Kenya expects faster growth in 2025, signs yen-denominated loan with Japan

Kenya Sees Stronger 2025 Growth as It Secures Yen‑Denominated Loan from Japan
Kenya’s economy is expected to outperform previous projections in 2025, with President William Ruto forecasting growth of 5.6%, outpacing both last year’s growth of 4.7% and earlier forecasts from the finance ministry and central bank. He made the announcement at the Tokyo International Conference on African Development (TICAD 9), pointing to Kenya’s resilience in the face of global headwinds such as rising U.S. tariffs and supply chain disruptions.
At the same conference, Kenya and Japan signed a term sheet for a yen‑denominated Samurai loan, backed by Nippon Export and Investment Insurance (NEXI).
While the full terms and pricing were not disclosed, the facility — worth up to ¥25 billion — is designed to support Kenya’s National Automotive Policy and to fund a programme to reduce electricity transmission and distribution losses.
NEXI’s backing is expected to lower Kenya’s borrowing costs by mitigating risks for lenders.
Reaction to the deal has been broadly positive. Supporters argue it marks a smart diversification of Kenya’s funding sources, reducing reliance on traditional Western lenders and opening up access to more affordable capital.
However, some analysts caution that foreign‑currency debt carries risks—especially if the Kenyan shilling weakens, which could make repayments more expensive. The move is part of a broader strategy by Nairobi to boost investment while managing its fiscal vulnerability.
Looking ahead, Kenya will need to leverage the new funds prudently. If the borrowing is channeled into productive sectors — such as clean energy infrastructure and local vehicle manufacturing — it could spur job creation and structural economic transformation. But with global economic uncertainty and currency risks still looming, the country will need to walk a careful line between ambition and sustainability.