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China’s debt colonization of Africa is well underway, as one African nation after another takes out gigantic loans from Chinese banks to build infrastructure projects that appear financially unsustainable.
Kenya is one of the most heavily indebted countries, but President Uhuru Kenyatta is in Beijing for a summit at which he will reaffirm his commitment to the Belt and Road initiative.
The leaders of several other African nations – including Tanzania, Burundi, Eritrea, Algeria, and the Democratic Republic of the Congo – decided not to attend the summit in person, citing issues at home that demanded their continued attention.
President Kenyatta is an enthusiastic participant in FOCAC despite mounting concerns about Kenya’s debts to China, as reported by the Daily Nation on Monday:
Today, the Chinese are the second biggest creditors to Kenya, after the World Bank. In the first two visits to Beijing, President Kenyatta secured loans that have built the Standard Gauge Railway from Mombasa to Naivasha.
In 2013, he got Sh500 billion, a huge portion of which was used to build the SGR from Mombasa to Nairobi (Sh327 billion). In the second visit in 2017, he got Sh150 billion to extend the line to Naivasha.
A diplomatic brief seen by the Nation indicates the President’s focus, besides BRI and dealing with trade imbalance, is to “secure funding for key infrastructure projects,” a sign of the determination to extend the railroad to Kisumu and on to Malaba.
The Kenyan government insists these massive loans are necessary because Kenyan taxpayers cannot generate enough revenue to fund the Belt and Road infrastructure projects. Critics wonder how Kenyan taxpayers could possibly generate enough revenue to repay those loans with interest.
Kenyan media obtained documents in July that showed Kenya is much more deeply indebted to China than previously admitted by the Kenyatta administration. China has become Kenya’s largest creditor by a wide margin, accounting for 72 percent of bilateral Kenyan debt at the end of the first quarter of 2018, a 15 percent increase over the past two years. China held a little over $534 billion of Kenya’s debt at that time, while the next largest creditor was France with a little under $65 billion.
One reason for the surge of Kenyan borrowing from China is that Beijing’s Asian Infrastructure Investment Bank has no requirements for fiscal reform and privatization, unlike American and European institutions like the International Monetary Fund. China is quite happy to lend enormous sums to nations that refuse to make the reforms that could make repayment of the debt possible.
Also, while the Chinese make a great deal of noise about cleaning up corruption within their own political system, they have no legislative barriers to paying bribes in exchange for lucrative contracts overseas. Financial inducements to the right officials can persuade African governments to sign contracts their population probably would not approve if the terms were made clear to them.
The resulting debt spiral is uncomfortably similar to the 2008 subprime mortgage crisis, except the bankrupt borrowers are nation-states buying railroads they cannot afford instead of fancy houses – and, unlike those distressed home buyers, African nations have plenty of valuable capital Beijing will be pleased to accept in lieu of payment.
Africa’s opposition parties may be emboldened by the growing difficulties Belt and Road faces in Asia, where leaders like Malaysia’s Prime Minister Mahathir Mohamad are pumping the brakes, the opposition in the Maldives is openly charging Beijing with “colonialism,” Beijing has already seized valuable real estate from heavily indebted Sri Lanka, and some of China’s infrastructure projects gobble up half the GDP of the countries hosting them.
One of the biggest problems with accepting China as a senior partner is that Beijing constantly lies about the true state of its economy, as the political crisis in China over its trade war with America demonstrates. African leaders currently singing the praises of “win-win cooperation” might change their tunes if they wake up one morning and discover China’s currency is not quite as solid as Belt and Road salesmen claimed.
Haya ndio JPM alikuwa anayasema "There's no free lunch, in fact, there's no lunch at all" bora kuanza kwa kile kidogo ulichonacho.
Kenya Drowning in Chinese Debt but President Kenyatta Wants More
China’s debt colonization of Africa is well underway, as one African nation after another takes out gigantic loans from Chinese banks to build infrastructure projects that appear financially unsustainable.
Kenya is one of the most heavily indebted countries, but President Uhuru Kenyatta is in Beijing for a summit at which he will reaffirm his commitment to the Belt and Road initiative.
The leaders of several other African nations – including Tanzania, Burundi, Eritrea, Algeria, and the Democratic Republic of the Congo – decided not to attend the summit in person, citing issues at home that demanded their continued attention.
President Kenyatta is an enthusiastic participant in FOCAC despite mounting concerns about Kenya’s debts to China, as reported by the Daily Nation on Monday:
Today, the Chinese are the second biggest creditors to Kenya, after the World Bank. In the first two visits to Beijing, President Kenyatta secured loans that have built the Standard Gauge Railway from Mombasa to Naivasha.
In 2013, he got Sh500 billion, a huge portion of which was used to build the SGR from Mombasa to Nairobi (Sh327 billion). In the second visit in 2017, he got Sh150 billion to extend the line to Naivasha.
A diplomatic brief seen by the Nation indicates the President’s focus, besides BRI and dealing with trade imbalance, is to “secure funding for key infrastructure projects,” a sign of the determination to extend the railroad to Kisumu and on to Malaba.
The Kenyan government insists these massive loans are necessary because Kenyan taxpayers cannot generate enough revenue to fund the Belt and Road infrastructure projects. Critics wonder how Kenyan taxpayers could possibly generate enough revenue to repay those loans with interest.
Kenyan media obtained documents in July that showed Kenya is much more deeply indebted to China than previously admitted by the Kenyatta administration. China has become Kenya’s largest creditor by a wide margin, accounting for 72 percent of bilateral Kenyan debt at the end of the first quarter of 2018, a 15 percent increase over the past two years. China held a little over $534 billion of Kenya’s debt at that time, while the next largest creditor was France with a little under $65 billion.
One reason for the surge of Kenyan borrowing from China is that Beijing’s Asian Infrastructure Investment Bank has no requirements for fiscal reform and privatization, unlike American and European institutions like the International Monetary Fund. China is quite happy to lend enormous sums to nations that refuse to make the reforms that could make repayment of the debt possible.
Also, while the Chinese make a great deal of noise about cleaning up corruption within their own political system, they have no legislative barriers to paying bribes in exchange for lucrative contracts overseas. Financial inducements to the right officials can persuade African governments to sign contracts their population probably would not approve if the terms were made clear to them.
The resulting debt spiral is uncomfortably similar to the 2008 subprime mortgage crisis, except the bankrupt borrowers are nation-states buying railroads they cannot afford instead of fancy houses – and, unlike those distressed home buyers, African nations have plenty of valuable capital Beijing will be pleased to accept in lieu of payment.
Africa’s opposition parties may be emboldened by the growing difficulties Belt and Road faces in Asia, where leaders like Malaysia’s Prime Minister Mahathir Mohamad are pumping the brakes, the opposition in the Maldives is openly charging Beijing with “colonialism,” Beijing has already seized valuable real estate from heavily indebted Sri Lanka, and some of China’s infrastructure projects gobble up half the GDP of the countries hosting them.
One of the biggest problems with accepting China as a senior partner is that Beijing constantly lies about the true state of its economy, as the political crisis in China over its trade war with America demonstrates. African leaders currently singing the praises of “win-win cooperation” might change their tunes if they wake up one morning and discover China’s currency is not quite as solid as Belt and Road salesmen claimed.
Haya ndio JPM alikuwa anayasema "There's no free lunch, in fact, there's no lunch at all" bora kuanza kwa kile kidogo ulichonacho.
Kenya Drowning in Chinese Debt but President Kenyatta Wants More
