The Infrastructure Trap
Kenya’s $5 billion railway to nowhere is exacerbating debt and corruption.
JUNE 15, 2023
One morning in March, a Chinese-built train departed the Kenyan capital of Nairobi and headed to the middle of nowhere. Chugging along the Standard Gauge Railway (SGR), the train was eerily empty until a dozen Kenyan students from a Catholic college entered blasting Afrobeats and Christian pop on a large Bluetooth speaker, snacking on candy and cookies. They were on a day trip to celebrate two of their birthdays, which they documented by posing for selfies inside the train cars. We barely heard the train’s whistle as we set off northwest toward the tiny town at the end of the line.
The students cheered as the train entered a dark tunnel and descended into the Great Rift Valley, where two tectonic plates are slowly pulling the African continent apart. Sunlight blinded us as we reemerged into dry, vast grasslands grazed by goats, sheep and cattle. The grass was yellow and dead, but the rainy season had just begun, and within a week the valley would transform into a palette of green.
Over the past two decades, the volume of Chinese lending in Africa has sparked international debates about the geopolitics of development and debt. But in Kenya, the more pressing issue is how ordinary people are struggling to bear the consequences of their nations’ investments.
The much-anticipated railway is the flagship project of Kenya’s all-encompassing Vision 2030 initiative, which was launched in 2008 to create “a globally competitive and prosperous country with a high quality of life by 2030” through investments in agriculture, infrastructure, technology, health and much more. Kenya’s leaders hoped that the new railway would promote trade across East Africa, cementing the country’s role as a center for economic activity in the region. With a price tag of $5 billion, mostly loans from the state-owned Export-Import Bank of China (EXIM), the railway is by far Kenya’s most ambitious, and costliest, infrastructure project in more than a century. Over the past two decades, the volume of Chinese lending in Africa has sparked international debates about the geopolitics of development and debt. But in Kenya, the more pressing issue is how ordinary people are struggling to bear the consequences of their nations’ investments.
In 2012, Kenya signed a contract for the first phase of the railway, which stretches nearly 500 kilometers from the port of Mombasa on Kenya’s Indian Ocean coast to Nairobi. “What we are doing here today will most definitely transform … not only Kenya but the whole eastern African region,” then-President Uhuru Kenyatta proclaimed in 2013. Construction began in December 2014, Kenyatta unveiled it less than three years later, in 2017, to an audience that included Chinese dignitaries, before riding it for himself. Six years later, to far less fanfare, the students and I were riding on the 100-kilometer extension track that runs from Nairobi to the middle of nowhere — a tiny trucker town called Suswa.
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“In the long run it will be worth it,” said Joseph, a student who was seated across from me, when I asked what he thought of the railway. Like many of his classmates on the train that day, Joseph was studying international relations. “China will gain almost all the income that comes from this train. But if Kenya can sustain the debt, it becomes more valuable.”
His friend, a law student named Brian, wasn’t convinced. “They built it, and we are in debt,” he said. “Trillions of shillings! Even our kids will be paying it back.”
This is not Kenya’s first famously expensive railway. More than 100 years earlier, the British-colonial Uganda Railway was dubbed the “lunatic line” by English tabloids for its outlandish expense. Built by indentured immigrants from India, the rails allowed trains to chug up from the Indian Ocean coast at Mombasa 500 kilometers to the highlands of Nairobi, gradually rising more than a mile in the sky. They then stretched another 1,000-kilometers westward past Lake Victoria into Uganda, moving people, supplies and goods that made British colonization of East Africa both easier and more profitable.
Kenya’s leaders intended the SGR to go all the way to Uganda, too. But in 2018, EXIM declined Kenya’s request for a loan to extend it farther. EXIM did not state its reasons but given that the railway was losing money from the start, bankers may have worried that Kenya could struggle to pay back the loan. Undeterred, Uganda is still attempting to build a railway from Kampala to the border to meet Kenya’s SGR — despite the fact that Kenya’s SGR stops nearly 400 kilometers short of it.
The result is that, instead of traveling across borders, today passengers disembark at a station in Suswa, while the train tracks themselves end in a tiny village appropriately named Duka Moja, which means “one shop” in Swahili. Exiting the train, the college students looked a bit bewildered at the emptiness. At the station I met with Kiano Sempui, a herder from the Maasai tribe who helps run the small conservancy where visitors can camp on the edge of a volcanic crater. Sempui and I jumped on his motorbike and took off to see what changes Kenya’s new railway had brought to his homeland.
Kenya’s leaders cared more about grandiosity than fiscal responsibility. Generations of Kenyans will be paying the price.
“It’s only the rich who benefit,” Sempui told me on the drive. Mount Suswa, which overlooks the valley where the railway ends, is the only home he has ever known. Tickets for the train to Suswa cost 100 shillings — less than a dollar, about a third of the price of a bus or a van, and far quicker and more comfortable. But even though passengers have made millions of trips on the other SGR route — the one that goes east to Kenya’s second-largest city, Mombasa — far fewer ride the extension west to small, drab Suswa. Those who do ride it tend to do so for novelty’s sake. “They come and go to a hotel to eat, then they go back to Nairobi,” Sempui said.
Twenty minutes later, we arrived at the SGR’s newly built “dry port.” Twice a week, cargo trains arrive here from the port of Mombasa. Because Kenya hasn’t yet found funding to extend the SGR to Uganda, the cargo is either offloaded onto trucks or onto the old, narrow meter-gauge railway to Uganda — the one the British built. This cumbersome stopgap measure makes the new $5 billion partial railway seem rather pointless: Kenya might as well have simply refurbished the old meter-gauge railway the entire way. In 2013 the World Bank warned that building the new SGR would cost 18 times as much as simply rehabilitating damaged or neglected sections of the old one. But Kenya’s leaders cared more about grandiosity than fiscal responsibility. Generations of Kenyans will be paying the price.
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The biggest mistake people make when referring to “China” in “Africa” is that they forget that neither is a monolith. Chinese state banks and state companies, though aligned in their general missions, often butt heads and compete against one another. “Chinese companies spend a lot of time lobbying African governments to borrow, and lobbying Chinese banks to lend,” said Yufan Huang, a researcher with China Africa Research Initiative (CARI) at Johns Hopkins University. The SGR came to be after a state-owned construction company, China Road and Bridge Corporation, offered to design the railway and help Kenya secure funding from EXIM to build it.
By 2013, the Communist Party had begun reframing the infrastructure projects that Chinese companies were already building across the globe as if they were part of a preplanned policy agenda. The party began encouraging further development and referring to the overall project as “One Belt One Road,” later the “Belt and Road Initiative,” or the “new Silk Road.” Since then, at least 145 countries expressed interest in participating, though the number where projects actually commenced may be far lower, with 54 countries receiving investments in 2022 and with 14 dropping out of the program between 2021 and 2022 alone, according to research done by Fudan University in Shanghai.
Today in Kenya, China’s One Belt One Road project feels more like just half a belt and half a road.
While it’s true that African nations like Zambia, Angola and Djibouti are deeply indebted to China, many are not. All told, China owns less than one-fourth of Africa’s debt — by some metrics, as little as 14 percent. Meanwhile, multilateral lenders such as the World Bank and IMF hold nearly twice as much. Still, last year, thanks in large part to the railway, Kenya’s debt to China surpassed $7.4 billion — a figure that amounts to only about 19 percent of Kenya’s overall external debt. Most of it is held by EXIM for the SGR, according to CARI.
Today in Kenya, China’s One Belt One Road project feels more like just half a belt and half a road. Undeterred, Kenya’s elite continues to pursue grand infrastructural projects. Keren Zhu, a postdoctoral research fellow at Boston University’s Global Development Policy Center, told me that Kenyatta, Kenya’s former president, “treated phase I of the SGR as his political legacy,” racing to complete it before the 2017 election. Chinese construction companies are renowned for their efficiency, which “aligned with the needs of the Kenyatta government within the time frame of Kenya’s political cycle,” Said Zhu. Kenyatta inaugurated the railway less than three months before the election — and won.
Zhu met me in Nairobi’s Kilimani neighborhood, which encompasses Nairobi’s unofficial Chinatown, flush with Chinese restaurants and Asian grocery stories and Chinese-built apartment buildings whose elevators announce floors in Mandarin. Zhu surveyed more than 100 Kenyans as well as Chinese and Kenyan officials about the railway, and found abundant dissatisfaction with domestic corruption. “They say, ‘Everyone wants to eat’” — a Kenyan euphemism for corruption, she told me. “It’s just satisfying the political elites and filling their pockets.”
If Kenyatta was the big winner of Kenya’s railway, the losers live in the town of Suswa, where the passenger line ends. Sitting inside a small shop whose shelves were nearly empty but for some orange juice drink, toothpicks and small bags of salt gathering dust, Raeli Taon, 45, told me that the cost of the daily commute to her shop had quadrupled since the railway blocked the road her motorbike taxi used to take. What’s more, the construction of the railway sparked a land-buying spree along the route, meaning that no one can afford to buy land for their livestock or their homesteads anymore. “It makes a lot of things expensive for us,” she said.
“It’s a white elephant, the train to Mombasa,” said her friend Nalakiti Meshuko, 43. “All the money they used, it didn’t help us.”
“This project is good for national importance… — Vision 2030 — but Maasai communities are suffering,” said Ken Sankui, 20, who lives in Suswa. He said he knew men who had been forced to give up their land to the government to make way for the railway, and who had not yet been compensated for their loss.
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Isaac Koynete, 25, is one of many men around Suswa who were hired as temporary day laborers to build the railway, working long days for low pay ($3 to $6 per day) until the railway was completed and the jobs disappeared. “People came from all over the country to work here,” Koynete said. “Workers used the money to seduce our young teenagers. Many ladies became pregnant and dropped out of school.”
“We used to work almost 18 hours,” said Sankui, who also found casual work as a day laborer on the railway. When he or his fellow workers failed to understand the Mandarin-language commands of their Chinese managers, the managers would berate them or even resort to violence: “They come to slap you if you don’t understand what they’re saying. It happened to all of us — disrespected.”
Discrimination or abuse by Chinese individuals against Kenyans frequently makes headlines in Kenya. In 2015, a Chinese restaurant in Nairobi was shut down for refusing service to Kenyans after dark after the restaurant was robbed by people posing as dinner-goers. In 2018, a Chinese man was deported after a video of him insulting Kenyans and calling them “monkeys” went viral. Chinese state-owned media routinely commit blunders that confirm Kenyans’ fears about Chinese racism and neocolonialism. In a Lunar New Year’s gala broadcast to some 800 million viewers in 2018, Chinese actors donned blackface, fake bosoms and buttocks, and a monkey suit, in a skit set in Kenya designed to show how grateful Africans are for Chinese investment.
Tensions about Chinese expats in Kenya often run high. This past February, hundreds of protestors surrounded a Chinese-owned shop in Nairobi to complain that it was undercutting them by selling the same Chinese-made plastic consumer goods for far less than the street sellers were able to purchase them for, insinuating that the goods were counterfeit or imported illegally. They waved signs that said, “Stop China Invasion.”
On the train to Suswa, I asked the students what they thought about the Chinese presence in Kenya. Nowadays, “we’re more like a colony of China,” said an international relations student named Marvelous, 19. “The U.S., their power is diminishing. The world is a power struggle and China has been building its influence.”
Dau la mnyonge haliendi joshi — “A poor person’s sailboat never catches the wind.” Poor men might build the railways, but they’ll barely benefit from it.
China outcompetes the U.S. in supplying loans and construction in Kenya. Years ago, the U.S. construction firm Bechtel won a bid to construct a major new highway between Nairobi and Mombasa. But after Bechtel rejected the idea of a public-private partnership toll road, which it said would massively inflate the cost of the project and make it unfeasible, Kenya rescinded the contract and awarded it to the China Road and Bridge Corporation instead. In 2020, a Kenyan court ruled that the SGR contract had been awarded illegally — given directly to the China Road and Bridge Corporation without an open bidding process that would have allowed other companies to compete for it.
Since its inception, the railway has been hemorrhaging funds. Its first three years, it suffered a $200 million loss. By 2021 revenues were increasing, but whether it will generate enough profit to repay the loans remains in doubt.
None of the Kenyans I spoke with blamed the U.S. or China the way they blamed their own government. Seventeen Kenyan officials have been charged with conspiracy to commit corruption and abuse of office for allegedly funneling more than $2 million in land compensation for the SGR to people and companies who did not own the land. In order to salvage his unprofitable creation, Kenyatta unlawfully forced shipping companies to use the railway and the dry port near Suswa, putting hundreds of truck drivers and Mombasa port workers out of a job. President William Ruto reversed the decision.
In my conversations with civilians, I found that many had come to take corruption for granted, echoing Swahili proverbs about the inevitability of inequality and misfortune. Fundi hana chombo — “Carpenters don’t own furniture.” Dau la mnyonge haliendi joshi — “A poor person’s sailboat never catches the wind.” Poor men might build the railways, but they’ll barely benefit from it.
Perhaps Kenya will go the way of the Democratic Republic of Congo and someday attempt to renegotiate or even renege on a bad deal. There, a $6 billion megadeal allowed Chinese banks to lend money to Chinese companies to build roads, schools and a massive cobalt and copper mine whose profits would repay the loans. Now, a decade later, Congo’s unelected leader is desperately trying to renegotiate the deal, arguing that the Chinese companies didn’t build as much infrastructure as they’d promised. But nobody knows precisely what was promised because two consecutive Congolese governments have refused to make the contract public.
The same dynamic is already playing out in Kenya. Kenyatta’s government illegally refused to release the SGR contract to the public, citing concerns about “national security,” even after a court ordered it to do so. Ruto, the current president, has released only parts. Without access to the full contracts, it’s impossible to know the full price that Kenyans are paying.
This obfuscation has caused high levels of confusion. In 2018, Kenya’s auditor-general misread excerpts of the SGR contract and informed Parliament that China could seize the port of Mombasa if Kenya failed to repay the loans. Experts at CARI have meticulously refuted the misreading of the “sovereign immunity waiver,” a standard provision of nearly any loan contract that keeps parties liable if other parties fail to pay back their debts. In short, if Kenya’s government doesn’t earn enough revenue from the railway, it will have to divert other public revenues to repay the loans.
The SGR ought to be a warning to Kenya’s leaders not to launch another project of uncertain payoff that requires heavy borrowing. But in 2014, Kenya began building the first phases of the Lamu Port, South Sudan, Ethiopia Transport Corridor (LAPSSET) to create oil pipelines, railways, highways and even a fantastical new “port city” on the island. So far, all that’s been completed is a few births of the new Lamu port. But if LAPSSET moves ahead, these dubiously planned projects could substantially amplify Kenya’s debt.
Chinese banks are now under increased government scrutiny and unlikely to continue making the same big bets on African infrastructure. “I don’t see this craze for infrastructure happening again,” Zhu told me. I asked whether she thought Kenya would one day secure loans to finish the railway. “Maybe if some future president wants to use that as his political capital,” she replied.
By the time Sempui dropped me back at the Suswa train station for my return trip to Nairobi, the students had already returned, a bit tipsy, having found booze and a place to picnic. A girl who’d been quiet on the way out removed her shoes, sang and danced to music as the train rolled back. Popcorn littered the cabin by the time we pulled into Ngong Station in Nairobi, two minutes ahead of schedule. The students stumbled off.
The station is so far on the outskirts of town that the only transport is by motorcycle or by foot. The students decided to walk along the narrow dirt road to the city, which had turned muddy from the rains.
✺ Published in “Issue 5: Debt” of The Dial
Photo: “A passenger train on the Mombasa - Nairobi SGR powered by a DF-11 diesel-electric locomotive” by TTC dude (via Wikimedia, licensed under CC BY-SA 4.0)