China Eximbank provides RMB 1.026 billion government concessional loan for Nairobi-Thika Highway Improvement Project (Lot 3)

Project narrative

On December 18, 2009, China Eximbank and the Government of Kenya signed a government concessional loan (GCL) worth RMB 1,068,000,000 for the Nairobi-Thika Highway Improvement Project (Lot 3). The face value of the loan was subsequently revised to RMB 1,026,923,076.92. The loan was provided with the following borrowing terms: a 2% interest rate, an 8 year grace period, and a 20.25 year maturity (final maturity date: March 21, 2030). The borrower made principal repayments worth RMB 41,076,923 between July 1, 2020 and June 30, 2021 (Fiscal Year 2020-2021) and RMB 82,153,846.16 between July 1, 2021 and June 30, 2022 (Fiscal Year 2020-2022). The loan’s amount outstanding was RMB 821,538,461.54 as of June 30, 2020, RMB 739,384,615.38 as of June 30, 2021, and RMB 657,230,769.23 as of June 30, 2022 The primary objective of the Nairobi-Thika Highway Improvement Project was to the expansion of the former dual carriageway (four-lane) Thika Road into six to eight lanes with dual service lanes for each side in most of the sections of the highway. The 50km highway is located in the northeast of the Nairobi Metropolitan Region (NMR) and it extends from Nairobi City Center to Thika District. The trunk road currently serves as a main cargo route and an important metropolitan, regional and international transit link and is part of the classified international trunk road A2, which originates in Nairobi City Center and extends to Moyale, Ethiopia. The road also acts as a main artery for various satellite towns and economic hubs that lie along and near the corridor, including Ruaraka, Kasarani, Kiambu Town, Githurai, Ruiru, Juja, and Thika. The project consisted of 3 lots and it was co-financed by the African Development Bank, China Eximbank, and the Government of Kenya. China Eximbank funded Lot 3 (the 23.8 km road segment from Kenyatta University to Thika) and the African Development Bank and the Government of Kenya financed Lots 1 and 2. The first lot (Lot 1) comprised the rehabilitation and upgrading of three Nairobi City Arterial Connectors to the Nairobi - Thika Road (A2) for a total of 12.4 km. The components were: Forest Road from Pangani to A104 Museum Roundabout (3.6 km); Muranga Road from Muthaiga to A104 at University Way Roundabout (4.5 km); and Kariakor Road from Pangani to A104 at Haile Selasse Road Roundabout (4.3 km). The second lot (Lot 2) covered the rehabilitation and expansion of the 14.1 km Muthaiga - Kenyatta University stretch on the Nairobi - Thika road (km 3+900 - km 18 + 00). The third lot (Lot 3) involved the rehabilitation and upgrading of the 23.88 km Kenyatta University (km 18+000) to Thika (km 41+880) section of the road. 3 Chinese contractors were responsible for project implementation: Shengli, Sinohydro Corp and China Wu Yi. China Wu Yi worked on Lot 1, Sinohydro worked on Lot 2, and Shengli worked on Lot 3. The project was initiated on January 22, 2009, and completed on October 11, 2011. The project was originally expected to reach completion, as per the project implementation schedule, on July 21, 2011. This project was designed with a robust monitoring and evaluation mechanism. Baseline data collected at the beginning of the project were compared with enplane data collected at project at completion. The indicators are largely “SMART”: measures of mobility assessed through changes in traffic flows; accessibility, tracked using journey speed survey data at the beginning and at completion of the project; increased inter-regional trade flows between Eastern Africa and the Horn of Africa, measured through secondary economic data in 2007 and assessed against target flows in 2011; traffic accident data in 2007 assessed against crash data in 2013; and average land values within the project corridor measured before and after the project. The outcome data at project completion were impressive: traffic flows increased from 85,000 vehicles per day in 2007 to 123,000 vehicles per day in 2012 (45% increase in mobility); journey speeds rose from 8km/hour to at least 45km/hour in sections with the highest registered traffic; the number of traffic accidents fell; and land values rose from $23 thousand to $46 thousand per acre in Thika, and even more in areas closer to the city like Kasarani—from $46 thousand up to $500 thousand per acre.