Kenya Restarts Railway Extension with New Funding Plan

Kenya will resume work on a major railway extension on Thursday, reviving a project that has been on hold for more than six years. The stalled section, near Naivasha, will continue toward the Ugandan border, aiming to improve regional trade and transport links. Construction slowed after China, which initially provided loans, reduced funding for large infrastructure projects in Africa.

The first segment of the railway, connecting Mombasa to Nairobi, was finished in 2017. The extension, however, remained incomplete, sparking concerns about funding and project management. Some critics described China’s loans as a “debt trap,” though Beijing has denied these claims. Last year, Kenya and China renegotiated the loan terms for the first phases, lowering repayment obligations for Nairobi.

To move the project forward, Kenya is using a new approach. Revenue collected from a railway development levy on cargo carried along the existing line; estimated at 35 billion shillings ($270 million): will be used to fund construction of the extension. This model allows Kenya to continue building without taking on additional debt or raising taxes.

China remains involved, with state-owned China Road and Bridge Corporation serving as the main contractor. Analysts say the arrangement reflects a new approach to infrastructure funding agreed at a 2024 summit in Beijing. “Following the heavy propaganda in regard to the debt burden, particularly from the West, China and Africa discussed a new model based on investments to sustain the level of building infrastructure,” said Peter Kagwanja.

Kenya has limited borrowing capacity, and past attempts to increase taxes sparked unrest in 2024. President William Ruto’s administration is increasingly using securitisation of revenue streams to fund infrastructure projects while keeping debt under control.

Construction will officially resume at a ceremony near Naivasha. Completion of the railway extension could boost trade links in East Africa and demonstrate Kenya’s ability to fund major infrastructure projects through creative financial solutions.