Spotlighting #EU and #China in East Africa’s Railway Development

By Olawale Rasheed

The refusal of China to fund Ugandan SGR line and subsequent declining of Chinese funding by Tanzania leadership set East Africa on a new trajectory in railway development . That involves semi- isolation of China backed Kenyan SGR with the rest of the countries within the zone gravitating towards Tanzanian covergence. Now, European Union is subtly entering the scene through Uganda , providing the enablement for the soft, anti-China alternative for East African Railway development.

There is a clear movement against Chinese railway diplomacy especially in East Africa. Tanzania while not neccesarily anti-China has crafted an alternative rail agenda which has been embraced by Uganda, Rwanda and Burundi. Instead of original plan for Kenya to be the rail hub of the region under Chinese umbrella, Tanzania has surged forward with connections extending down the line to Malawi and Zambia.

As it is , a force unknown or engineered by the West has tamed Chinese rampaging spread of rail influence. Tanzania is however no friend of West too. But the leadership of the country is leading a silent revolution which comforms to or promotes western interests in the region.

A weak link all along has been Uganda. President Yuweri Museveni had openly chided the West for failing to fund railway in Africa. But his attitudes changed when the Chinese refused financing for SGR in his country. Beijing was worried that the business case was weak, hence the cold feet on SGR. Relatedly, the Kenyan SGR was also going through turbulent water ,thus there was a strong  disincentive for further financing.

Museveni was consequently forced into the embrace of the Tanzanian led alternative caucus. In that u-turn, rehabilitating the old metre guage to ease burden of transporters and business operators was a quick win. Here the European Union came in, supporting the Government of Uganda to revitalize railway transportation in Northern Uganda by providing a grant of 21.5million Euros for the rehabilitation of the Tororo-Gulu railway line. The project will reduce transport costs within northern Uganda and beyond. 

EU brought her tradition of openness and transparency plus a diplomacy of adapting to adopt the viewpoints of partners in project initiation and implementation.There is a coscious effort to instil best practice in procurement and project management. The relationship with the Uganda government on rail support was consumated in 2018 and the project is ongoing. 

Ambassador Attilio Pacifici, Head of Delegation of the EU Delegation to the  Republic of Uganda provided deep insights into how EU operated and how it sees the Uganda infrastructure agenda, from the  Tororo-Gulu railway , Gulu Logistics Hub and the greater Tanzanian rail and port corridors: 

“The Tororo-Gulu railway line used to be a pivotal economic artery along the East African Northern Corridor linking the port of Mombasa and Eastern Uganda to Northern Uganda, as well as the neighbouring countries of South Sudan and Democratic Republic of Congo.  The line has been out of service since 1993 notably due to actions of war by the Lord’s Resistance Army and the unfair competition of overloaded trucks. We are now proud to support the revitalisation of this important economic link.  

“The EU’s support to rehabilitate the Tororo-Gulu railway line is a grant amounting to more than 90 billion Uganda shillings, equivalent to EUR 21.5 million. Uganda on her side will provide 57 billion shillings (equivalent to EUR 13.1 m).  These sums will finance: • The physical rehabilitation of the line,  • The supervision of the works,  • Capacity building to the Uganda Railway Corporation, • And the compensation of the people affected by the project. 

“With this project, the EU continues to support Uganda’s economy through the promotion of a multimodal, safe and efficient transport sector. We will in particular support the efforts of Government to shift cargo from roads to more environmentally friendly – or greener- transport modes such as railways and waterways.  This project is part of the EU’s efforts to help Government develop Northern Uganda. It also complements well the EU humanitarian assistance to refugees and the support to host communities provided under the EU Emergency Trust Fund.  

“A key point to be mentioned is that this project has been designed to complement the construction of the Gulu Logistic Hub done in a partnership with the Government of Uganda and with DFID Trademark East Africa. 

“These two projects will have a major impact on the facilitation of trade by reducing import and export transportation costs, thereby contributing to regional integration and to strengthen Uganda’s competitiveness within the EAC region. The Gulu Logistic Hub, together with the railway line, will be a key import/export platform not just for Northern Uganda but also for South Sudan and Eastern DRC. 

“The project will have a spill-over impact on private sector growth and on investment promotion. It will also add value to the key value chains of Northern Uganda including agriculture products, cement, oil and gas, mining as well as industrial products in general.  Efficient logistics is indeed a key factor to successful economic diversification, growth and trade. Along with transport, logistics is an important cornerstone for businesses across all economic sectors: from producers of natural or raw materials, to goods manufacturers, processors, exporters importers, etc..  Logistics is also one of the areas through which the competitiveness of companies operating in Uganda – in particular small and medium-size enterprises– can be increased dramatically in the short-term. 

“The benefits of improving logistics services in Uganda are potentially very significant, both in terms of productivity and employment generation. Over 200,000 people are estimated to be currently employed in logistics in Uganda and this number could rise to over 500,000. The numbers can actually be much higher when considering the indirect employment resulting from sector growth.  Furthermore, by reducing the costs for products importation, the project will also have an impact on poverty reduction. For example logistic costs for rice importation represent as much as 60% of the total value. Therefore, the price of rice can be significantly reduced if transport rates are lowered. Of course this project will also help deliver humanitarian assistance more quickly, efficiently and cost-effectively to the more than 1,000,000 refugees hosted in Uganda northern regions. 

“The Government of Uganda through Uganda Railway Corporation (URC) recently took over the operation of the railways in Uganda and since then several positive developments have been noted, such as the re-opening of the Central corridor with the rehabilitation of the Port Bell line.   We are aware that the management of trains’ operations, the maintenance of the infrastructure and assets, the maintenance of the rolling stock are important challenges now facing the URC.  However, we are also aware that the URC has a plan to address them. The Business Plan for the next 5 years of operation foresees significant investments in further rehabilitation, purchase of additional rolling stock and refurbishment of existing equipment as well as investments in staffing and capacity building. It will be of paramount importance to adhere to this plan to ensure that Uganda will benefit fully of the railway sector for its economic growth. 

“Again on the private sector, there will be good space for its involvement through the National Logistic Platform which will allow to engage transporters, forwarders, traders, shippers as well as the oil companies in order to see how they can use the services and the facilities to be made available by this project and how they can help improve logistic services in the stations. The project will also offer opportunities for private sector development especially with regard to logistics operation and maintenance of the line”, the Ambassador concluded.

Few takeaways. Uganda has taken the right decision by first dwelling on revival of the northern corridor. That is a quick win. Secondly, the Ugandan Railway Corporation neglected for long will get energised and its capacity restored and enhanced.Thirdly, the pro-Tanzanian linkage is increasingly a neccesity which the Museveni administration has diplomatically accepted.

Much more importantly, it escallates the railway diplomacy warfare. As Europe is walking her way back  in the best tradition of best practice, China is studying carefully. Beijing must review her strategies. If it has worked so far, the approach is facing resistance both locally amd externally.

*Olawale Rasheed, CEO, African Railway Consult Limited and Director, African Railway Roundtable, writes from Abuja, Nigeria.

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