Kenya Settles Ksh72 Billion SGR Loan After Demand Note From China

A collage of the Chinese President Xi Jinping signing documents in 2019 (left) and the Kenya Standard Gauge Railway.
People's Daily China

On Friday, January 19, Narok Senator Ledama Ole Kina raised fears that Kenya was likely to default on its international obligations after receiving a Ksh72 billion demand note from China. 

This was in relation to loans advanced to Kenya towards the construction of the Standard Gauge Railway (SGR) and other infrastructure projects undertaken by the previous administration. 

“We already settled this debt as we shall do for many others as and when they fall due,” Treasury Principal Secretary Chris Kiptoo stated on Saturday, January 20. 

The PS further assured Kenyans that under the leadership of President William Ruto, the country would not default on any of its foreign loans. 

President William Ruto shaking hands with his Chinese counterpart Xi Jinping on October 18, 2023
President William Ruto shakes hands with his Chinese counterpart Xi Jinping on October 18, 2023

“Meanwhile, we need to up the conversation on balancing revenue enhancement measures, debt management, and expenditure rationalization,” he added. 

PS Kiptoo did not divulge if the demand note alleged by Senator Ledama had pushed the government to act. 

“Ksh72 billion Chinese loan for the SGR and Northern and Southern Bypass must be paid tomorrow. The Chinese have sent a demand note,” Ledama’s statement that prompted Treasury reply read in part. 

China is the largest lender to Kenya having financed multibillion projects including the SGR which was constructed at a cost of Ksh508 billion (USD3.2 billion) 

On the other hand, the Southern Bypass in Nairobi cost Ksh15 billion while the Northern Bypass was to cost Ksh8.5 billion. 

The Chinese government-funded 85 per cent of the Northern Bypass project. 

With China financing most of Kenya’s infrastructure projects, Kenya is expected to continue borrowing from the Asian country. 

In December 2023, the government announced that China would advance Kenya Ksh158 billion (USD1 Billion) by mid-2024. 

President Ruto travelled to China on October 18, to negotiate the loan since many projects started by his predecessor Uhuru Kenyatta had stalled due lack of funds. 

A curve along the Southern Bypass in Nairobi
A curve along the Southern Bypass in Nairobi.