Tuesday, August 19, 2008

The shame of the Rift Valley Railways deal

We have complained in these pages about the bad job the IFC did as a transactional advisor on the RVR deal that put Sheltam and other partners in charge of running the Kenya-Uganda Railway.

Much of the trouble stems from Sheltam's lack of experience running a logistics business. The rail business is complex. Kenya Railways needed a big capital injection to strategize and execute a plan that would rapidly increase efficiency and make rail travel an enjoyable experience for cargo forwaders and consumers. Of course, executing such a strategy would have meant undertaking new projects that required a change of train carriers; I would be surprised if the deal was silent on getting the rail gauge right. To have a company that used to sell railway spare parts in South Africa as the lead stake-holder - its CEO running a complex railway network with no money, but hoping to bootstrap from its operations - is, in this situation, not really a good idea.

Read more from Peter Ndiangui here.