High Court Clears Ruto to Use Railway Levy for SGR Expansion to Malaba

The High Court has handed President William Ruto a major boost in his plans to extend the Standard Gauge Railway (SGR) to Malaba after upholding the constitutionality of the Railway Development Levy.

In a ruling delivered on Friday, July 17, Justice Gregory Mutai found that the Railway Development Levy, which the government intends to use to finance the extension, was lawfully enacted.

Justice Mutai ruled that the Railway Development Levy, charged at a rate of 2 per cent of the value of imports, was properly enacted.

The 2 per cent import levy generates roughly Ksh36.8 billion to Ksh50 billion annually.

President William Ruto, with his Ugandan counterpart, Yoweri Museveni, during the launch of the Kisumu-Malaba section of the SGR on March 21, 2026. PCS

The levy is paid directly to the Kenya Revenue Authority (KRA) before cargo clearance and applies to imports arriving by sea, air and land.

It was established to finance the construction, operation and maintenance of the SGR and other national railway infrastructure aimed at reducing regional freight transport costs.

Under the Miscellaneous Fees and Levies (Amendment) Act, the government ring-fenced the collections into a dedicated Railway Development Levy Fund.

The ruling is a major win for the Ruto administration, which has been seeking additional revenue streams to finance infrastructure projects while managing Kenya's public debt.

The decision also allows the government to continue leveraging up to 90 per cent of the fund's future revenues as collateral to raise financing for railway projects under the amended law.

The state is pursuing a 15-year infrastructure bond worth between Ksh387 billion and Ksh390 billion to finance the Naivasha-Kisumu-Malaba section of the SGR, expected to be completed around June to August 2027.

The railway levy is expected to serve as security alongside the Air Passenger Service Levy in a Ksh541 billion multi-levy securitisation programme aimed at financing major transport infrastructure.

The Treasury expects the Railway Development Levy to raise Ksh48.5 billion during the financial year ending June 2027, according to official budget estimates.

However, Justice Mutai ruled that the use of the levy to finance the Nairobi Commuter Rail project before Parliament amended the law was unconstitutional.

He directed the government to conduct a fresh, transparent and competitive tender for the continuation of the works within 90 days.

A train at the Nairobi Central Railway Station, Nairobi, October 18, 2024.

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KR