Kenya has failed to repay Chinese loans granted for the construction of the standard gauge railway (SGR), underlining the nation’s problems with the growing national debt.

According to Treasury figures, Chinese banks fined Kenya a total of 1,312 billion shillings for non-repayments in the fiscal year ending June.

Kenya obtained funding of over 500 billion shillings from Chinese lenders, led by the Export-Import Bank of China, to build the SGR from Mombasa to Naivasha.

Taxpayers were forced to bear the cost of borrowing for the SGR as profits from passenger and freight services provided on the line were not sufficient to cover operating expenses. By the end of the fiscal year in June, expenses to repay the railway’s debt amounted to 18.5 billion shillings against a turnover of 15 billion, resulting in a deficit of 3 billion.

This summer, during the China-Africa summit, the Chinese authorities had let it be known that seventeen low-income countries on the African continent would have their interest rates lifted. Chinese diplomats in Kenya had let it be known that the country would not be included in this initiative, aimed at showing how the dragon is intent on strengthening ties with the African continent. This is because Kenya has been classified as a lower middle-income country (

Kenya therefore still remains tied to China, which is its largest creditor state to date (one third of Kenya’s external debt obligations are owed to China), and in absolute terms, second only to the World Bank. Kenya has had to cope with a deteriorating cash flow situation, marked by declining revenues, worsening debt service obligations, and the effects of the Covid-19 pandemic. The debt has recently been aggravated by the economic turmoil triggered by the war in Ukraine, but Kenya has never defaulted and has always met its payments.


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