The government of Uganda is negotiating a $2.3 billion loan – a sum that represents a big portion of its national output – to be used to fund an initial 273 km stretch of rail line to connect neighbouring Kenya.
Uganda has taken a hammering from weak economy, depreciating shilling, slow recovery of war torn South Sudan and high interest rates for their woes.
But the $2.3 billion (Ushs 8,268,500,000,000) loan with China’s Exim Bank if secured and properly used will bring about faster and cheaper transportation, an official said on Thursday, with the rail links also expected to help to boost the volume and efficiency of trade between Kenya’s Indian Ocean seaport of Mombasa that Uganda uses daily and its vast hinterland stretching to South Sudan, eastern Democratic Republic of Congo (DRC), Rwanda and Burundi.
“The construction of the eastern route … will cost $2.3 billion,” Standard Gauge Railway project head Kasingye Kyamugambi told Reuters, referring to the 273 km stretch between Kampala and Malaba on the border with Kenya.
“Uganda is negotiating with Exim Bank of China to secure financing for the project and begin construction.”
Kyamugambi did not say when a deal is expected to be finalised but said that construction — slated to start once funds are secured — will take 42 months.
Once fully completed, the railway will have several arms connecting it to Congo, Rwanda and South Sudan and the new electric rail network is expected to save Uganda an estimated $2 billion a year through lower freight costs and shorter shipment times.
Kyamugambi said the Ugandan government will contribute 15 percent to the cost of the Malaba-Kampala stretch and also pay for land for the railway corridor.
Last month a Kenyan official said that work on the country’s Mombasa-Nairobi stretch of the new railway link, also financed by China, was 98 percent complete and that it would begin commercial operations in January 2018.