• Kenya saved about $167 million in debt servicing costs after converting Chinese loans from dollars to yuan.

• The swap covered three China Eximbank loans used to finance the Mombasa–Naivasha standard gauge railway.

• Kenya and China also agreed to extend maturities on two loans to 15 years with a four-year grace period.

Kenya saved about $167 million in servicing costs on its debt to China after converting railway loans from dollars to yuan, according to data released on February 2, by Budget Controller Margaret Nyakang’o.

Nairobi repaid 37.5 billion shillings ($290.7 million) to China Eximbank for a semiannual installment due in January. The payment compared with 59 billion shillings ($457.4 million) paid during the same period last year.

Finance Minister John Mbadi announced on October 7, 2025, the completion of the conversion of the outstanding balance of three $5 billion loans contracted from China Eximbank into yuan. The loans, originally denominated in dollars, financed construction of the standard gauge railway linking the port of Mombasa to Naivasha. Analysts have described the railway, which forms part of China’s Belt and Road Initiative, as Kenya’s most expensive infrastructure project since independence in 1963. According to the latest Treasury data, the outstanding balance subject to the currency swap stood at $3.5 billion in June 2024.

Extension of maturities on two loans

In addition to the yuan–dollar swap, Kenya and China agreed to extend maturities on two loans to 15 years with a four-year grace period. Authorities framed the agreement as part of a broader effort to ease the debt burden of East Africa’s largest economy.

President William Ruto’s government has adopted a “proactive overall debt management strategy” as public debt approaches 70% of gross domestic product. The strategy includes extending repayment schedules and increasing reliance on concessional borrowing to reduce fiscal pressure. Within this framework, the government has already refinanced three Eurobonds to spread maturities and has opened discussions with the International Monetary Fund on a new support program following the expiration of the previous arrangement in April 2025.

Kenya’s external debt totaled $41.7 billion at the end of September. The World Bank accounted for $15.2 billion, Eurobond investors for $7.9 billion and China for nearly $4.8 billion, according to Treasury data.

In a related development, Ethiopia’s central bank governor said in October that Addis Ababa was negotiating with Beijing to convert part of its $5.38 billion debt to China into yuan to secure lower interest rates.

Walid Kéfi