Transport: East Africa’s rail to the rescue

ethiopiaraillink710vincentfournierGovernments are betting big on new railway and port projects to boost the regional market’s competitiveness with Asia.
After years of neglect, East Africa’s logistics networks are starting to see the benefits of sustained investment from public bodies and private companies.
Ethiopia, which lost its access to the sea with the independence of Eritrea in 1991, relies on Djibouti’s port as its main access point.
The total throughput of Mombasa port is estimated to be around 26m tonnes per annum (mtpa) by 2017
Long lines of trucks stream out of Djibouti’s Doraleh Container Terminal, headed south along the crowded highway leading to Dire Dawa and the Ethiopian capital, Addis Ababa.
But this congestion should end when Ethiopia finishes its long-awaited rail links between the capital, the port to the north and various key economic zones in the country, including the new sugar plantations and refineries in the Awash Valley.
Given that inter- national transport costs can hit $4,000 per container, this should help move Ethiopia closer to its goal of offering an alternative to the manufacturing hubs of Asia.
Tracks on track
“By October 2015, a considerable portion of the Addis Ababa- Djibouti project will be finished,” Getachew Betru, chief executive of the Ethiopian Railway Corporation told reporters in January, adding that the first trains will run in early 2016.
With $1.6bn in upfront financing from the Export-Import Bank of China and sections built by China Railway Engineering Corporation and China Civil Engineering Construction Corporation, the $4bn project will connect Ethiopia’s inexpensive workforce to global markets.
However, exporters and importers still face challenges in clearing containers at Djibouti’s ports. Congestion can block the arrival of new containers.
“So instead of the cargo waiting at Djibouti, we can take it as soon as possible to our dry ports. And all other processes, including ours, will be finalised at [the end of this year],” Mesfin Tefera, the deputy chief executive of Ethiopian Shipping & Logistics Services Enterprise (ESLSE), tells The Africa Report.
The government is also targeting Port Sudan for imports and exports for northern Ethiopia and Berbera in Somaliland for importing coal.
“Five to ten percent of the country’s imports are planned to come through the port of Berbera, and we will be looking for proper ports for different areas of the country,” transport minister Workneh Gebeyehu told parliament in February.
“But the port of Djibouti continues to be the major one.”
The government in Addis Ababa has experimented in outsourcing the management of key parastatals without relinquishing ownership.
For instance, France Telecom managed Ethio Telecom from 2010 to 2013.
Given the scale of the ESLSE’s operations, it may well be that foreign companies see management opportunities arise.
Across the border in Kenya and Uganda, management contracts for parastatals already exist, although they had a bumpy ride in their first iterations.
The Rift Valley Railways (RVR) consortium picked up the baton in 2006 and is currently managing the colonial-era metre-gauge track system.
RVR bought 20 new General Electric locomotives in 2014, of which 13 have been delivered to Mombasa.
When added to the current rehabilitated stock, this doubles RVR’s mainline pulling power. An additional 120 wagons should arrive by November of this year.
RVR says that it welcomes the competition from Chinese-built rail networks.
China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, began work on a new standard gauge rail line in Kenya in 2014.
“The total throughput of Mombasa port is estimated to be around 26m tonnes per annum (mtpa) by 2017,” says Andreas Heinel, RVR’s chief commercial officer.
“We would be able to carry approximately 4mtpa at full capacity on the metre gauge. And the standard gauge railway would target around 10mtpa when fully up and running. That still leaves a lot of slack to be picked up.”

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