China Ambassador to Kenya Zhou Pingjian has dismissed claims Chinese loans are debt traps.
In an interview, Ambassador Zhou said Kenya owes less than 10 per cent of its public debt, or, less than 20 per cent of its foreign debt, to Chinese creditors, maintaining China is not the biggest lender to Kenya.
The envoy also said Chinese loans are project-specific based on equal-footed consultation and mutually beneficial cooperation.
“The fruitful and tangible outcomes of China-Kenya financing cooperation are solid there for all to seem,” he said.
Additionally, he noted that not a single developing country has ever fallen into the “so-called debt trap because of Chinese loans”.
“In fact, the so-called debt trap is a narrative trap created by those who wish to forever plunge Africa into a poverty trap and backwardness trap.
“Development takes financing support, internal or external. It cannot be said that only the loans provided by Western countries in the past were development aids, while those from China now are called ‘debt traps’, Ambassador Zhou said.
One example often cited by China loans critics is Sri Lanka, which years ago embarked on a massive port project in Hambantota with Chinese investment. But the billion-dollar project using loans and contractors from China became mired in controversy, and struggled to prove viable, leaving Sri Lanka saddled with growing debts.
In 2017, Sri Lanka agreed to give state-owned China Merchants a controlling 70 per cent stake in the port on a 99-year lease in return for further Chinese investment.
But when asked if there are Kenyan parastatals at risk of being taken over by China, the diplomat termed the claim as ill-intentioned speculation that has no factual grounds.
“In fact, not a single China-Africa cooperation project has been taken over or confiscated by China due to debt problems. I trust discerning Kenya friends will see through those misinformation or disinformation. No country can be denied the right to development,” Zhou said.
He also dismissed secrecy in loan agreements. “As we see it and as the facts go, I am also struggling to understand the narrative,” he said.
He said China has provided financing support to cooperation projects to the best of its capability based on Kenya’s needs and requests.
“I want to stress here that China has no capacity to impose any loan, any contract on any country, including our Kenyan friends. We try to do our best in line with requests from our friends. That’s what friends are for,” he said.
The envoy said China always follows the principle of openness, transparency, equality and mutual benefit, and every financial support goes through in-depth feasibility study and market-based assessment.
“All those loan agreements have been signed through consultation on a voluntary basis between both sides,” Ambassador Zhou said.
Global ratings firm Moody’s Investor Service in a 2018 report said Kenya is among countries at the highest risk of losing strategic assets to China over the pile of debt it owes Beijing.
In the report, Moody said China’s response to sub-Saharan Africa countries facing liquidity pressure has not been uniform or transparent – meaning predictability of credit implications are less clear.
“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,” the report said in part.
On the secrecy of the loans agreements, President Uhuru Kenyatta in December 2018 promised NTV anchor Mark Masai to have the document released to the public, which never happened.
However, then State House Chief of Staff Nzioka Waita in April 2019 said the document won’t be made public. “To the fact of the matter is that the contract will not be released to Mark Masai. So he shouldn’t be expecting it.
“The President did not lie (when asked about releasing the contract). He was counseled by the Attorney General who has guided that only the organization with locus should request for an agreement that is signed by two institutions which are bound by confidentiality clauses and must go through the public audit process,” Waita said.
China has the most diplomatic posts in the world, ahead of the US
