The China in Africa Podcast Kenya's Chinese Debt Swap Comes With a Hidden Currency Risk
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Oct 31, 2025 Yufan Huang, a pre-doctoral fellow at the China-Africa Research Initiative, shares his insights on Kenya's recent debt swap with China. He explains how Kenya converted $3.5 billion in high-interest U.S. dollar loans to more favorable yuan loans and the potential $215 million savings. However, Yufan warns that these savings could be illusory due to currency risks, including yuan appreciation. He also discusses the implications for other countries like Ethiopia and Indonesia, shedding light on China's evolving debt relief strategies.
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Kenya's $3.5B Dollar-To-Yuan Swap
- Kenya converted about $3.5 billion of SGR loans from USD to RMB and gained reported interest savings.
- The swap also included a maturity extension, which reduces near-term repayment pressure.
SGR Loans And Phase Three Halted
- Kenya borrowed roughly $5 billion from China Exim for the SGR in 2014–15 and began principal repayments around 2019–20.
- Phase three of the railway was not financed by China amid debt sustainability concerns.
Three-Way Win Framing
- Yufan Huang frames the deal as a three-way win: Kenya, China Exim Bank, and the Chinese state benefit differently.
- Kenya gains relief, Exim avoids deeper reprofiling, and China advances RMB internationalization goals.