Kenya and Uganda Press Ahead with Chinese-Funded Railway Despite Debt Concerns
Kisumu, Kenya – The presidents of Kenya and Uganda convened near their shared border on Saturday, March 21, 2026, to launch the construction of a multi-billion-dollar extension of the Standard Gauge Railway (SGR), a project initially built by China. The move comes despite significant debt burdens placed on Kenya by the railway’s earlier phases.
A Long-Delayed Project
The SGR, constructed between 2013 and 2019, currently connects the Kenyan port of Mombasa to Nairobi, the capital, and extends to Naivasha. However, further expansion to Uganda was stalled due to China’s reluctance to provide additional funding Gulf Times.
Debt and Financial Strain
Kenya currently allocates approximately $1 billion annually to servicing debts incurred from Chinese loans, with a substantial portion tied to the construction of the SGR AFP. This expenditure significantly exceeds the railway’s revenue generation, which stood at around $165 million last year, even with strong growth in passenger and cargo numbers AFP. A 2025 audit by Kenya’s auditor general revealed over $260 million in wasted funds due to penalties and interest on late debt payments AFP.
Renewed Commitment and Future Plans
Despite the financial challenges, Kenyan President William Ruto emphasized the railway’s potential to “define generations,” speaking at the launch ceremony alongside Ugandan President Yoweri Museveni in Kisumu AFP. Ruto argued the line would reduce logistical costs and enhance competitiveness in East Africa. The current schedule aims for the line to reach Kisumu by June 2027, with a subsequent phase extending to Malaba, a border town AFP.
Museveni echoed this sentiment, stating the railway would address inefficiencies within Uganda’s infrastructure, describing the current transport system as “irrational and wasteful” AFP.
Financing the Extension
Unlike the initial phases, Kenya is not seeking further loans from Chinese banks for this extension. Instead, the project will be financed through future cargo taxes, with construction undertaken in partnership with Chinese transport firms AFP. Between 2000 and 2019, China lent Kenya $9.7 billion, with approximately half allocated to the railway AFP. Lending paused between 2020 and 2023 as Kenya faced repayment difficulties, coinciding with a shift in China’s lending strategy towards Africa AFP.
Kenya views the railway extension as vital for bolstering trade across East and Central Africa, aiming to connect landlocked nations such as Uganda, Rwanda, South Sudan, and the Democratic Republic of Congo AFP.