• Japan grants Kenya ¥25 bln ($169m) samurai loan for autos and electricity

• Deal signed at TICAD-9 aims to cut power losses and boost EV production

• Nairobi shifts debt strategy toward lowering borrowing costs over short-term risks

Japan will provide Kenya with a ¥25 billion ($169.42 million) samurai credit facility to support the auto industry and improve electricity supply, Kenyan Prime Minister and Foreign Affairs Minister Musalia Mudavadi announced on August 21.

"This facility will strengthen our local vehicle assembly and parts manufacturing industry while also addressing electricity transmission and distribution losses, currently standing at about 23% of our national output," Mudavadi said in an X post.

He added that the funds will accelerate industrial growth, create quality jobs, and foster innovation in the auto sector, particularly in electric vehicle production. They will also improve energy efficiency to lower electricity costs and enhance fiscal stability, freeing up resources for Kenya’s national development agenda.

The financing agreement, denominated in Japanese yen, was signed between Mudavadi and Atsuo Kuroda, CEO of Japan’s Nippon Export and Investment Insurance (NEXI), during the 9th Tokyo International Conference on African Development (TICAD-9), attended by President William Ruto.

Kenya is seeking to diversify its financing sources as international markets remain volatile and U.S. interest rates high.

The loan deal reflects Kenya’s bold, forward-looking strategy to diversify financing sources, create new opportunities for its people, and deepen ties with Japan, a trusted partner in Africa’s transformation, Mudavadi said.

Speaking on the sidelines of TICAD-9, Raphael Otieno, director-general for debt management at Kenya’s Finance Ministry, said Nairobi’s debt strategy is now focused on lowering borrowing costs rather than short-term refinancing risks.

"The cost of our debt is very, very high," he said during a panel, noting that Kenya is exploring sustainability-linked bonds with guarantees, samurai bonds in yen, panda bonds in yuan, and debt swaps to ease repayment costs.