$3.75bn Loan from China Helps Kenya Build Railway

The Mombasa to Nairobi railway has had a cash injection of $3.75bn in a loan from China and should be complete by 2018. The standard gauge railway will cut journey times and increase capacity for intermodal trade via Mombasa.

The railway is initially built between Kenya’s major port and capital city but is planned to reach Kampala and Malaba, eventually connecting with other countries’ rail networks and improving trade in the entire region.

Mombasa’s freight throughput is increasing by 10% a year. It was 22 million tonnes in 2012, and should hit 30 million tonnes by 2017. The railway will be complete by 2018.

Not only will the railway improve efficiency by taking freight off the road - one study suggests that freight will get inland up to 60% more quickly. 37 crossing stations are to be built, allowing for access to the rail system even outside major cities.

The Chinese loan will be repaid over 40 years with a 10 year loan holiday. It is hoped that increased trade will improve the Kenyan government’s revenue streams with a 1.5% levy on imported goods - this should enable the country to pay off the loan in its own right.