The government is planning to issue a Sh390 billion bond to fund the construction of the SGR Malaba line. This is according to the Cabinet Secretary for Transport Davis Chirchir. This will be Kenya’s largest issued single bond.
According to Chirchir, investors who purchase the bond will be getting paid using the funds from the Railway Development Levy that are collected annually.
“We will basically look at financial markets and the available instruments… leveraging, of course, on the Railway Development Levy revenues. A railway should attract long-term borrowing, and we’re looking at a 15-year facility; the 2 percent the Railway Development Levy charge is sufficient to support [the SGR Malaba line],” said CS Chirchir.
Funds collected from the Railway Development Levy are derived from a 1.5 percent tax that the government has on all goods that are imported into Kenya. Chirchir said that this bond will have an expected maturity period of 15 years.
The construction of the SGR Malaba line has proven to be a hard nut for the government to crack after China pulled back over concerns that the railway line would not be commercially viable.
Between 2018 and 2020, Kenya was seeking additional funding to the tune of Sh368 billion for the extension of the Standard Gauge Railway line. This extension was supposed to be the second SGR phase and would cover the section between Naivasha and Kisumu.
However, China refused to give out the loan after the government failed to show how viable the project would be. China was also not willing to give out the loan as a grant or loosen their tight conditions around it.
This was despite the government of former President Uhuru Kenyatta, during a visit to China in early 2019, offered to allow China to operate and run the railway line until such a time when China could recover all the monies spent on the project.
Under president Ruto’s administration, Kenya had initially expressed interest in seeking funding for the railway line from the United Arab Emirates following a rejection by China. The government then changed tune and reapproached China again during a visit to China in April 2025 by President Ruto.
The current interest in offering a bond now implies that the government’s attempt to secure funding from China were unsuccessful.
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