Kenya allocates Sh16.5bn for Uganda SGR link
This allocation will be combined with funding from China and other lenders to support the construction.
Plans to extend the Standard Gauge Railway (SGR) from Naivasha to Kisumu and eventually Malaba have gained fresh momentum after the Treasury set aside Sh16.5 billion in the proposed budget for the long-delayed project.
This marks the first official allocation by the Exchequer for the 369-kilometre stretch, giving the green light to a critical phase of the railway line that is expected to enhance the value of the SGR and support regional trade.
The funding is part of a broader plan to link the Mombasa port to Uganda, and eventually to Rwanda, the Democratic Republic of Congo, and South Sudan.
According to budget documents presented to Parliament, this allocation will be combined with funding from China and other lenders to support the construction.
The move has brought renewed hope that the railway will finally reach Malaba, years after concerns were raised about its viability if it failed to connect with Uganda.
"The last 40 percent of the SGR line will be built by a consortium of Chinese companies. They will charge for the use of the railway line," Treasury Cabinet Secretary John Mbadi recently told MPs.
Kenya and China have agreed that each will contribute 30% of the required funding, with the remaining 40% expected to come from a joint venture involving Kenyan and Chinese banks.
This funding formula was settled during President William Ruto’s recent four-day state visit to Beijing.
The extension from Naivasha to Kisumu is expected to cost Sh380 billion, while completing the final stretch to Malaba will require Sh122.9 billion more.
Despite the massive cost, officials have welcomed China’s decision not to offer a full loan for the project, as it protects Kenya from deeper debt exposure.
Loan repayments to China already form the bulk of Kenya’s foreign debt burden, and the new arrangement is seen as a more sustainable approach.
The absence of a full loan reduces the pressure on public finances, while still pushing forward a project that is central to the country's transport and trade ambitions.
The railway extension has long been viewed as a vital missing link.
Uganda depends heavily on the Mombasa port, and the lack of direct railway access has hindered the full potential of the SGR.
If completed, the line would ease the movement of goods across borders and stimulate economic activities along the corridor.
By securing initial funding, Kenya has taken a major step toward achieving the goal of a modern transport network connecting the Indian Ocean to the heart of East Africa.