Kenya’s Standard Gauge Railway (SGR), a flagship Belt and Road project, has stalled, leaving a massive multi-billion dollar debt burden. With annual payments exceeding $1 billion, the “railway to nowhere” threatens Kenya’s financial stability.
The end of the line for Kenya’s ambitious SGR is a quiet, unsettling place. In a Rift Valley cornfield, the gleaming tracks stop abruptly, 468 kilometers short of their intended destination at the Ugandan border. This unused terminus has become a stark, physical symbol of a project now widely known as the “railway to nowhere.”
What was once pitched as an economic game-changer for East Africa has instead become the centerpiece of a deepening debt crisis, threatening to engulf the nation’s finances and serving as a cautionary tale for large-scale infrastructure borrowing.
“The reality of what remains the single-largest infrastructure program Kenya has ever embarked upon has fallen spectacularly short of its grand ambitions,” said Ben Marlow, an associate editor at The Telegraph, from Nairobi.
Funded primarily by Chinese loans, the SGR was envisioned to stretch from the port of Mombasa to Uganda and beyond, with a vision of linking landlocked neighbors like Rwanda and South Sudan to global trade routes. Today, it runs only from Mombasa to the capital, Nairobi, with a shorter, less-used extension to the town of Naivasha. The final, crucial leg to the border remains unbuilt, its future deeply uncertain.
A Crushing Financial Toll
The financial strain from the stalled project is immense. According to the Chinese Loans to Africa Database, Kenya’s total debt to China reached $9.6 billion from 2000 to 2023, the fourth-highest in Africa.
Servicing the debt for the SGR alone costs Kenyan taxpayers more than $1 billion annually. A July report by Kenyan Auditor-General Nancy Gathungu revealed the stark details for the 2025-2026 fiscal year: Kenya owes the Export-Import Bank of China $741 million in principal, $222 million in interest and a staggering $41 million in penalties.
“These penalties expose the public to expenditures that could otherwise have been avoided,” Gathungu wrote, declaring the expenditure “not a proper charge to public funds.”
The payments are consuming a massive share of the national budget. In July, SGR-related payments to China accounted for more than 81% of Kenya’s total foreign debt service. Nairobi-based journalist Juma Majanga estimates that Kenya’s overall debt-servicing costs this year eat up about 67% of government revenue—far above the 30% threshold recommended by the International Monetary Fund.
“Continuous borrowing for large infrastructure projects may project an image of a fast-growing economy but in the long run might expose future generations to debt saturation,” Majanga wrote.
A Belt and Road Legacy
The SGR was a flagship project of China’s global Belt and Road Initiative (BRI). Kenya secured two loans worth about $5 billion in 2014 and 2015 to build the initial phases. After a five-year grace period, repayments began in 2019, adding severe pressure to the national budget.
The long-delayed next phase to the Ugandan border is estimated to cost another $5 billion, funds Kenya does not have. In a telling move, the government announced in July it would transfer operations of the existing railway to private investors.
“The last 40% of the SGR line will be built by a consortium of Chinese companies,” Kenyan Treasury Cabinet Secretary John Mbadi recently told Parliament. “They will charge for the use of the railway line.”
Analysts say China, now the world’s largest debt collector, often employs an “extend and pretend” strategy with struggling borrowers, postponing defaults and extending loan terms. This approach, while offering short-term relief, risks creating hidden debt and long-term financial hardship for borrowing nations.
The IMF has taken note, classifying Kenya at a high risk of debt distress and suspending its loan program with the country. This leaves the government without access to a final disbursement of nearly $850 million.
David Omojomolo, an Africa economist at Capital Economics, said other heavily indebted African nations are watching Kenya’s situation closely.
“Without IMF support and meaningful fiscal consolidation, the country’s debt trajectory remains unsustainable,” Omojomolo said. “Kenya may muddle through in the short-term, but its ability to service its obligations will remain strained.”
For critics like Jimi Wanjigi, a prominent businessman and presidential aspirant, the SGR is more than a financial misstep; it is a national betrayal.
“It was one of the biggest cons we have ever seen, the beginning of a long fraud on Kenyans,” Wanjigi said. “It laid the foundation for what I call the ‘debt heist.’”
As the railway sits idle in a Rift Valley field, the weight of its debt continues to roll on, a constant reminder of a promised economic boom that has, so far, led to a fiscal bust.
