Banking & Finance
France, Germany Overtake China in Kenya Loans
Political analysts note that President Ruto leans more towards the West than the East, making several visits to Europe and the US and successfully inviting German Chancellor Olaf Scholz and King Charles of Britain
Kenya pivots West as France and Germany surpass China in funding Ruto-era projects, reflecting a shift in foreign policy and loan preferences.
France and Germany have overtaken China as Kenya’s top bilateral financiers under President William Ruto, signaling a significant foreign policy pivot from the previous administration.
According to Kenya’s National Treasury, France is set to fund projects worth KSh 26.49 billion (US$ 199.5 million), making up 30.45% of the KSh 86.99 billion (US$ 655 million) Kenya expects from bilateral loans and grants in the current fiscal year. Germany, through KfW, will provide KSh 16.71 billion (US$ 125.8 million).
In stark contrast, China—once Kenya’s largest bilateral lender—has scaled back dramatically, committing only KSh 7.25 billion (US$ 54.6 million) in new loans. This is a sharp decline from its peak of KSh 140.03 billion (US$ 1.05 billion) in the 2015/2016 financial year, and even less than Japan’s current commitment of KSh 14.39 billion.
Why China Is Retreating
Beijing has become more cautious in its African lending amid global economic uncertainty. Analysts say that China’s earlier model of high-volume infrastructure loans is giving way to a more conservative approach due to concerns over debt sustainability.
A study by AidData showed that many Chinese loan contracts contain secretive terms and prioritize repayment to Chinese lenders. This was evident during the COVID-19 pandemic, when Chinese lenders refused to extend Kenya’s debt repayments, unlike Western creditors.
Ruto’s Strategic Shift to the West
President Ruto’s administration appears to favor Western partnerships. His May 2024 visit to Washington, D.C.—the first state visit by an African leader to the US in 18 years—was a clear signal. The Biden administration responded with promises to help improve Kenya’s investment climate.
Ruto has also hosted German Chancellor Olaf Scholz and King Charles III, strengthening ties with Europe. His positions on international conflicts—such as Russia-Ukraine and Israel-Hamas—often align with the West, further distancing Kenya from China’s neutral or contrasting stances.
“Kenya is a leader in policy innovation in Africa,” the White House noted during the state visit, highlighting the country’s growing geopolitical value.
The Role of the IMF and World Bank
Kenya’s Western alignment has also deepened its reliance on multilateral lenders like the IMF and World Bank, which provide budget support but impose stringent economic conditions.
In February 2024, the IMF approved a US$ 1.5 billion loan that helped Kenya repay the majority of a US$ 2 billion Eurobond maturing in June. However, this came with tough requirements—such as the controversial 16% VAT on fuel—that have sparked public opposition.
For details, read our internal piece:
Conclusion: What This Shift Means
Kenya’s changing financing landscape marks a strategic departure from China’s influence and a bet on Western-backed transparency and governance. While IMF and World Bank loans come with strings attached, they also signal international confidence in Kenya’s fiscal trajectory.
In contrast, China’s model—criticized for “debt diplomacy”—may have lost appeal amid growing African skepticism. Ruto’s Westward tilt may redefine not only Kenya’s foreign policy but also its economic development trajectory.