National Treasury Cabinet Secretary John Mbadi is leading top government officials to China hoping to
secure new infrastructure financing
and debt restructuring.
On Wednesday, the team which
includes Treasury PS Chris Kiptoo,
Public Debt Management Office, Director General, Raphael Owino and
President William Ruto’s economic
advisors David Ndii and Mohammed Hassan met Chinan’s Finance
Minister Lan Fo’an and Export and
Import Bank of China (EXIM) Vice
President, Yang Dongning.
“The discussion in Beijing will explore areas of enhanced collaboration
while prioritising Kenya’s economic
interest, ensuring that future engagements align with the country’s broader fiscal and development goals,’’
Mbadi posted on X.
”He praised
Kenya’s relationship with the Asian economic powerhouse, saying that
over 25 years, China has invested
$9.2 billion (close to Sh1.2 trillion) in
Kenya, funding projects in transport,
energy and other critical areas.
The China visit is comes a week
after the CS hinted that the country is
in talks with Chinese firms to extend
the Standard Gauge Railway (SGR)
to Malaba.
“A consortium of Chinese companies will build the 40 per cent of the
SGR line,’’ Mbadi told the Budget
and Appropriation Committee last
Thursday.
Although he did not give more details on the anticipated amount, he
said Kenya would source 30 percent
of needed financing externally and
another 30 percent (equivalent to
Sh45 billion annually) locally.
“The remaining 40 per cent will be
sourced from a consortium of Chinese companies who will recoup the
money through tolls,’’ Mbadi told the
committee.
The visit comes just days after China renewed its commitment
to advance major signature projects
under its Belt and Road Initiative
(BRI) where the country’s premier
directly addressed Kenya’s goal of
extending the SGR beyond Nairobi.
China played a major role in the
construction of the Mombasa-Nairobi SGR line, which was completed in
2017 at a cost of Sh327 billion and
then extended to Suswa (Naivasha)—
Phase 2A at a cost of Sh150 billion.
Extension of the railway line to
Malaba remains the top choice for
the Kenyan government, with the
Kenya Railway boss Phillip Mainga
revealing that the cooperation is finalising key studies that will inform
relocation and investment decisions
on the planned extension from Naivasha to Malaba via Kisumu.
In an exclusive interview with
the Star, Mainga said that the corporation, through a consultant, had
completed the relocation action plan
study after identifying the corridor
for the construction of the railway
line, with a final report expected to
be ready by the end of this month.
This will be handed over to the
National Land Commission, which
will then move ahead with the relocation and compensation programme.
The railway line will run through
Narok, Bomet, Nyamira, Kisumu and
finally Busia County.
An Environmental and Social Impact study that assesses potential
impacts and mitigation measures in
consultation with Project-Affected
Persons (PAPs) is also expected to
be ready by April.
Kenya Railways has also commissioned a third study on logistic hubs
along the railway line with a key
focus on value addition, in a move
expected to promote industrialisation.
“The latest developments are a major boost to the development as the
government, through the Transport
and Treasury ministries, continues to
engage investors on funding of the
project which is expected to commence in the second half of this year.”
Apart from the new SGR financing plan, Kenya is likely to negotiate
for loan restructuring with China as
the East African nation runs against
time to reorganize its tight fiscal plan
amid limited revenue generation and
maturing loans.
Last week, Mbadi hinted at a plan
to negotiate a loan buy back plan
with multilateral lenders even as 80
per cent of its external loans are due
by 2034.
