Kenya at Highest Risk of Losing Strategic Assets to China- Global Ratings Firm

Kenya has been named as the country at the highest risk of losing its strategic assets to China over the accumulating debt it owes Beijing by the Moody’s Investor Service.

Moody’s Investor Service, a global ratings firm, has reported this in its newly-released report adding to the anxiety among Kenyans over the debt that has largely been blamed for the choking taxation of taxpayers.

The global ratings firm has weighed in on the transparency of the predictability of credit implications saying that China’s response to Africa countries facing liquidity pressure has not been even or transparent.

“Countries rich in natural resources, like Angola, Zambia, and Republic of the Congo, or with strategically important infrastructure, like ports or railways such as Kenya, are most vulnerable to the risk of losing control over important assets in negotiations with Chinese creditors,” Moody’s warned through in their report.

The report noted that Kenya, amongst such other countries, alternatively, faced the risk of being offered liquidity relief at higher resource concessions that could only diminish the value of future export earnings.

“Even if debt restructuring alleviates immediate liquidity pressure, the loss of natural resources revenue or other assets is credit negative,” the global rating firm reported.

The National Treasury data recently showed that the Chinese debt stood at 554.88 billion shillings which is 73.4 percent of the total bilateral debt which is 756.28 billion shillings.

“In general, concentrated exposure to a single creditor, with little transparency about decisions to restructure the terms of the debt, increases rollover risks, weakening the fiscal profile,” the report further warned.

Kenya’s largest debt to China is said to have been spent in the construction of the Standard Gauge Railway (SGR) while a chunk of it was spent on construction of roads such as the Thika superhighway.

Given the trend witnessed in China’s way of operating, Kenya could most likely lose the Standard Gauge Railway (SGR) and probably have to tax road users who were to use the Chinese built roads.

The realization of reality has since created tension between Kenyans and Chinese residents in Kenya. This can be seen from a video clip recording of a Chinese man insulting Kenyans and the Presidency.

World Bank and the European Union development assistance loans are linked to compliance with aims are allied to governance, socio-economic development, and democratic principles, meanwhile, Chinese loans do not care for conditions that would ensure growth in governance and structural reforms.

China has on countless occasions been accused of taking advantage of the ‘loan appetite’ in African Government officials to drive the countries into a debt trap. The Asian superpower country is on record as having taken over strategic and monumental assets in countries that failed to repay the loans. Sri Lanka can testify to the pain of losing assets after it lost its Hambantota Port.