Kenya To Receive Sh193.5B Loan From UAE Next Week

Kenya is poised to receive a $1.5 billion (KSh 193.5 billion) loan from the United Arab Emirates (UAE) by the end of next week.

According to a Bloomberg report citing sources familiar with the matter, this financial injection aims to alleviate Kenya’s mounting fiscal pressures, driven by a widening budget deficit and sluggish economic growth.

Kenya will get the financing in one go, reversing an earlier plan to stagger the loan, according to Bloomberg sources.

The loan, part of a seven-year budget-financing agreement with Abu Dhabi, comes at a critical juncture as Kenya seeks to stabilize its economy amid domestic and global challenges.

Kenya tapped the UAE for the funds last year to diversify its budget financing sources beyond eurobonds, traditional bilateral creditors like China and multilateral lenders.

A Growing Partnership

The UAE-Kenya relationship has flourished in recent years, evolving from modest diplomatic ties established in 1982 to a robust economic partnership. Bilateral trade reached $3.3 billion (KSh 425.7 billion) in 2023, with the UAE ranking as Kenya’s second-largest import source and sixth-largest export destination, according to Kenya’s Ministry of Foreign Affairs.

This growth was turbocharged by the signing of the Comprehensive Economic Partnership Agreement (CEPA) on January 14, 2025, during a high-profile visit by President William Ruto to Abu Dhabi.

The CEPA, the first of its kind between the UAE and a mainland African nation, aims to triple Kenya’s exports of meat, fruits, and horticulture while opening UAE investment in sectors like energy, logistics, and agriculture.

The past decade has seen trade between the two nations more than double, with Kenya exporting KSh 9.9 billion ($76.45 million) worth of meat to the UAE in 2023—over half its total meat exports—alongside KSh 10.8 billion ($83.4 million) in pineapples, avocados, and flowers.

In return, the UAE supplies Kenya with petroleum, machinery, and chemicals, cementing a trade dynamic that favors Abu Dhabi but is increasingly balanced by strategic agreements.

Recent Milestones

Beyond trade, the UAE has emerged as a key investor in Kenya’s infrastructure and agriculture. In November 2024, Kenya signed a KSh 1.9 billion ($14.7 million) deal with the UAE to support 50,000 flood-affected families, coordinated by the Kenya Red Cross.

Earlier, in February 2024, the UAE and Kenya finalized negotiations for the CEPA, which Reuters noted boosted non-oil trade by 26.4% to $3.1 billion (KSh 399.9 billion) in 2023.

President William Ruto attends the opening ceremony of the Abu Dhabi Sustainability Week (ADSW) Summit held at the Abu Dhabi National Exhibition Centre (ADNEC) in Abu Dhabi, United Arab Emirates.

This agreement has paved the way for projects like the Sh6.79 billion ($52.6 million) deal with UAE’s Al Dahra to expand the Galana-Kulalu irrigation project, leasing 200,000 acres and building a dam to irrigate 350,000 acres, enhancing food security.

High-level engagements have further solidified this bond. President Ruto’s 2023 meetings with UAE President Sheikh Mohamed bin Zayed Al Nahyan at COP28, followed by a July 2024 phone call discussing renewable energy and trade.

The UAE’s offer of a private plane for Ruto’s US trip in May 2024, amid domestic criticism, also underscored the goodwill between the leaders.

Loan Details and Economic Context

The $1.5 billion (KSh 193.5 billion) loan, carrying an 8.25% interest rate, will be drawn in tranches to comply with the IMF’s KSh 168.8 billion ($1.3 billion) commercial borrowing ceiling for the fiscal year, per Bloomberg.

Treasury Secretary John Mbadi has emphasized its affordability compared to Eurobonds, though the IMF has flagged foreign-exchange risks.

This follows Kenya’s October 2024 talks with the UAE for the loan, as reported by Serrari Group, reflecting a shift from traditional multilateral lenders amid delays in IMF disbursements.

Kenya’s economy grew by just 4% in Q3 2024, down from 4.6%, per the Kenya National Bureau of Statistics, hampered by protests, floods, and waning investor confidence.

The World Bank cut its 2024 growth forecast to 4.7% from 5%. With public debt soaring and reserves at a three-year high in November 2024, per the Central Bank of Kenya, the UAE loan offers breathing room as Kenya eyes a new IMF program and potential Eurobond issuance.

UAE’s African Strategy

The UAE’s support for Kenya aligns with its broader African ambitions. Abu Dhabi has provided Ethiopia with $2.9 billion (KSh 374.1 billion) in investments and Egypt with bailouts, while a $12 billion (KSh 1.548 trillion) oil deal with South Sudan in 2025.

In Kenya, talks to extend the Standard Gauge Railway to Uganda, reported by Bloomberg in January, and investments in ports and logistics under the CEPA, position the UAE as a pivotal player in East Africa’s connectivity.

Domestic Reactions

The loan has elicited cautious optimism. “It’s a lifeline, but the high interest rate raises concerns about debt sustainability,” said economist Ian Njoroge in The Standard. Opposition voices, like Martha Karua, demand transparency, echoing public skepticism after the scrapped Adani deals. Businesses, reeling from a Kenya Association of Manufacturers report showing 60% halted expansions, hope for liquidity relief.

Future Prospects

With tourism projected to earn KSh 560 billion ($4.33 billion) in 2025, per Tourism Secretary Rebecca Miano, and remittances stabilizing the shilling, Kenya has levers to pull. The UAE loan, coupled with the CEPA’s promise of deeper ties, offers a chance to reset. Yet, as Dr. Patrick Njoroge warned in Business Daily, sustainable debt management remains key to avoiding over-reliance on costly loans.

For now, this $1.5 billion (KSh 193.5 billion) infusion signals a new chapter in UAE-Kenya relations—one built on mutual economic ambition but tested by the realities of fiscal prudence.