Wamuzi News Ke
In an unexpected shift away from the use of large foreign loans, the government has announced a new and daring funding model that will finally lead to the long-running Naivasha–Kisumu Standard Gauge Railway (SGR) Phase 2B project.
This bold step will not only activate the essential rail connection but also greatly enhance the flow of trade and communication in the Western Corridor.
The signing of an important addendum to the commercial contract between Kenya Railways Managing Director Philip Mainga and Yu Xiao Dong of China Communications Construction Company (CCCC) marked the official recognition of the breakthrough on Tuesday, December 16.
This signature makes effective the new, debt-averse financing structure, which is to become the reason for faster delivery without putting much extra burden on the national treasury.
The new approach’s major point is the securitization of the Railway Development Fund (RDF) in part. The government will be able to obtain large sums of money by utilizing future revenues from the existing rail but not by taking on new high-interest sovereign debts, which might in the long run cripple the country’s economy.
Roads and Transport Cabinet Secretary Davis Chirchir welcomed the decision and pointed out that the new model is a sign of the government’s commitment to not only infrastructure development but also the commitment to infrastructure development.
“The alternative financing model will provide support for the project implementation, project management, and project supervision, all of which would be more efficient,” said Chirchir.
He also pointed out that the new model allows for risk sharing to a greater extent between the public sector and the private partner, which is a radical change from the traditional public-sector-dominated project models where virtually all risks were borne by the government.
The restoration of the road between Naivasha and Kisumu is the first major execution step after the Cabinet’s endorsement of the ambitious National Infrastructure Fund (NIF) and the Sovereign Wealth Fund (SWF) worth Kshs 5 trillion.
The NIF is aimed at mobilizing local resources, generating income from public assets—such as part of the railway revenue—and attracting private investment at a ratio of one to ten.
The SGR Phase 2B is crucial for the country’s wider economic strategy. The project, when finished, will drastically reduce the cost of transportation and logistics and make Western Kenya and the adjacent East African region very accessible to the country’s main port and transport arteries.
