East Africa’s railways carry less cargo than in the 1970s and their revival is crucial to boosting trade as the region deepens economic integration, the head of an African private equity firm said.
Transport prices in east Africa are among the highest in the world, World Bank data shows, with trucking between Uganda and Kenya costing more than $0.13 per ton/kilometre.
Karim Sadek, managing director of Egypt’s Citadel Capital said east Africa’s railways carry just 2 million tons of freight annually, compared to its ports, which he said handled more than 35 million tons of cargo in 2009.
“The challenge, particularly in east African markets now pushing for regional economic integration, is to get the rail system up to speed,” Karim told a transport conference in the Rwandan capital, Kigali.
“African governments have to bring in responsible private-sector investors with the capital and know-how needed to build new infrastructure and turn around existing investments.”
A subsidiary of Citadel, Ambience Ventures, is in line to take a 51 percent shareholding in Rift Valley Railways (RVR), which runs the Kenya-Uganda railway under the terms of a $250 million recapitalisation deal struck last month. Both Kenyan and Ugandan Governments demanded the funding after RVR failed to revive the track—having securing a 25-year concession in 2006—seen as vital for landlocked countries in east Africa and the Great Lakes region.
Sadek said capacity across RVR could reach 10 million tonnes per year if average speeds reach 50 kilometres per hour. (Reuters)