Japan has agreed to provide Kenya with up to 25 billion yen ($169 million) through a Samurai financing deal to support the country’s vehicle assembly industry and strengthen its energy sector.
The agreement was signed by Kenyan Foreign Affairs Minister Musalia Mudavadi and Atsuo Kuroda, CEO of Nippon Export and Investment Insurance (NEXI), Reuters.
“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 a post on X.
The funding comes as Kenya explores other debt management strategies, including talks with China to convert some of its dollar-denominated loans into yuan and extend repayment periods.
The goal is to ease the burden of servicing its sovereign debt, which costs the country around $1 billion annually to China, its largest bilateral lender.
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As East Africa’s biggest economy, Kenya is expanding its financing options amid volatile global markets and high U.S. interest rates.
On the sidelines of the Tokyo International Conference on African Development (TICAD), Raphael Otieno, director-general of debt management at Kenya’s finance ministry, said Nairobi is focusing on reducing expensive debt rather than relying on short-term refinancing.
Kenya is considering sustainability-linked bonds with guarantees, yen-denominated Samurai bonds, renminbi-denominated Panda bonds, and debt swaps.
The Treasury has also prepaid some domestic bonds and plans to continue doing so.
Shifting part of its repayments from U.S. dollars to China’s yuan could reduce interest costs by nearly half while extending repayment timelines, freeing up much-needed fiscal space.
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Image Credit: Business Insider Africa
