By Duncan Muriri, MOMBASA, Kenya
Kenya’s new Chinese-built railway should have been a boon for business.
The $3.3 billion line sliced hours off the journey from the port city of
Mombasa to the capital, Nairobi.
But some importers said their
transport costs shot up by nearly 50% when they used the rail due to extra
fees, more time spent clearing goods at the congested Nairobi train depot and
the need to send a truck to collect the goods from there.
A Standard Gauge Railway (SGR) cargo train transferring containers leaves the port of Mombasa, Kenya |
These importers used to truck their
goods in from the coast. But port authorities now say businesses based in
Nairobi and upcountry must use the new line because the Mombasa port is contracted
to supply it with a minimum amount of cargo.
“KPA has an obligation to feed the
railway ... we were the guarantors of the rail,” said Daniel Manduku, head of
the state-run Kenya Ports Authority.
The railway’s problems are a
cautionary tale, both for developing nations loading themselves with Chinese
debt, and for China as it seeks to expand global trade links and project soft
power through its massive Belt and Road initiative.
“The vast majority of its (China’s)
overseas spending has no detectable effect on economic growth,” said Bradley
Sparks, executive director of AidData, a research facility that tracks
development finance at William and Mary university in Virginia.
China has sought to allay fears that
its infrastructure projects overload some countries with debt.
Last year, it agreed to restructure
more than $12 billion in repayments owed by Ethiopia, whose Chinese-funded
railway is also struggling.
Now some Kenyan politicians are
asking whether their railway was worth the cost.
Hundreds of people - residents,
business owners and local leaders - hold weekly demonstrations in Mombasa
against the mandatory movement of cargo by rail.
“This is a revolution,” lawmaker
Mohammed Ali said earlier this month as demonstrators carried a mock coffin
branded “RIP China Colonisation” in blood-red letters.
The contract between China’s Exim
Bank, the Kenya Ports Authority (KPA) and Kenya Railways requires KPA to
provide 1 million tonnes of cargo to the railway per year, rising to 6 million
by 2024.
KPA says rail cargo is expected to
hit 5 million tonnes this year, after more than 4 million last year.
Mombasa is projected to handle 34
million tonnes of cargo this year; most does not go by rail. Cargo destined for
Mombasa, or countries other than Kenya, can still go by road.
But Kenyan importers in and around Nairobi
say they have been forced to use the line since October last year. The port
confirmed the policy in August, but rescinded the order in October after
protests. Businesses say little has changed and they are still required to use
the more expensive railway.
Port authorities are diverting
shipments to the new railway, said a Nairobi-based customs clearance agent.
“You are made to pay for it whether you like it or not.”
Moving a 40-foot container to Nairobi
by rail costs 80,000 shillings ($800) - roughly the same as a truck, said Mercy
Ireri, chief operations officer for the Kenya Transporters Association.
But importers must also pay at least
25,000 shillings for a truck to collect the goods from the Nairobi depot and
15,000 shillings in depot fees, said three businessmen who asked not to be
named.
Manduku, also a board member of Kenya
Railways, said the higher charges are necessary to meet loan repayments.
Kenya owes Exim Bank of China 660
billion shillings for the railway and other projects, about a tenth of its
total national debt. The bank did not immediately respond to a request for
comment.
Kenya Railways did not respond to
requests for comment. The China Road and Bridge Corporation, which built the
railway and now runs it through its Kenya subsidiary Africa Star Operations,
said it did not set policy on cargo.
The exact terms of the agreement are
not public.
The new line opened in 2017. Running
alongside a dilapidated track British colonialists built a century ago, it cut
the Nairobi-Mombasa journey to four hours from 12 for passengers and to eight
hours from 24 for cargo.
China supported the directive
requiring importers to use the railway, said Wu Peng, Beijing’s ambassador in
Nairobi.
“That is a responsible and smart move by the
Kenyan government,” Wu told Reuters.
After the directive was lifted, the
embassy said the line “has revolutionized cargo and passenger movement”.
Parliament summoned the transport
minister to answer questions about the cargo policy in November but he did not
appear. Esther Koimett, principal secretary at the department of transport,
told Reuters the government was no longer making importers use rail.
But Daniel Nzeki, chairman of the
Container Freight Stations Association of Kenya, and Ireri of the Kenya
Transporters Association, said port security in Mombasa was still preventing
trucks from picking up some cargo.
“It is a circus,” Nzeki said.
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