China’s Top 10 Loans to Kenya: Projects and Costs Revealed
The Africa Centre for Open Governance (AfriCOG) has published an in-depth analysis of Kenya’s debt, focusing on its largest creditor, China.
Kenya began receiving Chinese loans in the mid-1980s, which initially funded projects like the Kasarani sports stadiums, hospitals, and roads on an interest-free basis.
However, recent loans have transitioned to commercial terms. Notably, borrowing for medical equipment now incurs interest rates as high as LIBOR+5%.
The Standard Gauge Railway (SGR), spearheaded by the Uhuru Kenyatta administration, stands out as the most significant Chinese-funded project. It was marketed as a transformative venture for Kenya’s economy, promising increased GDP, job creation, and opportunities for local industries.
AfriCOG’s findings, however, reveal that the project primarily used imported materials, aligning more with China’s export goals through its EXIM Bank than benefiting Kenya.
The railway’s economic impact has been underwhelming, largely aiding Chinese industries and failing to deliver the anticipated transformative outcomes for Kenya.
Largest Chinese Loans to Kenya
1. Mombasa-Nairobi Standard Gauge Railway (SGR Phase 1)
In 2014, Kenya borrowed KSh 360 billion from China EXIM Bank for the 500-kilometer railway connecting Mombasa to Nairobi. The first loan of USD 2.003 billion has a 10-year repayment term ending in 2029, while a second loan of USD 1.6 billion is set for repayment over 13 years, concluding in 2034.
2. USD 600 Million Loan
A 2016 loan of USD 600 million from the China Development Bank, possibly linked to the SGR project, was issued with an interest rate of LIBOR+4.95%. Repayments, made semi-annually, started in November 2019 and ended in May 2023.
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3. Nairobi-Naivasha Standard Gauge Railway (SGR Phase 2)
In 2015, Kenya borrowed USD 1.4 billion (KSh 148 billion) from China EXIM Bank to extend the SGR by 120 kilometers to Duka Moja. The loan will be repaid over 30 semi-annual installments, with the final payment due in 2035.
4. Provision for Drilling Materials
AfriCOG notes that Kenya borrowed USD 382.5 million from China EXIM Bank in 2012 at a 2% interest rate. The project linked to this loan is unclear, but repayments in 26 semi-annual installments began in July 2020.
5. Nairobi Southern Bypass Road Project
A USD 183.6 million loan from China EXIM Bank, secured in 2011 under President Mwai Kibaki, funded the Nairobi Southern Bypass. This loan carries a 2% interest rate and will be repaid in equal installments until 2030.
6. Nairobi-Thika Highway Project
In 2009, China EXIM Bank provided KSh 15 billion (1.068 billion CNY) for the Nairobi-Thika Highway project. This loan, also under President Kibaki, is being repaid semi-annually at a 2% interest rate, with final payments scheduled for 2030.
7. Nairobi Inland Container Depot and Access Roads
This 2017 SGR-related loan of KSh 11.8 billion is repayable in 24 instalments. By mid-2023, the remaining balance stood at KSh 18.3 billion.
8. Garissa Solar Power Project
A 2015 loan from China EXIM Bank financed the Garissa Solar Power Project, initially recorded at KSh 10 billion. By mid-2023, Kenya owed KSh 15.5 billion. The loan, with a 2% interest rate, requires repayments from December 2025 to December 2044.
9. Nairobi City Centre High Voltage Network Upgrade
In 2013, China funded a high-voltage electricity transmission network upgrade. Though the original loan amount is unclear, Kenya owed KSh 9.3 billion by June 2018. Repayments began in 2021 and will continue until 2032.
10. Kenyatta University Teaching, Research & Referral Hospital
In 2011, Kenya secured a loan of CNY 744.56 million (KSh 9.18 billion) from China EXIM Bank at a 2% interest rate. Repayments started in 2018 and will conclude in 2031.
China’s Top 10 Loans to Kenya: Projects and Costs Revealed
