Kenya seeks fresh SGR financing as CS Mbadi leads delegation to China

Treasury Cabinet Secretary John Mbadi is leading a high-level delegation to China as Kenya seeks fresh infrastructure financing and potential debt restructuring amid growing fiscal challenges.

The team, which includes Treasury Principal Secretary Chris Kiptoo, Public Debt Management Office Director General Raphael Owino, and economic advisors David Ndii and Mohammed Hassan, met with Chinese Finance Minister Lan Fo’an and Export-Import Bank of China (EXIM) Vice President Yang Dongning on Wednesday.

According to Mbadi, the discussions in Beijing are aimed at strengthening collaboration while ensuring that Kenya’s financial engagements align with its broader fiscal and development goals.

He highlighted China’s longstanding investment in Kenya, amounting to $9.2 billion (approximately Sh1.2 trillion) over the past 25 years, supporting key sectors such as transport and energy.

The visit comes just a week after Mbadi revealed that Kenya is negotiating with Chinese firms to extend the Standard Gauge Railway (SGR) to Malaba.

Speaking before the Budget and Appropriations Committee last Thursday, he stated that a consortium of Chinese companies is expected to fund 40 percent of the project, with repayment being made through tolls.

While Mbadi did not disclose the total expected cost of the project, he indicated that Kenya plans to secure 30 percent of the financing externally, while another 30 percent—equivalent to Sh45 billion annually—will be raised from domestic sources.

The remaining 40 percent, he reiterated, will come from the Chinese consortium.

The talks come shortly after China reaffirmed its commitment to financing major projects under the Belt and Road Initiative (BRI), with Kenya prioritizing the SGR extension beyond Nairobi.

The Mombasa-Nairobi SGR line, which was completed in 2017 at a cost of Sh327 billion, was later extended to Suswa (Naivasha) at a cost of Sh150 billion.

The next phase targets Malaba, with Kenya Railways Managing Director Phillip Mainga confirming that key feasibility studies are nearing completion.

In an exclusive interview with The Star, Mainga revealed that the corporation, through a consultant, has finalized a relocation action plan study, identifying the railway corridor from Naivasha to Malaba via Kisumu.

The final report is expected by the end of this month, after which the National Land Commission will oversee relocation and compensation efforts.

The planned railway extension will traverse Narok, Bomet, Nyamira, Kisumu, and Busia counties.

Additionally, an Environmental and Social Impact Assessment (ESIA) is underway to evaluate potential effects and mitigation measures in consultation with Project-Affected Persons (PAPs), with findings expected by April.

Kenya Railways has also initiated a separate study focusing on logistics hubs along the railway line, aiming to enhance industrialization and value addition.

According to Mainga, these developments mark a significant step in securing funding for the railway extension, with the government continuing discussions with investors through the Transport and Treasury ministries.

The project is expected to commence in the second half of this year.

Beyond the SGR expansion, Kenya is also likely to discuss restructuring its loan obligations with China.

As the country faces mounting debt pressures, Mbadi recently suggested that Kenya is exploring a loan buyback plan with multilateral lenders, particularly as 80 percent of its external debt is set to mature by 2034.