Economics and political experts on Wednesday, May 17, weighed in on President William Ruto growing dalliance with the Western nations, a departure from a tight bond Kenya enjoyed with China.
The experts, Dr Wilfred Muliro, Professor Noah Midamba and Rashid Abdi explained that Kenya had no option but to show reluctance to Chinese debts that had become unbearable due to their short-term nature and high-interest rates.
Muliro noted that Kenya could only look to the West after exhausting its interest with China
"The government has deliberately made itself to be pro-Western because we have exhausted our interest in China due to our debt burden.
"The reason for most global Foreign Policies is economic, and at the centre of it, Kenya came out to redefine her interest based on the most pressing needs and talk to those who could provide the cheapest and quickest solutions," stated Muliro, a Diplomacy and International Relations Expert.
Midamba, an economist and former Vice Chancellor of KCA University, explained that Kenya stood a better chance in her quest for development if the country partnered with Western countries, especially the United States of America that hosts many Kenyans.
"This country can leap front if we choose to, but you will not do it by chance. There must be purposeful structures that will allow Kenya to be there.
"During former President Mwai Kibaki, we created what was known as Diaspora Pillar, which was responsible for seeking economic relations with other countries," the professor noted.
He further observed that, unlike other Asian countries, the United States had previously expressed interest in accommodating Kenyan professionals.
"We have around 3,000 Kenyan born Doctors in the United States of America and a similar number in Europe," he added.
Rashid, a Diplomat who worked for the Ministry of Foreign Affairs and possesses over a decade of work experience in foreign relations, stated that President Ruto had warm engagements with Western powers even before the election.
"Some of the deals that the current government is sealing with Western powers must have been mooted way before the August 2022 General Election. That is how these diplomatic engagements are planned," he explained
The three experts explained that the terms of the loans from the US government are generally considered favourable to Kenya. The interest rates are low and the repayment periods are long. This makes it easier for Kenya to repay its debt and use the funds for development projects.
On the other hand, Kenya's debt to China had been a source of concern in recent years. As of 2023, Kenya owes China over Ksh700 billion ($6 billion), which accounts for about one-third of the country's total external debt.
This debt was used to finance a number of major infrastructure projects, including the Standard Gauge Railway and the Lamu Port-South Sudan-Ethiopia Transport Corridor.
Over time, Kenyan taxpayers expressed concerns over the debt arguing that it may be too large for repayment ladden with high interest
The Kenyan government, however, took steps to address the concerns about its debt to China. In 2022, the government renegotiated some of the terms of its loans with China. The government also promised to slow the pace of borrowing from the Asian country.
"It remains to be seen whether Kenya will be able to successfully manage its debt to China. The country's economic growth will be a key factor in determining whether it can repay its loans. If Kenya's economy does not grow as expected, it may face difficulty repaying its debt," Rashid noted.
US Debt
While as of 2023, Kenya's debt to the United States was estimated to be around Ksh205 billion ($1.5 billion). This accounts for about 4 per cent of Kenya's total external debt.
According to the Central Bank of Kenya, the debt is owed to a variety of US government agencies, including the Export-Import Bank, the Millennium Challenge Corporation, and the US Agency for International Development.
The debt had been used to finance a number of development projects in Kenya, including the construction of roads, schools, and hospitals. It has also been used to support Kenya's economic development and poverty reduction programs.
"The Kenyan government has a good relationship with the US government and has a history of repaying its debts on time. This suggests that Kenya is unlikely to default on its debt to the US government," Rashid stated.
However, there are some concerns about Kenya's debt levels. The country's debt-to-GDP ratio is high and is expected to continue to rise in the coming years. This could make it more difficult for Kenya to repay its debts in the future.
President William Ruto on Sunday, May 13, announced steps to address these concerns by reducing the budget deficit and increasing its revenue collection.
