More countries are considering following Kenya's lead in shifting Chinese loans away from the U.S. dollar and into the Chinese yuan, a move that could reshape how developing nations manage debt and trade with Beijing.

🇰🇪 Breaking It Down

According to a new study by AidData , a United States-based research group that tracks global development finance, at least five countries in Africa and Asia are exploring Kenya-style debt conversions after Nairobi secured significant savings by restructuring its Chinese loans.

The report identifies Ethiopia, Mozambique, Zambia, Pakistan, and Indonesia as among the countries that could seek similar arrangements with Chinese lenders.

Kenya drew international attention after converting three Chinese-funded Standard Gauge Railway (SGR) loans from dollar-denominated repayments to yuan-denominated repayments while also securing longer repayment periods and additional grace periods.

📌 What You Need to Know

The restructuring is expected to save Kenya approximately Ksh27.83 billion (USD215 million) annually in debt servicing costs, according to AidData and Reuters .

"Kenya's widely publicised payment relief from China Eximbank has sparked interest among other countries in converting their existing debts from USD to RMB," AidData said in its report.

The findings suggest that China is increasingly encouraging countries to borrow and repay loans in yuan rather than dollars as part of a major push to internationalise its currency.

The development comes as Kenya continues to deepen its economic relationship with China, one of its largest trading partners and financiers of major infrastructure projects, including the SGR and the JKIA expansion works.

The development is being closely watched by economists, many of whom believe the shift could help countries reduce the burden of servicing expensive dollar-denominated debt.

The potential benefits come at a time when several developing economies are grappling with high borrowing costs, foreign exchange shortages, and mounting pressure on public finances.

📰 Source: Kenyans.co.ke