A report by the World Bank says that China has reduced its lending to countries in Sub-Saharan Africa, including Kenya.
In the International Debt Report 2023, released on Thursday, the World Bank noted that loans from China to the region had declined significantly since 2016.
The recent trend was attributed to four main factors, including the recent state of China's economy and a steep contraction in its current account surplus.
On the other hand, It was highlighted that the debt vulnerability of the regions had also forced China to reduce its lending given the risks of defaults among countries in the continent.
According to the report, China's lending in 2016 was USD52 billion (Ksh7 trillion). However, in 2022, their loans stood at USD5.4 billion (Ksh828 billion).
Interestingly, out of the Ksh828 billion loans issued in 2022, 80 per cent went to China’s neighbouring countries.
"Factors accounting for this downturn include changes in China’s own economic environment and a steep contraction in its current account surplus, the failure of some overseas projects to come to fruition or realize anticipated financial dividends, and an increase in debt vulnerabilities in borrowing countries that has led some of them to default to China," read the report in part.
Over the years, China was one of the biggest lenders for the continent. World Bank noted that China was also strategic in the loans they issued, which were mostly for infrastructural development.
According to the report, China targeted oil-producing countries, mineral-rich countries and other large countries on the continent.
Here in Kenya, China has been instrumental in financing key government projects such as the Nairobi Expressway, which was undertaken on a Public Private Partnership (PPP) model at an estimated cost of 80 billion.
The Chinese were also responsible for the construction of the Standard Guage Railway(SGR).
Meanwhile, Kenya is in talks with China over a Ksh153 billion (USD1 billion) loan, which will most likely be disbursed next year.
