This archive report was first published on 4 October 2019.
On October 4, 2019, the decision to make the use of standard gauge railway (SGR) for cargo transportation from Mombasa to the hinterland was reversed, a move that makes economic sense.
The directive to use SGR for cargo transportation was a bad business practice, especially in a liberalized market and a democratised social and political landscape.
The government's reasoning behind the directive was to recoup the funds spent on the new rail network and repay the exorbitant loans, but this was an obsolete thinking.
The directive precipitated major losses to long-distance road transporters, who were pushed out of business as SGR got preferential treatment, and triggered mass protests at the Coast with the transporters vowing to fight for their fair right of business at the port.
The port is the lifeline of Mombasa, employing many people and sustaining a major base of logistics companies that contribute to the region's economy.
When local entrepreneurs took to the streets to demand withdrawal of the directive, it was an economic protest threatening even the security of the region.
As a model, ferrying cargo via SGR and terminating at Syokimau in Nairobi is a major economic and logistical nightmare, amounting to double transaction, lost time and resources, rising demurrage costs, and safety concerns.
On its own, SGR is a tale of over-promise and poor delivery, making huge losses and with the latest projections, it is not coming out of the woods in the foreseeable future.
Mombasa port is strategic for the region, serving several countries in East and Central Africa, and its continued comparative advantage can only be guaranteed if its operations are liberalised and investors assured that they have an even playing field.
