EAC has a combined gross domestic product of $73.3 billion and a population of close to 127 million. It has a customs union, and a common market is due to take effect in July.
But the region has to contend with poor railway transport and most cargo going to and from the ports of Dar es Salaam in Tanzania and Kenya's Mombasa to landlocked neighbours Uganda, Burundi and Rwanda has to move by road which is more costly.
"The resolve to move to a single market will not succeed without railway connectivity. Some $20 billion is needed to modernise the existing network," Kikwete told a meeting on how to revamp the EAC's railways.
He said a robust railway would be crucial, especially once EAC merged with two other blocs -- Southern African Development Community and Common Market for Eastern and Southern Africa.
"We're going to create a huge free trade area from Alexandria to Cape Town ... But without a reliable railway network, accessing this huge market will not be possible," Kikwete said.
East Africa's railways have suffered years of mismanagement and underinvestment by government, leaving them dilapidated, inefficient and costly to run.
Kikwete said private business had a role in future investment projects on the bloc's infrastructure.
"The private sector is capable of filling the gap in financing railway development in the region. The absence of the participation of this sector is of great concern."
According to the East African Railways Master Plan seen by Reuters, upgrading the region's network could cost up to $35.5 billion, of which 75 percent would have to be financed by the public sector.
The report said traffic on the existing network -- Kenya and Uganda's Rift Valley Railways, Tanzania Railways and Tanzania-Zambia Railways had the potential to rise to up to 21 million tonnes by 2030 from 3.7 million tonnes in 2007.
"The future growth of rail traffic ... will be driven partly ... by winning new traffic from mining developments, recapture of container and fuel traffic from trucks and increased cement production," the master plan said. (Reuters)
