SGR Kenya in Brief: The Real Economic Footprint’s of Kenya’s Standard Gauge Railway

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Kenya’s Standard Gauge Railway (SGR) will fundamentally alter the future of the country and region’s economics. This begs the question: ‘What is the actual economic footprint-forecast of Kenya’s Standard Gauge Railway (the term ‘economic footprint’ connotes the economic impact in terms of gross value added, employment, exports and other key economic variables) in Kenya?’ SIS purview of ‘economic footprint’ scopes direct and indirect economic effects in the context of the wider relevance of rail transport to Kenya (direct positive impact on the economic, social & employment, and environmental aspects).

Analysts have been critical of the SGR-Kenya project. They’ve termed it as both expensive and corruptly coined. None of the sentiments make economic sense. Both sentiments are subjective assessments by biased quarters. A strategic Intelligence Service (SIS) Economic Intelligence expert briefly reviews the importance of the Kenyan Standard Gauge Railway (SGR) project from an economic and geopolitical perspective. Kenya is not seeking to assert hegemony over its regional counterparts rather; President Kenyatta’s economic strategy is about exploiting the robust economy and infrastructure to spur growth in Kenya and the East Africa region.  

Without Kenya’s infrastructure and massive consumer market, many of the infrastructure and energy projects being considered in the region would be neither economical nor feasible (synthesis and symbiosis). This is what is attracting the global eye on Kenya’s SGR. Even the most radical of socioeconomic transformations must be resisted and criticized. A Critical analysis of the importance of railway transport sheds light on magnitude of socioeconomic impact the Kenya SGR project will most certainly have. The importance is reflected not only in infrastructure numbers and freight volumes besides public transport but also in a long-term economic outlook.  

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The Direct Economic Impact’s of the Kenyan SGR

Direct effects include job creation/employment resulting directly from the construction and maintenance of the SGR-Line and from transport of passengers and freight.  The ruling coalition’s (Jubilee Party) economic ambitions could hinge on the President Kenyatta’s ability to address the country’s economic and structural problems through increased employment opportunities. The SGR provides a robust foundation for job creation, the foremost benefit of the behemoth project to the country.

The Indirect Impacts of the SGR in Kenya

Kenya’s President Efforts to stimulate economic growth have largely been undone by instability in the local economy, specifically shocks resulting from unstable political environment. The SGR provides ground for burgeoning upstream business. Upstream business networks burgeoning will be factored by the supply relations with SGR operations such as maintenance of the line and the locomotives provides. In addition, the jobs and value added through railway infrastructure investments (hotels, accounting, real-estate, roads, engineering, consulting etc) generates more ‘indirect effects’. We expect towns to grow along the SGR-Line, with them will come housing and many other forms of indirect benefits.

Induced Effects of SGR Kenya

Also known as ‘income effects’ reflect the behemoth job creation and value added created as a result of spending by those already employed directly or indirectly by the railway transport system. Companies will most likely setup shop near or along the line to cut costs of transport thus must employ. Hotels along the SGR line will procure goods and services from the locals besides employ from the same environment.

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Wider Effects of the Kenyan SGR Line

Wider effects of the SGR will be felt across the region. In fact wider effects cover broader economic outcomes linked to rail transport activities and infrastructure. These include labor and product market effects caused by lower transport times and/or costs, as well as agglomeration effects (spatial concentration effects) e.g. local business development, local real estate’s markets.

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Kenya is the most powerful exporter and importer in the East African region, thus provides a much needed regional business environment that factors growth of opportunities for trade. It must exploit its robust and resilient economy and growing infrastructure to improve this dominance as a leader in regional business. Kenya has developed financial systems, open and robust markets, and already significantly ahead besides a massive economic growth buoyed by prospects of low power costs, commodities, and crude sales in the short and long-term. The SGR is both value addition and a direct economic driver.

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