Kenya Cuts Debt Costs by Switching Railway Loans to Yuan

Kenya reduced its debt servicing costs by about $167 million after converting railway loans from dollars to yuan, according to data released on February 2 by Margaret Nyakang’o, the country’s budget controller. In January, Nairobi paid 37.5 billion shillings ($290.7 million) to China Eximbank for a semiannual installment, well below the 59 billion shillings ($457.4 million) paid during the same period last year. The lower payment reflected savings generated by the currency conversion.

Railway Financing and Currency Conversion

Finance Minister John Mbadi announced on October 7, 2025, that Kenya had completed the conversion of the outstanding balance on three China Eximbank loans from dollars into yuan. The loans, which originally totaled $5 billion, financed construction of the standard gauge railway linking the port of Mombasa to Naivasha. Analysts regard the railway as Kenya’s most expensive infrastructure project since independence in 1963. Treasury data show that the balance covered by the currency swap stood at $3.5 billion as of June 2024.

Alongside the currency conversion, Kenya and China agreed to extend the maturities of two railway loans to 15 years and grant a four-year grace period. Officials said the adjustments were intended to smooth repayment schedules and reduce short-term fiscal pressure.

Debt Management Measures

President William Ruto’s administration has intensified debt management efforts as public debt approaches 70% of gross domestic product. The strategy focuses on lengthening repayment periods, increasing the use of concessional financing, and reducing refinancing risks. As part of this approach, the government has refinanced three Eurobonds to spread out maturities and has opened discussions with the International Monetary Fund on a new support programme following the expiry of the previous arrangement in April 2025. Kenya’s external debt totaled $41.7 billion at the end of September, according to Treasury figures. The World Bank accounted for $15.2 billion of the total, Eurobond investors held $7.9 billion, and China was owed nearly $4.8 billion.