Why Kenya Wants to Pay China in Yuan Instead of Dollars for SGR Loan

Hello and welcome to the Money News Roundup Newsletter. Today, are covering Kenya’s push to repay the SGR loan in yuan instead of dollars, and the government’s proposal to split Safaricom into three separate entities.

Govt in Talks With China to Convert Currency of SGR Loan From US Dollar

As reported in Bloomberg, the government has begun talks with China to convert the dollar-dominated loans it took for the construction of the Standard Gauge Railway to yuan.

Treasury Cabinet Secretary John Mbadi stated that the move will be beneficial to the country as it would significantly reduce the debt burden by Ksh129 billion.

Additionally, the government is also in talks to extend the repayment period to reduce the debt pressure.

China is the largest foreign lender to Kenya and has funded various projects such as the Standard Gauge Railway and the Nairobi Expressway.

“The moment we move from the US dollar to the Renminbi (a currency referred to interchangeably with the Yuan), automatically, the interest rate reduces by almost half,” he stated.

As at the end on May 2025, Kenya owed China Ksh652 billion. The figures keep fluctuating owing to the shift in the dollar-shilling rate.

Therefore, the change to yuan is set to protect the country from the fluctuations posed by the strengthening of the dollar.

Govt Mulls Move to Split Safaricom into 3 Entities

The government is weighing a plan to split Safaricom Plc into three units: a telecommunications operator, a tower company, and M-Pesa. 

As reported by Bloomberg, Treasury Cabinet Secretary John Mbadi said an assessment has been done with an initial report showing a huge benefit to the government, which owns 35% of the company shares.

He explained that separating the businesses would make it easier to revalue each unit independently, providing clarity on Safaricom’s true market worth.

This would help the government assess how much its 35% stake is really valued ahead of plans to sell its shares.

The government has been exploring a wider privatization drive to raise revenue. Currently, the telco is valued at Ksh1.07 trillion.

Banks Slash Interest on Deposits to 25-Month Low 

Banks have cut interest on customer deposits to a 25-month low of 8.37 percent in June, reversing a two-year trend of rising returns aimed at attracting savers.

As detailed in the Business Daily, this marks the fifth consecutive month of falling deposit rates, according to data from the Central Bank of Kenya (CBK).

The June rate dropped from 8.7 percent in May, nearing the July 2023 average of 8.1 percent. It is the fifth time deposit rates have dipped below double digits, a sharp contrast to the recent peak of 11.48 percent recorded in June,  a 26-year high only rivaled by December 1998’s 12.99 percent.

The decline coincides with a cut in the Central Bank Rate (CBR) and lower returns on Treasury bills, all of which are now below 10 percent.

Richest Counties Lose Billions in New Revenue Allocation Formula

Thirty-five counties, including Kenya’s ten wealthiest, have lost Ksh6.76 billion in funding under a new revenue-sharing model introduced in July.

The revised formula, crafted by the Commission on Revenue Allocation (CRA), aims to boost equity by allocating more resources to poorer, sparsely populated counties.

Counties such as Nairobi, Nakuru, Kiambu, Mombasa, Meru, and Kisumu are among those hardest hit. In contrast, twelve poorer counties—including Lamu, Tharaka Nithi, and Elgeyo Marakwet—gained Ksh3.5 billion, according to Treasury data.

The new model factors in a county’s Gross County Product (GCP), a shift from the previous emphasis on population, land mass, and poverty index. The CRA argues that GCP offers a clearer picture of each county’s tax capacity and economic performance.

For instance, Nairobi’s allocation has been reduced by Ksh367 million. Read more from the Business Daily here.

SASRA Appoints Interim CEO

The Sacco Societies Regulatory Authority (SASRA) has appointed David Amiani Sandagi as acting CEO following the exit of Peter Njuguna, who opted not to seek a new term after serving since 2021. 

Sandagi, previously SASRA’s director of corporate affairs, takes office effective August 18, 2025.

Njuguna said his four-year tenure focused on regulatory reforms and expressed confidence that Sandagi would steer SASRA to the next level. His exit comes amid turbulence in the sacco industry after revelations of a Sh13.3 billion financial scandal at the Kenya Union of Savings and Credit Co-operatives (KUSCCO). Read more.

Treasury Nets Ksh179 Billion from Infrastructure Bond Tap Sale 

The Treasury has raised Ksh179.8 billion from the tap sale of the August infrastructure bond, following an oversubscription that saw bids hit Ksh207.45 billion against a Ksh50 billion target.

According to the Business Daily, the sale, open for only 24 hours, brought CBK’s total collection from the August bond to Ksh274.8 billion.

The bond, comprising reopened 15-year and 19-year infrastructure bonds, offered yields of 12.5 percent and 12.99 percent % respectively.