Kenya has taken a bold and strategic step to finally complete the Standard Gauge Railway (SGR) to Malaba, setting a new standard for infrastructure financing that could benefit the entire country.
After a crucial meeting between President William Ruto and Chinese President Xi Jinping in Beijing last week, the two countries agreed on a pragmatic, mixed-financing model that balances ambition with fiscal realism — a rare feat in Kenya’s politically charged infrastructure space.
Under the newly negotiated framework, Kenya will contribute up to 30 percent of the funding, with another 40 percent raised through a commercial partnership between Chinese and Kenyan banks. The Chinese government will then top up the balance with a concessional loan of 30 percent.
The agreement also grants Chinese contractors exclusive rights to build and operate the line for 25 years, helping them recoup their investment before Kenya assumes full control.
This arrangement deserves commendation, especially given Kenya’s history of exclusionary infrastructure planning. For too long, major projects have disproportionately favoured a few regions, leaving large swathes of the country marginalised.
The Ruto administration, by securing this deal, has shown political courage and a commitment to balanced, nationwide development.
Crucially, this funding model blends public-private partnership (PPP) principles with concessional financing, minimising the risk of Kenya falling deeper into unsustainable debt. By ensuring that the railway must pay for itself through operational revenues — rather than burdening taxpayers indefinitely — the government is protecting public finances while unlocking vital economic potential in western Kenya and beyond.
Still, Kenya must tread carefully. Previous mega-projects have suffered from legal confusion, poor public communication, and governance lapses. To avoid similar pitfalls, several lessons must be heeded.
First, transparency is paramount. The government should immediately publish the full terms of the agreement, allowing Parliament and the public to scrutinise the deal. This will build public confidence and deter misinformation.
Second, the legal reforms required — especially concerning the Railway Development Levy (RDL) and land ownership — must be approached inclusively. Stakeholder engagement, especially with local communities along the corridor, will be key to securing land and ensuring fair compensation without costly delays.
Third, operations must be tightly integrated with broader economic strategies. Expanding the port of Kisumu and boosting Lake Victoria shipping could unlock vital traffic for the railway, ensuring its financial viability. Moreover, encouraging industrial parks along the route will create sustainable demand and jobs.
Finally, institutional capacity must be strengthened. The special purpose vehicle that will own and operate the railway during the financing period must be professionally managed, insulated from political interference, and held to the highest corporate governance standards.
The writer is a professor at the Technical University of Kenya. He can be reached at [email protected] or @prof_miruka on X
