China’s BRI: Kenya and a railroad to nowhere « Khabarhub
Friday, July 19th, 2024

China’s BRI: Kenya and a railroad to nowhere

14 October 2023  

Time taken to read : 6 Minute

  • A
  • A
  • A

In 2017, Kenya celebrated the opening of the initial segment of its Chinese-built railway with great enthusiasm, BBC reported.

However, just two years later, construction on the rail network came to a halt in the heart of the country, casting doubts on the grand vision of connecting Kenya to other landlocked East African nations, according to the report.

As a result, the project is currently falling short of the anticipated financial returns, while Kenya grapples with servicing loans amounting to approximately $4.7 billion, primarily acquired from Chinese financial institutions.

Nonetheless, it’s challenging to dismiss the Standard Gauge Railway (SGR) in Kenya as a failure when you witness passengers disembarking from a fully occupied train consisting of around 12 carriages at the Syokimau railway terminus in Nairobi, the capital, after their non-stop journey from Mombasa, a city 470 kilometers away on the Indian Ocean, according to the BBC report.

Pauline Echesa, a 53-year-old commuter, expressed her satisfaction, noting that the four-and-a-half-hour trip provided the bonus of observing wildlife as the railway traverses national parks.

Another commuter, aged 30, found the experience somewhat tiring due to less comfortable seats but appreciated the cost savings compared to other travel options from the coast.

Undoubtedly, the passenger segment of the railway business is thriving and continuously fully booked. However, it was never intended to single-handedly repay the loans.

The responsibility for repaying these loans falls on the cargo side of the business, which aims to transport containers arriving at Mombasa port to Uganda, Rwanda, and the Democratic Republic of Congo. However, these containers can only reach the Kenyan town of Naivasha, 120 kilometers from Nairobi, still far from the Ugandan border. Consequently, most of the freight trains return to Mombasa empty, resulting in a substantial loss of potential income.

Kenya’s Transport Cabinet Secretary, Kipchumba Murkomen, acknowledges the challenge of financing but remains optimistic about the project’s prospects.

The government is considering various funding options for completing the remaining railway sections, potentially discussed during the upcoming Belt and Road Summit in China.

Since its launch in 2013, China’s ambitious Belt and Road Initiative (BRI) has had a transformative impact on global infrastructure, especially in Africa.

Nevertheless, the initiative’s future is now the subject of debate as China reduces its funding, and African nations grapple with mounting debts that could jeopardize their economies, BBC reported.

Concerns have been raised about opaque bidding processes and the compulsory involvement of Chinese companies, leading to inflated project costs and even project cancellations.

Furthermore, China’s internal economic challenges have resulted in significantly reduced funding for BRI projects in recent years.

According to BBC report, Kenya’s SGR is among the projects affected by these changes.

However, Murkomen indicates that Kenya remains open to options for securing funding, including cooperation with private sector entities in China willing to invest their own resources, provided they can negotiate a path to recouping their finances.

One possibility might involve a grace period to allow the country to first manage the loans used to finance completed railway sections.

Admitting the need for more funding might be met with resistance from Kenyan citizens already grappling with tax increases implemented by President William Ruto’s administration.

Concerns are mounting that debt repayments are imposing significant pressure on Kenya’s economy, with China being the country’s third-largest external creditor, accounting for 19.4% of its debt as of June 2022. Critics also point to a lack of transparency in agreements between Kenya and China.

For Kenya’s railway project to achieve the envisioned benefits, it needs to extend beyond its borders, involving neighboring countries such as Uganda.

However, this aspiration seems uncertain as Uganda may opt for alternative routes, particularly one from Tanzania, which offers electrified, higher-speed rail lines at a lower cost.

Tanzania’s decision to secure funding from other sources and build its railway, bypassing China’s offer, indicates a growing trend of African countries seeking more independence in shaping their destinies.

Western countries have initiated efforts to counter China’s BRI, such as President Joe Biden’s Build Back Better World Initiative, launched in collaboration with G7 economies.

Nevertheless, there is a consensus that China continues to offer more in terms of long-term development, according to BBC.

Despite the financial challenges and uncertainties, many commuters on the Nairobi-Mombasa railway believe in the potential benefits of these projects for Kenya’s future, urging a collective effort to repay debts and extend the railway to the border and beyond.

The Kenyan government’s goal is to persuade China and its banks that the SGR railway will be a profitable endeavor once it reaches the border and extends further into neighboring territories.

(Inputs from BBC)

Publish Date : 14 October 2023 16:31 PM

Today’s national news in a nutshell

Khabarhub brings you a glimpse of major developments of the

Five new ministers sworn in Madhesh Province

KATHMANDU: Madhesh Province welcomed five new ministers on Thursday during

8th South Asian Karate Championship: Nepal clinches 8 gold medals

KATHMANDU: Nepal has emerged victorious in the 8th South Asian

Deputy Speaker Rana faces criticism over controversial letter to US Embassy

KATHMANDU: Seventeen months ago, a letter penned by Deputy Speaker

125 people killed in disaster-related incidents since June 10

KATHMANDU: A total of 125 lives have been lost in