Business
Rail in Ethiopia riding high while Kenya is still lagging behind
Henok Assefa, managing partner of Precise Consult International in Addis Ababa, is convinced of the economic benefits of the rail network. “Part of the poverty that we have in Ethiopia is a direct consequence of the unintegrated nature of the country,” he says. “Bringing in the resources from the rural areas for processing is a problem. Part of that is transportation costs being high.”
The majority of goods entering and leaving this landlocked country travel by road to and from Djibouti. It is an expensive and time-consuming journey that, according to some manufacturers, can cost up to $4,000 per container. “For a country that is looking to grow richer by light manufacturing, where margins are very low, you need to be doing volumes and railways become a very handy instrument,” says Henok.
Ethiopia thinks ahead
As a result, the ERC’s priority is the line from Addis Ababa to the port of Djibouti. The government awarded this contract to CREC and China Civil Engineering Construction Company, and so far around 25% of the project has been completed. The government is using the first phase of construction of both the LRT and the national rail network to build capacity for domestic industries.
Contractors conduct training for local staff and the Institute of Technology has opened at Addis Ababa University specialising in engineering. The government is sending promising undergraduates to Russia, India and China to continue their education. The government hopes that the second phases of the LRT and rail network projects will be carried out entirely by Ethiopian enterprises, says Abebe.
Amid two parliamentary investigations and a court case against the contract for the standard gauge line that will link Nairobi and Mombasa, Kenya’s rail projects have been slow to develop. In November 2013, President Uhuru Kenyatta laid the first stone for the new line, which will compete with the colonial-era narrow gauge line managed by Rift Valley Railways.
