Kenya’s government is on the verge of securing a Ksh72 billion loan from China. This loan will be utilizedfor the construction of major roads projects. The road project are inclusive of the124-kilometre Kenya-Tanzania Road.
Kenya’s Treasury Cabinet Secretary John Mbadi, who spoke on Wednesday, May 14, stated the highway was initially planned to be constructed with funds from the World Bank.
Also read: 454-Kilometre Kenya-Tanzania Road to be Completed in 2024
Kenya-Tanzania Road Project Factsheet
Financier: China/ World Bank
Loan type: Concessional
Length: 124 kilometers
However, as a result of unprecedented delays by the lender in disbursing the funds, the road could potentially be constructed using the credit facility from China.
Speaking during an interview with Ramogi FM, Mbadi revealed that the agreement for building the Ksh124-kilometer road using the Chinese loan was reached after deliberations with Transport CS Davis Chirchir.
Other Roads to be Constructed by the Loan
According to the Treasury CS, a portion of the loan would also be used to construct other key roads within the country. These roads include two major highways. The highways are set to link counties within the Rift Valley region and the greater Lake Victoria basin.
“Just recently, the Transport CS revealed plans to construct two roads that would be financed by the World Bank. One of the roads is from the South Rift and connects Awendo, and the other one is from the North Rift,” Mbadi stated.
He went on: “So these roads were meant to be funded by the World Bank. However, yesterday we revealed to China about our plan to construct additional roads. We sought a total of Ksh72 billion from China for the roads.”
Concessional Loans for the Roads
During the interview, Mbadi made it clear that the two loans from both the World Bank and China would be concessional. A concessional loan is a credit made on more favourable terms than the borrower could obtain in the market.
“These loans that I am talking about are concessional. The World Bank sometimes awards us a loan that is even at 1 per cent. Also, the Chinese are willing to award us the loan at an interest rate below 4 per cent. So we will negotiate with them,” Mbadi clarified.
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