Editor’s Note: June 07, 2019

Old infrastructure is better than no infrastructure

Uganda is planning to invest $205m in the rehabilitation of a 273km stretch of railway between the capital Kampala and Malaba on the Kenyan border. This part of a Standard Gage Railway (SGR) project linking the two countries.

The country had planned to build a new railway with $2.2bn from the Export–Import Bank of China, but funding has been delayed, forcing Uganda to look to its old infrastructure instead.

Kenya is in a similar position. Most of its part of the SGR has been built, with billions in loans from China, except for a link between Naivasha in the Rift Valley and Malaba. Its government has also opted to modernize the final stretch, having failed to secure as much as $3.6bn in additional Chinese funding.

Not ideal, but it beats the alternative of having no rail link at all, or years of delays. Rehabilitation is expected to increase freight capacity five-fold by 2026 on the Ugandan side, from 20,000 tons – 120,000 tons.

It’s also much cheaper.

Kenya has come under fire for taking on a combined $4.7bn in loans from China to fund the SGR, amid warnings about debt sustainability. There are similar concerns about Uganda’s borrowing.

In short, old infrastructure is better than no infrastructure.

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