Kenya yesterday launched construction of a Chinese-funded $13.8bn flagship railway project, hoping to dramatically increase trade and boost Kenya’s position as a regional economic powerhouse.

The key transport link, to run from the busy port city of Mombasa inland to the highland capital Nairobi, is eventually hoped to extend onwards to Uganda, and then connect with proposed lines to Rwanda and South Sudan.

“What we are doing here today will most definitely transform the course of development not just for Kenya but the whole eastern African region,” President Uhuru Kenyatta told crowds at the ground breaking ceremony he called a “historic milestone”.

“As a result east Africa will become a competitive investment destination... a busy growing east Africa is good for us a country.”

Kenyan media have enthusiastically hailed the project, which replaces dilapidated British colonial-era lines, as the region’s largest infrastructure project for a century.

“Kenya is stepping forward... it will be a landmark project both for Kenya and east Africa,” China’s ambassador to Kenya Liu Guangyuan said at the ceremony.

Kenyatta thanked Chinese President Xi Jinping, praising his “great personal interest in the project and his government’s immense support.”

China has funded the project only for the first 450km section - $5.2bn - from Mombasa to Nairobi.

Work on that section, by the state-owned China Road and Bridge Corp (CRBC), is expected to be completed by 2017.

“Presently our region relies almost exclusively on road transport,” Kenyatta said, adding he was looking forward to waving off “the first train to Kigali via Nairobi and Kampala, delivering the promise of prosperity for all our east African peoples.”

CRBC completed in August the first stage of an expansion to Mombasa’s port, including a berth able to handle 50,000 tonne container ships.

According to plans, the new lines would see passenger journey times cut from the current 12 hours to around four, which is around half the current driving time on crowded and pot-holed roads.

Freight trains are planned to be able to cut the current 36-hour trip by rail to just eight, a major boost for regional landlocked nations, with planners claiming it will slash cargo transport costs by 60%.

However, the project has sparked controversy, with some Kenyan lawmakers criticising the awarding of the contracts and complaining the process was not transparent.

It has also rankled regional nations not included in the line, with Burundi’s transport minister yesterday announcing a raft of infrastructure plans with Tanzania and the Democratic Republic of Congo.

Tanzania, currently building a new port at Bagamoyo aimed to surpass Mombasa in size, is also planning to add to its railways with lines to Burundi and beyond to DR Congo.

Britain’s railway line from Mombasa to Kampala, cutting through thick bush and man-eating lion territory, was dubbed the ‘Lunatic Express’ - seen by many at the time as an impossible dream. Nairobi, Kenya’s capital, was founded as a railway station.

However, after years of minimal investment, less than half of the original 2,730km of line are operational. Services on the remaining tracks are infrequent and painfully slow.

“The standard gauge railway is the largest joint transport infrastructure project undertaken by the people of east Africa since the British colonial administration laid tracks for the Kenya-Uganda railway more than a century ago,” Kenya’s Daily Nation newspaper said.

Last year, Kenya launched the construction of a massive port, railway and refinery project in Lamu - a $24.5bn scheme aimed at connecting Ethiopia and oil-rich South Sudan.

Work has begun clearing sites to build the planned 32-berth port, near a Unesco-listed Indian Ocean island.