The Kenyan government is seeking $4 billion (Ksh517 billion) to extend the Standard Gauge Railway (SGR) line from Naivasha to Kisumu and Malaba on the Ugandan border.
According to a report by Bloomberg, Transport Cabinet Secretary (CS) Davis Chirchir confirmed that Kenya is in talks with Etihad Rail, the developer and operator of the UAE’s railway network, and will securitise the import levy to raise funds.
Chirchir said the Treasury collects about Ksh50 billion annually from the tariff that’s charged at a rate of 2% of the value of imports into Kenya.
“We’re seeking to allow securitization of this levy and use it to raise funds,” Chirchir said.
Etihad Rail is negotiating a concession in which it would invest in rolling stock (trains and wagons) and manage freight operations on the line.
Chirchir said the Company is looking at handling 17 million metric tonnes of cargo to justify a return on investment.
There are also discussions on the possibility of ferrying Kenyan crude from fields in the north of the country via railway wagons.
This would amount to about 3 million tons annually.
Etihad Rail has not responded to the reports that it will partner with the Kenyan government in the expansion of the SGR.
SGR Extension Plans
SGR extension has been an ongoing discussion since the completion of the first phase in 2019, which linked the port of Mombasa to Naivasha through Nairobi.
The extension to Malaba is expected to improve the sustainability of the railway by linking it to Uganda, Rwanda, and the Democratic Republic of Congo (DRC).
These countries are also developing their respective segments of the railway.
However, the report by Bloomberg stated that there are new plans to extend the railway network to South Sudan, Ethiopia, and the DRC to make a business case for Etihad to invest in freight operations.
Chirchir said the government plans to unbundle the railway industry to allow private investors to run operations, with the state-owned Kenya Railways Corporation being in charge of engineering and maintenance.
Also Read: KeNHA Gives Way Forward on Nairobi–Mombasa Expressway Project
Funding from China
In May 2025, Treasury CS John Mbadi said Kenya asked China to take on the full cost of extending the SGR.
Initially, Kenya was to raise 30 per cent of the $4.5 billion project, with China Road and Bridge, China Development Bank, and China Exim Bank proposing to fund another 30 per cent, while a consortium would cover the remaining 40 per cent.
However, plans changed after President William Ruto’s state visit to China in April 2025.
Mbadi stated that Kenya is experiencing both increasing expenditure and limited revenue, which means it cannot contribute 30% of the financing requirement.
“The discussion has changed, and we are looking at a model of procurement where we get funding exclusively outside of the government.”
Also Read: Govt to Use Ksh300 Million to Develop SGR Ticketing System
Ruto’s Financing Model
Ruto also negotiated a new financing model with China for the SGR Phase 2B from Nakuru to Kisumu all the way to Malaba.
Kisumu Governor Anyang’ Nyong’o thanked President Ruto for reviving the stalled railway project.
“This branch of Kenya Railways has been on the drawing board for a long time. Making it a reality at last is something we in the Lake Region need to applaud. Kudos, Mr. President,” Governor Anyang’ Nyong’o said.
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Hi the government should tell us what to do us who were affected by the sgr plans…. because they stopped us from doing any development in our home now is one year and nothing is happening..