The International Monetary Fund (IMF) has warned Kenya and other countries in the Sub-Saharan region over China's economic growth decline which is projected to affect the economy of the African countries.
In a press release dated Thursday, it was indicated that China's loans to the region could decline with the countries asked to adopt other ways of generating revenue.
Notably, the IMF highlighted that infrastructural loans to the Sub-Saharan countries had already declined by Ksh151 billion in the last year. This is the biggest drop registered in 20 years.
Kenya is one of the countries that was revealed to be among the top five beneficiaries of the China loans that have been used for various projects including the Standard Guage Railway (SGR).
"The cutback marks a shift away from big-ticket infrastructure financing, as several African countries struggle with escalating public debt.
"Chinese loans to the region rose rapidly in the 2000s, with the country’s share of total Sub-Saharan African external public debt jumping from less than 2 per cent before 2005 to 17 per cent by 2021," read the statement in part.
Therefore, President William Ruto and his colleagues were advised to adopt other measures to meet their demand for resources such as the promotion of inter-trade in the continent and undertaking tax reforms.
Leveraging on mineral exports was also advised as a way of boosting the country's coffers.
"The strong demand for minerals that support renewable energy development could provide an opportunity for countries to forge new trade relationships and develop more local processing capabilities.
"Countries can improve their competitiveness by creating a favourable business environment, investing in infrastructure, and deepening domestic financial markets," read the statement in part.
Notably, the caution by IMF comes weeks after Ruto travelled to China for the Belt and Road Initiative (BRI) forum where he also held bilateral talks with Chinese President Xi Jinping.
Ruto had sought at least Ksh150 billion (USD 1 billion) in loans to finance stalled projects. Since the visit, no indication has been given on whether Ruto managed to reach an agreement with the Jinping administration.
However, the Head of State was able to agree on investment deals with private companies to the tune of Ksh688 billion. Some of the deals struck included Ksh24.2 billion for the setting up of the Konza Medical City.
