Kenya Seeks Yuan Conversion for $5 Billion Rail Loan Amid Debt Management Push

Edited by: Safae Fathi

Kenya is negotiating with China to convert a dollar-denominated loan for its high-speed railway project into Chinese yuan, according to an aide to the finance minister. The move reflects Nairobi’s efforts to manage foreign debt more effectively and stabilize repayment obligations amid fluctuating currency markets. The $5 billion railway represents one of Kenya’s largest infrastructure investments, aiming to enhance regional connectivity and support economic growth.

China, as Kenya’s largest bilateral lender, has played a central role in financing major infrastructure projects across Africa, offering both capital and technical expertise. Converting the debt into yuan could reduce currency risk for Kenya, particularly as the value of the U.S. dollar fluctuates, affecting repayment costs. Analysts note that such currency swaps are part of broader strategies by African governments to diversify debt portfolios and mitigate financial exposure in an increasingly volatile global economic environment.

The railway project, which connects the port city of Mombasa to Nairobi, underscores the broader trend of Chinese investment in African transport infrastructure. While the initiative promises long-term economic benefits through improved trade and mobility, it also raises questions about debt sustainability and fiscal management. By exploring debt conversion options, Kenya aims to balance infrastructure development ambitions with prudent financial planning, ensuring that strategic projects remain both feasible and economically beneficial for the country.