Kenya and Uganda Launch Ambitious Railway Extension Amid Debt Concerns
In a landmark ceremony near the Kenya-Uganda border on Saturday, Kenyan President William Ruto and Ugandan President Yoweri Museveni officially marked the next phase of the multi-billion-dollar Standard Gauge Railway (SGR) project. The extension aims to connect Kenya’s coastal city of Mombasa to Uganda, promising to transform regional trade and logistics across East Africa.
The SGR, constructed by Chinese firms between 2013 and 2019, already links Mombasa to Nairobi and Naivasha. However, China halted further funding after Kenya struggled with repayments, leaving the railway’s expansion to Uganda in limbo. Kenya now spends approximately $1 billion annually servicing Chinese debt, far exceeding the $165 million in revenue the railway generated last year.
Despite the financial strain, Kenya remains determined to complete the project, which President Ruto described as a “generation-defining” initiative. Speaking at the ceremony in Kisumu, he emphasized the railway’s potential to slash logistics costs and boost economic competitiveness in the region. “We cannot build prosperity on inefficiency,” he declared.
The next phase aims to extend the railway from Naivasha to Kisumu by June 2027, with subsequent plans to reach Malaba, a border town connecting Kenya and Uganda. Currently, cargo takes an average of 80 hours to travel from Mombasa to Malaba and over 100 hours to reach Uganda’s capital, Kampala. The railway’s expansion is expected to dramatically reduce these transit times, easing trade bottlenecks and fostering economic growth.
Uganda’s President Museveni echoed Ruto’s optimism, calling the railway a critical step toward rationalizing East Africa’s transport systems. “The current infrastructure on the Uganda side is irrational and wasteful,” he said, highlighting the inefficiencies that the new rail link aims to address.
However, concerns about the project’s financial viability persist. Kenya’s auditor general reported last year that over $260 million had been wasted on penalties and interest from delayed debt payments. Critics argue that the costly railway risks deepening Kenya’s financial woes while failing to deliver promised economic benefits.
To fund the extension, Kenya is avoiding additional loans from Chinese banks, opting instead to borrow against future cargo taxes. The government estimates the project will cost over 500 billion Kenyan shillings ($3.9 billion). Chinese firms remain involved in construction, leveraging their expertise in large-scale infrastructure projects.
The SGR is central to Kenya’s broader vision of enhancing trade connectivity across East and Central Africa. By linking landlocked nations like Uganda, Rwanda, South Sudan, and the mineral-rich Democratic Republic of Congo to the port of Mombasa, Kenya hopes to position itself as a regional trade hub.
Despite its lofty ambitions, the project serves as a cautionary tale about the risks of heavy borrowing. China, once a major lender to Kenya, has scaled back its financing in recent years, reflecting broader shifts in its lending strategy across Africa.
For now, Kenya and Uganda are banking on the railway’s long-term potential to drive economic transformation. Yet, as the project moves forward, questions about sustainability and financial prudence will remain central to the debate.
— Reported by Nexio News
