End of the Line? Allegations of Corruption Knock Kenya’s Railway Project Off-Track

One of Kenya's existing railway lines. Photograph by Victor Bautista.

The growing controversy around Kenya’s multi-billion dollar railway project has delayed construction, but could it fully derail it?

By Sarah Collier

One of Kenya’s existing railway lines. Photograph by Victor Bautista.

Kenyans are continuing to hold their breath as a parliamentary committee investigates allegations of irregularities into the tender process for a multi-billion dollar railway project. The $5.2 billion standard gauge railway is to link Mombasa with Nairobi and has been heralded by President Uhuru Kenyatta as largest project to be undertaken in Kenya for 50 years. However, claims of corruption and mismanagement in the awarding of the contract have stalled construction and provoked questions into the true costs of the deal.

On one side, anti-corruption campaigners are calling for answers and the Parliamentary Public Investment Committee (PIC) is investigating various allegations and irregularities. On the other, the government has defended the deal and infrastructure companies are suggesting the inquiry is moving too slowly, holding up the crucial project. Meanwhile. a number of other issues − such as questions over the wisdom of the project in the first place and controversy over compensation for land − continue to cast a shadow over what has become one of Kenyatta’s pet projects.

Controversy on wheels

The need for improved infrastructure in East Africa is clearly apparent and well-documented. According to a 2011 World Bank report, the region’s infrastructure lags behind West and Southern Africa’s on various indicators, while the International Monetary Fund estimates that trade within the East African Community has tripled over the past decade, putting ever greater strain on already struggling networks. In Mombasa, for example, Kenya’s transport minister Michael Kamau claims some 3,300 trucks leave the regional port each day – one every 30 seconds – generating significant congestion.

In light of these challenges, a huge intra-regional rail network linking Kenya, Uganda, Rwanda and Burundi was announced in November 2013. The first phase of the development is to link Mombasa with Nairobi, and will, according to Kenyatta, reduce the costs of freight transport by 60%, cut the journey time down from 30 hours to just 8 hours, and relieve road congestion.

However, soon after the project was announced, rumours of corruption in the tender process emerged, and in December, the young and little-known MP, Alfred Kiptoo Keter, publicly alleged that the project was hugely overpriced relative to international standards and that the legal procedure for bidding had not been followed. Some political figures hit back with their own allegations that Keter had been hired to stir up trouble by business leaders who were disgruntled at not being awarded the railway deal themselves.

Nonetheless, Kenyan officials did reveal that there had been no public bidding for the concession, which was awarded to China Road and Bridge Corporation (CRBC) reportedly as part of a 2011 memorandum of understanding between the Kenyan and Chinese governments. That deal is also believed to have included an agreement that the China Exim bank would help fund 85% of the project.

Two parliamentary investigations were launched into allegations around the deal, while the project also faces a challenge in Kenya’s High Court. The first parliamentary probe − carried out by the National Assembly’s Committee on Transport, Public Works and Housing − gave the deal a clean bill of health in February and urged the government to speed up proceedings so construction could begin.

However, the second investigation − being conducted by the Public Investment Committee − is ongoing and has revealed various irregularities. For example, documents looked at by the committee suggest that the Public Procurement Oversight Authority (PPOA) − the government agency which approved the project − ignored warnings from Githu Mugai, Kenya’s Attorney-General, prior to the signing of the deal.

The PPOA reportedly consulted Mugai, who raised strong concerns over the way in which the same agreement for the railway switched from being a commercial contract to a government-to-government contract. In a letter to the agency, he wrote: “In adopting initially a procedure… and awarding a contract on that basis, only to subsequently cancel it, and purport to re-award it under alternative arrangements, raises doubt about the integrity of the statute’s authority.” One suggestion is that the type of deal was changed because government-to-government contracts are not under the purview of the PPOA, meaning it was therefore not required to ensure it followed the usual procurement procedures.

The committee has also reported difficulty getting coherent answers from the Kenya Railways Corporation (KRC) and summoned its management as well as that of the PPOA to return to the committee to clarify their testimony, claiming that contradictions in their previous responses show they “were not prepared to deliver factual information.”

A number of anti-corruption campaigners meanwhile have called on the government to suspend the railway project until the issues around it have been resolved, while others have demanded the deal be cancelled and a fresh and transparent tender process conducted.

Legacy project

Alongside the various allegations of corruption, the railway project has also stirred controversy in other ways.

Some, such as the African Development Bank (AfDB), for example, have argued that it would make more sense to improve existing railway systems rather than building new ones. According to the AfDB, railways in East Africa are currently operating at just 20-30% capacity due to poor maintenance and mismanagement, and the bank − along with other financial institutions − previously pledged $164 million to renovate the line between Mombasa and Kampala. An additional concern is that the new standard gauge railway line will be difficult to integrate with the existing network in East Africa which is mostly narrow gauge, while there have also been questions raised over compensation for those displaced by the construction of the lines.

These myriad concerns and legal challenges are likely to delay the Mombasa-Nairobi project’s timetable, which is set for completion in 2017. However, given President Kenyatta’s enthusiasm for it, it seems unlikely that the deal will be completely derailed. Kenyatta has publicly put his name behind the project and has gone as far as to say it “will define my legacy as president of Kenya.”

As attention on the project grows, Kenyatta may well be right that the railway programme will be one of the issues for which his time in office is remembered. But amidst growing controversy over the tender, allegations of corruption and questions over its cost-effectiveness, it remains to be seen just how happy those memories will turn out to be.

Amendment [27/03/14]: The original said that KRC and PPOA management was summoned last week. In fact they were called on by the committee in late January to answer questions last month.

Written by Think Africa

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