Elim Capital CEO on Kenya's SGR expansion plans

Kenya has set its sights on a massive 2.1 trillion Kenyan Shillings plan to extend the Standard Gauge Railway (SGR) to Kisumu, Malaba, and Isiolo by the end of June 2027. This ambitious move will push the total spend on the modern railway to over 2.75 trillion Kenyan Shillings. Odhiambo Ramogi, CEO of Elim Capital, joined CNBC Africa to provide insightful perspectives on this significant development. The expansion of the SGR has been a key priority for President William Ruto, following the halt in financing during the previous administration. Ramogi highlighted the plans for the second phase of the SGR which aims to extend the railway beyond Naivasha to Kisumu, Busia, and Malaba, potentially revolutionizing cross-country travel. While acknowledging the convenience and importance of such infrastructure, he also raised concerns about the financial implications and governance challenges faced in the first phase of the project, urging for improved oversight and cost-efficiency in the upcoming expansion. The construction of the SGR extension is set to commence in July this year, with projected budgetary allocations for the next three years. However, Ramogi expressed uncertainties regarding the financing plans, indicating a possible deficit of around 800 billion Shillings that may require borrowing to finance the project. He discussed the potential of a public-private partnership model for construction, emphasizing the need for transparent and sustainable financial mechanisms to avoid further burdening the government and taxpayers. Addressing the economic viability of the SGR expansion, Ramogi challenged the notion that the project's success hinges solely on its extension beyond Naivasha. He suggested that the key focus should be on enhancing connectivity between Nairobi and Mombasa, given the significant import and transit market in the region. While acknowledging the importance of extending the SGR to bolster regional trade, he emphasized that the primary economic impact lies in facilitating efficient transport within existing industrial hubs, rather than solely focusing on cross-border connectivity. Ramogi's analysis underscores the complexities and considerations involved in Kenya's ambitious SGR expansion plans, calling for strategic planning, sustainable financing, and a clear focus on enhancing domestic economic growth through improved transportation infrastructure.