The ???st African Railways Corporation -- run jointly by Kenya, Uganda and Tanzania -- has?
The ???st African Railways Corporation -- run jointly by Kenya, Uganda and Tanzania -- has run into serious economic difficulties which have shut down some services and the railways training school in Nairobi.
The crisis arose from the Corporation's bank balance, which has been in overdraft alnce August 1973. The Corporation said in spite of money transfers from kenya, Uganda and Tanzania, its overdraft had increased because of Headquarters expenses and transfers to its overseas agents in London. The overdraft on Monday (28 January) stood at 2,085,000 kenyan pounds (2.6 million pounds sterling).
The kenya commercial Bank, the Corporation's bankers, refused to honour any more cheques, including salaries for January 1974, until the overderaft was reduced to the authorised limit of 500,000 kenyan pounds (650,000 pounds sterling).
On Wednesday (30 January) money poured into the heavily-overdrawn account, with 700,000 kenyan pounds (910,000 pounds sterling) of Corporation funds released by the kenya Central Bank, 250,000 kenyan pounds (325,000 pounds sterling) from Uganda and 100,000 kenyan pounds (130,000 pounds sterling) from Tanzania. This was still only sufficient to halve the overdraft and the Corporation faced the problem of finding another 300,000 kenyan pounds (390,000 pounds sterling) for its wage bill for January.
On Friday, the kenyan Government stepped in and decided to pay the January wages of some 4,000 workers employed on the headquarters staff of the East African Railways Corporation. Another 1,000 workers will not be paid.
The cash crisis also forced the indefinite closure of the Railway Training School in Nairobi on Wednesday (30 January). More than 1,000 students were told to "pack up and leave" because no money was available to buy food for resident students.
Tensions amongst rail workers grew, and the general secretary of the African Railways Union, Mr. John Mollo, warned that rail workers in kenya would boycott goods and trains bound for both Tanzania and Uganda from next Tuesday (5 February) unlese both countries paid more money into the headquarters account.