Transportation and Infrastrucutre development in Eastern africa Transportation and Infrastrucutre development in Eastern africa

Literature Review
Business Communication
Johns Hopkins University
Professor Crain

Mohammad Alam
Malam6@gmail.com

The Perfect Chalk factory LTD is a private limited company (LTD), located in Kigali, Rwanda. Currently in 83% of the inhabitants of Rwanda are without electricity, making traditional forms of teaching, like chalk and chalk board, the main form of learning for schools, and universities. The goal of founder and CEO, of Perfect Chalk, Jean Bosco Mugabe is to be able to provide affordable, high quality and locally made chalk to school in the greater Rwanda region. Jeans’ vision is to expand his business to the outer limits of Rwanda, and possibly into other parts of Africa. However, The Perfect Chalk Factory is currently suffering from limited growth opportunities due to the inability to efficiently transport products outside of a certain radius of operation. The reason for this limitation is the quality of vehicles available to the company, high transportation costs and the condition of the roads outside of the city. The question that is being presented is whether there are better forms of product transportation available to the Perfect Chalk Factory, or are they forced to limit the reach of their business to their current area of operation.
Lowering the Cost of Transportation of Eastern Africa Teravaninthorn, and Raballand (2008) did a review of the main international corridors of Africa where they measured the costs, and the problems associated with the trucking industries of each region. The study was carried out in three phases. Phase one consisted of distributing a trucking survey, in which the researchers were hoping to understand the basic operations of trucking services. Phase two followed up on the survey via a field visit in which the researchers could validate their preliminary findings. Phase three quantitatively combined the information collected from the survey and field visit. Policy recommendations were reviewed and designed around each of the sectors established. This study will focus on the eastern sector (Where Rwanda is located). According to the researchers Rwanda doesn’t experience the effects of high variable costs in terms of transportation that most of Africa faces due to regulation of the transportation industry by cartels (Teravaninthorn, and Raballand, 2008). Instead, “In East Africa, the most effective measures would be improving the conditions of the corridor roads and lowering the fuel prices” (Teravaninthorn, and Raballand, 2008, p.9).
Improving the in country Road networks According to Abuhmaoud, Rahmat, and Ismail (2011), “the geological nature of Africa is yet another concern. The hills, valleys, loose soil, rainfall, etc., contribute to the improper road networking, especially in the interurban areas” (Abuhmaoud, Rahmat, and Ismail, 2011, p.54).
A study done by the USAID revealed that “The road network in East Africa is mostly earth or gravel” (Anyango, 1997, p.13). The World Banks’ Abuhmaoud, Rahmat, and Ismail (2011) showed how Eastern Africa was seriously lacking in term of paved roads. Their study outlined how Southern Africa had more than 30% of their roads paved, while Central and Eastern Africa had on average only 10% paved roadways. Teravaninthorn, and Raballand (2008) contributed to the discussion on Eastern Africa’s poor infrastructure by detailing the negative implication on vehicles of poor road conditions. They claim roads in poor conditions effect transportation in 5 ways. The first being that they reduce the fuel efficiency of the vehicle. The second is that roads in poor conditions end up damaging the vehicle, leading to high maintenance and high operating costs. Third is how unpaved roads reduce the life of the vehicles tires. Fourth they lower transportation efficiency (lower speeds). And finally they reduce the life of the truck (Teravaninthorn, and Raballand, 2008, p.79). For the reasons stated above, these researchers feel that infrastructure improvement funded on by external investors is a viable option that African policy makers should consider. Teravaninthorn, and Raballand (2008), believe that global policy makers should view this problem in a global context, since international investors such as China and India are interested in trade and investment in Africa (Teravaninthorn, and Raballand,2008, p.59). Njoh (2000), in his research, describes how three types of roads should be created. "namely the commuter route, farm-to-market roads, and truck roads—are necessary to meet the different socioeconomic needs of rural residents. The com- muter route is necessary to facilitate daily traffic to and from places of gainful employment, whereas farm-to-market roads are necessary to permit access to district markets, thereby eliminating the possibility of monopolies or monopsonies emerging. Truck roads are rationalized on the basis that they function as a link between functional areas, thereby bridging the gap between such areas and necessary goods and services” (Njoh,2000, p.294). The positive effects of improved infrastructure include the creation of labor in Africa, and an improved economy via international investment and more efficient trade (Perfect Chalk Factory’s major concern).
Freight Transportation One of the forms of transportation that isn’t available to Rwanda is direct freight transportation. Anyango (1996), conducted a cost analysis of the various forms of transportation, and created columns for the additions of certain forms of transportation to regions who lack it (e.g., Rwanda and freight transportation). The study revealed that a straight shot using freight transportation has the highest costs associated, but the ability to transport higher amounts of product provided substantial benefits, especially when transporting outside of the country. However,” Kigoma rail/lake ferry connection are the most cost effective routes to Burundi and Rwanda” (Anyango, 1997, p112). This route would entail the transportation of goods vie the ferry to the Kigoma port, in Tanzania, where it would be then transferred over to a railway that would transport the products out of country. This method may yield an estimated transit cost equivalent of $36 per ton (Anyango,1997, p.87). The insights provided by these studies show that The Perfect Chalk Factory maybe limited in its transportation options until Africa’s policy makers make a unified push towards developing the nations infrastructure. Ajakaiye, and Ncube state that “…Africa has the highest cost of doing business in the world with cost of infrastructure services making up a disproportionately large part of production and trade costs” (Ajakaiye, and Ncube, 2010, p. i5). For these reasons The Perfect Chalk Factory should look to utilize the trade routes through Kigoma, Tanzania in the south, while perhaps investing in better trucks to transport along the Northern Corridors. While this may allow some expansion, the company will more than likely incur higher production and transportation costs that could cause the business to suffer in the short run, until the countries main infrastructure problem is addressed.

References
Abuhamoud, M., Rahmat, R., & Ismail, A. (2011). Transportation and its Concerns in Africa: A Review. The Social Sciences, 51-63. Retrieved October 4, 2015, from http://docsdrive.com/pdfs/medwelljournals/sscience/2011/51-63.pdf
Ajakaiye, O., & Ncube, M. (2010). Infrastructure and Economic Development in Africa: An Overview. Journal of African Economies, I3-I12. Retrieved October 4, 2015, from http://eds.a.ebscohost.com.proxy1.library.jhu.edu/ehost/
Anyango, G. (1996). Comparative Transportation Costs Analysis in East Africa. Regional Trade Agenda Series, V-141. Retrieved October 2, 2015, from http://pdf.usaid.gov/pdf_docs/pnace655.pdf
Njoh, A. (2000). Transportation Infrastructure and Economic Development in Sub-Saharan Africa. Public Works Management & Policy, 286-296. Retrieved October 4, 2015, from http://pwm.sagepub.com.proxy1.library.jhu.edu/content/4/4/286
Teravaninthorn, S., & Raballand, G. (2008). Transport Prices and Costs in Africa. Directions in Development, Xi-139. Retrieved October 2, 2015, from https://books.google.com/books