Kenya seeks UAE aid for railway expansion after China’s funding withdrawal

Kenya Seeks UAE Partnership for Railway Expansion After China Withdraws Support

Kenya is taking a significant step to ensure its economic growth by working with the United Arab Emirates (UAE) to restart its Standard Gauge Railway (SGR) project, which has stopped. Originally financed by China as part of its Belt and Road Initiative, Beijing stopped funding the project in 2019, leaving it unfinished. Presently, Kenya and the United Arab Emirates are investigating ways to finish this important infrastructure project that will improve connectivity and trade in the region.

Reviving the Standard Gauge Railway Project

The Standard Gauge Railway was designed to connect Kenya’s coastal city of Mombasa with various inland regions and neighboring countries like Uganda and South Sudan. This project was anticipated to significantly boost trade and integration across East Africa. However, the construction came to an abrupt halt in the Rift Valley, approximately 468 kilometers short of the Ugandan border, following China’s withdrawal of funding.

Kenya’s President William Ruto, who took office in September 2022, has prioritized diversifying the country’s international partnerships. On Tuesday, Ruto shared on social media platform X (formerly Twitter) that discussions with the UAE are underway to finance and complete the SGR project. Both countries plan to conduct a feasibility study to evaluate the railway’s potential impact on regional trade and connectivity.

Strengthening Kenya-UAE Economic Ties

The UAE and Kenya work together on more than just the railway project. A Comprehensive Economic Partnership Agreement (CEPA) was recently signed by the two countries with the goals of lowering trade barriers, expediting customs procedures, and encouraging reciprocal investments. By 2023, bilateral commerce between Kenya and the UAE had increased to 445 billion Kenyan shillings. The UAE is currently Kenya’s sixth-largest export market and its second-largest import source.

UAE Minister of Trade Thani Al Zeyoudi has underlined President Ruto’s emphasis on Kenya’s strategic location as a gateway to East Africa. The CEPA deal is expected to open up new markets for Kenyan agricultural exports while guaranteeing a consistent flow of necessities like chemicals, machinery, and petroleum supplies from the United Arab Emirates.

Exploring Alternative Funding Sources

In addition to seeking UAE support for the railway, Kenya is finalizing a $1.5 billion commercial loan from the UAE to bolster its national budget. This move highlights the growing economic ties between the two nations and underscores the UAE’s confidence in Kenya’s role as a regional economic hub.

Regional Implications of Completing the SGR

The completion of the SGR has significant implications for East Africa. A fully operational railway will increase trade efficiency, reduce transport costs and foster economic integration across the region. For Kenya, the project is in line with its Vision 2030 development agenda, which aims to transform the country into an industrialized, middle-income economy.

By seeking the support of the UAE, Kenya is marking a strategic shift in diversifying its global partnerships. This collaboration with the UAE not only completes a significant infrastructure project, but also strengthens Kenya’s position as a regional trade and logistics hub. This partnership offers broad benefits for the entire East African region, paving the way for improved connectivity, economic growth and shared prosperity.