Has Kenya walked into Beijing’s debt-trap?

KATHMANDU: African nation Kenya is an example of China’s larger strategy to accrue massive amounts of a poorer country’s external debt by providing funding for infrastructure projects.

China then leverages the debt for influence in domestic politics and trade.

Beijing, meanwhile, is taking advantage of the economic devastation caused by the Covid-19 pandemic to bring two of East Africa’s strategic ports from debt-stricken countries under its control.

And one among them is Kenya’s Mombasa and Sudan’s Port Sudan.

Kenya, according to the World Bank’s international debt statistics, is one of the world’s most indebted countries, and its external debt increased four times over the last decade.

Observers have to note that the US$3.2 billion contract with China in 2014 to construct the standard gauge railways connecting Kenya’s capital Nairobi and the port city of Mombasa was a crux of the problem – China’s debt-trap policy.

One example is Kenya’s Standard Gauge Railway (SGR) — a marquee OBOR project in the continent, constructed at a price of US$3.3 billion.

In 2015, the railway line was expanded to Naivasha town, some 75 miles northwest of Nairobi, increasing the project cost by another US$ 1.5 billion, according to reports.

Now, the debts that Kenya took from China have been triggering a repayment crisis.

Beijing owns more than 72 percent of Kenya’s external debt standing at approximately US$ 50 billion.

Meanwhile, Kenya is expected to pay US$ 60 billion to the China Exim Bank alone over the next few years, reports suggest.

Kenya might even lose Mombasa port if it defaults on loan re-payment.

What has to be noted is that China is Kenya’s largest bilateral lender, and the continent’s largest economic partner as well as the world’s single largest creditor.

Therefore, China has been alleged of debt-trap diplomacy in several countries, including Africa and Asia.

Observers also allege China of burdening the developing countries with debt that can lead them vulnerable to exploitation on default.

One example is Kenya’s Standard Gauge Railway (SGR) — a marquee OBOR project in the continent, constructed at a price of US$3.3 billion.

However, the funds required to extend the track from Nairobi to Uganda have not been forthcoming, reports said.

(Source: Agencies)