The first part of Kenya’s Chinese-built rail was inaugurated in 2017 with little fanfare, but two years later, construction on the tracks came to a halt in the middle of the nation, and the master plan to connect it to other landlocked nations in East Africa appears to have failed.
This indicates that the project is not currently bringing in as much money as was anticipated, leaving Kenya with servicing loans totaling about$ 4.7 billion($ 3.9 billion ), mostly borrowed from Chinese banks.
However, it is difficult to believe that Kenya’s Standard Gauge Railway ( SGR ) is not successful when passengers disembark from a crowded train of about 12 carriages during the final service of the day at the Syokimau railway terminus in Nairobi.
They have traveled nonstop from Mombasa, a port city that is 470 kilometers( 290 miles ) away on the Indian Ocean.
Pauline Echesa, a 53-year-old passenger, told me,” It’s great.” She claims that the four and a half hour trip gives her the opportunity to observe animals along the way as the rail passes through national parks.
A 30-year-old passenger claimed that although the seats weren’t particularly secure, the trip saved her money when compared to other ways to travel up from the coast.
The passenger side of the company is undoubtedly doing well and is totally booked, but it is unable to repay the loans on its own and was not intended to do so.
The consignment part of the company is responsible for carrying the pots that arrive at Mombasa slot inland. They were supposed to travel to the Democratic Republic of the Congo, Rwanda, and Uganda.
The issue is that they are only able to travel as far as Naivasha, a African village on the SGR that is 120 kilometers from Nairobi but still far from the Ugandan borders. The majority of the transport trains therefore depart empty for Mombasa, greatly depleting their earnings.
Kipchumba Murkomen, the director of the Kenyan Transport Cabinet, told the BBC that continuing the venture would be more fruitful for us. However, the financial aspect is really our problem.
During the approaching Belt and Road Summit in China, he claims, the government will look into financing options for the remaining rail section.
The massive Belt and Road Initiative ( BRI ), which China launched in 2013, has spread throughout the world and significantly altered Africa’s infrastructure landscape.
But as China cuts back on cash and African nations deal with rising debt that, in some cases, poses a threat to the stability of their economies, its future is now up for debate.
The Council on Foreign Relations, an American think-tank, contends that some BRI assets have involved ambiguous selling procedures and required the use of Chinese companies, which have led to inflated prices that have, in some cases, caused project cancellations and political reaction.
According to Nigeria’s former Deputy Central Bank Governor, Kingsley Moghalu, internal problems that have had an impact on the Chinese market have even resulted in significantly reduced cash.
According to him, funding levels across the continent have not exceeded$ 2 billion in recent years, down from between$ 10 billion and$ 20 billion a decade ago.
One of those who has suffered is Kenya’s SGR.
However, Mr. Murkomen asserts that Kenya has a variety of choices:” We have private sector people in China who have said they are willing to put their own resources in place as long as we can discuss how they’ll deduct their money.”
He explains that there might be a grace period during which the nation was first pay off the loans used to fund the finished rail sections.
Many people in the nation, who have already been suffering from tax hikes implemented by President William Ruto since he took office a year ago, may not appreciate an entrance that the government is looking for more money.
Kenyans worry that loan payments are putting a lot of strain on the nation’s market. According to government data from the end of June 2022, China was Kenya’s third-largest physical creditor, accounting for 19.4 % of the loan.
According to Kenyan economist Ken Gichinga, the nation’s debt profile is currently quite high. He explains that Kenya will need to pay back a$ 2 billion Eurobond in June.
Additionally, there is a perception that not all of the funds were used to construct the rail, according to Mr. Gichinga.
Both their own people and critics worldwide are concerned about the transparency of the agreements that nations like Kenya have made with China.
Loan terms are often made public, according to the assessment by the Council on Foreign Relations, and Chinese banks are not under any pressure to cover lending rates or share information” because China refused to join the Paris Club of big standard creditors.”
It comes to the conclusion that” greatly outweighed its benefits” were the challenges facing both the US and the recipient nations.
Kenya’s railway needs to go international in order to reap the advantages that were anticipated at its inception.
Mr. Gichinga contends that” Uganda actually needs to also be ashore.”
But that goal seems weak.
Two routes into landlocked nations from the coast were intended for the classic East Africa Transport Master Plan, which was first put forth by the East African Community about 20 years ago. The northern corridor from Kenya and the central corridor, from Tanzania, were the two routes. Finally, it was connected to DR Congo and South Sudan.
But, Uganda might choose to direct its firm toward Tanzania. Due to the electrification of the column, its rail project has cost significantly less to construct and offers higher speeds.
Former African President John Magufuli reneged on the agreement his predecessor had made with China to construct the railway and rather chose to obtain funding from Turkey and Portugal to fund the first phase of the project.
Additionally, it appears that Tanzania will link to Rwanda, Burundi, and DR Congo, with China joining the project later.
According to Mr. Moghalu, nations on the globe” should be individuals of their own future ,” just like Tanzania.
African nations need to mentally reposition themselves so they don’t feel like they were mistreated by their previous spouses, the West, and should instead be pleased to China.
Recently, American nations have been attempting to combat BRI, including US President Joe Biden’s Build Back Better World Initiative, which was established in 2021 in partnership with G7 economy. However, it is generally acknowledged that China still has more to offer in terms of long-term growth.
For the commuters between Nairobi and Mombasa, for investments in the future of the nation are unquestionably useful.
Ms. Echesa told the BBC,” Let’s make sacrifices to pay the debt and obtain more for like jobs.”
The Kenyan state will try to persuade China and its bankers that the SGR rail will be successful once it reaches the frontier and above.
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