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February 21, 2019

Time to renegotiate debt for China infrastructure

President Uhuru Kenyattta and the Chinese President Xi Jinping. /FILE
President Uhuru Kenyattta and the Chinese President Xi Jinping. /FILE

African leaders are in Beijing for the Forum on China-Africa Cooperation. Three years ago President Xi Jinping pledged another $60 billion for infrastructure finance.

Many leaders are no doubt expecting further handouts. But is it a good idea to take the money?

Already African countries such as Ghana, Zambia and Cameroon are showing signs of debt distress.

Even Kenya — whose debt to GDP ratio is 57 per cent — is struggling to pay for its new infrastructure. That’s one reason why Kenya needed to put VAT on fuel to raise an extra Sh71 billion annually.

Chinese infrastructure has massively improved Africa in the last decade. But we still need to make some changes.

Firstly, MPs should properly monitor government borrowing and not allow it to exceed 50 per cent of GDP.

Secondly, we should not take on new infrastructure projects until the existing ones are completed and are paying for themselves.

And thirdly, African leaders, including Uhuru, should renegotiate their bilateral debt with China so that it is more affordable.

Quote of the day: "My memory will be that of a man of dignity who was loyal to his country."

Salvador Allende 

He was elected President of Chile on September 4, 1970



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