ADHERE: Did Auditor General intentionally misread SGR contract?

Since 2018, there has been a plethora of news and commentaries in Kenya and beyond about the possibility of Mombasa Port being at risk of forfeiture should the government default on the loan provided by China to build the SGR.

As the controversy intensified, the governments of Kenya and China have variously denied listing of the Port, or any other public assets as collateral for the Chin Eximbank loan.

In a new study, researchers at the John Hopkins based China Africa Research Initiative say the rumour sprung from an advisory in which Kenya’s Auditor General warned that Kenya Ports’ Authority's assets were at risk over the loan.

Mombasa Port is certainly the most priced of KPA’s assets. The authors of the study opine that the advisory was erroneous in fact and in law.

First, the study points out that the advisory incorrectly read the SGR contract clauses where the Auditor General mistook KPA to be a borrower. On the contrary, the borrower is the National Treasury, which has the duty and responsibility of repaying the loan.

Second, the Auditor General’s advisory relied on a clause in the SGR contract in which national sovereignty would not be invoked to cushion assets of the borrower from arbitration, suit or other legal process in light of the contract obligations.

As the study notes, by hyping this clause to fortify his case, the Auditor General failed to appreciate  such provisions are typical of international commercial loan contracts and was, therefore, non sinister in the SGR contract.

The big question now is, was the Auditor General’s advisory an innocent mistake or was it intentional? Was it a case of selective and casual reading of the contract?

Whatever the intentions and circumstances defining the advisory, its implications have been felt more outside KPA.

The opinion provided a multiplication platform for an enduring myth about China’s debt trap diplomacy. Many observers have used the advisory to unjustly accuse China of using its economic capabilities to push developing countries like Kenya into unsustainable debts.

Citing Kenya’s, scenario, a number of similar claims of asset seizures by China have also emerged in countries such as Uganda and Zambia.

Second, the claims have fueled politicisation of Kenya’s economic partnership with China. In an election season, some politicians have used Kenya’s debt to China as a campaign fodder, citing potential asset seizures.

Such hasty generalisations impinge on some of the enviable outcomes of economic ties between Nairobi and Beijing. Kenya’s massive infrastructure turnaround, particularly in the last decade was enabled to a large degree by international partners such as China. The fact that negative framing of Kenya-China economic ties is propagated by political actors who are or were part of the government decision making, points to more politics and less facts.  

Third, the extended shelf-life of the myths surrounding Kenya-China economic ties have blinded many people on the realities of the changing Kenya’s debt portfolio.

In the last two years, China has trailed Japan in lending to Kenya. Similarly, compared to the Sh29.5 billion that Beijing is tipped to lend Kenya in the 2022-23 financial year, Nairobi will get Sh205.6 billion from multilateral lenders, with World Bank and the International Monetary Fund jointly playing captain at Sh113.9 billion financial package.

These new financing dynamics are often pushed to the periphery yet they clearly point to radically different development finance architecture for Nairobi.

How can Kenya and other African countries overcome the dangers of false narratives regarding their development partnerships?

First, there is need for governments to proactively engage the population, effectively explain their development cooperation arrangements, including loan agreements. This will significantly fill the information void that is often exploited by myth peddlers.

Two, there is need for effective journalism. The media occupies an important role in public perception and memory formation. African journalists should seek to disseminate the truth and avoid the pitfall of repeating falsehoods.

In Kenya’s case, for instance, despite availability of new numbers and figures regarding Nairobi’s economic relations with China, there is an enduring tendency in news reports that use outdated figures and disproven talking points.

Good journalism has a huge potential in righting the wrongs in China-Kenya economic ties.

The writer is a scholar of international relations with a focus on China-Africa cooperation. @Cavinceworld.