China Hints at Sh407bn Loan Deal for Naivasha-Kisumu SGR

China’s Foreign Minister Wang Yi has expressed optimism over an eventual return to a botched standard gauge railway funding deal with Kenya, raising hopes of extending the railway that abruptly ended in Naivasha due to lack of funds.

Speaking during a tour of China-funded projects in Mombasa last week, Wang said Kenya’s SGR project has been prioritised for completion under a grand Horn of Africa masterplan that seeks to help the region accelerate construction of industrial and economic belts.

Under the plan, the SGR will be extended from Naivasha to Uganda, Rwanda, South Sudan, and eventually to the Democratic Republic of Congo. On the other hand, the Addis-Ababa-Djibouti railway will be extended to five other countries.

“This is part of our effort to help this part of the region accelerate the building of industrial belts and economic belts to create more jobs,” Wang said.

He was accompanied by President Uhuru Kenyatta.

Kenya borrowed $3 billion (Sh339 billion) from China to build the 472km railway from Mombasa to Nairobi and $1.5 billion (Sh169.5 billion) for the 120km Nairobi-Naivasha line.

However, in September 2018 when Kenya approached China for a third round of funding for the Naivasha-Kisumu SGR, the Asian nation declined to approve the loan.

RELATED: China Opts Out of Sh380bn Kisumu Railway Deal

This was shocking since Kenya and China Communications Construction Company (CCCC) had in August 2018 agreed on construction of the 267km railway, with only the finer details of the deal set to be finalised weeks later during President Kenyatta’s visit to China.

That did not happen.

Instead, Chinese Premier Xi Jinping asked the parties to defer making the approval until Kenya undertook a commercial viability study on the entire Mombasa-Kisumu railway.

It later turned out that China declined to make the approval as part of its policy changes that sought to manage debt default risks by countries or projects.

Funding talks

Although Mr Wang did not discuss the financing aspect of the project, his remarks signal Beijing’s major step in offering to restart funding talks with Kenya.

Indeed, the minister refuted claims that his country was trapping Africa in a debt trap by extending huge loans, saying that such claims were just a ‘narrative’ pushed by enemies.

“That is simply not a fact. It is speculation being played out by some (people) with ulterior motives,” Wang told journalists in Mombasa.

His three-nation tour of Eritrea, Kenya and the Comoros followed US Secretary of State Antony Blinken’s trip to Africa in November in what was seen as a well-calculated scheme to counter China’s growing influence on the continent.

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