NAIROBI, Kenya — Kenya has announced a new funding arrangement with a consortium of Chinese companies that will allow it to revive a stalled railway extension project bordering Uganda.
According to Kenyan Finance Minister John Mbadi, the consortium will provide 40% of the $5.3 billion needed for the 475-kilometer (295-mile) Standard Gauge Railway line from Naivasha to Malaba. The companies will also operate the railway and collect toll fees for a yet-to-be-determined period to recover their investment.
Mbadi told Kenya’s National Assembly that 30% of the project funding is expected to come from the Export-Import Bank of China (China Exim Bank) through loans. The China Exim Bank had previously funded the first 590-kilometer phase of the railway but halted financing for the extension in 2019, citing the need for a new commercial viability study.
The new loan agreement with China includes a grace period until after 2029, by which time Kenya expects to have repaid over 80% of the loan for the existing railway line. The Kenyan government will finance the remaining 30% of the construction costs, primarily through a railway development levy or the securitization of that levy, Mbadi said.
China’s new ambassador to Kenya, Guo Haiyan, stated in January that China would continue to support Kenya’s development plans, particularly the railway extension to the Malaba border.
Analysts have noted the strategic importance of the railway, with one Kampala-based specialist suggesting that the mineral-rich Democratic Republic of Congo represents a significant potential benefit for China at the end of the line.
