Kenya and China Launch $1.5 Billion Highway Expansion Project

Kenya has initiated a $1.5 billion highway expansion project in partnership with two Chinese state-owned firms, marking a significant return of Chinese investment in East African infrastructure after a period of reduced activity. The project, which commenced on November 28, 2023, aims to enhance a critical transport corridor linking the port of Mombasa to Kenya's western region and neighboring landlocked countries, including Uganda, via Nairobi. The initiative is structured in two phases, with financing sourced through a combination of debt and equity.

Kenya and China Launch $1.5 Billion Highway Expansion ProjectChina resumes big-ticket projects in East Africa with Kenya’s $1.5b highway expansionReutersKenya turns to China for $1.5 billion highway following U.S. funding setback

The first phase of the project, valued at approximately $863 million, involves the China Road and Bridge Corporation collaborating with Kenya's National Social Security Fund (NSSF) to upgrade two existing sections of a 139-kilometer single-lane highway into four- and six-lane dual carriageways. The second phase, costing around $678.56 million, will be undertaken by Shandong Hi-Speed Road and Bridge International, a subsidiary of the Shandong Hi-Speed Group, which will convert a 94-kilometer single-lane road into a six-lane carriageway. Both phases will be financed with 75% sourced from debt and 25% from equity, with the NSSF contributing 45% of the equity for its partnered phase.

Kenya turns to China for $1.5 billion highway following U.S. funding setbackKenya and China Launch $1.5 Billion Highway Expansion ProjectChina resumes big-ticket projects in East Africa with Kenya’s $1.5b highway expansionReuters

China's engagement with Africa has evolved significantly over the past few years. Following a period of extensive investment, Chinese lending to the continent sharply declined around 2019 due to rising debt levels in countries like Kenya. However, at a summit with African leaders in 2022, Beijing pledged $50 billion in credit and investments over three years, signaling a renewed commitment to infrastructure development in the region. The highway expansion project follows Kenya's termination of a previous agreement with a consortium led by French construction giant Vinci SA earlier in 2023.

Kenya and China Launch $1.5 Billion Highway Expansion Project

Kenyan President William Ruto emphasized the necessity of the project, stating that securing normal budgetary allocations would have taken a "lifetime" and that borrowing was untenable given the country's debt burden. In response to concerns regarding Kenya's strategic pivot towards China, Ruto defended the partnership, highlighting the economic benefits of expanding exports to markets like China.

Kenya and China Launch $1.5 Billion Highway Expansion Project

The renewed partnership with China has drawn criticism from U.S. officials, including former President Donald Trump, who expressed concerns over Kenya's alignment with Beijing. Critics argue that this shift could undermine Kenya's longstanding ties with the United States, which has historically been one of Kenya's closest allies.

Kenya and China Launch $1.5 Billion Highway Expansion ProjectKenya turns to China for $1.5 billion highway following U.S. funding setbackReutersChina resumes big-ticket projects in East Africa with Kenya’s $1.5b highway expansion

The construction of the highway expansion project is expected to be completed by the end of 2027, followed by a 28-year concession period during which the firms will collect tolls to recoup their investment. As the project progresses, it is anticipated to enhance regional connectivity and bolster trade links between Kenya and its neighbors, reflecting a broader trend of international investment in African infrastructure development.

China resumes big-ticket projects in East Africa with Kenya’s $1.5b highway expansion