Private sector brings investment into African transport
Posted on 25 October 2005
Globalization is facilitated by efficient transport and communications. Which is why this appears to be such good news: the "Lunatic Express", the railway from Mombasa to Kampala via Nairobi is to get a $300 million investment and upgrade over the next 25 years thanks to privatization.
It is the third time the Kenya-Uganda Railways, billed the Lunatic Express by pessimists who scoffed at its conception, is changing management since it was started at the end of the 19th century. It became the East African Railways and Harbours Corporation, that was split up and assets taken by the respective governments in Uganda, Tanzania and Kenya following the collapse of the East African Community in 1977.Since 1978, Kenya Railways Corporation (KR) has been on a steady decline. Between 1978 and 2005, the KR cargo freight market share dropped from 70 per cent to under 20 per cent. Cargo haulage fell... It has also accumulated debts totaling Sh20.5 billion.
However, the new move come with painful reforms, including the retrenchment of thousands of workers. The firm has a workforce of 7,000.
The cuts in the workforce are not good news for those involved of course but it has long been said that one of the reasons Africa has not been able to take advantage of the opportunities of globalization is the horrendous state of the transport infrastructure. The company involved, Sheltam Rail Company, is via subsidiaries involved in many such projects:
The Comazar Group, who are the technical partners, bring expertise in private rail management to the consortium. Founded in 1995, it has been active in 15 African countries. The Sheltam Group of Companies, which owns Sheltam Rail, has 46 per cent shareholding in the Comazar Group.Comazar is currently is the lead investor in operating the rail systems in Cameroon, Cote d'Ivoire and Madagascar. Camrail of Cameroon was granted a 20-year concession to operate the country's national railway.
Sitarail was given a 15-year concession to operate the national railways in Cote d'Ivoire and that of Burkina Faso.
In Madagascar, Madarail got a 25-year concession deal in 2003 to operate the Northern Railway network.
Comazar is also part of a consortium that has been pre-qualified to operate railways in Senegal, Algeria, Congo, Ethiopia/Djibouti, Uganda and Tanzania.
There are those who will wonder whether this could or should be done by the public sector but my attitude is simply to welcome the extra private investment in Africa, to the great future benefit of those who will be better connected to the outside world and thus be able to gain from the riches that increased trade will provide.