On SGR alone, the line from Mombasa to Naivasha has attracted a Sh500 billion loan, and extension to Kisumu was bound to raise the figure to more than Sh800 billion.
Put together with other infrastructure loans, Kenya was getting weighed down with Chinese debt — let alone others.
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Kenya needs to take a serious look at its infrastructure development plan following the failure of its bid to obtain additional funding to extend the Standard Gauge Railway from Naivasha to Kisumu and ultimately the Uganda border. The Chinese government, which has been exuberant with cash dole-outs, pointedly rejected Kenya’s quest for a new loan — estimated at Sh360 billion — to complete modernising its rail network. The reason was simple: Kenya is getting overburdened with loans and is becoming a risky borrower.
The Chinese authorities did not have to make this point to the Kenya government. It has been obvious to everybody that the government is mortgaging the country with huge debts. Cumulatively, Kenya is operating a debt portfolio of Sh5.4 trillion, the bulk linked to infrastructure, and which figure is nearly double the country’s annual budget.
On SGR alone, the line from Mombasa to Naivasha has attracted a Sh500 billion loan, and extension to Kisumu was bound to raise the figure to more than Sh800 billion. Put together with other infrastructure loans, Kenya was getting weighed down with Chinese debt — let alone others.
SGR phase one that rolled from Mombasa to Nairobi has been hailed as the best development project in modern Kenya. It has transformed long-distance transport, eased operations for the Kenya Ports Authority and reduced costs for transporters and business people. But the cost of putting it up was prohibitive. Unfortunately, despite increased cargo freight and commuter traffic, it is making losses. Government estimates last year indicated that the line made losses to the tune of Sh750 million a month.
With the third leg of the SGR to Kisumu put on hold, several questions arise. Will the entire project make economic sense? Does it make sense for transporters and business people to ferry goods from Mombasa and drop them at an inland port in Naivasha? Is it feasible to revive the old railway from Naivasha to Kisumu to complete the circuit? What does it mean for western Kenya that was hinging its hopes on it? What about neighbouring countries that were angling to benefit from it?
The Chinese experience is a sad reminder of the tragedy of development politics. It is imperialistic in nature and even though China, in the early years, opened financial taps to developing countries, mainly from Africa and without stringent conditionalities, the reality is that everything is about business. Western donors may have been frugal and harsh but everything boils down to economics. African countries must swallow that bitter pill.
Kenya must tame its appetite for loans and rethink its infrastructure development model.
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