Construction of Kenya's modern railway is on track - CNBC Africa

Construction of Kenya's modern railway is on track

East Africa

by Elayne Wangalwa 0

The building of Kenya’s Standard Gauge Railway (SGR) is set to commence this month.

China Road and Bridge Corporation, the main contractor for the project, has already set up management camps along the proposed railway line between Nairobi and Mombasa to embark on the multibillion Kenyan shilling project.

The construction of the SGR is one of the six critical thematic areas of the full year 2014/15 budget in order to further fortify the platform for accelerated inclusive growth. During the country’s budgetary address, the government allocated 22.9 billion Kenyan shillings in the 2014/15 Budget to fund its portion of the Standard Gauge Railway project which is scheduled for completion and commissioning in 2017.

The SGR is expected to improve Kenya’s productivity and competitiveness in the domestic and international markets and will be built according to Chinese railway design standards.  The railway will carry both freight and passenger trains.

(READ MORE: Education, ICT and energy take biggest share in Kenya's budget)

The construction of the modern railway line is anticipated to contribute 1.5 per cent to the country’s Gross Domestic Product (GDP).

“Going forward we will see a higher GDP growth of 6.5 per cent in 2015 and 7 per cent by 2017 as a result of the SGR,” Kenya’s Cabinet Secretary of the National Treasury, Henry Rotich said during a press briefing in December.

According to the financial agreement signed by Kenya and china in May 2014, the East African nation is required to finance 10 per cent of the 327 billion Kenyan shillings required to construct the 609 kilometer railway line from Mombasa to Nairobi, while China will finance 85 per cent of the total cost through the Export and Import (Exim) Bank of China.

Last month, the Chinese firm tasked with the construction of the railway announced that it will hire 30,000 Kenyans to construct the railway. The staff will range from engineering, technical and operations personnel.

“Kenyan workers hired to work on the railway will be trained on such areas as technology, safety and environment management,” the firm said in a statement.

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Meanwhile, in October, the International Monetary Fund (IMF) conducted an assessment for the country’s readiness to qualify for a precautionary loan facility.

“Fiscal policy will aim at preserving debt sustainability while providing room for the execution of the Standard Gauge Railway project. To accommodate additional investment spending, the government is committed to containing the wage bill over the medium term,” said Mauro Mecagni, Assistant director of the IMF's African department in a statement.