8/18/2019 Business, economy and finance: 1st place- Billy Rwothungeyo, New Vision

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BU$INESSB U S I N E S S V I S I O N & T E N D E R SNEW VISION, Thursday, July 23, 2015  2

CHRIS HARRISONIt is often said of accountants— unfairly in my view —that they know the cost ofeverything and the value ofnothing. I wonder if the samemight more properly be said ofmarketing decision makers?The people who approvemarketing budgets are notusually marketing-literate.Typically, they are at seniormanagement level in business,responsible for businessdevelopment, finance, or

sales. PAGE 22

DRAFT TO CUT DEFICITS

The trade ministry hasprioritised 17 products tocut Ugandas trade deficit,according to the draft

 

 F EA T U R E

8/18/2019 Business, economy and finance: 1st place- Billy Rwothungeyo, New Vision

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 24 NEW VISION, Thursday, July 23, 2015 NEW VISION, ThursdBUSINESS & TENDERS

operations on Lake Victoria.This would see wagon ferries

move from Mwanza in Tanzaniato Port Bell or Jinja.

Charles Kareba, themanaging director of clearingand forwarding firm Kargo

International, argues that ifUgandans use the centralcorridor more, the resultantincreased competition betweenthe ports ofMombasa and Dares Salaam wouldbring down thecosts.

“Today, we arealmost dependenton Mombasa, andthey give us termson take-it or leave-it basis, since wehave little choice,”he says.

The central corridor, though,would not be viable for Ugandawithout the rail-marineoperation on Lake Victoria.The prospects of a rail-marineoperation between Port-Belland Mwanza currently lookglum. In fact, no train hasmoved to Port Bell in over ayear now.

Some stakeholders haveaccused the concessioner of therailway transport in Uganda

and Kenya, Rift Valley Railways(RVR), of disinterest in thecentral corridor.

When a delegation fromTanzania organised a dialoguebetween the Central CorridorTransit Transport Facilitation

 Agency and members of theUganda Shippers Council inKampala earlier this year, RukiaShamte, the chief executiveofficer of the agency, touchedon this subject.

“We would be naive to thinkthat RVR would promote ourroute, as opposed to takingtheir goods to Kenya,” she said.

While RVR has the concessionto run operations on therailways in Uganda and Kenya,Uganda Railways Corporationis still mandated to overseerailway transport in Uganda.

Charles Kateeba, managing

director of the corporation,seemed to concur with Shamte’ssentiments.

“RVR earns 100% if they movegoods from Mombasato Kampala. But ifthey moved cargofrom Kampala toDar es Salaam, theywould not earn100%, because inUganda, they earn asRVR Uganda, and inKenya, they earn asRVR Kenya, but thetotal is all RVR. So for

them (RVR) to service the Dares Salaam route, there must bean incentive,” he said.

There are also reports thatRVR’s relationship with theTanzania Railway Limited(TRL) is strained.

“Although they (RVR) signedup to a contract that theymust keep the route open,they would use every excuseto delay the implementationof this. As government andUganda Railways Corporation,we recognise this constraint,”Kateeba said.

“Initially, RVR wanted aconcession with Uganda, Kenyaand Tanzania, but then theTanzanians pulled out. I thinkthey are still angry, and they donot want anything that by wayof their operations benefits the

Tanzanians,” said a source thatdeclined to be named.

Stephen Wakasenza, the chiefconcession officer at UgandaRailways Corporation, saysthe concessioner’s answers onwhy there have been no trainsgoing to Port Bell have not beensatisfactory.

“We have asked RVR anumber of times, why theyare not using that root fully.They have not yet given us asatisfactory answer.”

RVR’s responseSammy Gachuhi, RVR’sconcession managerand director externalcommunication, dismissedsentiments that the firm isnot interested in the centralcorridor.

HAS UGANDA ABANDONED THE CENTRAL CORRIDO

“This is a completely falseperception. We view our railmarine operations as a verystrategic part of our businessbecause, first of all, it gives usand our customers alternativeswhen there are issues on the

northern corridor. Secondly, itallows us to provide servicesto our customers who aremore comfortable using theport in Dar es Salaam. Finallyit opens RVR to a whole muchbigger market right across theEast African community whichresults in increased revenue,’he said.

On why RVR has not moved alocomotive to Port Bell in over ayear, Gachuhi explained: “It isimportant to note that RVR is atransport and logistics solutionsprovider and not just a railcompany. As such,when it makes morebusiness sense tomove goods froma changeover pointlike Port Bell to ourstorage depot usinganother form oftransportation, weuse that option.”

Botched MOUFearing a repeatof election violence in the

aftermath of the 2007 Kenyanpoll, a ministerial contingentfrom Uganda rushed to Tanzaniaand signed a Memorandum ofUnderstanding with Tanzanianauthorities.

Under the deal, UgandaRailways Corporation wasto provide two 73 classlocomotives for transportationof Uganda-bound cargobetween Tabora and Mwanza;60-80 tank wagons; and 100-150 covered wagons, with firstpriority provided transportationof fuel. Also agreed was the re-

introduction of Roll-On Roll-Off operations at Mwanza andPort Bell to achieve maximumefficiency of marine operations.The Tanzania Railway Limitedagreed to provide two dedicatedlocomotives for Uganda-boundcargo operations between Dares Salaam and Tabora.

However, none of theseever materialised. Worksand transport minister JohnByabagambi was part of thatdelegation that went to Dar esSalaam and he explains whythe agreement flopped.

“We did not fulfil what wehad agreed upon because of theconcession agreement we havewith RVR. We did not have thepowers to divert the wagons inRVR’s hands to Tanzania,” heexplains.

“We did not resolve the issues

of compensation with RVR,which made it impossible for usto get locomotives and wagonson the central corridor. After theelection in Kenya, we decidedthat we need to have anotherlook at the concession.”

Works in TanzaniaMeanwhile, authorities inTanzania have embarked onprojects along the centralcorridor including revampingof the railway.

“They are rehabilitating therailway, with slighter bigger

rails which cancarry more weight.If they can completethese works, andthe manufacturingof the locomotives,then they willhave the capacity,”Kareba, who alsosits on the board ofthe Central CorridorTransit TransportFacilitation Agency

reveals.

East Africa’s second largesteconomy is also continuing withthe development of the Isakadry port to make handling ofgoods destined for Uganda andother countries simpler.

The Isaka dry port is locatedabout 982km from Dar esSalaam, along the railway lineto Mwanza. In fact, trains arerunning to Mwanza.

What does the StandardGauge Railway deal holdfor the central corridor?Uganda, alongside Kenya,Rwanda and South Sudan

In the aftermath of the 2007Kenyan election violence, therailway line that connectsUganda to the Mombasa seaport was destroyed at Kiberain Kenya and Uganda-boundgoods including vehicles, were

burnt and destroyed. As a result,Uganda planned to use theDar es Salaam Sea Port as analternative route for its exportsand imports. This followedcalls by the Ugandan tradersto the Government to developthe Tanzanian route so as toavoid occurrences like whathappened in Kenya. Almost 10years since, the Tanzanian route,also called the Central Corridor,is still minimally used. BillyRwothungeyo looks at whatis hampering the development ofthe route

has committed to undertakeconstruction of the StandardGauge Railway (SGR) toimprove transport on thenorthern corridor.

The SGR contract has beensigned. What does this holdfor Uganda’s use of the centralcorridor? Will the rail operationson the central corridor remain apriority for Uganda?

Byabagambi reckons so: “The

central corridor is Uganda’ssecurity. We should never relyonly on one route because weare land locked. We shall dowhatever it takes to keep itopen,” he vowed.

“We are committed to buildingthe Bukasa Inland Port. We havecompleted the feasibility studyfor the expansion of Port Belland Jinja piers, so that we are ina better position to handle morecontainerised cargo.”

Why we need the railwayKareba says Ugandans mustnot lose sight of the i mportanceof investing in railway transport— both on the central andnorthern corridors.

“Until we have the rail way, thetransport costs will still remainhigh. One movement by onelocomotive can deliver up to 40containers. You need 20 trucksto deliver these 40 containers.Look at the cost in terms of

Mutukula

Mwanza

Mwanza

Port Bell

Bukasa

Making the central corridor viable

Bukoba

Bukoba

Connections from Mwanza

to Kampala, Jinja and

Masaka

N or th er n C or ri do r C en tr al C or ri do r  

tyres, the drivers, the fuel, plusthe direct cost of weighbridges,roadblocks and even damage tothe roads.”

Only then, shall Ugandaand East Africa as a regionbecome competitive, Karebaargues: “These transport costs

The bulk ofUganda’s goodsare transportedthrough thenorthern corridor.The northern

corridor refers to the transportroute linking the land lockedcountries of Uganda, Rwanda,Burundi, South Sudan andeastern DR Congo with Kenya’ssea port of Mombasa.

Uganda’s alternative route tothe Indian Ocean is the centralcorridor, which emanates fromDar es Salaam in Tanzania.However, this route is heavilydisadvantaged compared to thenorthern corridor because ofdistance.

The road journey fromMombasa to Kampala is about1,200km, while the journeyfrom Kampala to Dar es Salaamis about 1,800km. As a result, about 98% of

Uganda’s transit goods gothrough Mombasa. Less than2% goes through Tanzania’sDar es Salaam.

The rail-marine optionDue to the extra 600km thatUgandan truck drivers haveto endure from Dar es Salaamvia Mutukula on the Ugandan-Tanzanian border, the mostappropriate option would beto step up the rail-marine

TrucksOne movement byone locomotivecan deliver up to40 containers. Youneed 20 trucksto deliver the 40containers

MOUUnder the deal,Uganda Railwayswas supposed toprovide two 73class locomotivesfor transportationof Uganda-boundcargo

are whauncompmarket. from Wsay for cost youMombathat disp

A UgandanAfrica Unionpeacekeeperguardingmilitaryequipmentat theKenyan portof Mombasa

 From Mombasato Kampala isabout 1,200km,while from Kampala to Dar es Salaam isabout 1,800km

“We did nothave the powersto divert wagonsin RVR’s hands toTanzania,”  Byabagambi

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