By George Obulutsa and Colleen Goko
NAIROBI/JOHANNESBURG (Reuters) -Kenya’s economic growth this year is expected to exceed official forecasts despite higher U.S. tariffs and other challenges, President William Ruto said at a conference on Wednesday, where Kenya and Japan also signed a yen-denominated loan deal.
The East African nation’s economy is forecast to grow by 5.6% this year, Ruto said, more than the 4.7% recorded last year. That would surpass forecasts by Kenya’s finance ministry and central bank for 5.3% and 5.2% growth, respectively.
“GDP (gross domestic product) 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 cooperation, 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 largest 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 50 billion Japanese yen in an ESG-certified samurai bond in July.
Japan has been working to deepen economic partnerships across Africa. In Kenya, Japan has funded projects in areas such as power generation, road construction and scientific research.
Kenya is on a trajectory of sustained economic growth but faces risks from global trade disputes, market volatility and extreme weather conditions, according to the finance ministry.
(Reporting by George Obulutsa; Editing by Duncan Miriri and Bernadette Baum)
