Rwanda to spend $1.3 billion on railway project

Dec 18, 2018

Rwanda is looking for a staggering $1.3 billion to finance its portion of the Isaka-Kigali Standard Gauge Railway (SGR) aimed at reducing logistics costs, boost trade and ease the movement of people.

Lowering the cost of transporting goods is critical for Rwanda in its bid to balance its trade with other countries.

“The intention is to make sure that we reduce the cost of transport and this has a direct impact on our socio-economic development, specifically in terms of trade. We all import and export and if we can make it cheaper, then more money will be available for investment in all other economic activities,” Clever Gatete, the Minister of Infrastructure, said.

Gatete met his Tanzanian counterpart, Isack Kamwelwe, in Kigali on Tuesday to discuss the available funding options for the project.

The two ministers agreed to report to the Heads of State on the status of the project for further guidance. According to Gatete, the two countries are ironing out some of the hurdles along the way.

“We are being supported by the African Development Bank (AfDB) in terms of technical capacity on how to structure the financing arrangement for the investment because this is not cheap and that is why it is taking long,” he said.

Care is being taken in the initial stages, Gatete said, so as to make sure that “once we start, we don’t stop.” Specifically, Rwanda is looking for $1.3 billion, Gatete said, to construct the 130 kilometres on its side.

Studies and consultations continue and it is hoped that by end this month, the total cost of the entire project will be known. Kamwelwe emphasised that people from the two countries must be well assured that everything will be done to ensure that the project is implemented.

“Rwandans and Tanzanians must rest assured that the two governments are doing everything to make sure that this project is implemented,” he said.

If it comes to fruition, the project will deliver Rwanda’s first ever railway line. The ministers deliberated on key implementation issues of the project agreed to continue the bilateral discussion on financing options, and develop a project roadmap incorporating the guidance of the Heads of State.

They further directed the Permanent Secretaries responsible for Transport to fast track the ratification of the Bilateral Agreement by February, 2019.

Kamwelwe said the project – which will be implemented in six phases – has actually started, in Tanzania, where the first two are underway. In Tanzania, he said, they are using internal resources for ongoing construction. “We have phase one, 300 kilometres and the progress is at 37 per cent.

Phase two is 422 kilometres from Morogoro to Makutupora,” he said.

As noted, progress of ongoing construction of SGR from Dar to Morogoro is now at 37 per cent while the Morogoro to Makutupora section is at 4.6 per cent.

Leaders had earlier set December 2018 for laying the foundation stone.

This is likely to be extended. The ministers remain optimistic it could happen but admit there are still a few things to do and now want to consult and possibly extend the timeline for laying the foundation stone “a little bit” so as to clear unfinished business.

The money involved is a lot, Gatete said, and, as such, it is important to first get to know who will actually do the construction and where the funding will come from. According to Kamwelwe, it will be important for both countries to carefully strategize on matters such as how they will recoup the money invested.

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