The China in Africa Podcast Kenya’s China Debt Deal Challenges Old Narratives
Oct 10, 2025
Kenya's groundbreaking agreement to restructure $3.5 billion in railway loans from U.S. dollars to Chinese yuan could save $215 million, setting a precedent for other nations. The discussion challenges the narrative of China's 'debt-trap diplomacy' by highlighting the relatively small percentage of Kenyan debt owed to China. The implications for the internationalization of the RMB and potential lessons for the Global South are explored. Additionally, Cameroon’s emerging trade dynamics with China and France add to the complexities of this geopolitical landscape.
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Dollar-To-RMB Swap Lowers Kenya's Costs
- Kenya converted $3.5B of SGR loans from USD to RMB, cutting $215M in interest costs.
- The swap preserves principal while advancing China's goal of RMB internationalization.
Balancing Restructuring With Future Financing
- Kenya balanced debt relief requests to avoid scaring off future Chinese financing for SGR phase three.
- The swap signals Kenya's attempt to stay creditworthy while securing relief.
Use Currency Conversion To Reduce Servicing Costs
- Countries can use currency conversion to lower interest burdens without cutting principal.
- Consider RMB re-denomination where interest and FX stability reduce servicing costs.