Kenya, Japan seek to deepen development partnership beyond aid

Prime and Foreign Affairs CS Musalia Mudavadi on Wednesday said Kenya continues to attract strong global partnerships that deliver “real results”.

Mudavadi made the remarks following talks with a high-level delegation from Japan’s Official Development Assistance (ODA) research mission of the House of Councillors.

The Japanese mission, led by Ikuina Akiko, a member of the Committee on Health, Welfare and Labour, is in Kenya to assess the impact of Japan-supported projects in infrastructure, health, education, energy and agriculture sectors.

The team’s focus is on outcomes, sustainability and future collaboration.

The delegation also included lawmakers Aoshma Kenta of the Committee on Land and Transport and Otsu Tsutomu of the Committee on Cabinet and Japanese Ambassador Matsuura Hiroshi.

Mudavadi said discussions centred on scaling what works and unlocking new areas of cooperation.

“We identified practical pathways to expand collaboration into trade and investment, manufacturing, private sector partnerships and sports, aimed at driving jobs, growth and long-term economic value,” he said.

“Kenya takes seriously Japan’s support in sectors that deliver measurable impact and strong multiplier effects, lifting communities out of poverty, strengthening healthcare and education systems and accelerating economic growth.”

The call for an expanded scope of cooperation is aimed at driving job creation, economic growth and long-term value.

This signals a shift from development assistance anchored mainly in public projects to partnerships that actively involve the private sector.

Already, Japan has undertaken various projects in the country, including in infrastructure, energy, agriculture, education and research sectors.

In infrastructure, examples include the Dongo Kundu Bypass, which was constructed through ODA loans.

Japan also supported the Port of Mombasa expansion and associated infrastructure under long-term development cooperation, as well as the Ngong’ Road expansion through a grant that financed both Phase I and Phase II of the road.

In energy, Japan has assisted with Olkaria Geothermal Development by contributing turbines and technical expertise to expand geothermal energy capacity.

Japan’s ODA has supported the Sondu-Miriu hydropower project and energy distribution improvements in Nakuru and Mombasa.

In agriculture, it has been involved in irrigation development and technical assistance to boost rice productivity in Mwea through new cultivation techniques and scheme expansion.

Mudavadi said Kenya places high value on Japan’s support in sectors that deliver measurable impact and strong multiplier effects, particularly those that lift communities out of poverty and strengthen public service delivery.

“Kenya takes seriously Japan’s support in sectors that deliver measurable impact and strong multiplier effects, lifting communities out of poverty, strengthening healthcare and education systems, and accelerating economic growth,” he said.

The inclusion of sectors such as manufacturing and sports in the discussions signals a broadening of Kenya-Japan relations beyond traditional development priorities, potentially opening new avenues for skills transfer, youth engagement and investment.

Additionally, the focus on outcomes, multiplier effects and private sector participation closely mirrors the priorities outlined in the Draft 2026 Budget Policy Statement, which lays bare the fiscal pressures forcing the government to rethink how it finances development.

According to the policy statement, revenue performance in the early months of the 2025-26 financial year fell significantly below target, with total revenue and Appropriation-in-Aid underperforming projections and triggering the need for a supplementary budget.

Treasury warns that this underperformance has sharply constrained fiscal space, leaving the government with limited room to accommodate emerging priorities without cutting spending elsewhere or increasing borrowing.

It is against this backdrop that Mudavadi’s emphasis on concessional partnerships speaks to the financing constraints realities.

With domestic revenues falling short and tax measures politically sensitive, the policy statement directs ministries to prioritise programmes with “high impact” and “strong multiplier effects” — precisely the sectors highlighted in Japan-supported projects.

The policy statement also flags significant fiscal risks linked to Kenya’s debt profile, particularly vulnerability to external shocks, such as exchange rate volatility, rising global interest rates and tightening international financial conditions.

While Treasury maintains that public debt remains sustainable, it cautions that adverse macroeconomic developments could quickly increase debt-servicing costs and crowd out development expenditure.

In this context, Japan’s ODA, which is largely concessional, long-term and predictable, offers a financing model that aligns with Treasury’s goal of reducing exposure to expensive commercial borrowing.