Why Kenya’s Standard Gauge Railway was doomed from the start

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KENYA’S new multi-billion dollar standard gauge railway (SGR) was destined to fail even before it launched, argued Kenyan legal scholar Luis Franceschi in a new opinion column in the Nation newspaper. Franceschi joins a growing number of analysts who have long asserted that the railway was built using a faulty business plan and was never going to be able to generate the revenue needed to repay the loans.

Last month, Ian Taylor, a well-known China-Africa scholar at the University of St. Andrews reached a similar conclusion in a paper that he published in African Studies Quarterly.

Both scholars note that government planners predicated the feasibility study on the SGR nearly doubling its current cargo transport volumes, which would have been nearly impossible under normal circumstances and inconceivable now amid the ongoing pandemic.

Luis Franceschi’s case as to why the SGR will fail:
No profits: ‘Last year, the SGR recorded revenue of only Sh10.1bn (about $92 million), with an approximate operational cost of Sh18bn. This is 65.56 per cent below what Kenya Railways anticipated. Not only has the project been unable to generate profit greater than the interest cost of the loan, it has also been unable to generate any profit at all.’

No cargo: ‘The feasibility study of the project stated that the SGR would transport 22 million tonnes of cargo annually. As each train can only carry 3,000 tonnes, this would require 20 trains per day moving down the track.  However, according to KIPPRA, the operational capacity of the railway is 12 trains per day. From the onset, the SGR has been incapable of meeting its targets.’

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