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Uganda and Kenya seeking SGR funds in China

By Lucie Morangi | China Daily Africa | Updated: 2017-02-26 15:06

Finance ministers from Kenya and Uganda are set to travel to China at the end of this month to negotiate financing for the construction of a cross-border railway.

In a move that would transform the East African infrastructure landscape, the delegation - which will include the transportation ministers of both countries - will present proposals to the China Export Import Bank, an institution that has largely financed similar big projects in Africa.

According to Kenya's Finance Ministry, a letter outlining the two countries' intent to jointly pursue the implementation of the Nairobi-Malaba-Kampala Standard Gauge Railway (SGR) has already been dispatched to Kampala for signatures. The letter, also copied to the Chinese Finance Ministry and the Export-Import Bank of China, requests a joint visit to China from Feb 27 to March 4.

 Uganda and Kenya seeking SGR funds in China

Construction of Nairobi terminus of SGR railway by China Road and Bridge Corp in Nairobi, Kenya. Provided to China Daily

Acknowledging this move, Jackson Kinyanjui, director of the resource mobilization department, that serves as liaison with development partners, says China continues to be the preferred financier because it doesn't have the bureaucratic hurdles presented by other development partners.

"China's financing model fits us very well. It is tied to aid, and the loans are concessional. But the bureaucracies of other development partners disrupt absorption and hence push back the commencement and completion of government projects," Kinyanjui says.

The construction of the SGR will be undertaken by Chinese firms.

"We are soliciting funds for the implementation of the Naivasha-Kisumu-Malaba-Kampala SGR. We intend to have it completed within 42 months," he adds.

The 609-kilometer Mombasa-Nairobi project undertaken by China Road and Bridge Corp is near completion and set to be commissioned on May 1 by President Uhuru Kenyatta. Moreover, construction work for the 120-km Nairobi-Naivasha section has been launched, buoying the two countries' optimism that China will approve the solicited funds.

"For us to embark on this leg, China needed clear justification that Uganda is committed to the project, whereas our neighbor also needs assurances that we are on board to extend the tracks from the lakeside city of Kisumu to the border town of Malaba. The joint delegation has the approval of the two presidents, thus providing this mission the needed political commitment," Kinyanjui says.

The railway promises to see Uganda, a landlocked country, receive its cargo from the port of Mombasa in a timely and less costly manner. Transporting a 20-ton container from Mombasa to Nairobi by road costs $1,300, while a similar container from Mombasa to Kampala costs $3,400. The cost is $6,500 to Kigali. The Kenyan port is part of China's One Belt, One Road initiative, which aims to deepen global trade relations.

A feasibility study on the Kenyan leg has yet to be done. Uganda, on the other hand has completed its studies and awarded the contract to China Harbor Engineering Co. It is estimated the 273-km project will cost $2.3 billion.

China leads other countries in the funding and building of mega projects in the East Africa region, according to an annual report released by Deloitte, a global consulting company. The report shows that China funded 10 out of a total of 43 projects in 2016. It built 18 of them.

The SGR is expected to be extended to Rwanda's Kigali city from Kampala, and then to Juba in South Sudan.

lucymorangi@chinadaily.com.cn

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