Kenya has officially completed converting its $5 billion railway loan from the US dollar to China’s yuan — a strategic financial decision that will save the government about $215 million annually in interest payments, according to Finance Minister John Mbadi. The minister explained that the switch would immediately reduce Kenya’s debt servicing costs since yuan-based loans attract lower interest rates.
Mbadi noted that the move offers “an instant saving in our fiscal space,” signaling relief for the government amid rising global rates and a weakening shilling. Officials added that the change was not only about savings but also a deliberate strategy to reduce Kenya’s overexposure to dollar-denominated debt, which has long increased repayment pressure.
‘Our dollar exposure has been a growing concern,’ a Treasury official admitted, adding that moving part of the debt portfolio to yuan would cushion Kenya from exchange rate volatility. The shift aligns with a growing global trend where emerging economies are diversifying away from the dollar to stabilize their debt and improve fiscal resilience.
China, Kenya’s largest bilateral lender, financed the $5 billion Standard Gauge Railway (SGR) — a flagship project linking Mombasa, Nairobi, and Naivasha. While the SGR boosted regional trade and freight movement, the heavy debt tied to it has drawn criticism over sustainability concerns.
Economic analysts have hailed the currency conversion as a wise fiscal management step. With US interest rates still high and credit markets tightening, converting to yuan provides Kenya with breathing room and more predictable repayment terms.
A Nairobi-based economist described the move as “a smart fiscal adjustment that strengthens Kenya’s financial stability while reducing pressure on foreign reserves.” The Treasury confirmed that the new repayment terms have already taken effect, marking a major milestone in Kenya’s effort to rebalance and manage its external debt responsibly.
