Viability of planned Ugandan railway link to Kenya is questioned by analysts

Uganda has switched from a Chinese to a Turkish company to build a proposed $2 billion railway line linking its capital to the border with Kenya but analysts say Chinese investors poured doubt on the viability of the project.

The proposed railway is designed to link up the capital city Kampala with one being built in Kenya to improve trade and travel between the neighbors. After eight years of waiting, Uganda finally terminated its contract with China Harbor Engineering Company in favor of Turkish construction company Yapi Merkezi. The change in contractor was due to financial challenges after the Chinese firm reportedly failed to convince Beijing to finance the project, David Mugabe, the public relations officer for Standard Gauge Railway Uganda, says.

Under the Chinese deal, the project was to cost Uganda $2.2 billion with 85% funding to be sourced by the contractor. Ugandan officials say they interpret the comment made by China’s ambassador to Uganda that Beijing had become more cautious on financing big infrastructure projects in Africa as that it essentially raises questions about the financial viability of the whole project. “I think it’s possible they are being risk shy. We are not bankable,” says economist Madina Guloba who thinks that it’s likely China pulled out of the deal. “Then they are safer going out of it than try to look at other issues. We have had infrastructure things and they are not productive. So how best are you planning to make it even more productive,” Guloba added.