Africa News Bulletin

Kenya Raises Passenger Fares on Chinese-Built Railway Amid Economic Challenges.

Kenya Raises Passenger Fares on Chinese-Built Railway Amid Economic Challenges

Kenya made a significant announcement on Wednesday, revealing a sharp increase in passenger fares for its Chinese-built Standard Gauge Railway (SGR). The decision comes as Kenya grapples with the challenge of repaying substantial loans owed to Beijing and other creditors, compounded by rising fuel prices.

State-owned Kenya Railways issued a statement, indicating that the 290-mile journey between the port city of Mombasa and the capital, Nairobi, will see notable fare hikes. First-class fares will increase from $19 to approximately $30, while economy-class tickets will rise from $6 to $10.

The primary reason cited for this fare adjustment is the global surge in fuel prices. Kenya Railways pointed out, “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 development follows closely on the heels of a recent statement by Kenya’s central bank governor, Kamau Thugge, who highlighted that the Kenyan shilling had been overvalued by 25% for years. This artificial strength in the exchange rate had strained the country’s financial stability.

Just a fortnight ago, President William Ruto traveled to China in pursuit of a $1 billion loan to complete stalled infrastructure projects, even as Kenya’s overall debt has soared to a record $70 billion.

The revised train fares are scheduled to take effect on January 1, 2024. These changes will not only impact the popular commuter rail service in Nairobi but also affect the Kisumu and Nanyuki safari trains, which draw thousands of tourists annually.

The Standard Gauge Railway, funded by $4.7 billion in loans from Chinese banks and initiated in 2017, has grappled with low cargo service uptake. Economist Aly-Khan Satchu stressed the necessity of cross-border expansion for the SGR to achieve financial sustainability, suggesting that connecting Uganda’s oil to the sea and facilitating the transportation of Congo’s minerals would be vital steps.

Kenya has been wrestling with mounting public debt, prompting Ruto to announce stringent austerity measures. These measures include restrictions on foreign trips and more than a 10% reduction in all government ministry budgets.

However, Ruto has faced public criticism for his own frequent foreign travels, with 38 trips since his inauguration in September 2022, surpassing the foreign travel records of his four predecessors during their initial year in office.

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