East Africa's joint mega railway project at the crossroads

East Africa's ambitious standard gauge railway line linking the port of Mombasa to the landlocked countries in the region has fallen behind schedule largely due to financing constraints, doubts over its economic viability, the cost of construction and indecisiveness on the part of some partner states to build their respective sections.

The planned 1,500km-long railway from Mombasa to Kigali was expected to be completed by 2018, but only Kenya has completed the initial phase of the project from Mombasa to Nairobi.

Although Rwanda is part of this grand regional rail network, it has focused more on the Isaka-Kigali railway project seeking to link the capital Kigali with Tanzania.

The 571-kilometre railway, whose construction was planned to start last in December, is expected to improve trade between the two countries.

The project, to cost $2.5 billion — of which Tanzania will pay $1.3 billion and Rwanda $1.2 billion — is estimated to be cheaper by close to $200 million compared with if Rwanda had opted for the Kenyan route, connecting through Uganda.

The Ugandan section of the standard gauge railway was launched in October 2014 and although the country has completed the feasibility and designs for the 273km-long line between Malaba in Kenya and Kampala, the construction is yet to begin, with Kampala attributing the delay to lack of financing and Kenya’s failure to complete its part of the project by extending the line to Malaba.

The Ugandan section is estimated to cost $2.3 billion.

Rwanda, on the other hand, has completed the preliminary engineering design of the new line from Kampala to Kigali, via Mirama Hills, and is seeking financing. It is understood that Kigali has been in talks with China’s Export-Import Bank for a $1.2 billion loan.

But even if Rwanda were to get funding, it would not proceed with the project without assurance that Ugandan will do its part.

It is understood that China had offered to finance the entire joint railway project connecting Kenya, Uganda and Rwanda, but the idea was dropped after Kampala changed its mind, and gave priority to developing a railway link to South Sudan instead.

Last year, Uganda’s Finance Minister Matia Kasaija told Daily Monitor that the government had suspended the standard gauge railway project and has instead turned attention to revamping the old metre-gauge railway network.

“It is apparent the SGR is going to take us a lot of time to complete. First, we have to wait for Kenya to reach the Malaba border point then we can start,” Mr Kasaija said.

Kenya has secured Chinese funding to extend the line from Nairobi to Naivasha in the Central Rift, at an estimated cost of Ksh150 billion ($1.5 billion) and the work on the project is on-going.

The 120km-long Nairobi-Naivasha line is the first of the three segments that make up the second phase of the railway that ends in Malaba town on the Kenya-Uganda border.

However, Kenya is yet to secure financing for the last two segments of the project from Naivasha to Kisumu and then to Malaba, amid public concern that the country’s ballooning debt and particularly the Chinese loans, have put national assets at risk of being seized by the Chinese government in the event of loan default.

In its first year of operation to June 2018, the Mombasa to Nairobi cargo and passenger services suffered a loss of Ksh10 billion ($100 million), according to Kenya’s Ministry of Transport and Infrastructure.

The magnitude of the losses has raised concerns over the economic viability of the first major railway transport infrastructure that Kenya has developed since Independence.

The initial phase of the Kenyan section of the project, 609km-long line from Mombasa to Nairobi, was completed in 2017 at a cost of Ksh327 billion ($3.27 billion), with the China Exim Bank providing 90 per cent of the financing while the remaining 10 per cent was contributed by the Kenyan government.

The phase between Naivasha and Malaba, whose funding has not been secured, is expected to cost Ksh500 billion ($5 billion).

But Kenya has argued that it would not be necessary to extend its line to Malaba if other land locked countries are not committed to the project.

The standard gauge railway is part of the Northern Corridor infrastructure project designed to connect Mombasa to Malaba on the border with Uganda, and onward to Kampala, Uganda’s capital city and eventually Kigali in Rwanda, with a branch line to Kisumu, and a northern line to Juba in South Sudan through Kasese and Pakwach.