Kenya is facing mounting pressure to service billions in Chinese loans even as the Asian nation sharply cuts new lending to Africa, a shift that analysts warn could threaten future mega-infrastructure projects in the country.
The change comes as China, after more than a decade of financing roads, railways, and ports across Africa under the Belt and Road Initiative (BRI), increasingly shifts focus toward collecting repayments from countries whose loans are now maturing.
Recent analysis shows Kenya and several other African nations moved from receiving nearly Ksh3.87 trillion (USD30 billion) in Chinese loans between 2010 and 2014 to paying out about Ksh2.84 trillion (USD22 billion) between 2020 and 2024, pointing to a dramatic reversal in financial flows.
This means that Kenya is among the countries feeling the strain, largely due to loans used to finance the Standard Gauge Railway (SGR) linking Mombasa and Nairobi.
The government borrowed roughly Ksh903.07 billion (USD7 billion) from Chinese lenders to build the railway, expecting that freight and passenger revenues would eventually offset repayment costs.
However, the railway has struggled to generate the projected returns, leaving the Kenyan government responsible for servicing the debt from public finances.
As a result, Kenya now pays about Ksh129.01 billion (USD1 billion) annually in principal and interest to Chinese lenders, placing additional strain on a national budget estimated at around Ksh4.26 trillion (USD33 billion).
At the same time, new lending from Chinese banks to African countries has sharply declined as Beijing becomes more cautious about extending credit to heavily indebted nations.
Data indicates Chinese lending to Africa has fallen by nearly 90 per cent from its peak in 2016, with banks issuing just over Ksh258.02 billion (USD2 billion) in loans across the continent in 2024.
Experts say the tightening of Chinese financing could complicate Kenya’s ambitions to roll out new mega infrastructure projects, many of which previously depended on concessional loans from Beijing.
“Chinese banks lent so much in the past decade but are becoming more risk-averse because not every sum has been repaid,” Mengdi Yue, a researcher at Boston University’s Global Development Policy Center, told Semafor.
Countries that relied heavily on Chinese funding during the infrastructure boom now face the challenge of balancing growing debt repayments while still trying to fund development projects and maintain essential services.
Economists warn that unless alternative financing sources are secured, the shift in China’s lending strategy could slow the pace of infrastructure expansion in Kenya and across Africa.
Even so, President William Ruto’s administration has largely been banking on the securitisation framework and the establishment of the National Infrastructure Fund (NIF), which received parliamentary approval on Thursday, to support the government’s development ambitions.