By Emmanuel Nduka Obisue
Kenya has asked China to allow the conversion of a $5 billion loan, originally issued in U.S. dollars, into Chinese yuan in a bid to ease pressure on its dwindling foreign exchange reserves.
Finance Minister Njuguna Ndung’u told Reuters on Wednesday that the request specifically targets the loan Beijing provided to fund the Standard Gauge Railway (SGR), Kenya’s flagship infrastructure project linking the port city of Mombasa to Naivasha in central Kenya.
If approved, the restructuring could significantly cut the nearly $1 billion Nairobi spends each year servicing its Chinese debt. Rising global interest rates and the strength of the dollar since 2022 have sharply increased the country’s repayment costs.
It remains unclear whether Kenya intends to pursue similar conversions for other dollar-denominated debts. Beijing has not yet responded to the request.
According to Kenya’s Treasury, the country’s external debt stood at $40.5 billion at the end of March. Of this, $14.4 billion was owed to the World Bank, $7.52 billion to eurobond investors, and about $5.04 billion to China.
The International Monetary Fund has repeatedly flagged Kenya as being at high risk of debt distress. The SGR, built under China’s Belt and Road Initiative, was envisioned as part of a broader regional rail network but has faced criticism over its high costs and heavy debt burden.
