China’s loans to Kenya have dropped for the first time in 15 years, to $6.83 billion in June from $7.05 billion a year ago and $3 billion in 2016.
Treasury data shows Kenya’s debt contracted from China grew by a single-digit in the two financial years to June 2021, compared with double-digit growth previously.
For instance, China’s debt to Kenya grew 4.55% in each of the two financial years from to June 2021 before dropping last year by 3.2%. It grew 49% to $4.6 billion in the year ended June 2017.
Nairobi has been a major beneficiary of China’s loans for the development of mega infrastructure such as roads and a modern railway over the last decade, making Beijing the largest bilateral creditor since 2015.
The fall in Chinese debt emerges in a period when the World Bank and the International Monetary Fund (IMF) have stepped up lending to Kenya, firming the institutions’ grip on the country’s economy.
Beijing is adopting a more cautious lending in Africa where some nations have reached the limit of their borrowing capacity and the prospect of default looms.
In 2020, the IMF listed more than 20 African countries, including Kenya, as being in, or at high risk of, debt distress.
In response, lenders, including China Eximbank and China Development Bank, China’s two main policy banks, have adopted increasingly hardline lending terms.
Chinese President Xi Jinping says over the next three years, the country will cut the headline amount of money it supplies to Africa by a third to $40 billion, and redirect lending away from large infrastructure towards a new emphasis on SMEs, green projects and private investment flows.
