President Uhuru Kenyatta accompanied by his foe turned confidant Raila Odinga visted China to appeal for another Sh368 billion to complete the standard gauge railway, Phase 2B, from Naivasha to Kisumu.
It will open up the Lake region and China will generously agree to lend us more. When the deal is signed, that will bring the whole cost of the entire SGR to Sh840 billion. What might the collateral be?
There are questions whether the SGR is worth the cost per kilometre and why cargo transport isn’t making money, why government has ordered many transporters to use it.
But the big issue is unsustainable debt. We already have two Eurobonds and are going for a third. Then Jubilee administration will have borrowed Sh730 billion in five years.
Before the third Eurobond and before the new Chinese loan, Kenya’s total debt load stood at Sh5.4 trillion.
The IMF warned Parliament’s Budget committee in February that debt was fast approaching unsustainable levels.
According to Kenya Railways Acting Director Philip Mahinga, the corporation is also holding talks to finance a system that will ensure the railway, its passengers, goods and equipment are secure as they snake through sparsely populated regions in its 974-kilometre journey from Mombasa to Malaba in Busia County.
Kenyans, the International Monetary Fund and experts have raised questions about the repayment status of the existing loans.
The terms of repayment have also been a subject of debate following revelations a few months ago that the port of Mombasa could be handed over to Chinese if Kenya defaults on the loans.
Mr Xuhang said the Mombasa-Nairobi railway earned $100 million in the 2017/18 financial year.
“The railway has created more than 50,000 jobs locally and boosted Kenya’s economic growth by 1.5 percent,” he said during the press briefing attended by officials of SGR management, the National Treasury, Ministry of Transport and Infrastructure and Kenya Railways Corporation.
The Chinese said Kenyans form a majority of the SGR managers and employees, and that their safety is guaranteed, “contrary to negative reports in the media”.
