KENYA · RAILWAY FINANCE
Key Facts
- —The country Kenya is East Africa’s largest economy, led by President William Ruto, and a major borrower from China, the World Bank and bond investors.
- —What happened Kenya’s Treasury, in an October 2026 report, put the Naivasha to Malaba railway extension at Sh651 billion (about US$5.0 billion), Business Daily reported on Thursday 22 October.
- —The jump That is Sh148 billion (about US$1.1 billion) above the Sh502.9 billion (about US$3.9 billion) estimate published a year earlier.
- —The line The extension is about 370 kilometres long and runs through Narok, Bomet, Kericho, Nyamira and Kisumu to Malaba on the Ugandan border.
- —Who pays Sh618.8 billion (about US$4.8 billion) is expected from outside financiers, and a Chinese contractor will build it.
- —Still open How the outside money will be raised, and whether the line will run as a freight concession.
The Kenya Kisumu railway budget has risen to Sh651 billion (about US$5.0 billion), Nairobi’s Business Daily reported on Thursday 22 October from a Treasury report. The sum would extend the Chinese-built standard gauge railway from Naivasha to Malaba on the Ugandan border.
For foreign investors the figure matters because Kenya already carries heavy debt, and most of this bill is meant to come from outside lenders. It also shows how the financing of Chinese-built rail in Africa is changing as Beijing lends less.
What the Treasury Report Shows
The Kenya Kisumu railway budget now stands at Sh651 billion (about US$5.0 billion) for the whole Naivasha to Malaba extension. That is Sh148 billion (about US$1.1 billion) above the Sh502.9 billion (about US$3.9 billion) estimate of a year ago, also reported by the Nation.
The work is split into Phase 2B and Phase 2C, and Business Daily links the higher figure to the finished route alignment. Of the total, Sh618.8 billion (about US$4.8 billion) is expected from external financiers, which would leave about Sh32.2 billion (about US$0.25 billion) from other sources.
The Route From Naivasha to Malaba
Phase 2B covers about 264 kilometres from Naivasha to Kisumu, Kenya’s lakeside city on Lake Victoria, including an 8.69-kilometre branch to the proposed Kisumu port. Phase 2C adds 107 kilometres from Kisumu to Malaba, the border town on the road to Kampala.
The Kenya Kisumu railway budget covers a line planned to cross Narok, Bomet, Kericho, Nyamira and Kisumu counties before it reaches Malaba. The National Lands Commission has marked more than 5,000 acres for acquisition in seven counties, including Nakuru and Homa Bay, so owners can be compensated.
How Kenya Plans to Pay for the Line
The government has said it will raise up to Sh390 billion (about US$3.0 billion) through securitised bonds backed by the Railway Development Levy. That levy is a charge of two percent on the customs value of imported goods, paid by importers at the port.
Under securitisation, the state ring-fences public cash flows such as this levy and borrows against them through special purpose vehicles. These are companies set up only to hold the debt, and Business Daily reports that the new phase will be financed this way.
China Lends Less for Big Railways
The first section, from Mombasa to Nairobi, opened in 2017 and drew Chinese loans of about Sh465.7 billion (about US$3.6 billion). The Nairobi to Naivasha stretch drew a further Sh191.6 billion (about US$1.5 billion) in Chinese financing.
After that, China cut lending for giant projects under its Belt and Road programme, its worldwide infrastructure drive, and the line stalled in Naivasha. Beijing now favours what it calls small yet beautiful projects in health, education, farming and green energy.
Who Builds and Who Runs the Railway
China Communications Construction Company and its subsidiary China Road and Bridge Corporation have been picked to extend the line, reportedly through a public-private proposal. That proposal does not appear among the projects listed by the Public-Private Partnerships Directorate, a unit of the Treasury.
Transport Cabinet Secretary Davis Chirchir has said the state will build the track while a private investor supplies the trains, a US$5 billion project. He said freight would be a concession, so investors recover their money from passenger and freight charges and pay the state a fee.
Where the Project Stands Now
President William Ruto formally launched the project on 19 March, and construction officially began at Kibos in Kisumu County on 2 July. Civil works on the Naivasha extension itself are still waiting for land acquisition, according to Kenya Railways Corporation, the state railway operator.
The Treasury document says the environmental and social impact study and the resettlement plan for displaced families are complete. Kenya Railways has also reviewed the proposed route and land use, which clears the way for building to begin.
What It Means for US Readers
A Sh651 billion (about US$5.0 billion) rail bill feeds into how investors judge Kenya’s debt, since Kenya issues dollar bonds. The Rio Times has already tracked Kenya’s World Bank debt, which topped US$15.7 billion.
A private investor is to supply the locomotives, coaches and freight wagons, while a Chinese contractor holds the track work. Our guide to foreign powers and investors in Kenya shows how Washington, Beijing and the Gulf compete for such deals.
What Is Not Known
It is not yet clear how Kenya will raise the Sh618.8 billion (about US$4.8 billion) in outside money, or who will lend it. The Nation newspaper reported in March that neither the Sh390 billion (about US$3.0 billion) levy-backed bond nor a yuan-denominated panda bond had been issued.
Cabinet Secretary Chirchir did not respond to calls and texts on whether the railway will run as a freight concession. No date has been set for the first rail to be laid on the Naivasha extension.
More: Kenya news in English, every day from The Rio Times.
Frequently Asked Questions
How much will the Kisumu railway extension cost?
The Kenya Kisumu railway budget is Sh651 billion (about US$5.0 billion), per the Treasury. That is up Sh148 billion (about US$1.1 billion) from last year’s estimate.
How long is the new railway line?
The Kenya Kisumu railway budget covers about 370 kilometres, ending at Malaba on the Kenya-Uganda border. Phase 2B runs from Naivasha to Kisumu and Phase 2C from Kisumu to Malaba.
Who is paying for the railway?
Sh618.8 billion (about US$4.8 billion) is expected from external financiers. Kenya plans to back part of the borrowing with the Railway Development Levy on imports.
Is China still lending for the railway?
A Chinese contractor will build the line, but China has cut funding for large infrastructure projects abroad. Kenya is therefore using securitisation and private investors to cover the cost.
What does the cost rise mean for Kenya’s debt?
Most of the Kenya Kisumu railway budget is expected from outside lenders, so it adds to Kenya’s foreign borrowing. Investors will watch how that money is raised, which is not yet clear.
Sources: Business Daily, Kisumu railway budget increases, 22 October 2026; Business Daily, Malaba railway extension gets extra funds, 4 March 2026; Nation, SGR extension launch report, March 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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