Japan To Make $860m Infrastructure Funding Available To Kenya.

Legal News & Analysis - Asia Pacific - Japan - FDI - Energy & Project Finance

3 October, 2019


Japan will make $860 million available to Kenya in concessional loans and grants for infrastructure projects including the construction of a bridge in Mombasa, according to Reuters


According to Japan’s ambassador to Kenya Katsutoshi Komori, a loan of about $450m will be used for building a 1.3 km bridge linking Mombasa’s mainland to an island in the city. Another $350m loan and a $57m grant will go toward developing a few infrastructure facilities in the special economic zone, which is known as Dongo Kundu in Mombasa. 


“The completion of the bridge over the channel will significantly decongest the city of Mombasa by providing an alternative to the Likoni Ferry, allow free movement of marine vessels that need to access Kilindini Harbour,” said Kenya’s acting finance minister Ukur Yatani.


Infrastructure expert Nicholas Brown of Pinsent Masons, the law firm behind Out-Law, said:" This appears to be official development aid loan. Although the interest rates will be low it is not a gift.  Secondly, it appears to be modelled on the type of programme currently being applied by the lending agency, JICA, in the like of Myanmar and Bangladesh, involving private sector investors as well as sovereign debt funding."


The Standard Media said, the cabinet secretary made it public that the credits will attract an interest rate of 0.1%, repayment period of 28 years and grace period of 12 years.


According to South China Morning Post, Kenya ranks as Africa’s third most indebted country to China for the period during 2000 to 2017. The country’s current debt to China is about $9.8b, which are mainly about funding in national infrastructure. 


In year 2018, Japan has increasing loans to Kenya by 162%, bilateral loans from Japan was Sh52.2bn ($503m) in June 2018 and that had became Sh136bn ($1.3bn) by June 2019, according to Business daily Africa.


This article was published in Out-law here.

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Nicholas A Brown, Partner, Pinsent Masons