For those who haven't watched it (see link #4 below), the video posted by Mr. Muraya supports the idea of a rail system like SGR and discusses how past US administrations' mistake of pandering to corporate interests (like car manufacturers, road contractors and petroleum barons) led to sub-optimal infrastructural decisions which will be very costly to undo, if at all possible, and which inadvertently created a niche for other countries, like China, to establish technological leadership in Rail innovations, that is now being used for geopolitical advantage against US interests.

This is an excellent case study of how short-term oriented corporate lobbyists push for policies that sabotage governments and public interest in the long term. It also makes an interesting point: that high quality public infrastructure decisions are best driven by public interest and long term strategic planning (i.e. master-plan design instead of a haphazard "lets please the deepest pockets" approach).

The politics around our SGR makes it a tricky and sensitive topic. It is very difficult to have a sober debate on such topics because positions are so deeply entrenched and heavily reliant on deep personal convictions (rather than rational thought or evidence), as well as undisclosed political motivations, that it sometimes looks like a religious debate.

A key sign of entrenched positions is when sweeping statements are articulated as absolute and irrefutable "truths", applicable to ALL scenarios, no matter what, often with no supporting evidence or data, but even when confirming evidence or data exists, there is little if any interest in looking for, or entertaining, contradictory evidence or data. You can't establish an "absolute truth" by inductive reasoning (see links #1 & #2 below).

No wonder at the end of every debate on such hot topics, each side becomes more entrenched in their previous beliefs and absolutely no learning takes place, because in reality, it is not the issue itself being debated or defended, but the normative (right/wrong/good/bad) connotations around the issue - which significantly raises the personal stakes among participants leading to a natural defensive reaction. There are scientific explanations for this i.e. cognitive dissonance and confirmation bias - so irrational positions are not just about "tribe" or political affiliations but how our brains are fundamentally wired to operate when we are in real/perceived groups. (see link #3 below)

Even as I write this, I can't help but feel like a fly walking into the spider's den... Still, let me muster some courage and try tiptoe around the political minefield, so as to offer an intellectual perspective to those who may be receptive to a rational discussion on the topic of investment appraisal for public infrastructure.

To begin, two interesting phrases have been made by fellow listers, which I think are not as congruent as they may appear. The phrase "ahead of demand" makes more sense to me than "not really supposed to break even". The former considers or recognizes the question of demand. The latter dispenses with it completely.

I believe that SGR is an "ahead of demand" project that makes a lot of sense - just like Thika Superhighway and the various city bypass roads.

The government is just not articulating its position well because it seemingly does not have a technocratic communication team (or Think Tank) that can engage , non-politically, with opposing intellectuals to offer robust rebuttals to (real/purported) intellectual arguments, whilst educating the public on complexities and nuances around public interest projects. This failure to offer a robust articulation of net gains has a negative impact on trust - which creates room for toxic politics (propaganda).

SGR is a component of a continent-wide master-plan. If you consider developments like AfCFTA and continent-wide infrastructure projects, the SGR starts to make a lot of sense. Most arguments against it try to limit the scope of benefit to tangible aspects (direct revenue) strictly within the local context - but holistic business cases will also consider the intangible benefits (e.g. opening up the economy for MSMEs) as well as broader contexts (e.g. AfCFTA, strategic geopolitical gains etc).

So the business case for SGR (and it's payback period) largely depends the methodology and inputs used to calculate it - and this is why it is so vulnerable to politics. Sadly, Wanjiku doesn't know this - and Government has, so far, been doing a poor job of articulating it (as well as losing out of the benefits of teaching citizens how to think critically and independently - such as, lowering susceptibility of general population to geopolitical subversion. But these weaknesses can be addressed at any time by the relevant decision makers, if they wish to do so.

Is it pedantic to examine the difference between "ahead of demand" vs "not really supposed to break even"? Well, if you believe resources are unlimited, that any debt is better than smart debt, and that there are no competing alternatives where allocation of capital would yield better returns, then, yes, you will assert pedantry.

But if you take the view that resources are indeed scarce, that we are a poor country that relies on debt to provide even basic services like healthcare and/or education for our children, that we need to accumulate smart debt - not any debt, and you recognize the need to strike a balance between immediate needs (economic pain relief) and long term gains, you will see value in considering the demand-side and a culture that strives to focus on projects that have a clear and high value proposition for the country (the SGR being one of them, IMO).

Perhaps Isiolo Airport would be an example of Ali's "not really supposed to break even" project, if recent media reports are anything to go by (see link #5). I don't have data to make any definitive conclusions on it as yet so I reserve my opinion.

In order to establish a robust counter-narrative to that posed by economists and intellectuals (so that Wanjiku doesn't fall for intellectual dishonesty) the government should consider setting up "think tank" agencies or workgroups, in collaboration with entrepreneurs, TVETs and Universities, to offer intellectually robust thought leadership on national discourse; taking in the good ideas and offering robust counter-narratives to politically motivated intellectual arguments.

We need a culture of low-stakes debate, where we people can talk to each other about things/perspectives that we disagree on, with the goal of educating ourselves as curious individuals, and as a collective that desires to make the right choices for our, and our children's long term benefit.

Good evening.

Links / References:

1. The Problem of Induction

2. Deeper discussion on Inductive reasoning

3. Confirmation Bias And the Power of Disconfirming Evidence

4. CNBC Report - Why The US Has No High-Speed Rail

5. https://www.businessdailyafrica.com/corporate/shipping/Isiolo-Airport-mostly-idle-despite-Sh2-7bn-upgrade/4003122-5104960-mwawtm/index.html

Brgds,
Patrick.

Patrick A. M.










On Friday, May 10, 2019, 8:54:24 PM GMT+3, Eng. Dr. Zaipuna O. Yonah via kictanet <kictanet@lists.kictanet.or.ke> wrote:


I concur! I consider Infrastructure projects as investments AHEAD of demand, not where there is demand.

Regards
Zaipuna

On Fri, 10 May 2019, 19:16 Ali Hussein via kictanet <kictanet@lists.kictanet.or.ke wrote:
Interesting take.

Just one thing. Infrastructure projects are not really supposed to break even. This is not a Profit and Loss situation. The ramifications of great infrastructure supersede the profit motive. 

Regards

Ali Hussein

Principal

AHK & Associates

 

Tel: +254 713 601113

Twitter: @AliHKassim

Skype: abu-jomo

LinkedIn: http://ke.linkedin.com/in/alihkassim


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Any information of a personal nature expressed in this email are purely mine and do not necessarily reflect the official positions of the organizations that I work with.


On Fri, May 10, 2019 at 11:20 AM S.M. Muraya via kictanet <kictanet@lists.kictanet.or.ke> wrote:
Interesting documentary here..
Why The US Has No High-Speed Rail - https://youtu.be/Qaf6baEu0_w

Even with digital transformations, the USA is still creating (service industry jobs) which require movement of people + cargo, not just movement of money (online banking services).

MAYBE, the KE SGR will break even in 30 years (serving over 90 Mln Kenyans) if Kenyan SMEs are empowered to create more jobs all over Kenya. 
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