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Negative effects of SGR on the Kenyan economy

Some of the major negative effects of the SGR on the Kenyan economy.

Updated

Train Nairobi terminus.
A train at the Nairobi terminus on May 29, 2017. PHOTO | COURTESY

The Kenya Standard Gauge Railway (SGR), billed as the biggest transport infrastructure project in the country’s history, seeks to provide inexpensive and efficient mobility of cargo and passengers.

A flagship project of the Kenya Vision 2030, the SGR extends from the port of Mombasa at the Indian Ocean to Malaba town at the Kenya-Uganda boarder.

The initial phase of the project running from Mombasa to Nairobi was completed in 2017 and is operational with 14 freight and 4 passenger trains while the second phase – Nairobi-Naivasha SGR – is currently under construction.

Despite the fact that the railway is a worthwhile project expected to bring in numerous socio-economic benefits and grow the country’s GDP by 1.5%, it is a two faced sword with demerits.

Here are the negative effects of the SGR on the Kenyan economy:

1.) Increased debt

Kenya’s public debt continues to burgeon and is now considered to be on the blink of unsustainable levels at 60% of the GDP.

So bad is the situation that the IMF has placed the country on its debt-distress watch list.

To salvage the situation, the government has rolled out measures to boost revenue collection for loan repayment such as introduction of VAT on zero rated items – raising the cost of living.

RELATED: 7 Benefits of the Mombasa-Nairobi standard gauge railway

While the SGR is set to be a key catalyst for economic growth, it is funded with debt at a cost of Sh1.023 trillion, without interest, making it the largest single contributor to the ballooned debt and its negative effects.

2.) Market disruption

With reduced travel time and costs, coupled with safer travelling conditions, the SGR is set to become the preferred mode of transport for passengers and cargo owners hence taking a huge percentage of them off the roads.

Unfortunately, these positive aspects of the project are set to occasion diminished business and loss of income for truck and bus owners and job loss for drivers, turn boys and truck loaders.

3.) Collapse of towns

As SGR edges out trucks in long distance cargo transport, towns and market centers heavily reliant on trucks for business opportunities will be in danger of economic downfall as establishments such as hotels, bars, lodgings and garages collapse due to lack of customers.

With their ruin, loss of livelihood for shop owners, mechanics, oil recyclers, and waiters will be imminent forcing them to migrate or change profession – which is costly and time consuming.

4.) Danger to environment

Pollution from dust, exhaust emissions, waste materials, oil spillage, noise and vibrations from equipment and locomotives is bound to occur during construction and operation of the railway.

The construction phase will also result in destruction and loss of agricultural crops, natural vegetation and water bodies.

In addition, the line poses a danger to wildlife during and after construction in places where it passes through nature reserves. So far, trains have hit several lions and buffaloes as they snake their way through the Tsavo National Park.

5.) Involuntary resettlement

Resettlement because of infrastructure development is a common phenomenon in Kenya. Although those who suffer displacement are adequately compensated, moving from one place to go start life afresh in another location can be a daunting task even with adequate compensation.

Albert Andeso holds a degree in Civil Engineering from the University of Nairobi. He has extensive experience in construction and has been involved in many roads, bridges, and buildings projects.