Kenya, Japan sign Ksh22B deal to expand local vehicle assembly

Kenya and Japan have unveiled a new Ksh22 billion financial facility primarily aimed at rapidly expanding Kenya’s young automotive industry.

The deal between the Government of Kenya and Japan’s Nippon Export and Investment Insurance (NEXI) Company Ltd seeks to assemble more vehicles for the Kenyan market.

The bulk of the facility, about Ksh13.1 billion, will be directed towards supporting Kenya’s National Automotive Policy, which shifts focus from importing built units to increasing local value addition.

Speaking at the signing ceremony at State House Nairobi on Monday, President William Ruto said: “For too long, Africa has imported what it could build and exported the jobs that come with it.”

“We are changing that. We will not simply import finished vehicles; we will assemble them here in Kenya by Kenyan workers,” he added.

The agreement was signed on behalf of the Government of Kenya by Finance Cabinet Secretary John Mbadi and NEXI’s Chairman and CEO Atsuo Kuroda.

President Ruto pointed out that assembling vehicles locally creates jobs, builds Kenyan skills, talent and expertise while deepening the country’s manufacturing base.

“When we assemble vehicles here in Kenya, we stop exporting our jobs and begin keeping them. We keep the value here at home; and we begin to balance a trade account with our partners around the world that has tilted against us for too long,” he said.

The President explained that the agreement is the outcome of his visit to Japan in 2024 and Kenya’s participation in the Tokyo International Conference on African Development (TICAD) in 2025.

“At last, I have been vindicated. I was not on a journey as a tourist, but in pursuit of the best interests of our country,” he said.

Mr Kuroda explained that the facility was developed from a Memorandum of Understanding signed between NEXI and the National Treasury during President Ruto’s 2024 visit, leading to the financial agreement in March 2026.

“I believe this initiative will contribute to industrialisation and job creation in Kenya by leveraging on Japanese technology and support decarbonisation efforts in Kenya through energy efficiency,” he said.

The second component of the facility, Ksh5 billion, will fund the Reduction of Energy Losses Programme and help mitigate power losses in Kenya’s grid and ultimately lower energy costs.

“Cheaper and cleaner power is the foundation of an industrial economy,” President Ruto said.

The last tranche of the facility of Ksh4 billion will be used to support Kenya’s reform and development agenda, including delivering essential public services and protecting social investments.

“This reflects Japan’s confidence in the progress we are making and our commitment to responsible economic management,” the President said.

He explained that the partnership diversifies Kenya’s sources of finance, noting that this is the first time Kenya is accessing Japan’s financial market through a Samurai bond.

“It speaks to our strategy to diversify our sources of funding for the national transformation programme in our country. Traditional sources of financing cannot suffice for us to take this country to the next level,” he said.

Echoing the President’s position, Treasury Cabinet Secretary Mbadi said the Government is exploring more concessional loans charging between 0.5 and 3 per cent interest rate as opposed to expensive commercial loans.

Trade Cabinet Secretary Lee Kinyanjui said the agreement addresses long-standing challenges Kenya has been facing in its quest to manufacture its own vehicles.

Present were Prime Cabinet Secretary Musalia Mudavadi, Japanese Embassy Chargé d’Affaires in Nairobi Tomonobu Hori, Principal Secretaries, among others.