Tough Times for Kenya as 2nd SGR Loan Matures

  • Kenya will start repaying the Standard Gauge Railway (SGR) Naivasha line from January 2021 in addition to the current loan for the Nairobi-Mombasa line.

    The loan from China’s Exim bank which amounts to Ksh162 billion matured with the Treasury revealing that the payments would commence from January 21, 2021.

    The line which was acquired to link Nairobi to Naivasha was acquired in 2015 with a grace period of five years.

    The payments will increase the burden to Kenyan taxpayers as the country is currently servicing the SGR loan for the Mombasa-Nairobi line which began in 2017.

    Kenyan Currency notes.

    Kenyan Currency notes.


    As the loan repayments are scheduled to start, the overall payments to the bank will jump from the Ksh31 billion paid in the year to June 2019 to Ksh71.4 Billion in the current fiscal period.

    “Kenya Nairobi-Naivasha Standard Gauge Railway Project loan to be repaid in 30 installments from January 21, 2021, to July 21, 2035,” the Treasury stated.

    The loan repayments come at a time when the economy is grappling with the adverse effects of the Covid-19 pandemic that has crippled sections of the economy and resulted in unprecedented levels of unemployment. 

    The railway has over the years not been able to match the revenues to the operational costs.

    A report by the Transport Ministry in 2020 revealed that the railway recorded a loss of Ksh21.9 Billion over three years. The document says that during the 2020 period, the railway generated revenues of Ksh25.2 Billion but had operational costs of Ksh47.1 billion.

    The ministry cited reduced limited storage capacity at a Nairobi container depot, minimum use of the city’s freight terminal, and railway charges as reasons for the dismal performance.

    In April 2020, Treasury Cabinet Secretary Ukur Yatani tabled a supplementary Budget before parliament seeking approval to allocate funds to pay off the Chinese Government Ksh180.71 million, Chinese Exim Bank Ksh71.4 billion and China Development Bank Ksh22.34 billion.

    Kenyan lawmakers called for renegotiating of the loans by the government citing difficult times ahead.

    Treasury CS Ukur Yatani addresses the media on November 25, 2020, in Nairobi

    Treasury CS Ukur Yatani addresses the media on November 25, 2020, in Nairobi


    “We must renegotiate our debts with the Chinese otherwise we are headed for a very difficult time.

    “It is very easy to resolve this issue of loan repayment by just sitting down with the Chinese and telling them we made a mistake. We owe you all this money but you are also demanding so much from us in terms of repayment,” Kikuyu MP Kimani Ichung’wa noted.

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