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Sat, 07 Dec 2019 09:16 GMT

Kenya’s Businesses Hit by Forced Costs of New Chinese Railway

Business

7Dnews London

Tue, 03 Dec 2019 17:19 GMT

Business people in the Kenyan capital Nairobi say they are being forced to use the new Chinese-built railway connecting it to the port of Mombasa despite hidden costs making it significantly more expensive than road transport, Reuters has reported.

Although the $3.3 billion line has sliced hours off the journey, some importers said their transport costs jumped by nearly 50% when they used the railway link, due to extra fees and delays in clearing goods at the congested Nairobi train depot, where they had to hire a lorry to collect their goods.

Previously these importers brought their goods from the coast by road, but now port authorities require businesses based in Nairobi to use the new line because the Mombasa port is contracted to supply it with a minimum amount of cargo.

The new line opened in 2017, cutting the Nairobi-Mombasa journey to four hours from 12 for passengers and to eight hours from 24 for goods. A contract between China's Exim Bank, the Kenya Ports Authority (KPA) and Kenya Railways requires KPA to provide 1 million tonnes of cargo to the railway per year, rising to 6 million by 2024. KPA says rail cargo is expected to hit 5 million tonnes this year, up 20% from last year.

Kenya owes Exim Bank 660 billion shillings ($6.45bn) for the railway and other projects, about a tenth of its total national debt. Now some Kenyan politicians are asking whether their railway was worth the cost.

Meanwhile in Mombasa, hundreds of people, residents, business owners and local leaders, hold weekly demonstrations against the mandatory movement of cargo by rail.

"This is a revolution," lawmaker Mohammed Ali said earlier this month as demonstrators carried a mock coffin marked "RIP China Colonisation" in blood-red letters.

China has sought to play down fears that its infrastructure projects overload some African countries with debt. Last year, it agreed to restructure more than $12 billion in repayments owed by Ethiopia, whose Chinese-funded railway is also struggling.

The directive requiring importers to use the railway, which the government says has now been rescinded, was supported by Beijing's envoy in Nairobi. "That is a responsible and smart move by the Kenyan government," Ambassador Wu Peng told Reuters.

Daniel Nzeki, chairman of the Container Freight Stations Association of Kenya, said port security in Mombasa was still preventing trucks from collecting some cargo.

"It’s a circus," he said.


Africa