Has Kenya fallen into Beijing’s debt trap? « Khabarhub

KATHMANDU: The African nation of Kenya exemplifies China’s broader strategy of accumulating massive amounts of a poorer country’s external debt by allocating funds to infrastructure projects.

China then uses the debt to influence domestic politics and trade.

Beijing, meanwhile, is using the economic devastation caused by the Covid-19 pandemic to seize control of two of East Africa’s strategic ports from indebted countries.

And one of them is Mombasa in Kenya and Port Sudan in Sudan.

Kenya is one of the most indebted countries in the world according to the World Bank’s international debt statistics, and its external debt has quadrupled in the last decade.

Observers must note that the $3.2 billion deal with China in 2014 to build the standard gauge railways connecting Kenya’s capital Nairobi and the port city of Mombasa was at the heart of the problem – China’s debt-trap policy.

One example is Kenya’s Standard Gauge Railway (SGR) – a flagship OBOR project on the continent that was built at a cost of US$3.3 billion.

In 2015, the rail line was extended to the city of Naivasha, about 75 miles northwest of Nairobi, reportedly adding an additional $1.5 billion to the project cost.

Now the debt that Kenya took on from China has triggered a repayment crisis.

Beijing owns more than 72 percent of Kenya’s foreign debt, which totals about $50 billion.

According to reports, Kenya alone is to pay 60 billion US dollars to the China Exim Bank in the next few years.

Kenya could even lose the port of Mombasa if it defaults on loan repayments.

Notably, China is Kenya’s largest bilateral lender and the continent’s largest economic partner, as well as the world’s largest single creditor.

As a result, China has been accused of debt-trap diplomacy in several countries, including Africa and Asia.

Observers also accuse China of burdening developing countries with debt that can leave them vulnerable to exploitation if they default.

One example is Kenya’s Standard Gauge Railway (SGR) – a flagship OBOR project on the continent that was built at a cost of US$3.3 billion.

However, the funds needed to extend the route from Nairobi to Uganda have reportedly not been made available.

(Source: Agencies)

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