Kenya and Japan strengthen ties amid US tariff upheaval

Nairobi — Kenya’s economic growth this year is expected to exceed official forecasts despite higher US tariffs and other challenges, President William Ruto said at a conference on Wednesday, where Kenya and Japan signed a yen-denominated loan agreement.

The east African nation’s economy is forecast expand 5.6% this year, Ruto said, up from 4.7% recorded last year. That would surpass forecasts by finance ministry and central bank for 5.3% and 5.2% growth, respectively.

“GDP is expected to grow 5.6% this year, despite global domestic headwinds arising from escalating tariffs and trade disruptions affecting many economies,” Ruto said at the Japan-Africa leaders conference, known as TICAD, in the Japanese city of Yokohama.

Separately, Japan and Kenya signed a term sheet for a yen-denominated loan to be backed by Nippon Export and Investment Insurance (NEXI), Japan’s ministry of foreign affairs said.

Details on pricing and terms of the loan were not disclosed.

The deal builds on an agreement signed last February 2024 between Kenya and NEXI to expand financial co-operation, a statement from the Japanese government said.

NEXI’s insurance backing aims to reduce borrowing costs for sovereign borrowers by mitigating risks for investors.

Kenya, East Africa’s biggest economy, has been seeking diversified funding sources to support infrastructure development and economic growth amid global uncertainties.

The push is mirrored in other economies in the region, including Ivory Coast, which raised ¥50bn (about R6bn) in an ESG-certified samurai bond in July.

Japan has been working to deepen economic partnerships across Africa. In Kenya, it has funded projects in power generation, road construction and scientific research.

Kenya is heading for sustained economic growth but faces risks from global trade disputes, market volatility and extreme weather conditions, according to the finance ministry.

Reuters