Japan will extend up to 25 billion yen ($169 million) in Samurai financing to Kenya to support the country’s vehicle assembly and energy sectors.
- Japan will provide Kenya with 25 billion yen in Samurai financing to support vehicle assembly and the energy sectors.
- The announcement was made during TICAD 9, attended by Kenyan and Japanese high-ranking officials.
- This initiative aims to enhance Kenya’s vehicle assembly and mitigate electricity distribution losses.
- Kenya is exploring various funding strategies, including currency swaps and sustainability-linked bonds.
Japan will extend up to 25 billion yen ($169 million) in Samurai financing to Kenya to support the country’s vehicle assembly and energy sectors.
The deal was signed by Kenyan Foreign Affairs Minister Musalia Mudavadi and Nippon Export and Investment Insurance (NEXI) CEO Atsuo Kuroda, according to Reuters.
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“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 agreement comes as Kenya negotiates a separate term sheet with China to convert part of its dollar-denominated debt into yuan and extend repayment terms, a move aimed at easing sovereign borrowing costs.
The country currently spends about $1 billion annually servicing obligations to China, its largest bilateral creditor. As East Africa’s biggest economy, Kenya is widening its funding options at a time of volatile global markets and elevated U.S. interest rates.
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Kenya explores diverse financing
On the sidelines of TICAD, Raphael Otieno, director-general of debt management at Kenya’s finance ministry, said Nairobi’s strategy is shifting away from short-term refinancing risks toward reducing expensive debt.
Kenya is weighing 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 more such operations.
Switching repayment from dollars to China’s Yuan could slash interest costs by almost half, while lengthening the tenor would free up much-needed fiscal space.
