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Can Kenya keep importers happy and repay loans on China-funded railway?

  • An election promise by new president, William Ruto, to free companies from using the rail link could reduce its revenues
  • The US$4.7 billion project relies on Treasury allocations to operate its freight services between Mombasa, Nairobi and the Central Rift Valley

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Millions of passengers have travelled on Kenya’s Standard Gauge Railway, built and funded by China, but its freight operation has consistently failed to pay for itself. Photo: Reuters

Kenya’s China-built railway is facing a new challenge in the struggle to pay its way, after its US$4.7 billion price tag became a political issue in the East African country’s elections.

In September, on his first day in office, President William Ruto redirected cargo imports to unload at Mombasa, instead of the capital Nairobi or Naivasha in the Central Rift Valley.
It was the fulfilment of a campaign promise and welcomed by importers and associated businesses – who can now choose whether to use the railway or roads – but the move has dealt a huge blow to the railway, which snakes from Mombasa on the coast to Nairobi, with a controversial extension to Naivasha.
The project was funded and built by China as part of its Belt and Road Initiative, and is also operated by state-owned China Road and Bridge Corporation.

While the passenger service has been an unqualified success, moving millions of people since its launch in mid-2017, the railway’s primary purpose – freight – has consistently failed to pay for itself, relying on Treasury allocations for its operation.

Kenyan President William Ruto shortly before his swearing-in ceremony in Nairobi on September 13. Photo: AP
Kenyan President William Ruto shortly before his swearing-in ceremony in Nairobi on September 13. Photo: AP

At the same time, questions about the cost of the project – far higher than planned and soaring above other regional rail projects – turned the railway into a political issue in Kenya.

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