Ethiopia and Kenya agree to build crucial rail connection

Work on the ambitious Lamu–South Sudan–Ethiopia Transport Corridor Project (Lapsset) is slated to commence in 2025. This comprehensive initiative involves the construction of a high-speed electric railway that will span from Lamu, extending up to the town of Isiolo, situated approximately 200 kilometers northeast of Nairobi. From there, the railway network will bifurcate into three branches, facilitating connectivity to Nairobi, Addis Ababa, and the South Sudanese capital, Juba. The last updated report on the project was provided by the East African news based in Nairobi.

The scale of the Lapsset project is nothing short of monumental, with an estimated cost of $13.8 billion, surpassing Kenya’s other significant rail project, the Standard Gauge Railway (SGR) line connecting Mombasa and Nairobi. Despite its size, the Lapsset Authority has expressed a high degree of confidence in the project’s viability, citing an expected internal rate of return exceeding 12%. The Lapsset authority had informed Bloomberg of its plans last month.

To move forward with this ambitious endeavor, Kenya is actively seeking financial support, with a request for $9 million from the African Union Infrastructure Fund. These funds would be allocated towards conducting comprehensive feasibility studies to assess both the technical and economic feasibility of the proposed railway line.

Kenyan Transport Minister Kipchumba Murkomen has indicated his commitment to collaborating with Ethiopian counterparts to secure joint funding for the Lapsset project. This cooperative effort follows a recent agreement between Kenya and Uganda to collectively raise $6 billion for the expansion of the SGR from Naivasha in Kenya to the Ugandan capital, Kampala.

In summary, Lapsset represents a substantial undertaking with the potential to revolutionize transportation connectivity in East Africa. The project’s high expected return on investment and ongoing efforts to secure funding demonstrate a strong commitment to its realization and the broader regional development goals it aims to achieve. Funding for the project is expected to come from an assortment of multilateral and bilateral lenders including the African Development Bank and potentially the BRICS New Development Bank.