President William Ruto officially restarted construction of the multi-billion-dollar Standard Gauge Railway (SGR) extension on Thursday, ending a six-year hiatus after Chinese funding for the project dried up in 2019.
The extension, which will eventually link Naivasha to the Ugandan border at Malaba, is being financed through an innovative revenue securitisation model. Instead of taking on new bilateral debt, Kenya is “mortgaging” future collections from the Railway Development Levy (RDL)—a tax on all national imports—to raise immediate capital from private investors.
The first phase of the revival covers the 264-kilometer stretch from Naivasha to Kisumu. This segment is critical for transforming the SGR into a regional corridor capable of moving goods from the Port of Mombasa directly to the Lake Victoria basin and onward to landlocked neighbors.
“We are moving from a debt-driven model to an investment-led strategy,” a Treasury official noted at the groundbreaking. The project, featuring 79 bridges and 8 tunnels, is slated for completion by June 2027.
The move marks a strategic shift for the Ruto administration, allowing for massive infrastructure development while adhering to strict IMF debt-sustainability targets. By using existing tax streams to back the project, the government hopes to avoid the high-interest pitfalls that stalled the railway under the previous administration.
