Kenya-Uganda railway extension moves closer to border

Kenya-Uganda railway extension was back in focus on Saturday. The presidents of the two countries were preparing to meet near their shared border. Meanwhile, Kenya was moving ahead with a delayed rail project. Its financing has added heavily to the country’s debt burden.

Standard Gauge Railway, debt and revenue

The Standard Gauge Railway is the Chinese-built line at the centre of the project. It was built between 2013 and 2019. It runs from the port of Mombasa to Nairobi and then on to Naivasha. It was meant to continue into Uganda. Still, that next stretch stalled after China refused further lending. The delay was previously covered by Railway Supply.

Kenya now spends about US$1 billion a year servicing debt to China. Most of that borrowing is tied to the railway. Also, revenue was about $165 million last year, as The Jakarta Post reported. That is far below the debt bill. Passenger and cargo traffic have still grown strongly over the past year. In addition, Kenya’s auditor general issued a report last year. It found more than $260 million had been wasted. The losses came from penalties and interest on late debt payments.

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Kenya-Uganda railway extension timetable

Despite the controversy over the cost, Kenya has continued to push the line forward. On Thursday, President William Ruto broke ground on the next phase in Narok County. He said it will “catalyze regional economic growth, and firmly position Kenya as a leading transport and logistics hub in eastern and central Africa”. He also said it will create jobs and reduce road congestion.

“We have thought through this project [and]… its finance,” he insisted.

Ruto is due to meet Ugandan President Yoweri Museveni in Kisumu. At the same time, Kisumu is near the Kenya-Uganda border. Meanwhile, the line is due to reach the border area by June 2027. That is the target, if the ambitious construction schedule is to be believed. Separately, the next phase would then take it to Malaba, a town on the border.

Funding model and East and Central Africa trade corridor

Treasury estimates put the overall cost at more than 500 billion shillings ($3.9 billion). Kenya’s Business Daily reported that figure. Kenya is not taking more cash from Chinese banks for this phase. Instead, it is borrowing against future cargo taxes. It is also partnering with Chinese transport firms to build the new section.

The lending data comes from Boston University’s Chinese Loans to Africa Database. It says China lent Kenya $9.7 billion between 2000 and 2019. Around half of that amount went to the railway. Meanwhile, lending stopped from 2020 to 2023 as Kenya struggled to make repayments. At the same time, China revised its broader lending strategy toward Africa.

Kenya sees the extension as crucial to trade through eastern and central Africa. For example, Kenya hopes the route will reach several landlocked countries. Those include Uganda, Rwanda, South Sudan and the mineral-rich Democratic Republic of Congo.

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