By Boniface Ngahu in Blog

Jun 15, 2015

Market Talk has in the past highlighted the impact that the Standard Gauge Railway (SGR) is likely to have on road transport. Apart from reducing the amount of cargo transported by road on the Mombasa-Nairobi highway, there is a likelihood that road transport hubs like Salama are likely to have reduced economic activity. This is similar to what happened when the steam engine was replaced by a diesel engine in powering rail transport.

The book titled Death by Dieselization highlights how many rail transport hubs died since the new train did not have the many stops the steam one had. Based on the budget read by Treasury secretary Henry Rotich, you can tell the impact of the project on national infrastructure spending. This is a good investment that is likely to pay back in years to come. It also compensates for the many years rail transport in Kenya has suffered from under-investment. Recently I was at the Tsavo Super Bridge where the construction of SGR is at an advanced stage. There was a lot of activity going on as President Uhuru Kenyatta was set to visit the project the same day. We were traveling by car when we noticed the section; we stopped to have a look.

There were many advertisements under the bridge demonstrating how the project will change the way we transport people and goods. One stated that it would take less than four hours to travel from Nairobi to Mombasa by rail. What impressed most was the scenery created such as the super bridge. I figured that the SGR will also create some great landscape sites that will attract visitors from different parts of the region. I also noticed some heritage from the construction of the Kenya Uganda railway a century ago. Just next to the super bridge there is a hotel by the name Man Eaters Lodge. It reminded me of the many railway construction workers who were mauled by lions that had developed a special liking for human meat.

As we enjoyed the scenery from the top of the bridge, old memories of the Kenya Railways first-class travel flooded back. Kenya Railways had some of the best inflight entertainment and refreshment. The cafe had some of the best cutlery you could find in any five -star establishment at the time. I guess that the old times will be replaced by even more sophisticated services. All the same, it seemed that the new railway needs to pick some lessons from the old one, especially about how not to mess a big corporation. Good management practices will determine whether the new railway will live up to its promise.

Apart from the tourism opportunities that the SGR scenes will provide, it is important for business people in the transport hubs to keep watching out for new opportunities in those areas. They will need to make any changes to their businesses to address emerging challenges and opportunities. Some of the early opportunities have been brought about by resettlement cash and construction activities. Many years ago, I operated a phone bureau that offered telephony services. We would charge a premium for people to call using our services.

When the mobile phones reached critical mass in Kenya, voice revenue reduced drastically but revenue airtime and sim card sales provided new revenue streams. Mobile phone sets and accessories also emerged as a new business line. The construction of a new road meant that the premises had to be demolished. Always have in mind that trend is your friend and look for the diamond in the rough. In summary, apart from the tourism opportunities that the SGR scenes will provide, it is important for business people in the transport hubs to keep watching out for new opportunities in those areas.