East Africa has initiated a new push for regional economic integration, announcing on 11 May a $3.8bn railway project financed by China’s Exim Bank that will connect the the capitals of the East African Community (EAC) trade block to the Kenyan port of Mombasa.
The Chinese bank will fund 90 percent of the project, while regional economic powerhouse Kenya will contribute the remaining funds. China has dominated infrastructure development in eastern Africa, and this project will be no exception: in addition to providing most of the financing, the principal contractor on the deal will be state-owned construction conglomerate China Communications Construction Company.
Lack of infrastructure, poor transport links and trade barriers have long plagued African economies trying to attract foreign business, improve intra-African trade and build regional markets. While the idea of political pan-African integration - which had its heyday in the 1960s - is no longer a concept embraced by the continent’s leaders, economic integration is seen as key.
“If we can build infrastructure to link up our countries by road and rail, to open up and trade amongst ourselves, then within a decade we can expand trade by $250-$300bn,” says former UN secretary general and Ghanaian national Kofi Annan.
Regional economic organizations have been the focus of integration efforts, though the degree to which this has been achieved varies widely across the blocks.
“I'd place my money on the East African Community (EAC) first, the Southern African Development Community (SADC) second, and then ECOWAS lagging a long way behind," Citigroup Africa economist David Cowan tells This Is Africa.
The proposed East African rail lines, which will break ground in October 2014 and are projected to take 42 months to complete, will create links between Kenya, South Sudan, Uganda, Rwanda and Burundi. At the same time, the transport ministers of these countries signed an agreement to develop standard gauge railway systems. The region’s existing railway lines were built on different gauges, making it difficult to link them together into a network.
Current lines are all slow, underutilized and in need of upgrades. Kenya’s main line, for example, which runs from Mombasa through Nairobi and into the interior of Uganda, is a single-track railroad built by the British colonial administration in the early 19th century. Currently, the 300-mile journey from Nairobi to Mombasa takes an average of 12 hours for passengers, and often more. Freight train journeys can take up to 36 hours.
The CCCC claims that construction will boost employment in the region, creating around 60 jobs per kilometer of track laid during construction, and boosting GDP growth. The company was debarred by the World Bank in 2011 from participating in any projects it funds until 2017 due to “fraudulent practices” uncovered during an infrastructure project in the Philippines.
Recent oil discoveries in East Africa have gained substantial international interest, and developing the infrastructure to commercialize the discoveries has been made a priority by the Kenyan and Ugandan governments. In addition to already operating oil fields in South Sudan, discoveries in Kenya and Uganda could soon be producing up to 500,000 barrels per day.
The rail project is not the first major infrastructure upgrade spearheaded by the Kenyan government. The Lamu Port South Sudan Ethiopia Transport Corridor (Lapsset), which broke ground in 2012, is a $25.5bn infrastructure project that will build a second deep water port on Kenya’s northern coast, highway systems, railway lines and an oil refinery and pipeline system running through northern Kenya to South Sudan and Ethiopia.
The CCCC is also building parts of the LAPSSET project having secured a $470m contract to build Lamu Port’s first three berths.
Lack of infrastructure, poor transport links and trade barriers have long plagued African economies trying to attract foreign business, improve intra-African trade and build regional markets. While the idea of political pan-African integration - which had its heyday in the 1960s - is no longer a concept embraced by the continent’s leaders, economic integration is seen as key.
“If we can build infrastructure to link up our countries by road and rail, to open up and trade amongst ourselves, then within a decade we can expand trade by $250-$300bn,” says former UN secretary general and Ghanaian national Kofi Annan.
“I think what is happening with the regional groups - Southern African Development Community (SADC), the EAC, the Economic Community of West African States (ECOWAS) - is a good way of beginning to organize intra-African economic cooperation.”
Regional economic organizations have been the focus of integration efforts, though the degree to which this has been achieved varies widely across the blocks.
“I'd place my money on the East African Community (EAC) first, the Southern African Development Community (SADC) second, and then ECOWAS lagging a long way behind," Citigroup Africa economist David Cowan tells This Is Africa.
The proposed East African rail lines, which will break ground in October 2014 and are projected to take 42 months to complete, will create links between Kenya, South Sudan, Uganda, Rwanda and Burundi. At the same time, the transport ministers of these countries signed an agreement to develop standard gauge railway systems. The region’s existing railway lines were built on different gauges, making it difficult to link them together into a network.
Current lines are all slow, underutilized and in need of upgrades. Kenya’s main line, for example, which runs from Mombasa through Nairobi and into the interior of Uganda, is a single-track railroad built by the British colonial administration in the early 19th century. Currently, the 300-mile journey from Nairobi to Mombasa takes an average of 12 hours for passengers, and often more. Freight train journeys can take up to 36 hours.
The CCCC claims that construction will boost employment in the region, creating around 60 jobs per kilometer of track laid during construction, and boosting GDP growth. The company was debarred by the World Bank in 2011 from participating in any projects it funds until 2017 due to “fraudulent practices” uncovered during an infrastructure project in the Philippines.
Recent oil discoveries in East Africa have gained substantial international interest, and developing the infrastructure to commercialize the discoveries has been made a priority by the Kenyan and Ugandan governments. In addition to already operating oil fields in South Sudan, discoveries in Kenya and Uganda could soon be producing up to 500,000 barrels per day.
The rail project is not the first major infrastructure upgrade spearheaded by the Kenyan government. The Lamu Port South Sudan Ethiopia Transport Corridor (Lapsset), which broke ground in 2012, is a $25.5bn infrastructure project that will build a second deep water port on Kenya’s northern coast, highway systems, railway lines and an oil refinery and pipeline system running through northern Kenya to South Sudan and Ethiopia.
The CCCC is also building parts of the LAPSSET project having secured a $470m contract to build Lamu Port’s first three berths.
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