Dr. Sultan Bin Ahmed Al Jaber, Minister of Industry and Advanced Technology of the United Arab Emirates shakes hand with President Ruto during the past meeting. Photo | courtesy.
Kenya is set to receive Sh64.8 billion ($500 million) next week as the first drawdown from a $1.5 billion commercial loan secured from the United Arab Emirates (UAE), in a move aimed at shoring up public finances ahead of the close of the 2024/25 fiscal year.
Treasury Cabinet Secretary John Mbadi confirmed that while the government has access to $1 billion of the facility within the current financial year, it has opted to draw only half of that amount now, with the remainder deferred to 2025/26.
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The funding comes at a time when the country faces a tight fiscal environment, compounded by maturing debt obligations and shrinking access to concessional financing.
The UAE facility, while commercially priced, offers relatively flexible terms and is viewed as politically favourable, especially in the wake of heightened cooperation between the two countries in energy, logistics, and infrastructure sectors.
“This drawdown will enhance liquidity and help us meet critical obligations as we implement the 2024/25 budget,” said Mbadi, adding that the funds will be channelled through the National Treasury to support planned expenditures and debt servicing.
The disbursement reflects Kenya’s evolving debt strategy, which has increasingly turned to bilateral arrangements amid limited access to international bond markets. Global borrowing conditions have tightened significantly in recent years, forcing many emerging economies to seek alternatives to Eurobonds and syndicated loans.
Analysts view the UAE deal as a calculated move by Nairobi to diversify its debt portfolio while managing refinancing risks. Kenya’s recent fiscal performance has drawn scrutiny from global lenders, with the IMF urging tighter expenditure controls and improved domestic revenue mobilisation.
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Yet, the broader concern remains: whether the funds will translate into impactful development or simply serve to delay tough fiscal decisions. With total public debt standing at over Sh11 trillion, Kenya’s borrowing appetite continues to attract debate, especially around transparency and long-term sustainability.
The UAE, meanwhile, continues to expand its strategic footprint in East Africa, with the loan seen as part of a broader economic diplomacy push that includes port infrastructure, energy projects, and fintech investments.
