A report submitted by Leah Sagini, a student at Multimedia University, has examined how improved Standard Gauge Railway connectivity into Nairobi and Mombasa central business districts could reshape Kenya’s long-distance bus industry, particularly operators serving the busy Nairobi–Mombasa corridor.
The policy and economic research report, titled “The Impact of the Standard Gauge Railway (SGR) and the Proposed Extension of the SGR into Mombasa CBD on Long-Distance Commuter Bus Services in Kenya,” argues that the railway is unlikely to completely displace long-distance buses. Instead, it could gradually take away some of their most valuable passengers while forcing operators to rethink fares, routes and service quality.
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The report identifies the SGR’s current last-mile problem as one of the biggest reasons buses have remained competitive since passenger rail services began in 2017. Nairobi Terminus is at Syokimau while Mombasa Terminus is at Miritini, meaning many rail passengers still require taxis, matatus or other transfers to reach the city centres.
Long-distance buses, on the other hand, generally operate from terminals much closer to commercial centres, allowing passengers to complete their journeys with fewer transfers.
That advantage could narrow significantly if rail passengers are able to travel conveniently between the centres of Nairobi and Mombasa.
Sh4.2 Billion Mombasa Rail Link Could Change the Competition
The report highlights the Mombasa SGR Terminus–CBD Link, a Sh4.2 billion project designed to connect the Miritini terminus with the historic Mombasa Central Railway Station.
Rather than extending standard-gauge tracks directly into the CBD, the project rehabilitates approximately 26 kilometres of the existing Metre Gauge Railway corridor.
The works include rehabilitation of Mombasa Central Railway Station, mini-stations at Changamwe East, Changamwe West, Miritini and Shimanzi, a pedestrian connection between the railway platforms at Miritini and a railway bridge across the Makupa Causeway.
The line has a stated design capacity of around 4,000 passengers per day.
The report also examines the separate proposed connection between the SGR terminus at Syokimau and Nairobi CBD.
It argues that the real competitive change would come if both ends of the Nairobi–Mombasa journey become better connected.
Buses Could Lose 8% to 15% of Market Share
Under the report’s central scenario, long-distance buses could lose between 8% and 15% of their passenger market share on the Nairobi–Mombasa corridor within three to five years after effective CBD-to-CBD rail connectivity is established.
Under a more conservative scenario, the reduction is estimated at between 5% and 8%.
A more aggressive rail-growth scenario puts the potential decline at between 15% and 25%, particularly if the SGR increases frequencies, maintains competitive fares and bus companies fail to adapt.
The report makes clear that these are projections rather than official government forecasts.
The greatest movement towards rail is expected among passengers who value shorter journey times and comfort, including business and other less price-sensitive travellers.
Budget-conscious passengers and travellers heading to towns outside the railway network are expected to remain much more dependent on buses.
SGR Passenger Numbers Show Price Still Matters
According to figures cited in the research, SGR passenger numbers dropped 10.3% in 2024 to approximately 2.45 million following a 50% increase in fares.
Passenger numbers then rebounded by 11.6% in 2025 to approximately 2.7 million, while total SGR revenue reached Sh21.4 billion.
The report uses the decline following the fare increase as evidence that SGR demand remains sensitive to ticket prices.
This leaves buses with an important weapon: price.
Operators serving budget passengers can potentially maintain business by offering lower fares while also providing more frequent departure times and access to destinations outside the railway network.
Smaller Bus Operators Face Greater Danger
The report argues that the biggest threat to the bus industry may not be complete loss of passengers but shrinking profit margins.
Operators could be forced to lower fares in response to SGR competition at the same time they are paying for fuel, vehicle financing, insurance, wages, maintenance and other expenses.
Smaller and undercapitalised companies are likely to be more exposed because they may not have enough money to renew fleets, introduce digital booking systems or provide higher-quality services.
The report therefore expects financial pressure to fall unevenly across the sector.
Jobs Could Also Be Affected
The study also raises concerns about employment.
Kenya’s long-distance bus industry supports drivers, conductors, booking clerks, cleaners, mechanics, station workers and numerous informal businesses operating around bus terminals.
If passenger numbers decline sufficiently, bus companies could reduce the number of trips on the Nairobi–Mombasa corridor.
The report estimates that direct jobs exposed to the change could number in the low-to-mid hundreds over three to five years under its base-case assumptions.
However, the author cautions that this is only an illustrative estimate because Kenya does not have reliable corridor-level employment data for the long-distance bus industry.
Passengers Could Benefit From Bus-SGR Competition
For passengers, stronger competition between buses and rail could initially be positive.
Bus companies could respond by lowering fares, buying better vehicles and improving passenger services.
The report points to investments in features such as Wi-Fi, different passenger classes, newer buses and online booking systems as examples of how operators can differentiate themselves.
The result could be greater choice for travellers: faster journeys by rail on one side and more flexible or affordable bus services on the other.
Bus Companies Still Have Important Advantages
Despite the growing attractiveness of rail, the report says buses retain several advantages that will be difficult for the SGR to completely replace.
Buses serve a much wider network of destinations, depart more frequently and can change routes more easily.
They may also remain cheaper for budget-conscious passengers.
Travel time, however, heavily favours rail. The report compares a typical eight-to-nine-hour Nairobi–Mombasa bus journey with approximately 4.5 hours by SGR.
Once the inconvenience of travelling to and from outlying SGR stations is reduced, that difference in journey time could become much more important.
Malindi, Lamu and Other Towns Could Protect Bus Business
The report argues that one of the strongest responses available to bus companies is diversification.
Instead of concentrating heavily on Nairobi–Mombasa, operators could expand services towards destinations outside the SGR network, including Malindi, Lamu, Taveta and the Voi hinterland.
They could also work with rather than against the railway.
Passengers arriving in Mombasa by SGR may still require buses or shuttles to travel to destinations such as Kilifi, Malindi and Lamu.
The report therefore identifies rail feeder and last-mile services as a potential source of new business.
Lessons From Tanzania and Ethiopia
The study compares Kenya with several international railway systems.
In Ethiopia, road operators reportedly reduced fares by more than 20% after the Addis Ababa–Djibouti railway intensified competition, contributing to reduced profitability and pressure on smaller firms.
The Tanzanian experience is particularly relevant.
Research cited in the report found that bus profitability declined on corridors competing with the SGR largely because of falling passenger numbers. Operators that differentiated their services and improved route strategies performed better than companies that relied mainly on reducing fares.
The international evidence reviewed in the study generally shows that railway expansion reduces bus market share but does not completely eliminate long-distance road transport.
Government Asked to Prepare for the Transition
The report recommends that the government publish clear commissioning timelines and fare structures for the railway projects so transport operators can plan ahead.
It also calls for better collection of data on bus passenger numbers, revenues and employment.
Other proposals include support for workers whose jobs may be affected, fair regulation between state-backed rail and privately financed bus companies and greater integration between the two modes.
The report proposes through-ticketing, coordinated timetables and shared terminal infrastructure, which could allow bus companies to become formal feeder operators for SGR passengers.
SGR Unlikely to Kill Long-Distance Buses
The report ultimately concludes that improved SGR connectivity is unlikely to spell the end of Kenya’s long-distance bus industry.
Instead, it could produce a more clearly divided transport market.
Rail would become increasingly attractive for passengers who value speed, comfort and predictable journey times, while buses would remain competitive through lower fares, more destinations, frequent departures and flexible routes.
For long-distance bus companies, the biggest question may therefore not be whether they can stop passengers moving to the SGR.
It is whether they can adapt quickly enough to a transport market in which rail becomes increasingly convenient.
The report concludes that operators that diversify their routes, improve their services and work with the railway as feeder providers are likely to be better positioned than those attempting to compete with the SGR mainly through fare cuts.
