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The future runs on rails, Check-in Uganda

Article - August 4, 2014
With investments of $8.5 billion prioritized for a standard-gauge railway, Uganda is set to become a landlinked country rather than landlocked. The modernization plans of Entebbe International Airport will turn Uganda into the logistic hub and tourism entrance reference of the EAC
UGANDA
With an expected economic benefit of $118 billion by 2040, Uganda is transporting itself into the future via high-capacity, high-speed rail. Seeking to correct past mistakes, the country is planning to invest $8.5 billion into the construction of a standard-gauge railway (SGR) that will turn the landlocked country into a land link and allow for cheaper transport of imports and exports throughout the African continent.

“We are sitting at the eastern edge of the Democratic Republic of Congo (DRC), which has vast reserves of iron ore, gold, tin, nickel, copper, and much more,” says Charles Kateeba, Managing Director of Uganda Railways Corporation (URC). Most investors hesitate at the notion of transporting these minerals through undeveloped roadways from a country that is triple the size of France, he says. But bringing the SGR through Uganda and connecting it to the DRC could be a solution to this problem.

Additionally, plans for the SGR include connecting Uganda to oil-rich areas in western Uganda, southern Sudan, and northern Kenya, and moving through Rwanda down to Mombasa. This will ease the current cost and infrastructure burden that all-land transport incurs.

A collaboration of various regional governments, The single-gauge rail project is projected to create 50,000 jobs directly and 150,000 indirectly during construction.
This railway is not only a big step toward the future, but also a big move toward correcting past mistakes. Because of the African continent’s multiple rail gauges, long-range rail transport is difficult and expensive.

“You see, most of our railway systems were built as colonial avenues of transport,” says Mr. Kateeba. “The main objective was to transport raw materials from the interiors to the coast, and finished goods from the coast to the interiors.” Because of a miscommunication during the British construction of East African Railways (EAR), however, the continent ended up with three gauges between Cairo and Cape Town.

The history of URC is intertwined with Uganda itself. The railway was created to strengthen the British hold on the nation. It was reasoned that a reliable transport system was necessary to bring in goods and extract raw materials. Though this move was debated at the time, the British anchored both the construction of URC and the capture of Uganda on two points: the abolition of the slave trade, which made it necessary to construct transport rather than relying on human labor, and re-exportation of cash crops.

Now, Uganda is working to collaborate with different governments to boost the SGR project, which is projected to create 50,000 jobs directly and 150,000 indirectly during construction. Kenya, Uganda, Rwanda and South Sudan have signed a cooperation agreement that lays down the rules and procedures of the URC corporation; however, since Tanzania has not signed the agreement due to infrastructure concerns, the countries have adopted the term North Corridor rather than East African Community.

“we want to stimulate growth in agriculture, mineral development and processing, and create transit-oriented development”

Charles A. Kateeba,
Managing Director of the URC

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“[Aviation] is an area in which there could be minimum investment with high returns”

Dr. Wenceslaus Rama Makuza,
Managing Director of the CAA
URC views the North Corridor SGR as a special corridor development project. The railway is deliberately designed to create townships and business hubs around the most productive areas of the region. “By doing that, we want to stimulate growth in agriculture, mineral development and processing, and create transit-oriented development,” Mr. Kateeba says.

Moving from one location to another is a basic need shared by passengers, freight and information. James Byandala, Uganda’s Minister of Works and Transportation, sees a correlation between mobility and greater opportunity to develop on macro and microeconomic levels. “When transport systems are efficient, they provide economic and social opportunities and benefits that impact throughout the economy,” he says. “Mobility is a reliable indicator of development.”
Transportation and mobility are linked to a level of output, employment and income that reflects the whole economy, he adds, commenting: “In many developed countries, transportation accounts for between 6% and 12% of GDP.”

Transportation is also linked to producer, consumer, and production costs. For this reason, the importance of specific transport activities and infrastructure can thus be assessed for each sector of the economy.

Mr. Kateeba says the project’s greatest value lies in transport price reduction for Uganda’s industries and exporters. “We have a lot of minerals and agricultural produce,” he says. “However, much of this cannot be developed because of the expensive UTC.”

SGR’s completion will yield big development returns, but rail won’t meet all of Uganda’s transport needs. This is why Uganda is striving to develop its aviation sector as well, which has grown from 118,000 international passengers to 1.4 million in 2013. There are 13 domestic airports and one international airport in Uganda, but a second international airport is planned that will serve an oil refinery in Hoima. That airport will be needed by December 2015, two years before the oil refinery is constructed.

The Civil Aviation Authority (CAA) has set up a department of marketing and commercial services to encourage export of Uganda’s agriculture, livestock and fisheries. Dr. Wenceslaus Rama Makuza, Managing Director of the CAA, says, “In our plan for upgrading and expansion of the international airport, the first facility we will look into is the construction of a modern cargo center. The design is already in place with a capacity for 100,000 tons at a time.” He adds that this export potential lies in the European and Middle Eastern markets.

At the same time, 60% of air travelers are tourists globally, Dr. Makuza says. “We want to tap into that,” he adds. “It is an area in which there could be minimum investment with high returns.”

By rail or by air, Uganda is bolstering its transportation sector and looking toward the future. There are investment opportunities in all areas, Mr. Kateeba says. “Our ideal situation would be to have a railway public-private partnership (PPP) that will involve infrastructure, operations, and maintenance.”

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