Bottom Line: Rushing to get some massive infrastructure projects off the ground as oil discoveries move towards commercial production in Kenya, the Chinese launch a landmark multi-country railway project to compliment the port expansion at Mombasa.
Recommendation: This massive rail project—funded by Chinese soft power—will dramatically increase Kenya’s trade prospects and secure its position as a regional hub and economic powerhouse. Investment will respond in kind.
Analysis: The Chinese have officially begun construction on a $13.8-billion railway project that will connect the port of Mombasa, which is being expanded, and the capital city of Nairobi, and eventually possibly even link Kenya’s market with landlocked neighbors Uganda, Rwanda and South Sudan. So far, the Chinese have funded the first 450-kilometr sector of the project that runs from Mombasa to Nairobi for $5.2 billion, which is slated for completion by 2017. Construction is being done by state-owned China Road and Bridge Corporation (CRBC), which in August completed the first stage of expansion at Mombasa’s port—a massive project in itself which included a new berth with a 50,000-ton container ship capacity. The new rail line will boost transport volumes between the port and the capital significantly by reducing the transit time from 36 hours to eight hours and resulting in a reduction in transport costs by about 60%.
Work has also begun on Kenya’s…