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Kenya pins rail hopes on PPP funding from China firms for belt and road project
- ‘We cannot borrow any more’ says Kenyan leader William Ruto, as he seeks to get strategically important railway back on track
- If successful, the East African country will join a growing trend on the continent for public-private partnerships with Chinese companies
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Kenya is in talks with China to get its stalled rail link back on track under a proposed public-private partnership model that would see Chinese companies source funding to build and operate the railway in a bid to recover their investment.
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Kenyan President William Ruto is seeking Chinese financing to get the strategically important project – now halted at Naivasha in the middle of the Rift Valley – extended to Malaba, on the border with Uganda.
Ruto made the request directly to his Chinese counterpart Xi Jinping during his visit to Beijing for the belt and road forum in October. The project was originally funded with a US$5 billion loan as part of China’s Belt and Road Initiative.
While the Standard Gauge Railway (SGR) is important for Uganda, Rwanda and the Democratic Republic of Congo – which all rely heavily on Kenyan ports for their imports – Kenya has no headroom to fund its completion with further loans, Ruto says.
Ballooning debt has seen Kenya’s loan repayment costs, mainly to China, skyrocket as the local currency has depreciated. The East African country is also facing a debt crisis, with Eurobond payments falling due next year.
“We cannot borrow any more,” Ruto said, after Kenya and China celebrated 60 years of diplomatic ties this month.
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