Kenya's Economy
The Standard Gauge Railway and Chinese Loans
How Kenya built a Chinese-financed railway from Mombasa to Nairobi, opened in 2017, its costs and ridership, and debates about debt and value.
The Standard Gauge Railway (SGR) connects Mombasa to Nairobi and beyond.
The project
- Built by China Road and Bridge Corporation.
- Financed largely by China Exim Bank loans.
- Cost around 3.6 billion dollars for the Mombasa-Nairobi section, one of Kenya’s largest projects.
- Opened in 2017; extended to Naivasha in 2019.
Benefits
- Faster passenger travel than buses.
- Freight capacity from Mombasa port.
Criticisms
- High cost per kilometre compared with other railways.
- Freight revenue below projections; the government ordered importers to use the SGR to boost traffic, angering truckers.
- Debt repayments strain budgets.
- It stopped short of Uganda, its original goal.
Debate
Some argue it brought needed infrastructure; others say it was too expensive for its traffic.
Lesson
Infrastructure needs realistic traffic forecasts and financing terms.
The forced freight
Importers were told to move containers by SGR to Naivasha instead of trucks, raising costs for some and protests from trucking firms.
Thinking big railways always pay off
The SGR's revenue fell short, straining debt repayments.
Key takeaways
- The SGR links Mombasa and Nairobi, opened in 2017.
- It cost about 3.6 billion dollars with Chinese loans.
- Freight revenue fell short of projections.
- Debt repayments strain Kenya's budget.
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