India Announces $250 mn Line of Credit to Kenya

GS Paper II International Relations

Context: India announced a $250 million line of credit to Kenya for modernizing its agricultural sector.

Line of Credit to Kenya

A Presidential visit from Kenya is taking place after a period of over 6 years and is expected to strengthen and invigorate the bilateral relations between the two countries.Both Countries issued a vision document for maritime cooperation in the Indian Ocean.
The five agreements signed by the two sides includes memorandum of understanding (MoU)
- On sharing successful solutions for digital transformation,
- between Indira Gandhi National Open University and the Open University of Kenya,
- on agreement on culture exchanges for the period 2023-27,
- on the Bureau of Indian Standards and Kenya Bureau of Standards, and
- on cooperation in sports.
Kenya has decided to join the Global Biofuels Alliance and the International Solar Alliance.

What is the Line of credit (LOC)?

A line of credit (LOC) is a preset borrowing limit that can be tapped into at any time.
The borrower can take money out as needed until the limit is reached.
As money is repaid, it can be borrowed again in the case of an open line of credit.

About: India and Kenya are maritime neighbors. The contemporary ties between India and Kenya have evolved into a robust and multi-faceted partnership, marked by regular high-level visits, increasing trade and investment and extensive people-to-people contacts.
Bilateral Trade: An India-Kenya Trade Agreement was signed in 1981, under which both countries accorded Most Favoured Nation status to each other.
- India was Kenya’s largest trading partner in 2014-15 with bilateral trade of US$ 4.235 billion.
Investment: According to the Kenya Investment Authority (KenInvest), India is the second largest investor in Kenya. Over 60 major Indian companies have invested in various sectors including manufacturing, real estate, pharmaceuticals, telecom, IT & ITES, banking and agro-based industries.
Development Cooperation: India offers development assistance to Kenya through loans and credit. A LOC agreement of US$ 100 million for the Agricultural Mechanization Project was also signed in January 2017.
Indian Community and Diaspora in Kenya: Indians were trading with the Swahili coast since early A vibrant community of persons of Indian origin presently numbered around 80,000 including an estimated 20,000 Indian citizens.
- Several Kenyans of Indian origin have distinguished themselves as lawyers, judges, doctors and academics.
Vaccine Maitri: Kenya was given 1.12 million doses of AstraZeneca (1.02 million under COVAX alliance and 100,000 as gift from India).