KENYA IN TALKS WITH CHINA TO CONVERT DOLLAR SGR LOAN INTO YUAN

Kenya has entered negotiations with China to convert its multi-billion dollar Standard Gauge Railway (SGR) loan from U.S. dollars into Chinese yuan, in a bid to ease the country’s heavy debt servicing burden.
According to an aide to Finance Minister John Mbadi, the discussions focus on repricing the $5 billion loan that funded the railway line between Mombasa and Naivasha. If successful, the shift could significantly cut interest costs, as yuan-denominated loans typically attract lower rates compared to dollar borrowings.
Reports indicate that Kenya pays about $1 billion annually to China for the SGR, making it one of the country’s most expensive debts. In July alone, SGR repayments accounted for over 80 percent of Kenya’s external debt service, contributing to a sharp decline in the nation’s foreign reserves.
The government is also seeking to extend the repayment period, providing further relief to its strained finances. Analysts say the move aligns with a growing trend across Africa, where nations are reducing reliance on the U.S. dollar while China pushes to internationalize the yuan.
The negotiations come as Kenya battles mounting fiscal pressures and seeks new strategies to stabilize its economy amid fluctuating global markets.