Leading Chinese banking conglomerate, Hong Kong Mortgage Corporation (HKMC), has proposed plans to buy Africa's debt and repackage them into securities for sale to investors.
The plan will see more than 90 firms including project developers or operators, commercial and investment banks, multilateral development financial institutions, asset owners and managers and professional service firms from Hong Kong, mainland China and overseas join as partners.
It will provide China with extra liquidity that it can loan out to finance more infrastructure projects.
This could prove to be bad luck as it could lure African countries to more debt.
“This initiative we believe will help ‘recycle’ commercial banks’ capital to be redeployed into other greenfield infrastructure projects, besides enabling wider capital markets participation in infrastructure development under the Road and Belt initiative,” said HKMC Greater China Chief Executive Helen Wong.
The new development comes at a time when China’s main project insurers, China Export, and Credit Insurance Corporation cast doubt on the viability of some infrastructure projects.
Nation has reported that regional economies owed China and its institutions more than Ksh2.942 trillion as at April 2018 in infrastructure loans.
Ethiopia leads the region with a Ksh1.373 trillion followed by Kenya at Ksh980 billion.
Uganda owes Ksh296 billion; Tanzania owes Ksh234 billion. Rwanda, Burundi, and South Sudan owe Ksh289 billion, Ksh99 billion and Ksh182 billion respectively.
President Uhuru Kenyatta travelled to China on Saturday, November 3, to attend the inaugural China International Import Expo.
He expressed his appreciation to President Xi Jinping for initiating the process of opening up the Chinese markets to Kenya’s exports.
