Kenya’s President William Ruto is expected to ask China for a $1 billion loan to complete stalled road projects when he visits Beijing later this month, his deputy said on Friday. Ruto will also request an extension on the repayment period of existing loans, which amount to more than $8 billion.
The loan request marks a shift in Ruto’s stance on Chinese debt, as his coalition had criticized his predecessor, Uhuru Kenyatta, for borrowing heavily from China during last year’s election campaign. Kenyatta had used Chinese loans to finance infrastructure projects, including the Nairobi expressway. However, many of these projects have since stopped as contractors abandoned them due to unpaid bills.
Ruto will tell Chinese officials, “Can we talk to see if you can add us time so we can pay slowly and add a little money to finish road construction?” Deputy President Rigathi Gachagua said on the local Inooro FM radio station.
“If we get $1 billion, we can give these people (contractors) the money they are owed so they can return, so even as we pay the debt, the roads are completed,” he said.
Kenya was one of the countries in focus during China’s Belt and Road Initiative, a comprehensive project launched by President Xi Jinping in 2013, aimed at expanding China’s geopolitical and economic influence through global infrastructure development.
But the surge in Chinese loans to countries like Kenya, before a slowdown in Chinese lending in 2019, has angered critics and pushed up debt loads and the subsequent repayment burden. Official data shows that the Kenyan government spends roughly half its revenue to repay falling-due debts, straining its finances. Foreign debt repayments have compounded the situation amid a steep weakening of the Kenyan currency.
In response to this financial strain, the cabinet ordered all ministries to cut 10% of their budget on Tuesday, while the president’s office imposed some restrictions on foreign travel by government officials to rein in expenditure.
“Many people have indeed been traveling abroad, spending a lot of money, and that is why the president ordered that even ministers and governors can only travel with two people,” Gachagua said.
Kenya is not the only African country facing debt challenges from China. According to a report by the China Africa Research Initiative at Johns Hopkins University, China has lent more than $150 billion to African countries between 2000 and 2019. Some of these countries, such as Angola, Ethiopia, and Zambia, have sought debt relief or restructuring from China amid the economic fallout of the COVID-19 pandemic.
China has said it is willing to work with African countries to address their debt issues and support their development. It has also pledged to provide COVID-19 vaccines and medical supplies to African countries as part of its health cooperation.
Ruto’s planned engagement with China for financial assistance holds the potential to address critical infrastructure needs and alleviate some of the financial burdens currently faced by the Kenyan government. Despite the challenges and criticisms, it also signals Kenya’s willingness to maintain its strategic partnership with China. Ruto has said he hopes to strengthen Kenya’s ties with China and other countries during his visit.
Source: Reuters
