SGR financing in limbo as Kenya looks to both China, UAE

The financing of the next phase of the Standard Gauge Railway to Malaba remains in limbo as the government appears to be struggling to find a suitable investor.

In November last year, a high-level Communist Party of China delegation visited Nairobi in what was the clearest sign that the SGR — Kenya’s biggest infrastructure since independence — could eventually reach Ugandan border.

At the time, President William Ruto spoke about “swift project implementation” and urged China to “expedite project approvals” during the talks at State House-Nairobi.

The Nairobi meeting came just a month after Ruto’s visit to Beijing where he he held talks with President Xi Jinping.

However, on January 14, during an official visit to the UAE President Ruto announced Kenya was exploring a partnership agreement with the UAE to facilitate the rail expansion.

It remains unclear if attempt to convince China to bankroll the new phase has hit a snag.

Even though the issue of the SGR featured in Ruto’s-Xi discussions in September, China did not make any commitments.

“Discussed various projects such as the Rironi-Mau Summit-Malaba dual carriageway, Galana-Kulalu Irrigation Project, Bomas International Conference Centre and the expansion of the SGR into the region,” President Ruto stated.

The SGR financing headache comes at a time when Kenya is seen to have grown cozy with the US and abandoned its Eastern allies under the Ruto presidency.

The US is however not known to fund large infrastructure facilities in Africa.

Two days after the UAE announcement,Foreign Affairs CS Musalia Mudavadi said the Chinese would finance the extension of the railway line.

Mudavadi said China Ambassador Guo Haiyan had reaffirmed her country’s commitment to finance the extension of the SGR from Naivasha to the Malaba border.

“As Kenya continues to strengthen its strategic partnership with China, this collaboration will play a significant role in driving economic growth, fostering regional development, and contributing to broader prosperity across the African continent,” Mudavadi said after the meeting.

The project requires a huge war chest and would cost approximately Sh503 billion.

The project in question is Phase 2B of the SGR from Naivasha to Kisumu, which is estimated to cost Sh380 billion.

Phase 2C, from Kisumu to Malaba is projected to require another Sh122.9 billion, totalling 503 billion.

Ruto has been actively scouting for a financier of the project since his election in 2022.

During his inaugural visit to China in October 2023, President Ruto sought funding in a joint bid with Uganda, DRC and Congo.

The bid too was unsuccessful.

In July of that year Kenya and Uganda announced they were seeking $6 billion to extend the railway in a joint bid.

Transport ministers Murkomen (currently in Interior) and Katumba Wamala ( Uganda) had agreed to jointly source for financing, either in form of loans or a public-private partnership arrangement, for the project to resume.