Treasury Cabinet Secretary John Mbadi announced that Kenya has converted its Chinese-funded Standard Gauge Railway (SGR) loans from US dollars to Chinese yuan, projecting annual debt-servicing savings of $215 million.
Mbadi presented the move as a financial strategy to ease the burden of Kenya’s external debt, which exceeds $80 billion, by aligning repayments with the currency of its primary creditor.
He noted that analysts view the decision as a potential precedent for other African nations grappling with similar debt challenges, citing its protection against dollar fluctuations.
The announcement, however, has stirred controversy. Prominent lawyer Ndegwa Njiru took to X to warn of diplomatic repercussions, particularly with the United States.
“After this, Kasongo will never step his feet in Washington,” Njiru posted, referring to a government official.
He labeled the conversion a serious diplomatic mess that could further strain Kenya’s relationship with Washington, already weakened after the revocation of the African Growth and Opportunity Act (AGOA) last year.
Njiru predicted dire consequences, stating, “The US will impose TRADE embargos on Kenya. WANTAM,” using a slang term to mock Kenya’s economic aspirations.
Mbadi defended the decision, emphasizing its fiscal merits over geopolitical implications.
“This is about reducing costs, not picking sides,” he said, addressing concerns about alienating the US, a key trade partner. Kenya’s $600 million in annual exports to the US, including coffee and apparel, could face risks if tensions escalate.
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