Kenya is engaged in discussions with China to convert approximately $5 billion of its dollar-denominated Standard Gauge Railway (SGR) loan into Chinese yuan as part of efforts to diversify its external debt portfolio and reduce the annual $1 billion cost of servicing debt to China. This move is seen as a strategy to manage Kenya's $40 billion external debt more effectively. Concurrently, Japan has agreed to provide Kenya with up to ¥25 billion (approximately $170 million) in yen-denominated funding, a smaller amount than Nairobi had anticipated. These funds are intended to support Kenya's automotive industry and enhance electricity supply. The broader context includes Japan's plan to allocate up to ¥810 billion for infrastructure projects across African nations starting next year. Kenya's debt management strategy also involves talks to halve the interest rate on the SGR loan alongside the currency conversion discussions. Additionally, Kenya is exploring financing options through China's panda bonds and Japan's samurai bonds to further diversify its funding sources.