KENYA: In a move aimed at mitigating the financial challenges posed by mounting debt obligations and increased fuel prices, Kenya has announced a significant increase in passenger fares for the Chinese-built Standard Gauge Railway (SGR). State-owned Kenya Railways unveiled the fare adjustments in a statement, revealing that the 290-mile journey connecting the bustling port city of Mombasa with the capital, Nairobi, will experience notable price hikes. First-class tickets will see their cost rise to approximately $30, up from the previous $19, while economy-class tickets will increase to $10, compared to the previous $6.
Kenya Railways explained the fare adjustments as a response to the global surge in fuel prices, stating, “This increase is informed by changes in the energy and petroleum sector, where prices of fuel have significantly increased, thus affecting the cost of our operations.”
This decision follows comments made by Kenya’s central bank governor, Kamau Thugge, who recently suggested that the Kenyan shilling had been overvalued by 25% for years. This overvaluation contributed to the country’s artificially strong exchange rate, which created challenges for Kenya’s economic stability. Just two weeks ago, President William Ruto visited China, where he sought a $1 billion loan to address stalled infrastructure projects, even as Kenya’s overall debts reached a record $70 billion.
The revised train fares will come into effect starting on January 1, 2024. This adjustment will not only impact the critical railway connection between Mombasa and Nairobi but will also influence the commuter rail service in the capital city, Nairobi. Additionally, it will affect the Kisumu and Nanyuki safari trains, which attract thousands of tourists annually. The Standard Gauge Railway (SGR), a $4.7 billion project funded by loans from Chinese banks, commenced operations in 2017. However, it has faced challenges related to low cargo service uptake.
Economist Aly-Khan Satchu emphasized, “The Kenya SGR desperately needs cross-border expansion to make it a financially sustainable project. The SGR, as is, is a dud. To make it sustainable, it needs to connect Uganda’s oil to the sea and Congo’s minerals.” Kenya has been grappling with rising public debt levels, prompting President William Ruto to announce stringent austerity measures. These measures include restrictions on foreign trips and budget cuts exceeding 10% for all government ministries.
Nevertheless, President Ruto has faced criticism from the Kenyan public regarding his frequent foreign travels. Since his inauguration in September 2022, he has embarked on 38 trips, surpassing the travel records of his four predecessors in their first year in office.