Japan aims to challenge China’s stronghold on African lending by offering cheaper loans through its development financing arm, the Japan International Cooperation Agency (JICA). The strategy is set to give an option to the high-cost lending by China to African Countries. The Asian country has been a key lender to countries in Southeast Asia, including Cambodia, Indonesia, Thailand, and Vietnam.
The high cost of lending has plunged many African countries into high debt crises. Speaking to the Financial Times, Naoki Ando, the senior vice-president for JICA, said that the conversion of high-cost debt into concessional debt is really important to stabilize the African continent. Japan plans to offer loans with low interest rates, longer grace periods, and longer repayment periods.
China is currently Kenya’s largest bilateral lender after the government took a series of loans to finance infrastructure projects. Recently, Kenya held talks with China to convert dollar-denominated loans used to finance the Mombasa-Naivasha Standard Gauge Railway (SGR) to Chinese yuan in a bid to lower the interest payments. According to the 2025 Economic Survey by KNBS, Kenya’s outstanding debt to Tokyo in 2024 was KES 80.5 billion, while Beijing’s debt was KES 737.9 billion.
Japan Key Projects in Kenya
Tokyo has also played a key role in standout projects in Kenya across different sectors. In the transport sector, Japan constructed the Dongo Kundu Bypass Highway in Mombasa, upgraded the Ngong road, and constructed the Nairobi western ring roads. In the energy sector, Japan, through JICA, co-financed a 140 MW Olkaria V Geothermal Station, Sondu Miriu, and Sang’oro hydroelectric power plants.
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