Lack of funds delays SGR line

Wednesday February 19 2020

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Cargo at the Rwanda-Tanzania boarder customs.For the last few years, more than 70 per cent of Rwanda’s cargo has been coming through the Dar es Salaam port to Kigali, with only 30 per cent coming through Mombasa. Photo | Cyril NDEGEYA 

MOSES K. GAHIGI
By MOSES K. GAHIGI
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The lack of finances is delaying the construction of the 532km Isaka-Kigali standard gauge railway line, that will now extend to the Democratic Republic of Congo.

In July last year, Rwanda gazette a bilateral agreement it had with Tanzania, detailing the mechanism for the construction of the railway project, but works are yet to begin due to a shortfall in funds.

The Isaka-Kigali line is expected to cost up to $2.5 billion, with Tanzania paying $1.3 billion and Rwanda $1.2billion. However, Rwanda is expected to incur extra expenses to extend the line to Rubavu, near the DRC border.

Minister of Infrastructure Claver Gatete said the three countries are currently in discussion with the African Development Bank on financing the project which is expected to unlock trade across the region.

“By the end of March we shall have a clearer picture; before the money is put together and partners come together, we had to bring on board other stakeholders like DRC,” said Mr Gatete, adding that AfDB will help to mobilise resources and engage the private sector so that governments are not left to foot the bill alone.

“A number of private sector players have approached us with build-operate and transfer bids, while others are interested in buying a significant stake in the project. The discussions are ongoing, but if there is a need for public borrowing, AfDB will help us get cheap resources,” said Mr Gatete.

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He said the plan is to have the Central and Northern Corridors complementing each other. The Development Bank of Southern Africa — a Southern Africa financial institution with a $9 billion kitty, recently committed to helping finance the Isaka-Kigali SGR.

In a separate interview, the DBSA regional manager for Central and East Africa Hildabertha Kundu, said the project is in the appraisal process and that the financial institution is looking forward to approving it.

Lack of seamless and efficient connectivity is one of East Africa’s biggest setbacks, with projections showing that the movement of cargo on rail will be significantly cheaper than road, hence bringing down the cost of goods.

Reductions of the number of cargo trucks will in the end increase the life of the roads. Rwanda has identified Ndera to be the SGR terminal. On the Tanzanian side, the SGR is being constructed in sections, with works on the Dar es Salaam- Morogoro-Isaka link already underway.

A joint technical monitoring committee made up of five technocrats from each of the governments, was set up to fasttrack the project.

The line ministers are required to meet twice a year to review progress on financing, policy and regulation.

For the past few years, more than 70 per cent of Rwanda’s cargo has been coming through the Dar es Salaam port, with only 30 per cent coming through Mombasa.

Rwandan importers say on average they pay $4,990 to import a 20ft container, while the sub-Saharan average is $2,504, which significantly affects the country’s competitiveness in terms of cross-border trade, and ends up driving up commodity prices for the final consumer, something the SGR is expected to address once operational.

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