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Kenya-Ethiopia railway deal is historic

By Mbatau wa Ngai | July 2nd 2016
By Mbatau wa Ngai | July 2nd 2016
President Uhuru Kenyatta and First Lady Margaret Kenyatta receive Ethiopian Prime Minister Hailemariam Desalegn and First Lady Roman Tesfaye on arrival for the State Visit offical reception at State House, Nairobi on June 23, 2016.

Kenya and Ethiopia’s decision to establish a Joint Railway Commission and a Project Co-ordination Committee, last month, to implement a bilateral agreement signed in March 2012 is as historic as it is significant.

The decision is historic because it brings together a country that was never occupied by a colonial power—Ethiopia—and another that had to wage a bloody war of liberation before gaining independence. It is worth noting that although the colonial power sought to knit together the economies of Kenya, Uganda and Tanzania, the latter two were never colonised although they were administered by Great Britain as a protectorate and a trustee territory respectively.

Their walk to freedom was equally different. Although the three economies have converged in some respects, the centrifugal forces tearing them apart have gained ground in recent days. Uganda’s decision earlier this year to tear up its agreement to build a joint oil pipeline with Kenya to take their crude oil to Lamu port which is under construction should be viewed as its way of ensuring the latter’s quest to become a regional economic hub.

This proposition is bolstered by the realisation that Uganda has until now stalled the construction of its Standard Gauge Railway (SGR) which, according to the joint agreement signed with Kenya, Rwanda and Southern Sudan, would have connected with the line from Mombasa through Malaba.

There are now increasing doubts that Uganda will build this railway line any time soon. Analysts opine that it is only a matter of time before Kampala announces that it will join its railway line to the proposed Tanzanian one as Rwanda has already done.

But contrary to the political and economic forces bent on denying Kenya its historic destiny as a major continental player, the recent agreement signed between President Uhuru Kenyatta and Prime Minister Hailemariam Desalegn have the potential to put Nairobi back on the saddle.

It may be worth noting that the on-going construction of joint roads connecting Kenya to Ethiopia that will allow the latter to use Mombasa Port even before the Lamu one is complete will give Kenyan business people a market of more than 100 million people who will need ever increasing amounts of Kenyan goods as they put up their own industries. This market is bigger than that of Uganda, Tanzania and Rwanda combined.

One of the first businesses that are expected to take advantage of the warming of relations between Kenya and Ethiopia is the banking sector. It is interesting to note that Ethiopia had appreciated the important role the financial sector can play in its economic development by relaxing the regulations governing the setting up of foreign banks in the country.

The collaboration agreement between the two countries’ co-operatives movement would seem to give the Co-operative Bank of Kenya a leg up on its competitors and analysts would not be surprised if it the first one to open for business in Addis Ababa.

The setting up of Kenyan banks in Addis Ababa would help exporters of local goods with the challenge shifting to the manufacturers to ensure that their products compete head-to-head against those imported from Asia, particularly China.

Mid-night oil

The hope is that the Government and the private sector will burn the mid-night oil in search of ways in which the two players can help one another to see that goods shipped from thousands of miles away do not price Kenyan products out of the new market as they seem to be doing in the East African region.

This is not the time for either player to leave the responsibility of finding and maintaining new markets to the other but time to work together. The fact that there are several Cabinet and principal secretaries drawn from the private sector should help the drafting and the implementation of the necessary strategies. The existing regional markets of Tanzania, Uganda, Rwanda, South Sudan and the Democratic Republic of Congo (DRC) should also be maintained and expanded.

The apparent laissez-faire attitude displayed by government officials except in matters to do with taxation should be consigned to the dust heap of history as no country has ever industrialised—anywhere-- without active state support.

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