Kenya is negotiating with China to convert a dollar-denominated loan for its Standard Gauge Railway (SGR) into Chinese yuan, a move aimed at easing repayment pressures amid rising debt concerns.
An aide to Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi, confirmed the talks to Reuters on Wednesday, following a Bloomberg report that said the shift could help Kenya cut costs given lower interest rates in China compared to the United States.
China is Kenya’s largest bilateral lender and financed the $5 billion high-speed railway, the country’s most ambitious infrastructure project since independence. However, servicing the debt has weighed heavily on the economy, with the International Monetary Fund (IMF) and investors repeatedly warning that Kenya remains at high risk of debt distress.
The government has been seeking new strategies to stabilize public finances after last year’s tax hikes, introduced to boost revenue, triggered widespread and deadly protests.
President William Ruto’s administration subsequently rolled back the tax measures and has since turned to debt restructuring, concessional borrowing, and expenditure cuts to create fiscal space.
Chinese authorities have yet to comment on the proposed loan conversion. If approved, the move would deepen Kenya’s financial alignment with China while potentially shielding the economy from dollar volatility and rising U.S. interest rates.
Written By Rodney Mbua
