NAIROBI, Mar 19 – Kenya is set to restart construction of its long-delayed railway extension, reviving a project that has been stalled for over six years after Chinese funding slowed.
The extension, which halted in 2019 near Naivasha, will now be financed through securitisation of a railway development levy rather than new borrowing from Beijing. Authorities say the levy, charged at 2% on imports, is expected to generate about 41 billion shillings ($318 million) annually and could raise up to $4 billion for the project.
The railway’s first phase, a 472-kilometre line linking Mombasa to Nairobi, was completed in 2017, while a second phase extended about 120 kilometres before construction stopped short of the Ugandan border. The remaining stretch will run from Suswa to Kisumu and onward to Malaba, forming part of a regional corridor connecting landlocked neighbours.
Officials estimate the final leg will cost about $5 billion, making it Kenya’s largest infrastructure project since independence.
The restart comes amid mounting debt pressures, with Kenya spending roughly $1 billion annually servicing Chinese loans. In response, the government has turned to alternative financing models, including securitising revenue streams, after tax hikes triggered widespread protests in 2024.
Kenya also renegotiated earlier Chinese loans, switching them into yuan and cutting annual debt servicing costs by about $215 million. The revised terms include lower interest rates of around 3% and extended repayment periods.
While no new Chinese loans are planned, China Road and Bridge Corporation remains involved as a contractor and is expected to invest about $500 million in the project.
The move reflects a broader shift in China-Africa financing, with Beijing increasingly favouring investment-led partnerships over large-scale lending.
