KENYA · ECONOMY
Key Facts
- The railway Kenya, in East Africa, built a Chinese-financed Standard Gauge Railway (SGR) from Mombasa toward Naivasha.
- What happened A new World Bank report says Kenya could have saved up to US$900 million on construction.
- The cause At least 30% of that gap comes from governance failures, including direct contracting and land fraud.
- The comparison Kenya’s diesel line cost US$7.6 million per kilometre; Tanzania’s electric line cost US$5.7 million.
- The debt Kenya borrowed US$5 billion from China in 2014 and 2015 for the Mombasa-Nairobi line.
The World Bank says Kenya overpaid by up to US$900 million (about 117 billion Kenyan shillings) to build the Mombasa-Naivasha Standard Gauge Railway, known as the SGR. The lender made the finding in a new report this week, comparing Kenya’s line with two similar railways in East Africa.
For US readers, the finding bears on Kenya’s debt, including the US$5 billion it borrowed from China for this line. Our report on Kenya’s debt to the World Bank shows how much the country already owes the lender.
What Happened
The World Bank compared the cost per kilometre of three single-track lines: Kenya’s diesel-powered Mombasa-Nairobi railway, Tanzania’s electric Dar es Salaam-Dodoma line and the electric Djibouti-Addis Ababa line. Kenya’s line cost US$7.6 million per kilometre, against US$5.7 million for Tanzania and US$5.3 million for the Djibouti-Addis Ababa line.
The bank said that at the same cost per kilometre as Tanzania, Kenya could have saved up to US$900 million in initial construction costs. It said at least 30% of that amount is linked to governance problems rather than terrain or technical differences.
Why the Bank Points to Governance
The bank listed a preference for direct contracting over competitive tendering, land speculation and outright fraud in land valuation and compensation payments. It also noted that Kenya’s line is the only one of the three that is not electrified.
The bank said the Ethiopia-Djibouti line had to climb to about 2,300 metres above sea level, while Kenya’s line reached only about 1,600 metres. Land costs were also much higher in Kenya, even though Tanzania built its line a few years later and to a higher standard.
In August 2018, Atanas Maina, then head of the state-owned Kenya Railways Corporation, and Mohammed Swazuri, a former chairman of the National Land Commission, were arrested over claims of graft in land compensation for the railway. Prosecutors alleged that taxpayers lost money in fraudulent payments for five parcels of public land, and this article does not report any verdict.
How the Railway Was Paid For
Kenya borrowed three loans worth US$5 billion in 2014 and 2015 from China’s Export-Import Bank, a state lender, to build the line from Mombasa to Nairobi, later extended to Suswa near Naivasha. China Road and Bridge Corporation, a Chinese state-owned contractor, built the line and also carried out its feasibility study.
Last year Kenya extended the repayment period of the three loans to 2040. Revenue from running the trains is held in a joint account as security against a missed payment.
The government has fought to keep the loan terms secret, and the Court of Appeal rejected that bid in May. Officials still cite secrecy clauses, national security and diplomatic confidentiality for withholding other project details.
What It Means for You
If you hold Kenyan government bonds through emerging-market funds, the finding adds to questions about how well the country’s borrowing was spent. The report does not change the loan terms or the repayment schedule.
Travellers need not change plans, because the finding concerns construction costs, not train safety or service. Our guide to the Nairobi to Mombasa train explains how US visitors book seats.
What Is Not Known
It is not known whether Kenya’s government will respond to the finding or reopen any contract. The World Bank figure is a comparison with other railways, not a court ruling of fraud.
It is also unclear how much of the US$900 million applies to the Nairobi-Naivasha extension, because the bank’s comparison centres on the Mombasa-Nairobi section. The full split between terrain, land costs and contracting is not set out in the public figures we reviewed.
More: Kenya news in English, every day from The Rio Times.
Frequently Asked Questions
How Much Did Kenya Overpay for the SGR?
The World Bank says Kenya could have saved up to US$900 million, about KSh117 billion, by matching Tanzania’s cost per kilometre. It says at least 30% of that comes from governance problems.
Who Built Kenya’s Standard Gauge Railway?
China Road and Bridge Corporation, a Chinese state-owned firm, built it with loans from China’s Export-Import Bank. Train operations began in 2017.
Does the Finding Change Kenya’s Loans?
No, the report is an analysis and does not alter the loan terms. Kenya extended the repayment period to 2040 last year.
Sources: World Bank, report on the cost of Kenya’s Standard Gauge Railway, published November 2026; National Treasury of Kenya, public debt records; Court of Appeal of Kenya, ruling on disclosure of railway loan agreements, May.
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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