Standard Gauge Railway

The country’s troubles with the growing public debt have led to a failure to make payments on the Chinese loans given for the construction of the standard gauge railway (SGR). This has led Chinese banks to penalize the country by Sh1.312 billion in the fiscal year that ended in June.

Chinese lenders, led by the Export-Import Bank of China, lend Kenya more than 500 billion shillings to finance the building of the SGR from Mombasa to Naivasha.  

Due to insufficient earnings from the passenger and cargo services which totaled Ksh15 billion in the fiscal year ending in June compared to the cots of operations that stand at Ksh 18.5 billion thus taxpayers have been compelled to bear the cost of the SGR loans.

China is Kenya’s second-largest foreign creditor after the World Bank, contributing for nearly one-third of the country’s external debt payment expenses for 2021–2022. Kenya spent Sh117.7 billion on Chinese debt in total during that period.

The administration of former President Uhuru Kenyatta mostly borrowed money from China starting in 2014 to construct roads, bridges, power plants, and the SGR.

This was after Kenya’s transition to a lower-middle-income economy, which prevented her from receiving highly concessional loans from development lenders like the World Bank.