China has set new loan conditions for Kenya following a thorough evaluation of borrowing and utilization requests.
The now China says that loan disbursements to Kenya will purely be based on need, and will therefore be granted to specific national programmes, depending on the country’s ability to pay off the debts.
This is a sharp deviation from previous loan engagements, and a reaffirmation that China is keenly changing her lending policy in Kenya.
The Asian economic giant indicated that they will be factoring in pending debt payments before clearing any more loans to Kenya.
“We are willing to listen, discuss and improve cooperation as equal partners. The Chinese may fit in some programmes so going forward the priority of our cooperation will be decided by two sides involved,” Chinese Ambassador to Kenya Zhou Pingjiang said.
Kenya is increasingly submerging under the weight of debts, especially those from international lenders, which are believed to be more expensive because they are short-term.
China is however, giving priorities to development projects that are aligned to the country’s economic strategy, including the Belt and Road Initiative (BRI), a colossal infrastructure project dotting African states including Kenya.
According to Ambassador Pingjiang, Kenya’s new administration, which is facing a funding headache for its key China-backed infrastructure projects, will continue to enjoy a cordial relationship.
Chinese fiscal conservation, which has seen its offensive lending to Africa considerably slowdown in recent months due to market turmoil and other factors such as the pandemic.
It was recently reported that Kenya had defaulted and fined Kh1.32 billion by China for late SGR loan repayment, before Treasury dismissed the reports.
Nairobi owes Beijing more than Ksh700 billion (nearly $42bn) in total which she used to fund key infrastructural projects especially during retired President Uhuru Kenyatta's era.
This new development will definitely place the country on an active capital market in the current and next fiscal year.
So far, the Central Bank of Kenya (CBK) has floated two infrastructure bonds of more than Ksh140 Billion from the 18-year and 14-year tenured security.
