Kenya is an important component of China’s overall Africa strategy. The country is home to major Chinese-funded and built infrastructure projects and has thus become a showcase for Beijing’s development and investment initiatives on the continent. It is also home to the port of Mombasa on the Indian Ocean, a key link in the Belt and Road Initiative’s ‘Maritime Silk Road’ between Asia and Europe via the Suez Canal.
A large chunk of Chinese financing has gone into Kenya’s 485 km standard gauge railway linking the capital of Nairobi with the port city of Mombasa. Now known as the ‘SGR’ or Madaraka Express, the rail line is the result of a US$ 3.2 billion contract signed with the state-owned China Roads and Bridges Corporation in 2014. Over 85% of financing for the project came from China, and as of 2018 both passenger and freight service have commenced. The passenger line cuts travel time from its previous twelve hours to five. It moved some 1.3 million passengers in its first year and raked in nearly US$ 10 million in passenger sales. Freight service has not been so successful out of the gates. Importers have been reluctant to use the line, and it was used to transport just 1,600 of the roughly 80,000 containers that went through Mombasa in the first month it was operational. The lack of customers has prompted several tariff cuts by the authorities, who are trying to encourage shippers to switch from road-based options. As it stands there are fears that the railway will never transport the kind of volumes that would allow it to pay off the loans required to build it.