Kenya is pursuing a strategic overhaul of a $5 billion loan from China that financed the construction of its flagship Standard Gauge Railway (SGR), according to a statement by the country’s finance minister. The move, if approved, could ease mounting pressure on Kenya’s foreign exchange reserves.
The loan, underwritten by Beijing, supports the SGR a major infrastructure project linking the port city of Mombasa to Naivasha in central Kenya. It forms part of a broader regional connectivity initiative aimed at boosting trade and mobility across East Africa.
Kenya currently spends close to $1 billion annually servicing its debt to China, a burden that has grown heavier since 2022 due to rising global interest rates and the strengthening of the U.S. dollar. While the government has not disclosed whether it is seeking similar adjustments for other dollar-denominated loans, the potential reprofiling signals a shift in Nairobi’s approach to managing its external liabilities.
As of the end of March, Kenya’s external debt stood at $40.5 billion. Of that, $14.4 billion is owed to the World Bank, $7.52 billion to eurobond holders, and approximately $5.04 billion to China, according to data from the Treasury.
The International Monetary Fund has classified Kenya as being at high risk of debt distress, underscoring the urgency of fiscal reforms and debt restructuring efforts.
Beijing has yet to respond publicly to Nairobi’s request.
