Kenya forcing importers to use costly new Chinese railway, businessmen say

Kenya’s new Chinese-built railway should have been a boon for business. The $3.3 billion line sliced hours off the journey from the port city of Mombasa to the capital, Nairobi.

But some importers said their transport costs shot up by nearly 50% when they used the rail due to extra fees, more time spent clearing goods at the congested Nairobi train depot and the need to send a truck to collect the goods from there.

These importers used to truck their goods in from the coast. But port authorities now say businesses based in Nairobi and upcountry must use the new line because the Mombasa port is contracted to supply it with a minimum amount of cargo.

“KPA has an obligation to feed the railway ... we were the guarantors of the rail,” said Daniel Manduku, head of the state-run Kenya Ports Authority.

The railway’s problems are a cautionary tale, both for developing nations loading themselves with Chinese debt, and for China as it seeks to expand global trade links and project soft power through its massive Belt and Road initiative.

“The vast majority of its (China’s) overseas spending has no detectable effect on economic growth,” said Bradley Sparks, executive director of AidData, a research facility that tracks development finance at William and Mary university in Virginia.