Kenya’s stock of expensive loans rose to 36 percent of the total debt, even as cheap loans from multilateral institutions like World Bank declined from 45 percent to 30 percent three years back.
Today, Kenya’s debt to China stands at Ksh650 billion after President Uhuru Kenyatta went back to Beijing for more loans to fund the Standard Gauge Railway (RGR).
President Kenyatta went for an extra Ksh97 billion this year, a loan which in division, included a Ksh35.2 billion installment for the first phase of the Mombasa to Nairobi railway line, and an additional Ksh44.7 billion for the second phase of the SGR from Nairobi to Naivasha.
Last year, China tightened its grip on Kenya’s economy, extending about Sh165 billion in loans, the latest data shows.
This saw the Asian country stretch its lead as the country’s largest bilateral lender, with its debt stock increasing by 52.8 percent to Sh478.6 billion in 2017, from Sh313.1 billion in 2016.
The world’s second-largest economy now controls 66 percent of Kenya’s total bilateral debt, which stood at Sh722.6 billion as of June 2017.
This rivals multinational institutions such as the World Bank and United Nations, whose combined debt stock stood at Sh526.6 billion last year.
Kenya, which spent over Sh440 billion on SGR from Mombasa to Nairobi, and had expected to pump a total of Sh1 trillion into the railway by the time as it had planned to stretch the railway line to Malaba border in Busia County.
“In bilateral debt category, the stock of debt from the People’s Republic of China grew by 52.8 percent to Sh478.6 billion, accounting for 12.1 percent of the total national government’s debt position,” said the Kenya National Bureau of Statistics in its 2018 Economic Survey.
China’s s debt to Kenya has increased more than seven times from Sh63 billion in 2013, overtaking Japan, then, as the country’s leading bilateral lender to Kenya.
By 2010, China had lent Kenya a paltry Sh14 billion, trailing Japan (Sh62 billion), France (Sh28 billion), and Germany (Sh16 billion). Japan would continue holding the pole position until 2013 when China deposed it.