Kenya is advancing a $4 billion infrastructure financing initiative to extend its Standard Gauge Railway (SGR) from Naivasha to Kisumu and Malaba, strategically positioning the line as a regional freight artery linking the port of Mombasa to South Sudan, Ethiopia, and the Democratic Republic of the Congo.
The funding structure will securitise revenue from the railway development levy — a 2% tariff on imports generating approximately KES 50 billion (US$387 million) annually — offering predictable cash flows to underpin investor confidence. The financing will target both domestic and international markets, with the extension designed to unlock higher freight volumes and enhance the network’s commercial viability.
The current 480km SGR, built at a cost of $5 billion and completed in 2019, is Kenya’s largest infrastructure project since independence. The expansion plan envisions a public-private operational model: Kenya Railways will retain engineering and maintenance functions, while private operators — potentially led by Etihad Rail — will manage freight services.
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Discussions with Etihad Rail include moving an estimated 3 million tonnes of crude oil annually from Kenya’s northern oilfields, aligning with the operator’s requirement for 17 million tonnes in annual freight volumes to justify investment.
In parallel, the government is reactivating a $2 billion expansion of Nairobi’s Jomo Kenyatta International Airport (JKIA), seeking financing from multilateral and bilateral lenders, including China Exim Bank, JICA, KfW, the EIB, and the AfDB. Construction of a new terminal and runway refurbishment could commence before year-end.
To further diversify infrastructure funding sources, a KES 175 billion (US$1.36 billion) securitised bond for road construction will be issued next month, split evenly between local currency and USD tranches. Proceeds will partly refinance US$530 million in bridge financing from a syndicate including TDB, KCB, and Absa.
Investor Takeaway
Kenya’s multi-pronged approach reflects a shift towards securitisation and blended financing to reduce reliance on direct sovereign borrowing. The SGR extension presents opportunities for freight operators, logistics investors, and infrastructure funds seeking exposure to East Africa’s trade corridors, while the parallel airport and road projects signal a coordinated push to modernise transport infrastructure and support regional economic integration.
