Given its leadership in railway building, perhaps it was not by chance that a Chinese firm was chosen to build Kenya’s first Standard Gauge Railway line.China Road and Bridge Corporation is expected to build the Sh327 billion SGR line and is already on site in Embakasi and MtitoAndei, which shall house special facilities for the first phase of the project, a regional enterprise whose end-game is a seamless line stretching to Malaba, with a branch to Kisumu and onward to Kampala and Kigali, and most likely from Kampala to Juba.China’s ascendancy as an economic powerhouse is already well documented. The country has distinguished itself as a low-cost and efficient producer, a fact that has enabled its firms to compete favourably on the international stage, even trumping competitors from the West.Today, most of the big name Western transnationals have production units in China. Goods manufactured in China tend to be relatively more affordable than equivalents made in other parts of the world like the US, Europe and the Americas.The cost of production is eventually down to how much one pays for a mix of several factors of production. A key component of this mix is the cost of transport, which China has managed to consistently keep as low as possible.What is often forgotten when China is celebrated as a low-cost producer is how the country has leveraged one of the world’s most expansive and modern railway transport networks to build and sustain competitiveness.Over the last 10 years, China has built over 40,000 kilometres of railroads. When it comes to high speed railway, China is the global leader, with 13,000 kilometres. A significant 60 per cent of mass freight transport in the country is by rail. In 2012, the overall figure hauled through rail transport was 3.9 billion tonnes of freight, the highest in the world and one billion tonnes higher than the US, which comes a distant second. China’s rail network, which constitutes six per cent of the world’s railroads, conveys about a quarter of the globe’s total freight.
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But the most profound story is how the investment in a modern railway infrastructure has spurred economic growth in a country’s whose growth in gross domestic product (GDP) has topped the world in the last 10 years.As always happens, the introduction of high-speed railways has resulted in the development of cities connected by the bullet trains, which have become known as “second tier” cities. The development is for instance credited with for 59 per cent in average “market potential” of these cities. This measure refers to an area’s access to markets for inputs and outputs.The improvement in transport spawned by the railways has improved economic integration between the cities, improving market access, expanding the labour market, and encouraging spatial agglomeration. By creating new settlements, the trains have helped to reduce congestion and pollution within the mega cities, making them both cost effective and catalysts for wider economic benefits.In East Africa, whose countries have decided to go the SGR way, the bullet train may still be a way off, but the potential advantages of having a material improvement on railway infrastructure cannot be gainsaid.Already, consumers and producers in these countries are paying too heavy a price for an inefficient transport system, currently estimated at 45 per cent of the cost of goods and services. This is a dismal performance compared to global threshold of between five to 15 per cent.A functioning and efficient inter-city and inter-country SGR network would not only improve the region’s competitiveness. It would also spawn closer national and regional integration, improve spatial economic growth along the railway track. Besides, it would create new jobs and engender new opportunities for citizens, just as has happened in China and the other countries where similar projects have been implemented.By Julius Li
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