Kenya signs Sh21.7 billion automotive and energy deal with Japan

President William Ruto and Prime CS Musalia Mudavadi lead a bilateral meeting with with Dr Tanaka Akihiko, President of the Japan International Cooperation Agency in Tokyo, Japan. [@MusaliaMudavadi, X]

Japan has extended up to Sh21.7 billion (25 billion yen) in Samurai financing to Kenya to support the country’s vehicle assembly and energy sectors. 

The deal was signed by Kenyan Foreign Affairs Minister Musalia Mudavadi and Nippon Export and Investment Insurance (NEXI) CEO Atsuo Kuroda, according to a document shared by the Kenyan government.

"The facility will strengthen our local vehicle assembly and parts manufacturing industry while also addressing electricity transmission and distribution losses, currently standing at about 23 per cent, Musalia said.

In the document seen by the Standard, between Sh10.5 billion and Sh13.1 billion will facilitate the national automotive policy, Sh5 billion will go to procurement of high-performance transformers to reduce electricity transmission, and Sh4 billion will go to general budget support, focusing on projects exempted from environmental impact assessment. 

The agreement comes as Kenya negotiates a separate term sheet with China to convert part of its dollar-denominated debt into yuan and extend repayment terms, a move aimed at easing sovereign borrowing costs. 

President William Ruto has insisted that the country is shifting away from short-term financing risks towards reducing expensive debts.

He said the country was weighing sustainability-linked bonds with guarantees, yen-denominated Samurai bonds, renminbi-denominated Panda bonds, and debt swaps.

His administration has also prepaid some domestic bonds and plans more such operations.