China may take Mombasa port over billion-dollar Kenyan debt
- 5 years ago
MOMBASA, KENYA — The Daily Nation reports that the Kenyan government might lose its prized port to China if it defaults on its billion-dollar debt.
Kenya currently owes China $9.8 billion. The government borrowed the money to fund the Standard Gauge Railway between Nairobi and Mombasa, as well as other national infrastructure.
A report from the auditor-general to Kenya Ports Authority revealed that the port's assets were used as collateral to secure the loans from China's Exim bank. Under the loan agreement, Kenya's prized Mombasa port would not have state immunity, which means Chinese lenders can seize it if the country can't pay its debt.
The audit report notes that "the agreement is biased, since any non-performance or dispute with the China Exim bank would be referred to arbitration in China." And let's face it, China only looks out for numero uno.
The prospective Chinese takeover sparked alarm and outrage among Kenyans. But President Uhuru Kenyatta called the report propaganda, according to The Star, and claimed the country is ahead of its payment schedule, with no cause for alarm.
The South China Morning Post reports that the incident highlights the risks of participating in Beijing's "Belt and Road" project, which aims to connect trade between Asia, Africa, and Europe with infrastructure built and paid for by China.
But China has been accused of practicing debt trap diplomacy. According to the Center for Global Development, huge loans are given to countries that will be unable to repay, forcing them to surrender assets and territory when the loans default.
Credit rating agency Moody's previously warned that nations rich in natural resources or with key infrastructure are vulnerable to the risk of losing control of their valuable assets.
One such country was Sri Lanka, which in 2017 lost Hambantota Port to China for a lease period of 99 years, after struggling to repay its loans.
Zambia also lost its international airport to Beijing over debt repayment in 2018, according to Daily Nation.
China's acquisition of assets, especially ports, have led analysts such as Brahma Chellaney from New Delhi's Centre for Policy Research to speculate that the actual aim is to create a network of naval bases via Belt and Road trade routes.
Kenya currently owes China $9.8 billion. The government borrowed the money to fund the Standard Gauge Railway between Nairobi and Mombasa, as well as other national infrastructure.
A report from the auditor-general to Kenya Ports Authority revealed that the port's assets were used as collateral to secure the loans from China's Exim bank. Under the loan agreement, Kenya's prized Mombasa port would not have state immunity, which means Chinese lenders can seize it if the country can't pay its debt.
The audit report notes that "the agreement is biased, since any non-performance or dispute with the China Exim bank would be referred to arbitration in China." And let's face it, China only looks out for numero uno.
The prospective Chinese takeover sparked alarm and outrage among Kenyans. But President Uhuru Kenyatta called the report propaganda, according to The Star, and claimed the country is ahead of its payment schedule, with no cause for alarm.
The South China Morning Post reports that the incident highlights the risks of participating in Beijing's "Belt and Road" project, which aims to connect trade between Asia, Africa, and Europe with infrastructure built and paid for by China.
But China has been accused of practicing debt trap diplomacy. According to the Center for Global Development, huge loans are given to countries that will be unable to repay, forcing them to surrender assets and territory when the loans default.
Credit rating agency Moody's previously warned that nations rich in natural resources or with key infrastructure are vulnerable to the risk of losing control of their valuable assets.
One such country was Sri Lanka, which in 2017 lost Hambantota Port to China for a lease period of 99 years, after struggling to repay its loans.
Zambia also lost its international airport to Beijing over debt repayment in 2018, according to Daily Nation.
China's acquisition of assets, especially ports, have led analysts such as Brahma Chellaney from New Delhi's Centre for Policy Research to speculate that the actual aim is to create a network of naval bases via Belt and Road trade routes.