Kenya Receives Loan to Build High Speed Rail Link to Burundi

A loan from China will fund the Kenyan section of a standard gauge railway between Mombasa and Bujumbura. The loan, worth $3.5 billion, will be spent on building the railway and paying for rolling stock. The railway should be complete by 2018.

The loan will be on favourable terms, with a holiday on repayments until the railway is operational, and low interest rates of just over 2.5%. It will be complemented with inward investment by Kenya which will be funded by a special import levy at Mombasa’s port.

Kenya plans on encouraging private investment into its rail network, in hope that private companies running trains will increase competition and drive down costs for rail users. This mirrors the drift to privatisation of railways in parts of the EU and the US.

Government run Kenya Railways Corporation, which is building the new project, will go from being an operator to being an industry regulator.

The railway being built is part of a network that will connect South Sudan, Rwanda, Tanzania, Burundi, Uganda and Kenya to improve trade in the region. The regional railway plan was agreed between member countries in June this year.