By Emem Ekanem
Kenya, on Wednesday, the 1st of November, revealed a significant rise in passenger ticket prices for the Standard Gauge Railway, which China constructed. This move comes as the nation grapples with the challenge of repaying debts to Beijing and other lenders, compounded by soaring fuel prices.
Kenya Railways, a government-owned entity, announced that the fare for the four hundred and seventy-kilometer (470-kilometer ≈ 290-mile) journey from Mombasa to Nairobi will increase to approximately thirty dollars ($30) for first class, up from nineteen dollars ($19), and ten dollars ($10) for economy class, which was previously six dollars ($6).
Kenya Railways attributed the hike in fuel prices worldwide to shifts in the energy and petroleum industry, leading to a substantial rise in fuel costs that in turn impacts their operational expenses. They stated that “the increase is informed by changes in the energy and petroleum sector, where prices of fuel have significantly increased, thus affecting the cost of our operations.”
This announcement came, following recent statements by the governor of the Central Bank of Kenya, Kamau Thugge. He mentioned that the Kenyan shilling had been considered overvalued by twenty-five percent (25%) for an extended period, resulting in the country artificially propping up its exchange rate.
Kenyan President, William Ruto visited China two weeks ago, aiming to secure a one-billion-dollar ($1 billion) loan for completing delayed infrastructure projects, even though Kenya’s total debt has reached a historic high of seventy billion dollars ($70 billion).
Starting from January 1, 2024, there will be new train fares. These adjustments will apply to the well-frequented commuter rail service in the capital, Nairobi, as well as the Kisumu and Nanyuki safari trains, which draw in thousands of tourists each year.
The Standard Gauge Railway, or SGR, funded by a 4.7 billion dollar ($4.7 billion) loan from Chinese banks, commenced operations in 2017. It can be recalled that in 2017, Kenya’s former president, Uhuru Kenyatta officially launched the railway constructed by China, as the distinctively red-and-white diesel train departed from a brand-new terminal in the coastal city of Mombasa, with Kenyatta, Chinese dignitaries and citizens from various parts of the country on board for its inaugural trip to Nairobi. The trip between the two cities, typically a hair-raising five-hour drive along a congested one-lane highway frequented by slow-moving trucks and prone to fatal accidents, will now be completed in significantly less time, marking the nation’s most significant infrastructure project since gaining independence. The railway has been regarded as a component of a broader vision set forth by leaders in East Africa. Their goal is to establish a railway network, now known as the Standard Gauge Railway (SGR) that will ultimately connect Uganda, Rwanda, South Sudan, Burundi, and Ethiopia. The initial leg of the railway was primarily funded by ninety percent (90%) of China’s Export-Import Bank with the Kenyan government contributing the remaining ten percent (10%) of the financing. This ambitious project seeks to solidify Kenya’s position as the primary entry point (gateway) to East Africa. However, it has faced challenges in gaining significant usage for its freight (cargo) services.
Economist Aly-Khan Satchu emphasized that for the Kenya Standard Gauge Railway (SGR) to be economically viable, it is crucial to extend its operations across borders. He further noted that this expansion is seen as essential for the project’s financial sustainability. This was conveyed to the Associated Press. In his words, he stated, “The Kenya SGR desperately needs cross-border expansion to make it a financially sustainable project.”
According to Satchu, the current state of the Standard Gauge Railway (SGR) is effective. To ensure its long-term viability, it must establish a link between Uganda’s oil production and the coast, as well as facilitate the transportation of minerals from the Congo. He said, “The SGR, as is, is a dud. To make it sustainable, it needs to connect Uganda’s oil to the sea, and (Congo) minerals.”
Kenya is facing challenges with its increasing public debt. As a response to this, Kenyan President, William Ruto has declared stringent austerity measures, which involve limitations on international travel and reducing the budget of all government ministries by more than ten percent (10%).
Ruto has received scrutiny from Kenyans for his extensive foreign travels, undertaking thirty-eight (38) trips since taking office in September 2022. This surpasses the travel frequency of any of his four predecessors during their first year in power.
