Kenya dismisses US concerns over mounting Chinese loans

Foreign Affairs Secretary Monica Juma. PHOTO | FILE
Foreign Affairs Secretary Monica Juma. PHOTO | DENNIS ONSONGO | NMG 

Nairobi has dismissed US concerns that Chinese loans were pushing African nations such as Kenya deeper into unsustainable debt that has weakened the continent’s ability to generate jobs for unemployed youth.

Foreign Affairs secretary Monica Juma said Kenya’s engagement with Beijing, just like the rest of the world, serves the country’s interest and adds value to the people.

“This country is engaging with the partners from across the world driven by our own interest and for our own value,” Ms Juma told reporters in Nairobi yesterday, but declined to delve further into the US concerns on the impact of the Chinese ballooning debt.

US secretary of State Rex Tillerson, who makes a stop in Nairobi today as part of his ongoing inaugural official visit to Africa, has questioned the economic engagement in Africa by the world’s second largest economy.

The US top diplomat says China, which has made inroads on the continent through heavy investment in the much-needed infrastructure, has encouraged dependency and endangered natural resources.


At a Press conference in Addis Ababa yesterday ahead of his visit to Nairobi, Mr Tillerson said the US was not trying to keep away Chinese investment in Africa, but was advising Africa to be careful while inking loan deals with Beijing.

“It is important that African countries carefully consider the terms of those agreements and not forfeit their sovereignty,” he was quoted as saying by Reuters.

China, which has been Kenya’s biggest bilateral lender since mid-2014, last December overtook the World Bank Group, whose debt to Kenya stood at  $5.18 billion (Sh524.83 billion), to become Nairobi’s top creditor.

President Uhuru Kenyatta’s administration has largely contracted debt from China, which comes with semi-concessional and commercial terms, since 2014 to build the standard gauge railway, roads and bridges.

Beijing debt to Nairobi rose to $5.202 billion (Sh526.95 billion) at the end of 2017 from $4.089 billion (Sh414.18 billion) a year earlier and $2.734 billion (Sh277 billion) in December 2015, latest Treasury data shows.

China’s debt accounted for 22.86 per cent of Kenya’s total external debt of $22.757 billion (Sh2.305 trillion) last December and 68.62 per cent of $7.58 billion (Sh767.87 billion) total bilateral loans.

Ms Juma, however, denied that Nairobi was leaning more to the East than its traditional partners in the West.

“There are many areas where we agree (with traditional partners) and work together on. But, like in very relationship, there are areas upon which we do not have a common ground, and when that happens, we engage,” she said.

“The principle is the same that we’ll work together when we have mutually agreed interests and we’ll talk to one another when we disagree to try and find a middle ground.”

Nairobi paid Beijing nearly Sh12.72 billion in loan repayments between July and December 2017, accounting for 18.53 per cent of the Sh68.63 billion total external debt service obligations.

“I think there is also an element of a political statement behind it. They (China) may be filling a vacuum from traditional western powers which may be withdrawing, and the Chinese have decided that East Africa is an important investment destination,” Deloitte Africa infrastructure and capital projects leader Jean-Pierre Labuschagn said on February 6.