Kenya has secured an extension of three Chinese loans used to build the Standard Gauge Railway (SGR), pushing the final repayment deadline to 2040 and easing pressure on public finances.
The National Treasury announced that the dollar-denominated loans have been converted to yuan, with a new four-year grace period on principal repayments introduced. This effectively turns the facilities into a 15-year arrangement starting this year.
“The loans are now going to be paid for 11 years with a four-year grace period for a total of 15 years,” Treasury Cabinet Secretary John Mbadi said on Thursday.
Kenya borrowed KSh655 billion (USD5.08 billion) from the Export-Import Bank of China between 2014 and 2015 to construct the SGR from Mombasa to Nairobi and later to Naivasha.
The original loans were scheduled to mature between 2029 and 2035, with semi-annual interest payments due in January and July.
Lower annual servicing costs
The restructuring is expected to reduce annual debt servicing on the SGR loans from KSh50 billion to KSh37 billion. The currency switch to yuan is also projected to save Kenya approximately USD215 million (KSh27.7 billion) yearly by reducing exposure to dollar fluctuations.
Kenya’s external debt remains heavily weighted in dollars, which accounted for 52% of the total at the end of September. Euro-denominated debt stood at 27.9%, yuan at 12.3%, Japanese yen at 5.2% and British pound at 2.5%.
Public debt now stands close to 70% of gross domestic product, or roughly KSh12 trillion, with more than half of government revenue going to debt servicing.
Shifting creditor dynamics
President William Ruto’s economic adviser David Ndii has said multilateral lenders, including the World Bank and International Monetary Fund, pressed Kenya to restructure the Chinese loans.
“The Western lenders queried why they should be supporting us while other lenders are taking out their money,” Ndii said last month.
“That’s why they put pressure on countries to restructure debts so that the money they put in stays in the country and does not pay other lenders.”
China has not extended new loans to Kenya beyond the original SGR facilities. Outstanding debt to Beijing fell 18.8% over five years to KSh620.3 billion by September 2025, down from KSh764.2 billion in 2021.
“If you look at the net position of external lenders, the World Bank position is positive, so is the IMF, but China’s position is negative in that they are putting in less money than they are getting out,” Ndii added.
The government has also lengthened maturities on Eurobonds and explored revenue securitisation to fund projects such as extending the SGR toward the Ugandan border and upgrading Nairobi’s main airport.
The SGR has carried more than 30 million passengers and 15 million tonnes of cargo since beginning operations in 2017, though freight volumes have remained below initial projections.
