China SGR Loan: Kenya is among countries that are chasing a fresh loan for the completion of the Standard Gauge Railway project. A report that appeared on the South China Morning Post says that Kenya is among East African countries that are preparing to make a pitch for a new loan that will take the SGR from Naivasha to Kampala.
These countries include Kenya, Uganda, Rwanda and South Sudan. The report said that the four countries will make their pitch during the Forum on China-Africa Cooperation (FOCAC) summit which is schedule to be held later in the year.
However, analysts from China told the paper that the pitch was highly likely to be rejected. “Going forward, I would still expect Eximbank and [China Development Bank] to be at the forefront of financing for large-scale projects on the continent but with the caveat of displaying a greater degree of caution, especially towards projects which may be sold as more political than financial in nature,” the publication quoted Benjamin Barton, a professor at a University in Malaysia.
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Already, Kenya has failed in its bid to have debt relief extension from China. In July, there were reports that critical government projects had stalled because of failure by the Chinese Exim Bank to extend funds over Kenya’s delays in repayments.
China halted funding for the SGR project over what it termed as Kenya’s inability to show value for money. The SGR terminated in Naivasha. Although the SGR has been a flagship project of President Uhuru Kenyatta, it has often been criticized as lacking value addition due to the amount of money it consumed, and its failure to make profit since inception.
Africa Star Railway, the Chinese firm that has been running the Standard Gauge Railway line has demanded the full payment of billions owed to it before it can hand over the operations of the SGR to the State in May 2022. Africa Star Railway Operation Company Ltd (Afristar) is demanding over Sh. 40 billion that hasn’t been paid.