NAIROBI- Britain is partnering with Kenya to build a new rail hub in the capital Nairobi, and its development arm CDC Group will invest $1 billion in various sectors over the next five years, officials said on Tuesday.

Britain, the former colonial power, has increased its engagement with Nairobi in recent years, after signing a new post-Brexit trade dealin late 2020.

It has also displayed a readiness to help Kenya develop its infrastructure, an area dominated by Chinese funds and firms in the past decade.

British engineering firm Atkin Global is designing a modern, eight-platform central rail station and a public space, which will anchor commercial and residential developments on a 425-acre spread that will host the railway transit hub.

The deal was first agreed between Kenya's President Uhuru Kenyatta and British Prime Minister Boris Johnson at a meeting in London two years ago, both sides said.

"We are delivering that ambitious, strategic partnership that was agreed by our two national leaders," said Vicky Ford, Britain's minister for Africa.

The initial phase of the project will cost 1.35 billion Kenyan shillings, excluding consultancy fees, which will be paid by the British government, Philip Mainga, the managing director of Kenya Railways, told Reuters.

The railway city will take many years to implement, Kenyan government officials said.

KPMG, the global consulting firm, is leading the hunt for investors into the segments of the project with commercial viability, including office towers, residential homes and multi-storey car parks, said James Woodward, director at KPMG.

Kenya will also benefit from $1 billion of investments into various sectors, including climate financing, over the next five years from Britain's development finance arm CDC Group, said Tenbite Ermias, the agency's Africa head.

The East African economy already accounts for 10% of the agency's $4 billion investment portfolio on the continent, said Tenbite.

(Reporting by Duncan Miriri Editing by Mark Potter) ((duncan.miriri@thomsonreuters.com; Tel: +254 20 4991239; Reuters Messaging: duncan.miriri.thomsonreuters.com@reuters.net))