Kenya renegotiates Arror, Kimwarer Sh19bn defaulted Italian loans

Kenya and Italy have agreed to renegotiate the controversial €578.2 million (Sh79.2 billion) loan that was intended for the construction of the Arror and Kimwarer dams, which were later cancelled by former President Uhuru Kenyatta. The Italian syndicated loan package, provided by commercial banks, stalled due to allegations of fraud and the inflation of project costs. Former Treasury Cabinet Secretary Henry Rotich was charged alongside other senior officials and forced out of office in July 2019 over the allegations. Up to Sh19.8 billion had been paid in advance to offshore firms for the projects despite the dams not being built. Kenya defaulted on the Sh19.6 billion loan after failing to make the first installment payments to Italian Bank Intesa San Paolo in May 2021. Kenya and Italy are now withdrawing the court cases linked to the project cancellation, with a view to restarting the process of restructuring financing.