Debt trap: How Kenya’s president slept on the job as China plotted to own SGR through deliberate flaw in contract
Kenyan railway engineer Lawson Kamau Mbugguss has launched a stinging criticism of the Kenyan government for openly and negligently signing infrastructure development contracts without paying attention to the finer details with the potential to cost the country an arm and a leg.
Dr Kamau Mbugguss’s exposé comes on the back of fresh revelations that President Uhuru Kenyatta was in April last year forced to revisit the contract he signed – without reading – with the state-owned China Road and Bridge Corporation, which gave the lender automatic concession to the standard gauge railway (SGR) if Kenya defaulted on loan repayment.
From the time he served as finance minister in former President Mwai Kibaki’s government, Mr Kenyatta had a reputation for appending signatures to documents without reading them.
The SGR contract left no room for rescheduling of the loan of approximately Ksh400 billion ($3.8 billion). The government, it now emerges, had to sit down with unwilling Chinese government to insert a clause in the agreement that allows for rescheduling of repayment or renegotiating the loan without ceding sovereignty.
President Kenyatta’s attention was drawn to the flaw in the agreement by a state house official whose name was only given as Stanley. However, no date was given on when the anomaly matter came to light. What is not in doubt is the panic that followed when the Chinese appeared averse to revisiting the agreement for amendments.
“I am actually the one who got the feedback last April (and alerted the government). The ability of Kenya to reverse the previous arrangements was only realised by the Kenya government in September then all went completely silent,” the engineer responded when asked to shed more light on the finer details of the project.
This was after the China appeared to be exploring the possibility of taking ownership of the standard gauge railway citing ravenousness and high-level corruption became the byword of the authorities in Nairobi. Traditionally, China does not impose conditionalities on bilateral lending save for the ability to repay.
Against the backdrop of Nairobi bumbling and bungling to amend the agreement, research economists have warned that Beijing is occasioning a “debt trap” it plans to use to gain unstinted access to Africa’s natural resources – mainly mineral and timber.
Nairobi has received roughly Ksh400 billion ($1 billion) SGR construction facility for phase one and two from Beijing, but servicing the loan the East African nation secured for building the 600-kilometre Mombasa-Nairobi-Naivasha railway. The third phase of the project will push the credit facility to soar to roughly Ksh1 trillion ($8.6 billion).
“It was shocking and embarrassing to learn that President Kenyatta and his team of advisers did not read and understand the agreement. A clause in the original agreement that allowed China to own the railway was inserted in the agreement, but no government official seemed to be aware of it and its implication on Kenya’s sovereignty. China was on the verge of taking over the railway, less than 10 years after it was completed. It was a junior member of staff at State House who raised the red flag,” Mbugguss, a former Central Bank of Kenya (CBK) senior official, explained.
The president reportedly responded by demanding the agreement be renegotiated with the contractor, which included a clause on rescheduling the repayment to forestall the prospect of the railway falling in the hands of the Chinese.
Instructively, the Uhuru administration has never made public details of the agreement, even after promising to do so at a meeting with senior news editors at Mombasa State House in February 2020.
Mbugguss revisited the controversy around the SGR in Kenya, which he says has become a case study for hyper-inflated costs of infrastructure development in Africa, as he compared the strides made in in the United Kingdom to manufacture electric cars that run on railways against Kenya’s investment in decadent railway infrastructure.
Tell has learnt that the renegotiated agreement took nine months to hammer out, but the final details left the government with an egg on the face for compromising the sovereignty of the country by exposing taxpayers to the vulnerabilities created by the attorney general’s office, the ministry of trade and industry, the ministry of transport and the ministry of foreign affairs had roles in the flawed agreement.
Mbugguss spoke to Tell just days before he was invited by uSky Test and Certification Centre for a personal experience in testing and operation of the innovative suspended transit system, in addition to casting “a professional glance at uSky Transport & Infrastructure Technology,” in London, United Kingdom.
The engineer currently works as a railway engineer, trainer and lecturer in railway engineering from London. He runs a railways training college in London.
A media dispatch by uSky Test &Certification Centre after Mbugguss’s tour of the facility explained that the former Kenyan banker “knows that construction of conventional routes is extremely expensive, hard or infeasible at all in the regions and areas where difficult terrain or water barriers do not allow for regular transportation links. Thus, the construction of uSky complexes in mountainous areas or jungles, rainforests or deserts can be much cheaper compared to any other available transport means.”
Mbugguss, a now a British citizen, was born in Naivasha, Kenya, and educated in local schools before enrolling in the University of Nairobi for a degree in economics. He worked briefly for CBK before quitting to venture in civil engineering.
USky Transport & Infrastructure Technology is currently involved in the development of a “uCar” for countries in the tropics, which Mbugguss had been invited to give and expert opinion.
A brochure sent to Tell describes the car as comfortable and innovative. It says, “uCar is a comfortable electric vehicle with four seats. It is driven with a traction power from a contact network or on-board energy storage unit, and used for riding on urban and suburban routes. The design of the uCar makes it possible to arrange its modules into a single train through a rigid coupling. The number of train units and their capacity depends on the assumed ridership. The customised uCar in tropical version is designed for regions with arid climate and upper operation temperature limit up to +55°C.”
The cars, explains Mbugguss, make the SGR diesel-powered locomotives look medieval. The ravenous urge to pinch money from the project has no equivalent elsewhere in Africa, he points out.
The engineer says that with proper planning and transparency in tendering and execution of contracts for infrastructure development Kenya and the wider East Africa have the potential to smoothly switch transport modes from fossil fuel-powered vehicles to electric cars.
Mbugguss has in the recent past been engaging some African countries on how they can make railway transport more efficient and cheaper to develop and run.
According to uSky Centre, “Being an expert in his field, Dr Lawson Mbugguss is actively interacting with the African Union involved in the development of railway infrastructure on the African continent covering over 58,000 kilometres to link the African major cities and cross Africa from North to South and East to West. At this stage, a 12,000 kilometre route is under consideration, which assumingly should be implemented before 2026.’
It goes on to says that within this infrastructure, “the section of the railway in Nigeria running through Calabar, the capital of Cross River State and a port city of importance for freight traffic flows, is of greatest interest.”
When he spoke to Tell Mbugguss said he was optimistic uSky Transport & Infrastructure Technology could be an ideal alternative solution for the 80-100-kilomettre track.”
- A Tell report