Kenya fails to secure funding for extension of flagship rail project

10th May 2019 By: John Muchira - Creamer Media Correspondent

Kenya’s flagship infrastructure project, the standard-gauge railway (SGR) project, will terminate about 120 km from the capital, Nairobi, after government failed to secure funding for an extension to Kisumu.

Hopes by Kenya to extend the project from Naivasha to the lakeside city of Kisumu were dashed after China refused to approve a $3.6-billion loan, despite high-level appeals from government officials led by President Uhuru Kenyatta during the recent Belt and Road Initiative conference, in China.

The Asian country has been the sole financier of the $4.6-billion, 607 km SGR line, which stretches from the coastal city of Mombasa to Nairobi and onwards to Naivasha.

Phase 2A, the stretch from Nairobi to Naivasha, is slated for completion in August.

“The most important investment right now is to connect the SGR line to the Naivasha metre-gauge railway (MGR) line so that, come August, there will be seamless connectivity,” says Transport Cabinet Secretary James Macharia.

Although China declined to fund Phase 2B of the SGR line to Kisumu, the Asian giant has committed $400-million for the modernisation and upgrading of the MGR line, which has been operational for more than a century and is in a deplorable condition.

Failure to secure funding for the project is a major blow to the East African nation’s efforts to become a regional gateway – the line was originally designed to run to Kampala, in Uganda, and onwards to Kigali, in Rwanda.

It was hoped that the line would be used for the transport of freight destined for not only Kenya but also Uganda, Rwanda, South Sudan and the Democratic Republic of Congo from the Port of Mombasa.

Official statistics show the Port of Mombasa has been losing business to the Port of Dar es Salaam, in Tanzania, with Uganda being the main importer through Kenya.

According to the Kenya Ports Authority, goods transiting through Kenya increased from 8.8-million tons in 2017 to 9.6-million tons in 2018, while Uganda’s import cargo increased from 6.5-million tons to 7.4-million tons.

To secure the Ugandan business, the Kenyan government has offered Uganda land in Naivasha to build an inland dry port, a move that was linked to a possible extention of the SGR line to Kampala.

With the line terminating in Naivasha, the viability of Kenya’s flagship project is now in doubt. The line has been struggling to attract business, owing to high charges.