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Kenya holds third highest Chinese debt in Africa

According to the Asset managers, railway transport could reduce production costs by 10 percent by easing decongestion in the region hence enhance economic growth/FILE

NAIROBI, Kenya, Sep 20 – Kenya ranks as the third most indebted country to China in Africa in the period between 2000 to 2017 according to China Africa Research Initiative data.

Though the borrowing decreased significantly in 2017 compared to the years 2014 to 2016 Kenya’s borrowing from China currently stood at Sh980 billion as at the end of 2017.

Only Angola and Ethiopia, who owe China Sh4.28 trillion and Sh1.37 trillion in the period under the review, are ahead of Kenya.

Standard Gauge Railway and Road network expansion was the main use of the debt borrowed from China.

A huge chunk of Kenya’s loan was borrowed in 2014 at Sh370 billion as Kenya began building the first Phase of the Standard  Gauge Railway (SGR) line from Mombasa to Nairobi that cost Sh327 billion.

The following year, the country borrowed another Sh257 billion while in 2016 the country borrowed Sh109.5 billion from China.

However, in 2017, the country borrowed about Sh64 billion.

“Other top ten debtors of China from Africa include Republic of Congo (Sh742 billion), Sudan (Sh649 billion), Zambia (Sh637 billion), Cameroon (Sh556, billion), Nigeria (Sh483 billion) Ghana (Sh349 billion), and DRC (Sh343 billion),” the report indicates.

Closer home Uganda owes China Sh296.8 billion while Tanzania owes Sh234.7 billion.

According to the data, China’s debt to Africa is at Sh14.3 trillion with transport and power sectors absorbing the lion’s share of the loans at Sh381.7 billion and Sh301.1 billion respectively followed by mining at Sh191.1 billion.

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In 2018, Chinese financial pledges in support of FOCAC (Forum on China-Africa cooperation) hit Sh6 trillion with the Chinese state putting Sh5 trillion of its own money at stake, while encouraging Chinese companies to contribute the rest through their own investment projects.

China pledged Sh2 trillion in new credit lines, Sh1. 5 trillion in foreign aid: grants, interest-free loans and concessional loans, Sh1 trillion for a special fund for development financing, Sh500 billion for a special fund for financing imports from Africa.

“Chinese loan finance is varied. Some government loans qualify as “official development aid.” But other Chinese loans are export credits, suppliers’ credits, or commercial, not concessional in nature. China is not Africa’s largest “donor”.  That honor still belongs to the United States,” the research states.

Kenya’s ambitious infrastructure projects as it plans to take the railway line from Nairobi to Malaba, in the second and third phase.

The government is also keen on implementing the LAPPSET project, expansion and modernization of Malindi, Isiolo and Lokichogia airports as well as Eldoret International Airports.

Meanwhile, Kenya plans to open two new consulates in China as it gears to enhance trade and bilateral relations President Uhuru Kenyatta announced in June 2018.

The President said the two consulates will help Kenya tap the huge potential existing in the tourism and commercial sector and will promote people to people exchange between the two countries.

“I intend to establish Consulate Generals in Guangzhou and Shanghai to facilitate the growing interaction between our peoples,” said President Kenyatta, when he Chinese People’s Political Consultative Conference (CPPCC) Chairman Wang Yang in August.

President Kenyatta pointed out that since December 2015, Kenya has received 13 grant projects worth USD102 million, four preferential loans projects worth USD292 million, 14 commercial projects worth USD8.545 billion and a cumulative investment projects amounting USD564 million.

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