China Eximbank provides $37 million loan for Phase 1 of NOBI Project (Linked to Project ID#47014 and #30384)

In 2007, China Eximbank and the Government of Kenya signed a $37 million loan agreement for Phase 1 of the National Optic Fibre Backbone Infrastructure (NOFBI). The borrowing terms of the loan are unknown. However, it is known that the borrower was expected to use the proceeds of the loan to finance a commercial contract that it signed with ZTE Corporation Ltd. and Huawei Technologies Co. Ltd. in September 2007. Phase 1 involved the laying of 4,300 km of fiber optic cable to connect eight provincial headquarters and 53 towns. The ultimate goal of the project was to provide universal high-speed Internet access. ZTE Corporation Ltd., Sagem Communications and Huawei Technologies Co. Ltd were the contractors responsible for project implementation. Phase 1 was completed between 2007 and 2009. However, it later became a major source of controversy. A forensic audit published by Kenya’s Auditor General in 2022 identified NOFBI equipment that was faulty, idle, or disconnected from electricity. It also noted that ‘[t]otal funding from Exim Bank of China could not be ascertained as the framework and concession loan agreements for Nofbi phase 1 were not provided for audit’ and that ‘the commercial contract for ZTE Corporation was not provided for audit and therefore [it was] not possible to establish the total cost of Nofbi phase 1.’ It also noteworthy that the China Eximbank loan for Phase of the NOFBI Project is not included in the Government of Kenya’s external public debt register.

Additional details

1. The Chinese project title is 设了肯尼亚国家光纤主干基础设施 or 肯尼亚国家光纤宽带基础设施项目. 2. The forensic audit of the NOFBI project can be accessed in its entirety via https://www.oagkenya.go.ke/wp-content/uploads/2022/08/Implementation-of-National-Optic-Fibre-Backbone-Infrastructure-Project.pdf. 3. China Eximbank also financed subsequent phases of the NOFBI project (as captured via Project ID#47014 and #30384). 4. Some sources suggest that the total cost of Phase 1 was $80 million and it was financing with a combination of loans, grants, and supplier credits. This issue warrants further investigation. 5. This loan is not included in the database of Chinese loan commitments that SAIS-CARI initially released in 2020 and updated in 2021.

Number of official sources

2

Number of total sources

9