The last few years a lot of African countries have thrived economically and socially, scenes in tech, music, art, infrastructure in certain countries in east and west Africa have seen great improvement. You can credit some of the change to the industrious Africans in certain countries finding ways to innovate and disrupt the system with their companies or the government pumping in a lot of money into the society to help facilitate new innovations in the people.
Kenya is one of the special African countries booming in the East, both in tech, infrastructure and creativity, Kenya feels like a unicorn being born. That sadly isn’t so true, the country’s government has borrowed a lot of money from foreign countries to run its operations to upgrade infrastructural investment, expand energy options and distribution, and improve transportation systems. Some might say some of this has been effective but the sad part is most of it was done on lent money, a common struggle most African countries face to break through the third world. The economy which is inferior to most developed nations has to seek loans and strike deals to get foreign aid which the government turns over to help stabilize the system and pay back the loans in the future.
Kenya’s public debt load recently surpassed the 5 trillion shillings mark ($50 billion), Quartz reports and the government is being questioned if they can validate the money being borrowed.
The Chinese have become adept at colluding with cabinet secretaries and heads of parastatals into signing opaque commercial agreements that end up saddling our external debt register with expensive loans, Jaindi Kisero, a columnist with the Kenyan paper, Daily Nation, wrote in May.
“Kenya continues to record declining levels of concessional debt and build-up of commercial and semi-concessional borrowing since its elevation to a lower middle-income economy status in September 2014,” the Central Bank of Kenya has reiterated in its latest Quarterly Economic review report for the July-September 2017 period.
Most of the bilateral debt comes from China which is a big part of Kenya’s growing economy, the Chinese accounting for 72% of bilateral debt by the end of March, according to documents from the Treasury obtained by Kenya’s Business Daily newspaper.
In early May, Kenya was also the latest nation to join the Asian Infrastructure Investment Bank, a China-led financier that offers credit by dropping the conditionality on deregulation, privatization, and reforms that come with aid from Western-led multilateral agencies like the IMF. Kenya was also one of 14 African states that recently met in the Zimbabwean capital Harare to discuss whether to hold the yuan as part of their foreign reserves. – Quartz Africa.
I think there is also an element of a political statement behind it. They may be filling a vacuum from traditional western powers which may be withdrawing, and the Chinese have decided that East Africa is an important investment destination,” Deloitte Africa infrastructure and capital projects leader Jean-Pierre Labuschagn said.