An efficient and well-integrated transport system is critical for business competitiveness and economic growth, especially for landlocked countries like Uganda with no direct access to seaports. To attain this goal, East African countries; Uganda, alongside her counterparts Rwanda, Kenya, and Tanzania, committed to the Standard Gauge Railway (SGR) project in 2014. While Kenya and Tanzania quickly advanced with their SGR sections on their territories, Uganda has experienced significant delays due to funding shortages, contractor issues, and compensation challenges for affected communities.
Uganda has finally set eyes on developing its SGR. The first phase involves the construction of the 272-kilometre railway from Malaba on the Kenyan border to Kampala Uganda’s capital City. Despite the SGR’s high upfront cost, estimated at USD 2.7 billion (UGX 10.8 trillion), it can be argued that the long-term consequences of its inaction would be even more costly. Currently, Uganda’s heavy reliance on road transport along the main Northern Corridor, which handles 90 percent of the country’s international cargo, leads to persistent congestion and delays in the movement of goods and services. These inefficiencies not only reduce worker productivity for passengers in transit but also increase the risks of cargo spoilage and safety incidents along the route.
For instance, the average turn- around time for cargo from Mombasa is 4 days but can even be longer to about 6 -7 days due to heavy traffic and bureaucratic documentation processes at the border points. Every extra day of delay in transit increases the transport cost by USD 200 – 250 per track. These high costs of transport in logistics and supply render Ugandan commodities uncompetitive on the local and foreign market.
Notably, evidence from African Development Bank shows that transport costs for cargo in Uganda are about 50–70 percent higher than regional averages, undermining the country’s competitiveness in both regional and global trade. Also, Uganda ranks at 116 out of the 190 countries globally in terms of Ease of Doing Business Index (EDBI) and even worse at 121st out of 190 countries globally, in the Transport and Logistics component.
High transport and logistics inevitably drive up the prices of goods and services causing inflation, which possess challenges for domestic manufacturers who strive to remain competitive while managing their production costs. For instance, the Uganda Bureau of Statistics (UBOS), shows that annual transport inflation more than doubled, rising from 2.3 percent in 2023 to 5.9 percent in 2024 due to the surge in fuel costs coupled with inefficiencies along the Northern corridor. This hugely affects foreign direct investments as potential investors prefer other regional counterparts with more efficient transport systems and present better investments returns.
Further, Uganda’s delay to implement the SGR posses a threat in form of loss of opportunity as regional trade route and connectivity. Whereas Uganda’s SGR has stalled for over a decade, Tanzania and Kenya railway currently in operation position them as more attractive trade routes for landlocked neighbors such as Burundi, Rwanda and DRC. This is likely to divert transit trade from Uganda and affect complementary business trade associated with logistics and supply in the country.
Fast-tracking the recently launched Uganda’s Standard Gauge Railway (SGR) project offers a promising solution to long-standing logistical challenges faced by the country’s private sector, particularly the high costs of cross-border transport. Once operational, the SGR could address these constraints by significantly reducing cargo turnaround times to just one day, enabling businesses to benefit from timely and reliable logistics services. Enhanced efficiency would then support uninterrupted production and sales cycles, and result into increased order volumes, improved business resilience, and enhanced survival rates for private enterprises.
Additionally, the project has the potential to promote the resilience of Uganda’s private sector against regional and global disruptions, such as the COVID-19 pandemic and political instability in neighboring Kenya. By shifting freight movement from roads to rail — a mode less vulnerable to roadblocks, political strikes, and logistical bottlenecks, the SGR will enhance stable supply chains during periods of crisis. This could also ease supply-driven inflationary pressures and foster private sector stability and contributing to sustained economic growth.
In the short run, the SGR’s construction phase will also create significant market and employment opportunities for local businesses which supply labor, materials, and services for the project. The passenger train also presents a viable and cheaper option for promoting tourism, particularly by attracting visitors from neighboring countries.
The author is a research analyst at EPRC, Makerere University
This article was first published in Weekly Observer on June 25, 2025
