Kenya has announced the conversion of about $3.5 billion in loans from the Export–Import Bank of China into Chinese yuan, marking a strategic move to cut interest costs and stabilize its debt repayments.
The loans were originally secured for the construction of the Mombasa–Nairobi Standard Gauge Railway (SGR) – Kenya’s largest infrastructure project since independence, financed 90% by China’s Exim Bank and built by the China Road and Bridge Corporation (CRBC). The project remains a flagship of China–Africa cooperation under the Belt and Road Initiative (BRI).
Kenya’s Finance Minister John Mbadi said the decision could save the government up to US$215 million annually, reducing the impact of dollar exchange rate volatility.
“By converting our repayment obligations into yuan, we are aligning our fiscal framework with our largest trading partner,” he said.
The restructuring reflects a growing global trend toward de-dollarization, particularly among developing economies with strong trade links to China. Economists view the move as both financially pragmatic and symbolically significant, showcasing Kenya’s intent to pursue flexible, sustainable debt management strategies.
“This step demonstrates China’s willingness to renegotiate in good faith and Kenya’s resolve to strengthen its fiscal outlook,” said Dr. George Odhiambo, a Nairobi-based economist.
The Mombasa–Nairobi Standard Gauge Railway (SGR), completed in 2017 at a cost of US$4.7 billion, has since carried over 10 million passengers and 30 million tons of cargo, reinforcing its role as a cornerstone of regional trade. However, its associated debt burden has remained a point of domestic debate.
China remains Kenya’s largest bilateral creditor and development partner, having also financed the Nairobi Expressway and key energy and road projects. The new yuan-based repayment deal highlights an evolving partnership, one focused on sustainability and mutual benefit.
“Kenya’s proactive management of its China debt shows a new maturity in Africa’s financial diplomacy,” said Paul Frimpong, Executive Director of the Africa–China Centre for Policy and Advisory (ACCPA). “It’s about redefining partnerships to drive shared growth.”
