The Kenyan government has announced plans to resume construction of the long-stalled Standard Gauge Railway extension from Naivasha to Malaba, with funding to come primarily from the Railway Development Levy rather than new loans from China.
The 369-kilometre line, part of Phase 2B of the Mombasa–Kampala SGR project, was originally intended to connect Naivasha to Kisumu and ultimately Malaba at the Uganda border. Construction halted in 2019 after completion of the 120-km Naivasha–Suswa section due to funding constraints, land acquisition challenges and negotiations over financing terms with China Exim Bank.
Transport Cabinet Secretary Kipchumba Murkomen confirmed the resumption during a stakeholder briefing in Nairobi on February 24, 2026. “We are ready to restart the SGR extension to Malaba,” Murkomen said. “This time we will not take new loans from China or any other lender. We will use the Railway Development Levy, which has accumulated significantly since 2013, to fund the project progressively.”
The CS revealed that the government estimates the full Naivasha–Malaba line will cost up to Sh518 billion. Of this, the Treasury has identified Sh300–350 billion in accumulated levy funds currently held in a dedicated account, with projections showing the levy will continue generating revenue at current rates to cover the balance over the construction period.
The Railway Development Levy, introduced in 2013 at 1.5 percent on the customs value of imported goods, was specifically designed to finance SGR construction and debt servicing. While part of the levy has been used to repay the Mombasa–Nairobi Phase 1 loan from China Exim Bank, a substantial portion remains unutilised due to the 2019 pause. Murkomen said redirecting these funds avoids additional debt burden at a time when Kenya is focused on fiscal consolidation.
“We have learned from the past,” Murkomen stated. “The first phase was financed with a loan that has high repayment costs. This extension will be built with our own resources, meaning lower interest payments and greater ownership of the asset. It also protects our sovereignty over this strategic corridor.”
The project will be implemented in phases to manage cash flow and construction risks. Phase 1 of the extension (Naivasha–Eldoret) is prioritised, with detailed designs and land acquisition already advanced. Subsequent sections to Bungoma and Malaba will follow as levy collections and progress allow.
Kenya Railways Corporation Managing Director Phillip Mainga said the resumption will create thousands of direct jobs and stimulate economic activity in Rift Valley and Western Kenya. “The full Mombasa–Malaba line will reduce transit times for cargo from 36 hours by road to under 12 hours by rail,” Mainga said. “It will lower transport costs for importers and exporters, decongest the Northern Corridor highway and boost regional trade with Uganda, Rwanda, South Sudan and DRC.”
The decision to avoid new Chinese financing follows public and parliamentary scrutiny of the original SGR loan terms, including high interest rates and the pledge of the levy as security. By relying on domestic resources, the government aims to retain full control over tariffs, operations and future extensions.
Makueni MP and Public Investments Committee member John Mati said the approach is prudent. “Using the levy makes sense because it is already ring-fenced for rail development,” Mati noted. “Parliament will scrutinise the implementation to ensure value for money, transparency in procurement and protection of the public interest.”
The resumption has been welcomed by business groups. Kenya Association of Manufacturers CEO Anthony Mwaura said: “Reliable rail connectivity is critical for manufacturing competitiveness. We urge the government to maintain momentum and deliver this corridor efficiently.”
The project still requires final Cabinet approval for the funding model and procurement strategy. Kenya Railways has invited expressions of interest from contractors experienced in large-scale rail construction, with preference for local and regional firms to maximise local content.
As Kenya seeks to complete its flagship SGR network without additional external debt, the Naivasha–Malaba extension represents both a test of domestic resource mobilisation and a strategic move to strengthen regional trade links.
