A sample of the Standard Gauge Railway. PHOTO | KEVIN ODIT | FILE
NATION MEDIA GROUP
Given its leadership in railway
building, perhaps it was not by chance that a Chinese firm was chosen to
build Kenya’s first standard gauge railway(SGR) line.
China
Road and Bridge Corporation is expected to build the Sh327 billion SGR
line and is already on site in Embakasi and Mtito Andei, which shall
house special facilities for the first phase of the project, a regional
enterprise whose end-game is a seamless line stretching to Malaba, with a
branch to Kisumu and onward to Kampala and Kigali, and most likely from
Kampala to Juba.
China’s ascendancy as an economic
powerhouse is already well documented. The country has distinguished
itself as a low-cost and efficient producer, a fact that has enabled its
firms to compete favourably on the international stage, even trumping
competitors from the West.
Today, most of the big name
Western transnationals have production units in China. Goods
manufactured in China tend to be relatively more affordable than
equivalents made in other parts of the world like the US, Europe and the
Americas.
The cost of production is eventually down to
how much one pays for a mix of several factors of production. A key
component of this mix is the cost of transport, which China has managed
to consistently keep as low as possible.
What is often
forgotten when China is celebrated as a low-cost producer is how the
country has leveraged one of the world’s most expansive and modern
railway transport networks to build and sustain competitiveness.
Over
the last 10 years, China has built over 40,000kms of railroads. When it
comes to high speed railway, China is the global leader, with 13,000
kilometres. A significant 60 per cent of mass freight transport in the
country is by rail.
In 2012, the overall figure hauled
through rail transport was 3.9 billion tonnes of freight, the highest in
the world and one billion tonnes higher than the US, which comes a
distant second. China’s rail network, which constitutes six per cent of
the world’s railroads, conveys about a quarter of the globe’s total
freight.
DEVELOPMENT OF CITIES
But
the most profound story is how the investment in a modern railway
infrastructure has spurred economic growth in a country whose growth in
gross domestic product (GDP) has topped the world in the last 10 years.
As
always happens, the introduction of high-speed railways has resulted in
the development of cities connected by the bullet trains, which have
become known as “second tier” cities. The development is for instance
credited for 59 per cent in average “market potential” of these cities.
This measure refers to an area’s access to markets for inputs and
outputs.
The improvement in transport spawned by the
railways has improved economic integration between the cities, improving
market access, expanding the labour market, and encouraging spatial
agglomeration. By creating new settlements, the trains have helped to
reduce congestion and pollution within the megacities, making them both
cost effective and catalysts for wider economic benefits.
China
has also played a major role in the development of the world’s rail
network, in what has become known as a new Chinese brand of economic
diplomacy, creating new opportunities not just in rail construction, but
equipment manufacturing as well.
Among the most
notable projects is the construction of a link between the capitals of
Hungary and Serbia, Belgrade and Budapest. Similar deals have been
signed by China to promote “bullet train” technology in Romania and
Thailand. By the end of 2010, China had signed contracts with at least
50 countries, with a total value of at least $26 billion.
In
East Africa, whose countries have decided to go the SGR way, the bullet
train may still be a way off, but the potential advantages of having a
material improvement on railway infrastructure cannot be gainsaid.
Already, consumers and producers in these countries are paying too heavy
a price for an inefficient transport system, currently estimated at 45
per cent of the cost of goods and services. This is a dismal performance
compared to global threshold of between five to 15 per cent.
A
functioning and efficient inter-city and inter-country SGR network
would not only improve the region’s competitiveness. It would also spawn
closer national and regional integration and improve spatial economic
growth along the railway track.
Besides, it would
create new jobs and engender new opportunities for citizens, just as has
happened in China and the other countries where similar projects have
been implemented.
The author works for China Road and Bridge Corporation
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