China’s losses in Kenya are America’s opportunities in Africa



kenya china debt railway 05182023 AP AP23137713022471

On Sunday, hundreds of Kenyans flooded into the center of Nairobi, demanding President William Ruto step down.  

Ruto, whose presidency may not survive nationwide demonstrations, is one of America’s closest partners in Africa. Whatever happens to the embattled leader, longtime activist and politician, Boniface Mwangi, was certainly correct when he told Sky News last month that “Kenya has changed forever.” 

Demonstrations started June 18 after Ruto proposed nearly $2.7 billion in tax increases, largely to help pay off the country’s indebtedness. Kenya is carrying $82 billion of debt, about 75 percent of GDP per my estimate, which puts the country in the danger zone.  

Currently, interest payments alone eat up 37 percent of government revenues. When repayment of principal is taken into account, more than half of revenues go to servicing debt. 

Kenyans, already hit by inflation, took to the streets. Demonstrators broke into parliament on June 25 to stop the vote on the government’s tax package. Twenty protestors were reportedly killed that day. The government then withdrew the tax plan and announced austerity measures and budget cuts. Protests have since spread to Mombasa, the country’s second-largest city, and other locations. 

There’s no mystery about how Kenya landed in this predicament. Ruto’s predecessors put the country in hock to China, Kenya’s biggest bilateral creditor, to which it owes around $8 billion.  

Kenya’s government put the money borrowed from China to poor use, especially the China-sponsored $4.7 billion railway designed to connect Uganda to the sea through Kenya. As envisioned, the line was to run from Mombasa, on the Indian Ocean, to the capital of Nairobi, and then to the border with Uganda. At the moment, the tracks, after cutting through Kenya’s national parks, stop in a field near the town of Duka Moja in the Rift Valley, more than 200 miles short of the Ugandan border.  

The line was fueled by Chinese graft — it has been dubbed the “Jewel in the Crown of Corruption” — and financed by the Export-Import Bank of China, which has refused to put up additional funds for its completion. Similarly, work on Chinese roads in Kenya has ended as money to pay China has run out.

The protesters are now angry about more than foreign lenders. Recent protests target corruption and bad governance in general. 

The killings of protestors — perhaps as many as 39 have died — have galvanized younger Kenyans. Mwangi said Gen Z have “lost their innocence.” 

“They were not there when there was post-election violence and they have never been part of any tribal violence — so for them, they have grown up in a very unified and non-tribalist country,” he explained. “They came out in the streets — one country, one nation, one language and the language is love — asking for a better country, and they were murdered.” 

Ruto has therefore lost hearts and minds, but the U.S. is also a loser. Before the demonstrations, the Biden administration had been able to capitalize on Kenyan elites souring on Beijing. For a long time, they had looked to China as their development model, putting their country in “the Chinese orbit.” Aly-Khan Satchu, a Kenyan-based economist, talks about “whiplash” as Kenya now turns toward the West again.  

Kenya may not be in America’s orbit, but Ruto did go to the White House for a state visit in May, to mark “60 years of official U.S.-Kenya partnership,” as the White House put it. It was the first state visit by a Kenyan leader in two decades and the first state visit by an African leader since 2008. 

Moreover, late last month, Kenya was the first sub-Saharan nation to receive the designation as a Major Non-NATO Ally. North African states Egypt, Morocco and Tunisia are among the 18 other countries with this status. 

Ruto’s troubles are therefore America’s troubles. African leaders have been unhappy with Washington for decades for apparently making grand promises and delivering little. The Biden administration has an African plan, announced in August 2022, but its execution has not impressed anyone. 

This is a moment when America can make headway on the continent, because African leaders are also upset about China’s unfulfilled pledges, such as those made by Xi Jinping in Johannesburg last August. 

China’s economy is stumbling, which means Beijing is stretched for funds to complete Belt and Road infrastructure projects. Chinese investment in the continent is up post-COVID, but there will be a turning point soon, as there has already been a falloff in public-sector investment and public-sector lending.

Sunday’s protest took place on “Saba Saba,” meaning “Seven Seven” because of the seventh day of the seventh month. The day is known for demonstrations in Kenya as it marks the moment in 1990 when opposition figures demanded multi-party democracy.  

Kenya now has a democracy, but debt threatens the government’s viability. 

“There are currently 21 African countries that are in, or at high risk of, debt distress according to the IMF,” write Zainab Usman and Tang Xiaoyang for the Carnegie Endowment. “Chinese public and private creditors own about 13 percent of this debt.”  

There will undoubtedly be more Kenya-type crises across Africa. 

Gordon G. Chang is the author of “The Coming Collapse of China” and “China Is Going to War.”





Source link

About The Author

Scroll to Top