SGR will be a boon to the economy

PHOTO: COURTESY

Economists are unanimous that infrastructure is one of the pillars that underpin a country’s growth. Indeed, the state of transport systems is one of the key factors investors take into consideration before putting their money in a country.

Most developed economies today attribute their success to massive investment in infrastructure. African countries have always been counselled that for them to attract more foreign direct investment and turn around their fortunes, they have to significantly improve the state of their transport arteries, which are mainly roads and railways.

Even for local businesses, the importance of an efficient transport system cannot be overemphasised. A poor transport infrastructure is costly to companies and the public who are consumers of products.

This is because poor road and railway networks drive up prices of commodities and general cost of business. This means the cost of living is kept high while a return on investment is not worth the effort. Such an environment is not conducive for a country’s economic takeoff.

For a country such as ours whose mainstay of the economy is agriculture, good roads and an efficient railway are particularly critical as perishable commodities must reach the market on time.

When the Jubilee administration came to office, one of its main focus was to revolutionise the transport system by revamping roads and speeding up the construction of a modern railway. This was motivated by the need to transform livelihoods.

 Poor infrastructure is a barrier to accelerated growth necessary to attain this grand objective. Construction of the Standard Gauge Railway therefore dovetails very well with Jubilee’s vision for Kenya.

The Standard Gauge Railway will stimulate the economy in diverse ways. It will be a boon to areas where it passes through, spawning new trading centres and hubs.

 Income for many Kenyans will be substantially enhanced as goods will reach the market quicker and at far lower costs than is the case currently— analysts are projecting up to 40 per cent reduction in transport¬¬ costs. More fundamentally, the railway will add 1.5 per cent to GDP, which is by no means a small figure.

It will also considerably ease congestion at the Port of Mombasa and lessen the time taken for goods to reach various destinations. It will significantly reduce wear and tear of roads savings billions of shillings in taxes. Accidents should also decrease as the number of trucks on roads decline.¬ Thus, there is absolutely no reason to cast doubts on the viability of the SGR and those doing so are either ignorant of or indifferent to our economic needs, or they are envious of our level of development aspirations.

Some say that with Uganda, Tanzania and Rwanda building their own separate railways lines, SGR will be nothing more than a white elephant.

The Economist has said as much in its latest edition. Nothing can be further from the truth. Even for our own rapidly expanding economy, without factoring in regional trade, the SGR will bring on board huge benefits.

Our country is already on the road to industrialisation and as more goods are churned out by local factories the more useful the railway will be. With the regional countries revamping their respective infrastructure, East African can only sharpen its competiveness in the continental and global commerce. Kenya stands to reap big from such developments bearing in mind it is not only the region’s economic giant, it is also doing its best to maintain that position.

We do not need to belabour the fact that Kenya is the gateway to the region; you just need to look at the number of companies setting up regional offices in Nairobi. Considering the magnitude of infrastructure projects being rolled out, Kenya will certainly solidify its stature as the leading investment destination in the region.

So any project that will foster East Africa’ ease of doing business and upscale trade volumes is a boon to Kenya and must be embraced with both hands. Something else, these regional railway lines will feed into each other as the countries will continue trading among each other with Kenya at the centre of it all. Therefore, the railway will be a catalyst, not an impediment to local and regional trade.

Economies take off, not through half-hearted measures, but bold initiatives such as the SGR. Indeed we need more not less of such projects. In the First World countries, railway transport is at the heart of commerce. Yet these countries want to throw cold water on our projects which are meant to take us to the next level of development.