A very nervous Bloomberg News reported on Aug. 20, that Kenya and China are in talks to “convert dollar-denominated debt ... to yuan and extend the repayment period,” on their $5 billion loan to build a high-speed rail line across Kenya. In a phone call, Kenya’s Treasury Secretary, John Mbadi, confirmed this and more, noting, “The moment we move from U.S. dollar [debt] to renminbi, automatically, the interest rate reduces by almost half,” and that “adjusting the tenor of the loan would also benefit the country,” in the words of Bloomberg. “To us,” Mbadi said, “that is a big saving.”
According to a January 2024 report by the IMF, Kenya is “at a high risk of debt distress” (default), with its public debt having reached 73% of GDP at the end of 2023. Debt service now consumes about 55% of revenues. Although not noted by the banksters, the largest segment of Kenya’s debt, by far, is owed to the IMF and private Western (especially European) bondholders. According to a 2024 report in Kenya’s Star news outlet, the three largest debt holders were AllianceBernstein, Lord Abbett & Co. LLC, and BlackRock.
Kenyan President William Ruto has struggled with the debt issue since his election in August 2022. In June 2024, street protests broke out in Nairobi against a proposed tax policy aimed at raising funds specifically to make foreign debt payments. After meeting with the Gen Z protesters, Ruto actually fired half of his bloated staff and made other changes to his administration. But the debt wouldn’t go away.
