Kenya keen to renegotiate debt, fees with China as coronavirus hits unprofitable Mombasa-Naivasha rail line

Kenya keen to renegotiate debt, fees with China as coronavirus hits unprofitable Mombasa-Naivasha rail line

  • State-owned engineering giant China Communications Construction Company and its subsidiary built the Mombasa-Naivasha Standard Gauge Railway line
  • The 580km (360 mile) line, which was completed in 2017, cost US$4.7 billion as part of China’s Belt and Road Initiative

Kenya’s debt troubles on its Chinese-built Mombasa-Naivasha Standard Gauge Railway line underline an endemic problem with large-scale Belt and Road projects that have been made much worse by the coronavirus pandemic.

These ambitious, and often ill-conceived projects, are brought to reality with generous Chinese funding, but unravel due to poor management by local governments, sometimes through misconduct, trade lawyers and analysts said.Poor profitability, made worse by tough Covid-19 economic conditions, were the main cause for Kenya last week to call for a renegotiation of its loan from China used to fund the 580km (360 mile) rail line, rather than the US blacklisting of Chinese state-owned engineering giant China Communications Construction Company (CCCC), which helped build the line.