Kenya’s key assets might be auctioned off or seized by China over the multi-billion loans that the government owes Beijing. This is according to a new report by global ratings firm Moody’s Investor Service.
The report, which has ranked Kenya among sub-Saharan Africa who have been taking billions of loans from China for white elephant projects says that China has not been clear on the implications of its credit to African borrowers.
“Countries rich in natural resources, like Angola, Zambia, and Republic of the Congo, or with strategically important infrastructure, like ports or railways such as Kenya, are most vulnerable to the risk of losing control over important assets in negotiations with Chinese creditors,” says the report. It further says that these countries are also at of being offered more debts at higher resource concessions that only reduce the value of future export earnings.
“Even if debt restructuring alleviates immediate liquidity pressure, the loss of natural resources revenue or other assets is credit negative,” it says. Outside sub-Saharan Africa, China got land in exchange for some debt relief in Tajikistan and took control of the Hambantota Port in Sri Lanka.
Currently, Chinese debt stands at Sh. 554.88 billion or 73.4 percent of total bilateral debt of Sh. 756.28 billion. However, the government has not shown any willingness to cut down on the debt binge. President Uhuru has been on record saying that the government will continue to take more debts to fund its infrastructure projects.
It is also expected that the Chinese debt will widen if Beijing advances more loans to take the SGR from Naivasha to Kisumu.