Kenya is closing gap in repayment of Chinese loans

NAIROBI, Kenya - Kenya’s loans to China have drooped for the first time in a decade, this is according to data from the National Treasury that reveals a drop from $6.83 billion in June to $7.05 in 2021 and $3 billion in 2016.

This can be attributed to the Asian powerhouse’s adaptation of a new cautious lending strategy to the continent.

In 2002 to the National Treasury, public records reveal that Chinese loans to Kenya dropped slightly.

The erratic drop in Chinese debt comes at a time when both World Bank and the International Monetary Fund have stepped up lending to Kenya, firming the institutions’ grip on the country’s economy.

The East African economic powerhouse is Beijing the largest bilateral creditor since 2015. These loans have been used to fund the development of mega infrastructures like the Standard Gauge Railway line.

In 2020 during the peak of COVID-19, Kenya was among the 20 countries listed by the IMF as being at high risk of, debt distress.

The IMF listing of the 20 African countries triggered a response from the China Eximbank and China Development Bank, who are the two main policy banks that have adopted i hardline stand on lending terms to African states.

In 2021 Chinese President Xi Jinping in a video revealed that his country in the next three years, would cut the headline amount of money it supplies to Africa by a third to $40 billion and, he implied, redirect lending away from large infrastructure towards a new emphasis on SMEs, green projects and private investment flows.

Chatham House, a UK think-tank said “China is moving away from this high-volume, high-risk paradigm into one where deals are struck on their own merit, at a smaller and more manageable scale than before,” an analysis of China’s lending to Africa. Lower funding to Africa, local analysts say, could be a pointer that Beijing is starting to see signs of reduced benefits from the cash it commits in the continent.”

Over the last two decades, the Asian giant has positioned itself as a lead financier of first resort for many African e countries in need of infrastructural development.

Recent research by the College of William & Mary conducted in September this year reveals that African countries received 42 percent of all Chinese official development assistance between 2000 and 2017.

Chinese Loan genesis in Kenya

Kenya’s appetite for Chinese loans started in 2009 under the late President Mwai Kibaki who borrowed to finance the country’s first Superhighway.
Thika Superhighway was constructed at the tune of KSH 32 billion.

China has funded two railways, two ports, and 23 road projects in Kenya since 2009. This has been carried out by China Road and Bridge Corporation, a subsidiary of China Communications Construction Company.

They include the $3.5 billion standard gauge railway, a $398 million oil terminal at the Mombasa port, and road projects such as the Southern and Eastern Bypass in Nairobi.

GAROWE ONLINE