US Think Tanks Sounds Warning to Kenya over Chinese Loans
A US Defence Department think tank has sounded a warning to Kenya and other African countries over Chinese funded projects.
Washington-based Africa Centre for Strategic Studies (ACSS) says African countries must adopt effective oversight and accountability mechanisms if they are to reap benefits from Chinese investments.
ACSS says African countries should be aware that Chinese investment in the continent is a way of extending Beijing's political influence and military reach.
The Africa Centre observes that China's $900 billion One Belt, One Road (OBOR) Initiative “is first and foremost a Chinese geopolitical project designed to advance China's grand strategy."
OBOR helps finance 1,700 infrastructure projects in more than 60 countries.
In an analysis, Africa Centre research associate Paul Nantulya says the infrastructure loans aim at exerting China's military and economic influence in the next three decades.
“The challenge for Africa is in establishing where its interests converge with China’s, where they diverge, and how areas of convergence can be shaped to advance African development priorities,” the study suggests.
"The Sh320 billion Mombasa-Nairobi standard gauge railway, financed by Chinese lenders, serves as a “flagship OBOR project” in East Africa and ranks as the biggest investment in Kenya since independence," the think tank notes.
A study by the United Nations Economic Commission for Africa shows the railway could increase Kenya's annual exports by $192 million.
"But the standard gauge railway is producing economic deficits for Kenya as well as potential benefits," the Pentagon think tank points out.
The think tank cites a report by World Bank, which established that Kenya's economic competitiveness is shrinking due to a large volume of Chinese exports to neighboring Tanzania and Uganda.
"This sharp increase in exports of Chinese materials can be seen as an “offloading of Chinese excess capacity in Africa,” Nantulya states.
“In the past decade, Tanzania and Uganda’s imports from China increased by as much as 60 percent, while those from Kenya grew by 4 and 6 percent, respectively, over the same time period.”
“Kenyan manufacturers have blamed their country’s declining market share of industrial products on Chinese firms, which they also accuse of importing raw materials from China and hiring Chinese labor,” adds Nantulya.
The study further suggests that what happened in Sri Lanka and Pakistan could also occur in Kenya if the East African is unable to service Chinese loans.
“Beijing appears in some cases to have attached more importance to acquiring strategic assets than debt repayment from its partners,” the US think tank says.
“In 2017, Sri Lanka handed over Hambantota port to Chinese state-owned companies on a 99-year lease after defaulting on an infrastructure loan. Pakistan handed over Gwadar port on a 40-year lease in an arrangement where the Chinese partner also retained 90 percent of its revenues.”
“The opaque nature of many OBOR negotiations prevents public and private sector scrutiny. Beijing is sensitive to how host nations perceive it. When the public is aware, vigilant and active, OBOR negotiators can become more responsive to local demands. The lessons of Hambantota and Gwadar suggest that when accountability and oversight are absent, the risks of unfavorable agreements, and ultimately default, increase," the study says.
Comments
This is all for competing…
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This is all for competing for Uganda businesses against Tanzania. But Tanzania SGR is built on their own money and not loan. Hence Tanzania competition will be tougher as they can make it cheaper to supply goods to Uganda than Kenya.
In long term Kenya will loss and Museveni has already gave out hints on this such not sure of building its SGR from its border (Malaba) to Kampala. And many more.
Uhuru deserves a lot of help - the reality here's sad but true for poor Kenyans.
Blame it on FOOLS who 2wice…
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In reply to This is all for competing… by Mbwana (not verified)
Blame it on FOOLS who 2wice voted a Mlevi and a Mkora (their Mangamangaring Prezzo and Vice = Wicked and Immoral).
yep yap yep yap usa my fut!!…
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yep yap yep yap usa my fut!!!!Lets us remind u first that we had u for the last 50 years n u did completely nothing in kenya r Africa at large!!How comes i neva build the same roads before the chinese came???U keep mentioning chinese debt yet u owe them more than 8trillion$$$.Can u pay it first then u continue to lecture us????Please please leave us alone.We will pay the debt come rain come sunshine.U guys did nothing to kenya all we experienced is total aid,hunger,war human rights this n that n poverty levels increased heavily so please let the chinese do their thing??How comes the same ya think tank did comment on the deal that was given expanding the mombasa highway to 8 lanes costing over 300bksh but they r happy to comment about chinese debt???Bure kabisa wr not fools anymore as africans n we will do bizness with any country.
Mkenya halisi you have…
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In reply to yep yap yep yap usa my fut!!… by mkenya halisi (not verified)
Mkenya halisi you have stated pure facts...it's high time we all embrace the 'empire changes'.
Mu Kikuyu friends remind me…
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Mu Kikuyu friends remind me of a saying translated for all "The ones who know have heard the advice" or something to that effect. The boy in statehouse is being advised but his arrogance can't allow him to accept the advise. Fools fall into the same traps the have been told others fell into. Bure Kabisa!
Why can't the US think-tank…
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Why can't the US think-tank analyze the US debt to China instead of Africa. US is still borrowing and external debt levels are in trillions of dollars. Africa will not grow unless external financing us acquired. Capital asset debt is good.
Mkenya halisi, “did nothing…
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Mkenya halisi, “did nothing for Kenya?” That’s plain dumb. What did Kenya do for herself? These are two sovereign countries, just because America asks for accountability and China doesn’t? Think before you talk.
What are the Kenya Think…
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What are the Kenya Think Tanks saying about this? or are they all "Shark Tanks" eagerly waiting to devour the most innocent in society-the poor taxpayers? Instead of answering questions from investigating agencies EACC, DCI etc, the CS and their teams of "axe-parts" or "ask-parts" should be issuing rebuttal to these Think Tanks. Unfortunately as fate would have, them guilty are afraid regardless of what sin they are about to be accused of.
I agree with Mkenya Halisi…
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I agree with Mkenya Halisi 100%.These mofos want to poke their noses in everybody's bizness. They're always busy placing sanctions on any country which doesn't toe their line. Well guess what, there's a new sheriff in town and you're not calling shots any more. The Roman Empire tumbled. British Empire sunk. American Empire is a house of Cards on fire. The world has moved on and America needs to get with the program.
@bwaana hehehe please do yr…
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@bwaana hehehe please do yr homework bro Tanzania borrowed at stanchart which is not tanzania owned.Its owned by singapore who is the biggest shareholders so please don't confuse us.Ifs it was funded by tanzania the cash will b coming from central bank of tanzania n it's tanzania budget???For me competition is good n let the countries who want to build sgr everywhere do it juu transportation will b cheaper??Loans will pay itself n we should worry much juu other countries like japan r still borrowing n u will continue buying toyota,honda,n others cars there for many years n they use this money to pay its loan so it's upto african or kenya to know where this cash will come from to pay them loans??Only 2m kenyans pay taxes if the gava can make sure atleast 45% of population pay taxes we will repay the loan within 3 years n borrow more n more.
What's their advice to US,…
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What's their advice to US, the largest consumer of Chinese loans?
Hapo I'm with Mhalisi 100%…
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Hapo I'm with Mhalisi 100%. US is riddled with Chinese debt, they need to freaking mind their own country business! Kila saa watch dogs when their country is rotting with opiods, obesity,inequalities, racism, tackle that first and worry about Kenya second!
Talk of US borrowing from…
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Talk of US borrowing from China is either ignorant or mischievous. The loans are in $$$$$$. The US just prints $$$ and sends to China. Kenya cannot do that it has to depend on diaspora remittances for $$$ to pay China.
Can the U.S leave us alone…
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Can the U.S leave us alone please! Let us get raped by the Chinese! The U.S has starved us for a long time! We're a free for all countries that want to do all sorts of business with us!
If only the loans were to be…
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If only the loans were to be fully used for the projects not being pocketed by UhuRuto corrupt individuals, if only the workers were Kenyan Engineers who will employ other Kenyans to gain from the projects, if the income from the projects will be enough to pay the debt and the remaining will be invested in other projects, then Kenya will be justified to take these loans. But if a quarter of the loans is used by Uhuru to build a city in his home, a quarter used by Ruto and half of the remaining Chinese pocket in salaries, then the remaining do the project, do you guys believe Kenyans will gain from it. And please don’t compare Kenya with US or Japan. US or Japan will not give Uganda and China land for free to do business with them. Useless Kenyan leaders
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