A number of analysts, activists and even Kenya’s National Assembly have all raised the red flag on the ability of Nairobi to sustainably fulfill its external debt obligations. As Kenya’s economic woes continue to deepen due to the COVID-19 global pandemic, fears are now mounting that the country could easily default on debt repayments.
Calls are now mounting for Kenya to engage the creditors, especially, China on possible debt service suspension. From the forgoing discourse, it almost sounds like Beijing is somewhat indifferent to the plight of Kenya. Yet, China has recently undertaken bilateral debt agreements with dozens of African countries, indicating the precedent willingness and of Beijing to support badly hit countries back to the economic growth path after the pandemic-inspired economic difficulties.
Chinese creditors have, for example, agreed to grant Angola a three-year debt repayment moratorium, which came as a major relief for the economy that was badly seeking some breather. During his visit to the Democratic Republic of Congo, Chinese State Counselor and Foreign Minister Wang Yi also announced that Beijing would write off loans to DRC worth an estimated US$28 million to help the country overcome the impacts of Covid-19 pandemic. China has also signed debt service suspension agreements with twelve African countries while providing waivers of matured interest-free loan for another fifteen states under the G20 brokered Debt Service Suspension Initiative.
However, to get desirable debt relief assistance, affected countries must voluntarily engage the creditors. Kenya appeared to dillydally in its debt relief outlook. Nairobi, for instance, initially refused to sign up to the DSSI because it was keen on safeguarding its sovereign rating and future access to international markets. Only recently did Kenya renege its months’ long hardline stance to accept the DSSI terms. The country now is set to save Sh32.9 billion in foreign debt repayments after 10 countries under the auspices of the Paris Club agreed to suspend debt service from January-June 2021. If Nairobi’s DSSI application goes through, the country would enjoy another Sh40 billion in savings from the G20 members.
The G20 framework also grants Kenya greater latitude to engage with other bilateral lenders, including China. Beijing has previously reiterated commitment to grant pandemic related assistance to most affected countries. In a response to media enquiries, the Chinese Embassy in Nairobi on Friday allayed fears that China was indifferent to helping Kenya with the debt challenge. In statement, the Embassy maintained that China was ready to strengthen coordination with the Nairobi, including on debt management.
It is now up to the Kenyan side to present their case to the Chinese creditors and find mutually agreeable and sustainable debt servicing arrangement. The economic viability of Kenya is a matter of interest to China, which now ranks as Kenya’s largest trade partner, development projects financier and constructor. As a key cog in the Belt and Road Initiative implementation, Kenya’s economic relations with China is widely scrutinized and has been the basis of unsubstantiated narratives regarding China’s debt-trap diplomacy in the continent.
The writer comments of China-Africa relations. Twitter: @Cavinceworld.
