SGR passenger numbers drop 10 percent in 2024, but revenue soars

For the first time since the Covid-19 pandemic, passenger traffic on Kenya’s Standard Gauge Railway (SGR) has experienced a decline.

Last year, the number of passengers dropped by 10%, marking a stark contrast to previous years of steady growth.

Despite the decrease in numbers, the Kenya Railways Corporation (KRC) was able to maintain its revenue growth, thanks to the hike in ticket fares.

The SGR saw 2.44 million passengers last year, down from 2.72 million in 2023.

The decrease is attributed to the fare increase that saw ticket prices rise by as much as Sh1,500.

However, this fare hike translated into a significant rise in revenue, which surged by 39%, reaching Sh4.09 billion last year, compared to Sh2.93 billion in 2023.

Before last year, the only time SGR recorded a decrease in passenger numbers was in 2020, when the Covid-19 pandemic led to travel restrictions that heavily impacted the transport sector.

The fare increase that took effect in January last year was aimed at offsetting rising operational costs, particularly fuel prices.

The changes saw first-class tickets from Nairobi to Mombasa rise from Sh3,000 to Sh4,500, while economy class tickets went up to Sh1,500 from Sh1,000.

The SGR, which launched passenger services in 2017, had consistently shown year-on-year growth in ticket sales, except for the 2020 period.

However, the revenue growth has been insufficient to cover the high costs associated with the multi-billion-dollar loan from China, which was used to finance the construction of the railway and the purchase of trains.

While the hike in passenger fares boosted revenues, the SGR's financial situation remains concerning.

The government has struggled to generate enough income from the service to fund its operations and meet its debt obligations.

For instance, in 2021, the government controversially diverted Sh18.1 billion from the Petroleum Development Levy to pay Africa Star Railway Operation Company Ltd (Afristar), the Chinese firm managing the SGR.

Another challenge to the SGR's revenue growth was a decline in cargo revenues.

The Kenya Railways Corporation recorded a 4 percent fall in freight earnings last year, with revenues from the cargo business dropping to Sh13.97 billion from Sh14.68 billion in 2023.

The fall in cargo revenue is partly due to the government's decision in 2022 to revoke a directive that had mandated all cargo from the Port of Mombasa to be transported by the SGR trains.

Prior to this, SGR's cargo operations had been a primary revenue stream, and the compulsory use of the railways had been enforced to help the service become self-sustaining.