Kenya Standard Gauge Railway (SGR)
Name: Kenya Standard Gauge Railway (SGR)
Chinese Name: 肯尼亚标轨铁路
Type of Project: Transportation; logistics.
Project Developer: Kenya Railways Corporation (KRC).
Main Contractors: China Road and Bridge Corporation (CRBC), a subsidiary of China Communications Construction Company (CCCC), was the main contractor for the railway construction between Mombasa and Nairobi, while CCCC was the main contractor between Nairobi and Naivasha.
Financiers: Export–Import Bank of China; Government of Kenya.
Cost: 3.6 billion USD for Phase I (Nairobi–Mombasa); 1.5 billion USD for Phase IIA (Nairobi–Naivasha).
Project Status: Operational.
The Kenya Standard Gauge Railway (SGR) is one of the flagship projects of Kenya’s national development program ‘Vision 2030’, which aims to transform Kenya into an industrialised and middle-income country by the end of this decade. This project emerged during a summit of the Eastern African Community in 2004. In 2009, a regional Northern Corridor Initiative between Kenya, Uganda, and Rwanda was formed to promote a sustainable freight transport system, which would later expand to other countries in the Great Lakes Region. The same year, the China Road and Bridge Corporation (CRBC) approached the Government of Kenya to carry out a feasibility study for the project, conditionally ‘free of charge’, in exchange for a future construction contract. CRBC brought on board the Export–Import Bank of China (China Eximbank), which later agreed to fund the project through concessional loans, with the stipulation that the construction contract be awarded to CRBC. In 2012, the Government of Kenya granted the construction contract, including for civil work and equipment supply, to CRBC. Two years later, during an official visit by Chinese Premier Li Keqiang to Kenya, the two governments signed the loan agreement to finance Phase I (Mombasa–Nairobi SGR). China Eximbank would finance 90% of the project, and CRBC was announced as the main contractor.
Phase I of the SGR project links the Port of Mombasa with Nairobi, Kenya’s capital. Construction began in October 2014 and was projected to take five years; however, it was completed in two and half, largely due to pressure to deliver the project before the 2017 election. In May 2017, Kenyan President Uhuru Kenyatta (in office from 2013 to 2022) inaugurated the passenger services between Mombasa and Nairobi. The passenger train, named the ‘Madaraka Express’, opened to fare-paying passengers on Madaraka Day on 1 June 2017, the fifty-fourth anniversary of Kenya’s attainment of self-rule from the British colonial power.
In 2014, Kenya Railways Corporation (KRC) signed a memorandum of understanding with China Communications Construction Company Limited (CCCC) for a joint feasibility study for Phase II of the SGR, which would connect Nairobi to the Kenya–Uganda border, thereby completing the master railway plan to advance Kenya’s regional economic integration. Phase II was divided into three sections: Nairobi–Naivasha, Naivasha–Kisumu, and Kisumu–Malaba (Uganda). During the 2015 Forum on China–Africa Cooperation (FOCAC), the Chinese and Kenyan governments signed a financing agreement for the extension. China Eximbank agreed to provide a loan of 1.5 billion USD for the Nairobi–Naivasha section (Phase IIA), covering 85% of the financing for the project, while the Kenyan Government would provide the remainder. The construction contract was awarded to CCCC, the parent company of CRBC. Groundbreaking took place in October 2016, and construction was completed in three years. The SGR was extended from Nairobi westward, with new train stations built in Ongata Rongai, Ngong, Mai Mahiu, and Suswa.
In 2017, CCCC restructured its operational department into the Africa Star Railway Operation Company (Afristar), which was awarded the contract to operate the SGR for five years. Again, there was no competitive bidding for the contract. According to the operational agreement, in 2022, Afristar would gradually exit operation of the SGR and hand it over to KRC, including the freight and passenger services. As of August 2022, there is little sign the handover will be completed soon.
Hopes of extending the SGR to Kisumu and Malaba started to fade when regional commitments to complete the network began to fall apart. In 2016, Rwanda pulled out of the SGR, due to shifting relations among East African Community countries, and announced it would focus on building a railway through Tanzania to the Indian Ocean. In 2018, Uganda announced the SGR would be put on hold over unresolved issues such as who would finance the border-crossing segment of the railway. When President Kenyatta failed to secure a proposed loan of US$3.6 billon during his visit to Beijing in 2019, it became clear China Eximbank would not continue to fund the SGR. Faced with these hurdles, the governments of Kenya and Uganda opted to rehabilitate their respective narrow-gauge railways built during colonial times. SGR freight trains now run from Port Reitz in Mombasa straight to the Inland Container Depots in Nairobi and Naivasha, where cargo is cleared or transferred to Uganda and other neighbouring countries.
- Employment and Labour Relations: SGR construction created more than 65,000 local jobs, though most of these were temporary. While CCCC tried to train local employees, it was accused of mistreating local workers.
- Environment: Construction of the SGR has had impacts on soil, water, and the wider ecosystem. A major environmental controversy is the fact the SGR Phase IIA traverses Nairobi National Park, a natural reserve and one of the country’s most famous tourism destinations.
- Governance: The planning and implementation of the SGR project have been criticised for their opacity and lack of public participation. The fact that CRBC secured a procurement contract without an international bidding process violated Kenya’s procurement laws.
- Local responses: Local responses to the SGR project have been mixed and include a collective anxiety about the national debt challenge and related sovereignty issues.
- Debt: The SGR loan has raised concerns about Kenya’s external debt challenge. The opacity of the loan agreement has fed into narratives about ‘debt-trap diplomacy’ and led to the false rumour that China was ‘taking over’ Kenya’s national assets.
According to CCCC and CRBC‘CCCC & CRBC, Kenya SGR Project Social Responsibility Report 2018/2019.’ On file with the author., construction of SGR Phase I employed more than 40,000 local workers and engaged more than 1,000 local companies, while Phase IIA created nearly 25,000 local jobs and engaged 157 local companies in subcontracting and cooperation. Between its inauguration in May 2017 and 31 August 2019, the Madaraka Express transported 3.4 million passengers with an average seat occupancy rate of 96.4%. The passenger train provides an on-time, affordable, and convenient alternative to road and air traffic between Nairobi and Mombasa, though there are complaints about malfunctions in the booking system and security checking arrangements. In the same period, SGR freight services transported more than 3.12 million tonnes of goods.
Local responses to the SGR have been mixed, with many citing concerns about Kenya’s rising external debt. During SGR Phase I construction, World Bank economists warned the Kenyan Government against taking excessive loans from China. In response, Chinese officials downplayed the loans, arguing that the SGR would increase economic growth in Kenya. According to the Kenyan Treasury, in 2021, debt to the Chinese Government and banks (approximately 801 billion KES or 6.73 billion USD) accounted for 20.5% of Kenya’s total external debt (3.9 trillion KES or 32.76 billion USD).
Other rumours regarding the SGR loan agreement have accompanied concerns about debt sustainability. In 2018, a leaked report by the Auditor-General’s office indicated that Mombasa Port, a strategic national asset, was used as collateral to secure the SGR loan. However, Bräutigam et al. (2022) debunked this rumour through careful reviews of related documents and reports, arguing that the misleading claim resulted from misinterpretations of highly technical documents. Nevertheless, the rumour and the sustained debates about the loan agreement reflect the complex geopolitics surrounding the project, the lack of transparency in decision-making, and the deep trust deficit of the Kenyan people towards their government.
The sustainability of the SGR’s development model raises concerns not only about the consequent debt challenge, but also about limited social and economic impacts. Most of the jobs created by the project were temporary, and there has been limited evidence of capacity or skills transfer to local populations or industries. There were also complaints about unequal treatment of workers, such as Chinese managers refusing to share tables and vehicles with their local counterparts. In response to these issues, CCCC and CRBC began to jointly publish an annual Corporate Social Responsibility Report. In the 2017–18 edition, CCCC announced that, in conjunction with the Kenyan Railway Training Institute, it had introduced training in locomotive maintenance and train operation for local employees. Chinese and Kenyan media have also promoted stories about training of female Kenyan locomotive drivers.
The SGR also sparked controversy about corruption, especially over land compensation. In August 2018, the Kenyan prosecutor’s office announced the arrests of 18 Kenyan officials and businesspeople, including the managing director of KRC and the chairman of the National Land Commission, who had allegedly engaged in false compensation claims. In November, Chinese and Kenyan officials from CRBC were charged with attempting to bribe officers of the Directorate of Criminal Investigations during an investigation of a suspected multi-million-shilling ticketing fraud.
The biggest controversy, however, concerns the transparency of the project and the closed-door negotiations between the two governments. In 2014, only a few months after Phase I construction began, activist Okiya Omtatah and the Law Society of Kenya attempted to have the construction contract rescinded on the grounds that CRBC sealed the deal with KRC without an open tender and therefore had violated procurement laws. The practice of securing a contracting agreement before lobbying for finance is common for Chinese contractors, as China Eximbank requires this before committing its financial support. Kenya’s High Court dismissed the lawsuit in 2014 based on the interpretation of the contract as ‘government-to-government’ procurement. However, in June 2020, approximately three years after Phase I of the SGR went into operation, the Kenyan Court of Appeals declared the contract for construction of the SGR between CRBC and the Kenyan Government was illegal. Although the SGR project cannot be undone, the ruling underscored the current position of the Kenyan Government: foreign investors should not circumvent the Kenyan Constitution, and procurement requires public input or contestation. The construction of the SGR has had mixed ecological impacts, leading to increased soil erosion, sedimentation of water bodies, and ecosystem fragmentation. SGR Phase I followed the old narrow-gauge railway route and cut through Tsavo National Park. Environmentalists observed that construction of the railway has not only hindered elephant movement, but also increased the number of human–elephant conflicts. The primary environmental controversy surrounding SGR Phase IIA is that it traverses Nairobi National Park, one of the country’s most treasured conservation and tourism areas. At least seven different routes were proposed for the section from Nairobi Terminus to Ngong Station, six of which crossed the park. Due to the complicated and expensive land compensation challenges in the urban areas of Nairobi, cutting through the park seemed to be the most convenient option. Despite complaints, the Kenya Wildlife Service (the park’s managerial body), the land commission, and KRC agreed to build long bridges stretching over parts of the park. In September 2016, Kenya’s National Environment Tribunal issued a stop order on the construction for Phase IIA after receiving an appeal jointly filed by human rights activist Okiya Omtatah and the Kenya Coalition for Wildlife Conservation to revoke the Environmental Impact Assessment Licence because it was issued ‘under suspicious circumstances’. However, construction soon resumed despite the ruling of the tribunal and was completed in 2019. The 6.7-kilometre SGR bridge stretches along the southern boundary of the national park, with an average height of 18 metres, and its impact on biodiversity and animal movement remains to be documented.
Bräutigam, Deborah, Vijay Bhalaki, Laure Deron, and Yinxuan Wang. 2022. How Africa borrows from China: And why Mombasa Port is not collateral for Kenya’s Standard Gauge Railway. China Africa Research Initiative Working Paper No. 52. Washington, DC: School of Advanced International Studies, Johns Hopkins University. Link.
Kimari, Wangui and Gediminas Lesutis. 2022. ‘Infrastructure as Symbolic Geopolitical Architecture: Kenya’s Megaprojects and Contested Meanings of Development.’ In The Rise of the Infrastructure State: How US–China Rivalry Shapes Politics and Place Worldwide,edited by Seth Schindler and Jessica DiCarlo, 58–70. Bristol, UK: Bristol University Press. Link.
Lesutis, Gediminas. 2022. ‘Infrastructure as Techno-Politics of Differentiation: Socio-Political Effects of Mega-Infrastructures in Kenya.’ Transactions of the Institute of British Geographers 47(2): 302–14. Link.
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Wissenbach, Uwe and Yuan Wang. 2017. African politics meets Chinese engineers: The Chinese-built Standard Gauge Railway project in Kenya and East Africa. China Africa Research Initiative Working Paper No. 13. Washington, DC: School of Advanced International Studies, Johns Hopkins University. Link.
Zhu, Keren, Rafiq Dossani, and Jennifer Bouey. 2020. ‘Addressing Impact Evaluation Gaps in Belt and Road Initiative Projects in Africa: The Standard Gauge Railway Project in Kenya as a Proof of Concept.’ The African Review 47(2): 1–38. Link.