The government of China has given Kenya a Ksh1.8 billion grant to improve healthcare.
A grant is a financial or in-kind contribution provided by one government to another without the expectation of repayment. Countries often use it as a tool to expand diplomatic relations.
According to a statement from the Treasury, China and Kenya signed the grant agreement on Thursday morning, with the funds providing crucial capital injections toward the improvement of health facilities.
Treasury Cabinet Secretary John Mbadi and the Chinese Ambassador to Kenya, Guo Haiyan, inked the deal for a Ksh1.8 billion grant agreement at the Treasury Building.
A grant agreement outlines the terms and conditions of the funding, ensuring both parties understand the scope, amount, and purpose of the grant.
The government says the funds will be directed toward the upgrading of key hospitals across the country, including Londiani Referral Hospital, Baringo County Referral Hospital, Kilifi Hospital, Misikhu Hospital, Bildad Kagia Hospital, and Kaimosi Farmers Training College.
"We applaud China for the tangible and practical contribution to social and productive sectors of our economy through this grant," Foreign Affairs Principal Secretary Korir SingOei said in response to the donation.
In September 2024, during President William Ruto's official visit to China, Kenya secured a Ksh40 billion (approximately $270 million) loan from the Chinese government. This funding is designated for the completion of 15 stalled infrastructure projects across more than ten counties, aiming to enhance regional development and economic growth.
Already, China is Kenya's largest bilateral lender, and with the government indicating it has no option but to continue borrowing, China's share of Kenya’s debt is likely to grow once again.
As of March 2024, Kenya's debt to China stood at approximately Ksh920.52 billion (about $7.2 billion), primarily used for infrastructure projects such as roads, railways, and port developments.
In comparison, France, the second-largest bilateral lender, had extended loans totaling around Ksh116.69 billion (approximately $902.4 million), focusing mainly on urban development and water projects.
However, it's important to note that multilateral institutions like the World Bank remain the country's overall largest creditors, with loans amounting to about Ksh1.8 trillion (approximately $14 billion) as of March 2024.
This week, the government of President William Ruto announced that it would continue to rely on borrowing to finance its budget, abandoning its earlier goal of aligning expenditures with revenue by 2027.
In a bid for fiscal responsibility, President Ruto announced his goal to attain a balanced budget within two years. However, Treasury Secretary John Mbadi has cast doubt on this ambition, labeling it as overly optimistic.
“If you balance your budget now, you will not offer services,” Mbadi told reporters on Wednesday.
According to his projections, the nation is likely to grapple with a fiscal deficit of around 3 per cent of its GDP by 2028.
He asserted, “No one will accept to pay taxes if they are not using services. If you don’t give them services, they have no reason to pay taxes.”
