DEBT COMPETITION BETWEEN CHINA AND JAPAN IN KENYA
Introduction
The diplomatic ties between Kenya and China make up what is known as China–Kenya
relations. In 1963 the two countries formed their diplomatic connection though ties faced
temporary suspension in 1967 before relations were renewed in 1978. The economic and
investment agreements between China and Kenya have grown extensively which
positions China as Kenya's foremost trading partner despite Japan establishing its
embassy in Nairobi in 1964 right after Kenya gained independence. The diplomatic
mission of Kenya opened in Japan during 1979 and today Nairobi has become a hub for
Japanese expatriates in Africa. The population of Japanese nationals residing in Nairobi
achieved a total of 633 in 2009. JICA together with JETRO and JBIC operated their
regional offices from Nairobi as their headquarters.
China and Japan are collectively financing half a billion dollars worth of Kenyan
infrastructure projects in the current fiscal year, more than any other country, according
to new data from the National Treasury in Nairobi.Chinese loans and grants in the 2022-
2023 fiscal year total $245 million, while Japanese creditors have provided $258 million
for various roads and other projects currently in development.While China remains
Kenya's largest bilateral creditor overall due to past large-scale infrastructure projects,
Japan has been steadily gaining ground in recent years, particularly in terms of new
financial commitments. It is now that Japan is lending more fresh loans than China, a
stark shift in the dynamics of Kenya’s external debt. This is rather a competition for
1
,strategic interests for both countries in Africa, as well as to lend financing on key
infrastructure and development projects.
Projects in Kenya Funded by China and Japan
Chinese-Funded Projects in Kenya
China has been turned out to be one of Kenya’s biggest development partners,
particularly in building of big infrastructure projects, over the past two decades. Standard
Gauge Railway (SGR) is one of the most well known extends from Mombasa to Nairobi
and later on to Naivasha. This modern railway was built at around a cost of about \$5
billion and mostly from borrowed money from the China’s Export-Import Bank, by the
China Road and Bridge Corporation (CRBC). It has reduced the travel time for people
between the major cities and it made road transport more comfortable by moving cargo
more efficiently. However, the project has attracted criticism of whether Kenya is
borrowing too much debt and whether the railway is making enough revenue to pay for
itself (African Development Bank, 2021; World Bank, 2020).
Another hot topic Chinese project is Nairobi Expressway, what one argue it was partly an
act of reducing their pollution from vehicles and also reducing traffic jams within
Nairobi, it is a 27 kilometre elevated highway that spans from the Jomo Kenyatta
International Airport (JKIA) to Westlands. There is one road: this road, built under a
$668 million public private partnership, that has slashed how long many Nairobians used
to spend wasted in gridlock. The road is now a toll road, and some see it as an expensive
exercise to use, but most are willing to pay for it because the time gained is more than
worth it (Business Daily, 2022). In addition, China has also helped to pay for the first
2
, phases of construction of the sprawling new seaport of Lamu which is part of the bigger
LAPSSET Corridor Project. China built three initial berths in behalf of what is likely to
become a huge trade gateway between Kenya, Ethiopia, and South Sudan (LAPSSET
Authority, 2020).
China’s roads in Kenya don’t end there. The Chinese Exim Bank together with African
Development Bank funded the Thika Superhighway, a route linking Nairobi to Thika
town, costing around \$360 million. One of the busiest and most important roads in the
country, it is now referred to as a national highway (Kenya National Highways Authority,
2019). On the tech side, China’s Huawei has been involved in building out Kenya’s
ambitious smart city project, Konza Technopolis, which seeks to bring Kenya into a
category of countries using digital infrastructure as a way of becoming a regional
technology hub (Konza Technopolis Authority, 2021).
Japanese-Funded Projects in Kenya
Over the years, Japan has quietly but steadily supported Kenya’s development journey, in
equal emphasis on development that is sustainable, of quality and projects that have
people at its centre. Having said that, a good example is Mombasa Port Development
Project, where with over $500 million in loans and grants, Japan assisted in the financing
for the various construction of Berth 19, 20, and 21. With the amount of cargo they could
handle, this investment made it possible for the port to considerably increase trade not
only in Kenya but also in the entire East Africa region which depends on Mombasa as a
shipping hub, asserts JICA (2021).
3
Introduction
The diplomatic ties between Kenya and China make up what is known as China–Kenya
relations. In 1963 the two countries formed their diplomatic connection though ties faced
temporary suspension in 1967 before relations were renewed in 1978. The economic and
investment agreements between China and Kenya have grown extensively which
positions China as Kenya's foremost trading partner despite Japan establishing its
embassy in Nairobi in 1964 right after Kenya gained independence. The diplomatic
mission of Kenya opened in Japan during 1979 and today Nairobi has become a hub for
Japanese expatriates in Africa. The population of Japanese nationals residing in Nairobi
achieved a total of 633 in 2009. JICA together with JETRO and JBIC operated their
regional offices from Nairobi as their headquarters.
China and Japan are collectively financing half a billion dollars worth of Kenyan
infrastructure projects in the current fiscal year, more than any other country, according
to new data from the National Treasury in Nairobi.Chinese loans and grants in the 2022-
2023 fiscal year total $245 million, while Japanese creditors have provided $258 million
for various roads and other projects currently in development.While China remains
Kenya's largest bilateral creditor overall due to past large-scale infrastructure projects,
Japan has been steadily gaining ground in recent years, particularly in terms of new
financial commitments. It is now that Japan is lending more fresh loans than China, a
stark shift in the dynamics of Kenya’s external debt. This is rather a competition for
1
,strategic interests for both countries in Africa, as well as to lend financing on key
infrastructure and development projects.
Projects in Kenya Funded by China and Japan
Chinese-Funded Projects in Kenya
China has been turned out to be one of Kenya’s biggest development partners,
particularly in building of big infrastructure projects, over the past two decades. Standard
Gauge Railway (SGR) is one of the most well known extends from Mombasa to Nairobi
and later on to Naivasha. This modern railway was built at around a cost of about \$5
billion and mostly from borrowed money from the China’s Export-Import Bank, by the
China Road and Bridge Corporation (CRBC). It has reduced the travel time for people
between the major cities and it made road transport more comfortable by moving cargo
more efficiently. However, the project has attracted criticism of whether Kenya is
borrowing too much debt and whether the railway is making enough revenue to pay for
itself (African Development Bank, 2021; World Bank, 2020).
Another hot topic Chinese project is Nairobi Expressway, what one argue it was partly an
act of reducing their pollution from vehicles and also reducing traffic jams within
Nairobi, it is a 27 kilometre elevated highway that spans from the Jomo Kenyatta
International Airport (JKIA) to Westlands. There is one road: this road, built under a
$668 million public private partnership, that has slashed how long many Nairobians used
to spend wasted in gridlock. The road is now a toll road, and some see it as an expensive
exercise to use, but most are willing to pay for it because the time gained is more than
worth it (Business Daily, 2022). In addition, China has also helped to pay for the first
2
, phases of construction of the sprawling new seaport of Lamu which is part of the bigger
LAPSSET Corridor Project. China built three initial berths in behalf of what is likely to
become a huge trade gateway between Kenya, Ethiopia, and South Sudan (LAPSSET
Authority, 2020).
China’s roads in Kenya don’t end there. The Chinese Exim Bank together with African
Development Bank funded the Thika Superhighway, a route linking Nairobi to Thika
town, costing around \$360 million. One of the busiest and most important roads in the
country, it is now referred to as a national highway (Kenya National Highways Authority,
2019). On the tech side, China’s Huawei has been involved in building out Kenya’s
ambitious smart city project, Konza Technopolis, which seeks to bring Kenya into a
category of countries using digital infrastructure as a way of becoming a regional
technology hub (Konza Technopolis Authority, 2021).
Japanese-Funded Projects in Kenya
Over the years, Japan has quietly but steadily supported Kenya’s development journey, in
equal emphasis on development that is sustainable, of quality and projects that have
people at its centre. Having said that, a good example is Mombasa Port Development
Project, where with over $500 million in loans and grants, Japan assisted in the financing
for the various construction of Berth 19, 20, and 21. With the amount of cargo they could
handle, this investment made it possible for the port to considerably increase trade not
only in Kenya but also in the entire East Africa region which depends on Mombasa as a
shipping hub, asserts JICA (2021).
3
