Kenya struggeling to pay China
Even before the COVID-19 outbreak, the railway failed to meet passenger and cargo volume targets and now the economic downturn brought on by the pandemic is making the problem even more acute. The railway is losing money at an unsustainable rate of $9.2 million a month making it inconceivable that Kenya Railways will be able to repay its Chinese creditors at the current rate.
Earlier this summer, Kenya’s parliament was warned that portions of the new railway network could be forced to halt operations, after Kenya Railways defaulted on $350 million payment to the China Road and Bridge Corporation’s subsidiary, Africa Star, which operates the SGR.
Now, lawmakers are speaking out in uncharacteristically frank terms: “Look, our economy is beaten and we are not able to pay,” said Kimani Ichung’wa, chairman of the Parliamentary Budget and Appropriations Committee. “We are not saying the debt is not there, but we simply want to renegotiate what we owe you and the terms of payment,” he added.
In a recent report, the parliament was urged to slash the SGR’s operational costs by 50% and urgently renegotiate the loans with Chinese creditors before it is too late. The collapse of Kenya’s SGR would be a spectacular failure for both President Uhuru Kenyatta, who staked his legacy on big infrastructure projects like this, and the Chinese who held up the railway as an exemplar of its Belt and Road Initiative.
