Shipping & Logistics

Uganda’s move to revive old rail casts more doubt on SGR

Nairobi-Naivasha railway construction
Nairobi-Naivasha railway construction. Kenya was banking on the port should Uganda fail to construct the SGR towards the Malaba border. FILE PHOTO | NMG 

Kenya’s plan of extending the Standard Gauge Railway (SGR) to Malaba hangs in the balance with the announcement that Uganda will be reviving its metre gauge line at Sh20 billion.

This comes as the future of financing the the second phase of the SGR teetering in limbo.

Ugandan President Yoweri Museveni said last week during the state of the nation address that revamping metre gauge will boost freight and cut down on cost of operation giving a small difference in the margin between SGR and the meter gauge line.

“The modernisation of the railway system by building the SGR will bring down the cost of transport per 40 feet container from $3,456 to $1,800. Even by repairing the old meter gauge railway, the cost of transport goes down to $2,016,” said Mr Museveni.

Kenya also announced last month that it will revamp its section of the metre gauge railway between Naivasha and Malaba, after efforts to secure funds for SGR by top government officials during the China trip hit a snag.


China, which is funding the SGR project had put a condition in place that Uganda has to show willingness to construction SGR from Malaba to Kampala, before they issue funds for building the second phase which will connect Kisumu and the Ugandan border.

The move by Uganda puts the East African dream of achieving a seamless northern corridor transport network in a limbo. SGR is part of the northern corridor transport network, which connects the Port of Mombasa to the neighbouring land-locked countries of Uganda, Rwanda, Burundi and South Sudan.

Should Kenya fail to get funds for extension of the SGR to Kisumu, then the planned construction of a multi-billion port in Kisumu will stall too.

China Roads and Bridges Company (CRBC) had planned to build a modern Sh14 billion port in Kisumu as Kenya targets a bigger maritime trade stake in the region.

Kenya was banking on the port should Uganda fail to construct the SGR towards the Malaba border, where it would serve its neighbouring landlocked countries through the facility.

Kisumu is deemed a critical hub for trade with neighbouring countries such as Tanzania and Uganda and by extension Rwanda and Burundi as well as those in the Great Lakes region.

For decades Kisumu port registered robust business activity helped by a reliable railway system and maritime vessels that ferried cargo to ports such as Mwanza and Bukoba in Tanzania and Jinja and Port Bell in Uganda.

It has become increasingly difficult for Kenya and Uganda to secure funds since 2016 with the two states making several trips to Beijing to secure finances.

Exim Bank of China, which is the financier of the project for both countries, had committed to extending credit to Uganda on condition that Kenya is ready to extend its section of the railway to Malaba.

Uganda had written to Kenya in November 2016 requesting an assurance that it will extend the rail to the border town in a bid to secure financing from the China-based lender.

The Transport ministry had indicated that it would not extend the railway to Malaba if Rwanda pulled out of the project following news that it was mulling not participating in the project. However, Rwanda later clarified that it was still interested in the venture.

Building of the railway on the Kenyan side has faced a number of challenges including delays after animal rights activists claimed that it would interfere with wildlife in Nairobi National Park.