middle East and Africa section of the print edition under the headline "Kenya’s white elephant"
Did Kenya get a loan to build a railway, or vice versa?
