Kenya, Uganda seek $6bn in joint bid to take SGR to Central Africa

Kenya and Uganda are seeking at least $6bn to restart work on the standard gauge railway (SGR) to connect central Africa to the port of Mombasa.

China financed the first phases of the project but has been reluctant to back the continuation of the line to Uganda and beyond.

The two countries hope to resume the project in December with transport ministers from the two countries having agreed to work together on attracting investment over the next four months.

At present, the line runs from Mombasa to Nairobi, and then some 90km northwest to the town of Naivasha. 

The second phase of the SGR was to have laid track between Nairobi as far as Malaba, on the Ugandan border.

Meanwhile, Uganda is planning to build a $2.6bn link between Malaba and its capital, Kampala. 

From there, the line will eventually branch out to the Democratic Republic of Congo, Rwanda, and South Sudan.

The search for financiers is on and Kenyan and Ugandan officials say financiers from Europe and the Middle East are being drafted into the project although they did not immediately name the targeted lenders.

Transport CS Kipchumba Murkomen said the Kenyan government was hoping to interest foreign lenders in the scheme.

“We are now going for financiers either from Europe or the UAE or whoever comes with a good deal for our people in East Africa,” Kenyan Transport CS Kipchumba Murkomen.

According to the people in the know, the UAE is being considered as a suitable candidate, as it has also offered to improve the port, the main gateway of goods destined for the Great Lakes region.

Sources said Nairobi had not yet agreed to the deal, as there are political implications – akin to the now controversial Dubai deal with Dar es Salaam.

Yet frustrations over finding a suitable financier may see Nairobi go for UAE as Kenya continues to grapple with high debt, downgraded credit rating, and a struggling economy.

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In Kampala, things are smoother, with Yapi Merkezi, the Turkish firm that was exclusively selected as contractor for the Kampala-Malaba line, having submitted its technical and financial bids to the SGR project, to lead towards evaluation, negotiation, and contract signing, which is expected to be concluded by November 1.

Yapi Merkezi is also one of the companies building Tanzania’s 754km SGR line. The others are two Chinese firms – China Civil Engineering Construction Corporation and China Railway Construction Company – and Portugual’s Mota-Engil Africa.

“Uganda’s financial bid includes a proposal for a changed model of financing that brings on board a number of export credit agencies (ECAs),” officials said.

“The details on financing are with the Ministry of Finance. The financiers have made contact [with the ministry],” said Eng Perez Wamburu, SGR project coordinator, who confirmed that a number of ECAs have come together to bankroll the Ugandan section, which has been in limbo for years.

Finance Minister Matia Kasaija confirmed that some ECAs “have approached us,” but added that his ministry has also approached other financiers to come into the project during the later phases of development.

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