BU$INESS

NEW VISION, Thursday, July 23, 2015

21

xxxx

BUSINESS VISION & TENDERS

E
FEATUR

CHRIS HARRISON

It is often said of accountants

unfairly in my view
that they know the cost of
everything and the value of
nothing. I wonder if the same
might more properly be said of
marketing decision makers?
The people who approve
marketing budgets are not
usually marketing-literate.
Typically, they are at senior
management level in business,
responsible for business
development, nance, or
sales. PAGE 22

DRAFT TO CUT DEFICITS

The trade ministry has

prioritised 17 products to
cut Ugandas trade decit,
according to the draft
National Export Development
Strategy. The plan, which
will run from 2015/16 to
2019/20, emphasises interagency collaboration, and
import substitution. The draft
strategy aims to close the
trade decit.

PAGE 33

Trucks at the port of Mombasa. Most of Uganda's imports go through Mombasa not the port of Dar es Salaam

BILL BEFORE CABINET

The trade ministry has

submitted the Competition
and Consumer Protection Bill
to Cabinet for approval to kick
start the creation of Ugandas
rst Competition Commission.
Uganda is one of the ve
countries in the 19-member
Common Market for East and
Southern Africa trading bloc
that is yet to set up a body to
cater for consumer interests.

PAGE 32

Has Uganda abandoned

the central corridor?

Why is Mombasa preferred to Dar es Saalam?

What Uganda and Kenya Rift Valley Railways say

You requested
we've provided

DESTINATION
Entebbe - Nairobi

After listening to you, that one flight a day isn't

enough, we've decided to add a second flight.
You can now choose between two flights
daily for your convenience.

Nairobi - Entebbe

DEP
9:30
12:40
14.50
21.05

For more information:

Rwenzori Courts, Gr. Floor, Lumumba Avenue
(+256) 414 344851 /2/
Airport (+256) 772614077
sales.kampala@rwandair.com

ARR
10:40
14:10
16.20
22.15

Story on page 24&29

NOW FLYING

2X DAILY

ENTEBBE - NAIROBI

24 NEW VISION, Thursday, July 23, 2015

BUSINESS & TENDERS

NEW VISION, Thursday, July 23, 2015

29

HAS UGANDA ABANDONED THE CENTRAL CORRIDOR?

T
In the aftermath of the 2007
Kenyan election violence, the
railway line that connects
Uganda to the Mombasa sea
port was destroyed at Kibera
in Kenya and Uganda-bound
goods including vehicles, were
burnt and destroyed. As a result,
Uganda planned to use the
Dar es Salaam Sea Port as an
alternative route for its exports
and imports. This followed
calls by the Ugandan traders
to the Government to develop
the Tanzanian route so as to
avoid occurrences like what
happened in Kenya. Almost 10
years since, the Tanzanian route,
also called the Central Corridor,
is still minimally used. Billy
Rwothungeyo looks at what
is hampering the development of
the route

he
bulk
of
Ugandas
goods
are
transported
through
the
northern corridor.
The
northern
corridor refers to the transport
route linking the land locked
countries of Uganda, Rwanda,
Burundi, South Sudan and
eastern DR Congo with Kenyas
sea port of Mombasa.
Ugandas alternative route to
the Indian Ocean is the central
corridor, which emanates from
Dar es Salaam in Tanzania.
However, this route is heavily
disadvantaged compared to the
northern corridor because of
distance.
The road journey from
Mombasa to Kampala is about
1,200km, while the journey
from Kampala to Dar es Salaam
is about 1,800km.
As a result, about 98% of
Ugandas transit goods go
through Mombasa. Less than
2% goes through Tanzanias
Dar es Salaam.
The rail-marine option
Due to the extra 600km that
Ugandan truck drivers have
to endure from Dar es Salaam
via Mutukula on the UgandanTanzanian border, the most
appropriate option would be
to step up the rail-marine

VOTE TO SAVE
YOUR FAVOURITE
CONTESTANT

1
2

Type VOTE (space)

contestant number e.g
VOTE 1 and send to 8338

PEREZ

Find out who stays this Sunday only on

2
5

Repeats
Tuesday 3:05pm

DOREEN

7:00PM
Repeats
Friday 11:00pm

Repeats
TV

3
8

7:00PM

Thursday 11:30AM
Repeats Friday 11:30pm

BOMANI
RatedNextUg

(Available on MTN only)

@RatedNextUg

GRAPHIC BY BRIAN SEKAMATE

Making the central corridor viable

Port Bell

Bukasa

Mutukula

We did not
have the powers
to divert wagons
in RVRs hands to
Tanzania,

Byabagambi

Bukoba

Mwanza

Northern Corridor

Central Corridor
Connections from Mwanza
to Kampala, Jinja and
Masaka

operations on Lake Victoria.

While RVR has the concession
This would see wagon ferries to run operations on the
move from Mwanza in Tanzania railways in Uganda and Kenya,
to Port Bell or Jinja.
Uganda Railways Corporation
Charles
Kareba,
the is still mandated to oversee
managing director of clearing railway transport in Uganda.
and forwarding firm Kargo
Charles Kateeba, managing
International, argues that if director of the corporation,
Ugandans use the central seemed to concur with Shamtes
corridor more, the resultant sentiments.
increased competition between
RVR earns 100% if they move
the
ports
of
goods from Mombasa
Mombasa and Dar
to Kampala. But if
es Salaam would
they moved cargo
bring down the One movement by from Kampala to
one locomotive
costs.
Dar es Salaam, they
Today, we are can deliver up to
would
not
earn
almost dependent 40 containers. You 100%, because in
on Mombasa, and need 20 trucks
Uganda, they earn as
they give us terms to deliver the 40
RVR Uganda, and in
on take-it or leave- containers
Kenya, they earn as
it basis, since we
RVR Kenya, but the
have little choice,
total is all RVR. So for
he says.
them (RVR) to service the Dar
The central corridor, though, es Salaam route, there must be
would not be viable for Uganda an incentive, he said.
without
the
rail-marine
There are also reports that
operation on Lake Victoria. RVRs relationship with the
The prospects of a rail-marine Tanzania Railway Limited
operation between Port-Bell (TRL) is strained.
and Mwanza currently look
glum. In fact, no train has
moved to Port Bell in over a
year now.
Some stakeholders have
accused the concessioner of the
railway transport in Uganda
and Kenya, Rift Valley Railways
(RVR), of disinterest in the
central corridor.
When a delegation from
Tanzania organised a dialogue
between the Central Corridor
Transit Transport Facilitation
Agency and members of the
Uganda Shippers Council in
Kampala earlier this year, Rukia
Shamte, the chief executive
officer of the agency, touched
on this subject.
We would be naive to think
that RVR would promote our
route, as opposed to taking
their goods to Kenya, she said.

Trucks

From Mombasa
to Kampala is
about 1,200km,
while from
Kampala to
Dar es Salaam is
about 1,800km
Although they (RVR) signed
up to a contract that they
must keep the route open,
they would use every excuse
to delay the implementation
of this. As government and
Uganda Railways Corporation,
we recognise this constraint,
Kateeba said.

Initially, RVR wanted a

concession with Uganda, Kenya
and Tanzania, but then the
Tanzanians pulled out. I think
they are still angry, and they do
not want anything that by way
of their operations benefits the
Tanzanians, said a source that
declined to be named.
Stephen Wakasenza, the chief
concession officer at Uganda
Railways Corporation, says
the concessioners answers on
why there have been no trains
going to Port Bell have not been
satisfactory.
We have asked RVR a
number of times, why they
are not using that root fully.
They have not yet given us a
satisfactory answer.
RVRs response
Sammy
Gachuhi,
RVRs
concession
manager
and
director
external
communication,
dismissed
sentiments that the firm is
not interested in the central
corridor.

A Ugandan
Africa Union
peacekeeper
guarding
military
equipment
at the
Kenyan port
of Mombasa

introduction of Roll-On RollOff operations at Mwanza and

Port Bell to achieve maximum
efficiency of marine operations.
The Tanzania Railway Limited
agreed to provide two dedicated
locomotives for Uganda-bound
cargo operations between Dar
es Salaam and Tabora.
However, none of these
ever
materialised.
Works
and transport minister John
Byabagambi was part of that
delegation that went to Dar es
Salaam and he explains why
the agreement flopped.
We did not fulfil what we
had agreed upon because of the
concession agreement we have
with RVR. We did not have the
powers to divert the wagons in
RVRs hands to Tanzania, he
explains.
We did not resolve the issues
of compensation with RVR,
which made it impossible for us
to get locomotives and wagons
on the central corridor. After the
election in Kenya, we decided
that we need to have another
look at the concession.

This is a completely false

perception. We view our rail
marine operations as a very
strategic part of our business
because, first of all, it gives us
and our customers alternatives
when there are issues on the
northern corridor. Secondly, it
allows us to provide services
to our customers who are
more comfortable using the
port in Dar es Salaam. Finally
it opens RVR to a whole much
bigger market right across the
East African community which
results in increased revenue, Works in Tanzania
he said.
Meanwhile, authorities
in
On why RVR has not moved a Tanzania have embarked on
locomotive to Port Bell in over a projects along the central
year, Gachuhi explained: It is corridor including revamping
important to note that RVR is a of the railway.
transport and logistics solutions
They are rehabilitating the
provider and not just a rail railway, with slighter bigger
company. As such,
rails which can
when it makes more
carry more weight.
business sense to
If they can complete
move goods from Under the deal,
these works, and
a changeover point Uganda Railways
the manufacturing
like Port Bell to our was supposed to
of the locomotives,
storage depot using provide two 73
then
they
will
another form of class locomotives have the capacity,
transportation, we for transportation Kareba, who also
use that option.
sits on the board of
of Uganda-bound
the Central Corridor
cargo
Botched MOU
Transit Transport
Fearing a repeat
Facilitation Agency
of election violence in the reveals.
aftermath of the 2007 Kenyan
East Africas second largest
poll, a ministerial contingent economy is also continuing with
from Uganda rushed to Tanzania the development of the Isaka
and signed a Memorandum of dry port to make handling of
Understanding with Tanzanian goods destined for Uganda and
authorities.
other countries simpler.
Under the deal, Uganda
The Isaka dry port is located
Railways Corporation was about 982km from Dar es
to provide two 73 class Salaam, along the railway line
locomotives for transportation to Mwanza. In fact, trains are
of
Uganda-bound
cargo running to Mwanza.
between Tabora and Mwanza;
60-80 tank wagons; and 100- What does the Standard
150 covered wagons, with first Gauge Railway deal hold
priority provided transportation for the central corridor?
of fuel.
Uganda, alongside Kenya,
Also agreed was the re- Rwanda and South Sudan

MOU

has committed to undertake

construction of the Standard
Gauge Railway (SGR) to
improve transport on the
northern corridor.
The SGR contract has been
signed. What does this hold
for Ugandas use of the central
corridor? Will the rail operations
on the central corridor remain a
priority for Uganda?
Byabagambi reckons so: The
central corridor is Ugandas
security. We should never rely
only on one route because we
are land locked. We shall do
whatever it takes to keep it
open, he vowed.
We are committed to building
the Bukasa Inland Port. We have
completed the feasibility study
for the expansion of Port Bell
and Jinja piers, so that we are in
a better position to handle more
containerised cargo.

tyres, the drivers, the fuel, plus

the direct cost of weighbridges,
roadblocks and even damage to
the roads.
Only then, shall Uganda
and East Africa as a region
become competitive, Kareba
argues: These transport costs

are what is making the region

uncompetitive on the world
market. You bring a container
from Western Europe; let us
say for $1500, it is going to
cost you $3500 to bring it from
Mombasa to Kampala. Look at
that disparity!

Why we need the railway

Kareba says Ugandans must
not lose sight of the importance
of investing in railway transport
both on the central and
northern corridors.
Until we have the railway, the
transport costs will still remain
high. One movement by one
locomotive can deliver up to 40
containers. You need 20 trucks
to deliver these 40 containers.
Look at the cost in terms of

Change In Prime
Lending Rate
Dear Esteemed customers and the general
public, this is to inform you that due to the
prevailing market conditions, our Uganda
Shilling prime lending rate will change to
24%p.a and US Dollar prime lending rate to
12.5%p.a effective 22nd August 2015.
For more information, please contact your
branch manager or relationship manager on
0414 259652 or info@housingfinance.co.ug

Housing Finance Bank is a financial institution

regulated by Bank of Uganda.