- With China becoming more cautious in disbursing loans, China’s loans to Kenya have dropped significantly. According to the Kenyan Treasury, China’s total lending dropped to $6.83 billion in June from $7.05 billion a year ago.
With China becoming more cautious in disbursing loans, China’s loans to Kenya have dropped significantly. According to the Kenyan Treasury, China’s total lending dropped to $6.83 billion in June from $7.05 billion a year ago.
Since last decade, China has been lending heavily to Kenya for the development of mega infrastructure projects including roads and a modern railway. As a result, China emerged as the largest bilateral creditor to Kenya since 2015. China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, has won most of Kenya’s mega projects, two railways, two ports and 23 road projects.
According to an assessment by the IMF in 2020, more than 20 African countries, including Kenya, were estimated to be at high risk of debt distress. IMF pointed out that, many of China’s African debtors have reached the tipping point of their borrowing capacity with a dim prospect of their repaying capacity. Since then, Chinese lenders such as China Eximbank and China Development Bank adopted increasingly stricter lending terms. At the same time, World Bank and the International Monetary Fund (IMF) stepped up lending to Kenya.
Addressing the triennial Forum of China-Africa Cooperation held in Senegal in November 2021, Chinese President Xi Jinping stated that his country would trim the funding support to Africa by a third to $40 billion. Experts point out that China is being more selective in terms of projects and that it plans to move away from large infrastructure projects to SMEs, green projects and private investment flows.
