NAIROBI, Kenya – Kenya plans to raise Sh390 billion ($3 billion) through a 15-year bond to finance the extension of the Standard Gauge Railway (SGR) from Naivasha to Malaba, reflecting China’s cautious stance on further funding.
The government intends to use revenues from the Railway Development Levy (RDL)—a 2% charge on imported goods—to repay investors.
Roads and Transport Cabinet Secretary Davis Chirchir said officials are evaluating whether to issue a bond or seek loans from development banks, both with 15-year maturities.
“We have a good stream from the Railway Development Levy, which is ring-fenced to build the railway. But if you look at it from a cashflow perspective, it’s not enough to build the railway in two or three years,” Chirchir told reporters.
The SGR currently ends in Naivasha, 468 kilometres short of the Uganda border, due to financing constraints.
Kenya had previously explored support from the United Arab Emirates and revived discussions with China during President William Ruto’s visit in April.
Exim Bank of China, which funded 90% of the Mombasa–Naivasha line, withdrew from the next phase citing debt and revenue concerns. The bank has reportedly agreed to participate if Kenya covers 30% of the costs.
The Naivasha–Malaba phase will pass through Narok, Bomet, Nyamira, Kisumu, and Busia counties. Feasibility and environmental assessments have been completed, and Kenya will coordinate with Uganda and South Sudan, linking the project to the East Africa Rail Corridor.
Uganda is expected to fund the 272-kilometre stretch to Kampala, while South Sudan will extend the line to Juba, giving landlocked countries access to the Port of Mombasa.
Chirchir emphasized the government’s push for public-private partnerships and securitisation to fund infrastructure, reducing reliance on foreign loans.
The SGR extension is expected to boost trade along the Northern Corridor, support Special Economic Zones, and ease road congestion.
Last month, freight hauled by rail reached 640,000 metric tonnes, equivalent to removing 23,000 trucks from highways.
Officials from Uganda and South Sudan noted that the project would lower business costs and enhance regional competitiveness.
The Nairobi meeting discussing the project included Principal Secretary Mohamed Daghar and Kenya Railways Managing Director Philip Mainga.
