A high-level Kenyan delegation, led by National Treasury Cabinet Secretary John Mbadi, recently visited China, signalling a renewed effort to deepen financial and trade cooperation. This visit underscores Kenya’s strategic ambition to secure development funds while addressing concerns about debt sustainability and a significant trade imbalance.

A primary goal of the Kenyan delegation was to negotiate continued financing for essential infrastructure projects. The Export–Import Bank of China has been instrumental in Kenya’s development, funding projects like the Standard Gauge Railway (SGR), major road networks, and healthcare facilities. 

However, with Kenya’s rising debt burden, discussions focused on securing financing on more favourable terms, potentially shifting towards concessional loans with lower interest rates or public-private partnerships (PPPs) to share financial risks. 

Kenya has long pursued funding for the SGR extension from Naivasha to Malaba, intending to connect the country to Uganda and the Great Lakes region. While China initially showed interest, concerns over debt viability slowed progress, with critics arguing that the current phase has not generated the anticipated economic returns. 

Negotiations may involve alternative financing structures or private sector investment to alleviate fiscal pressure. Diversifying funding sources, such as exploring options with other development partners or international financial institutions, is also crucial for Kenya.

The Kenyan delegation hinted at advocating for debt restructuring or refinancing to ease repayment pressures. This aligns with Kenya’s fiscal policy of reducing reliance on external borrowing and improving domestic revenue collection. 

CS Mbadi’s emphasis on “sustainable financing mechanisms” indicates a cautious approach to new debt, ensuring alignment with Kenya’s repayment capacity.

Addressing trade imbalances and expanding market access

Beyond debt financing, another key concern for Kenya is its significant trade imbalance with China. In 2023, bilateral trade exceeded $6.8 billion, with imports from China significantly outweighing Kenyan exports. 

This imbalance is reflected in a ratio where imports are roughly five times the value of exports. To counter this, Kenya aims to improve market access for its agricultural and manufactured products.

CS Mbadi’s meeting with China’s Minister of Finance, Lan Fo’an, highlighted Kenya’s desire to renegotiate trade terms. Kenya seeks to reduce tariff and non-tariff barriers that hinder the competitiveness of its exports, including tea, coffee, avocado, and textiles, in the Chinese market. 

The talks also explored increasing Chinese investment in Kenya’s industrial and manufacturing sectors. Attracting Chinese firms to establish production hubs in Kenya could boost job creation, facilitate technology transfer, and balance the economic relationship.

China’s Belt and Road Initiative (BRI) has been central to its engagement with Africa, and Kenya is a key participant. China’s motivations include expanding its global influence, securing access to resources, and creating new markets for its goods. Given changing global economic dynamics, China is focusing on projects offering mutual benefits rather than solely funding large-scale infrastructure.

Kenya’s role as a regional economic hub makes it strategically important for China’s long-term strategy in Africa. The Beijing talks reinforced Kenya’s significance within the BRI while ensuring future projects deliver tangible economic benefits. This pivot also has regional implications, affecting Kenya’s relationships with its neighbours, such as Uganda, which also seeks infrastructure development.

Why the Eastward pivot?

Donald Trump’s return to the White House has amplified Kenya’s eastward tilt. Kenya’s growing alignment with China is not new, but it has gained urgency in light of recent global developments and Trump’s “America First” policies. 

During President Joe Biden’s tenure, Kenya was designated a major non-North Atlantic Treaty Organisation (non-NATO) ally, a status that strengthened ties with Washington. However, Trump’s well-documented scepticism of foreign aid as a means of development in Africa—coupled with his administration’s likely focus on domestic priorities—has cast doubt on the continuity of U.S. support. 

Already, Trump’s decision to suspend USAID has impacted Kenya, which is seeking alternatives to plug the hole. The recent imposition of a 10 per cent reciprocal tax on Kenyan exports to the U.S. is set to increase the cost of trade for Kenyan traders by up to Sh100 billion.

Kenya’s economic aspirations under the Bottom-Up Economic Transformation Agenda (BETA) require significant capital for infrastructure and industrialisation—areas where China has proven expertise and willingness to invest. The Nairobi Expressway, for instance, not only improved connectivity but also showcased the potential of PPP models, which Dr. Chris Kiptoo, Principal Secretary, National Treasury, highlighted in Beijing as a blueprint for future projects.

With Trump’s administration potentially scaling back on trade and investment initiatives in Africa, Kenya’s leadership sees China as a more reliable partner to fill the gap.

China’s dominance in infrastructure—controlling approximately 70 per cent of such projects in Kenya—makes it an indispensable partner. For this reason, Kenya has to keep a close link with China and hence the recent visit by Mbadi and team.

The Beijing meeting builds on momentum from the 2024 Forum on China-Africa Cooperation (FOCAC) Summit, which prominently showcased Kenya’s diplomatic and economic ties with China and laid the groundwork for future collaborations in infrastructure, trade, and technology. 

The summit’s Action Plan aligned with Kenya’s Vision 2030 and BETA, focusing on sectors like trade, infrastructure, and green development—areas critical to Kenya’s development goals.

Kenya’s pivot to the East is a pragmatic response to a changing global landscape. While the U.S. remains an important partner in security and technology, as President William Ruto affirmed in his message to Trump, the economic imperatives of infrastructure development and job creation drive Kenya closer to China.

However, Kenya must navigate the risks of over-reliance on Chinese loans, which have sparked debate about sustainability and sovereignty. As Trump’s policies unfold, Kenya’s “Look East” strategy may serve as a model for other African nations facing similar uncertainties with Western partners.