China’s Debt BNI Trap: Kenya’s railway to nowhere

The first section of Kenya’s Chinese-built railway was opened with much fanfare in 2017 – but two years later work on the tracks stopped in the middle of the country and the master plan of linking it to other landlocked countries in East Africa seems to have derailed.

This means the project is not bringing as much money as was hoped at this stage, while Kenya is left servicing loans totalling around $4.7bn (£3.9bn), mainly borrowed from Chinese banks.

China is Kenya’s third biggest external creditor – accounting for 19.4% of the country’s debt. The opacity in the deals countries like Kenya have signed with China is a matter of concern to their own citizens as well as critics abroad.

BBC, by Anne Soy.

According to this article passenger side of the business is doing well and is fully booked, but it cannot pay back the loans on its own – and it was never meant to do so. This burden falls to the cargo side of the business – bringing inland the containers that arrive at Mombasa port. It was intended that they would reach Uganda, Rwanda and the Democratic Republic of Congo.

The problem is that they can go only go as far as the Kenyan town of Naivasha – 120km from Nairobi but still far from the Ugandan border – on the SGR. Most of the freight trains then return to Mombasa empty, a huge loss of potential income.

MORE >> Kenya’s railway to nowhere.