Kenya in May 2014 entered into a deal to borrow Sh324.01 billion loan from China’s Exim Bank
This will be more than triple what the country is paying Chinese State-owned lenders in the current year ending June (Sh26.61 billion).
Kenya in May 2014 entered into a deal to borrow Sh324.01 billion loan ($3.233 billion) from China’s Exim Bank, comprised of $1.633 billion commercial loan and $1.6 billion concessional to build a 385km modern railway between Mombasa and Nairobi.
The loan, whose interest is 3.6 percentage points above the six months average of London Inter Bank Offered Rate (Libor) which serves as an international benchmark, is to be repaid in 15 years with a grace period of five years.
President Uhuru Kenyatta’s administration has for the past four years turned to China for loans to build much-needed roads, bridges, power plants and the SGR.
This after Kenya was locked out of highly concessional loans from development lenders such as the World Bank Group following its elevation to lower middle income economy status.
The deal to fund the first phase of the SGR saw Beijing overtake Tokyo as Kenya’s largest bilateral lender.
Debt repayments (Sh82.85 billion) to Beijing will account for a third of the Sh274.24 billion that Kenyan projects will be due to foreign lenders in 2019-20.
China’s debt stock to Nairobi has since surged nearly two and a half times to $5.2 billion (Sh521.38 billion) by last December from $2.22 billion (Sh222.60 billion) in January, dethroning the World Bank Group as Kenya’s largest lender.