Renegotiate Chinese debt, Mudavadi tells state

Kenya owes China close to Sh3.5 trillion, some already due and others about to mature

In Summary
  • Mudavadi economy could collapse if clear proactive contingency measures were not put in place
  • Asks Uhuru to introduce food relief, review taxation on petroleum products and provide farm inputs to farmers
ANC leader Musalia Mudavadi
FREE ADVICE: ANC leader Musalia Mudavadi
Image: FILE

China should relax its debt repayment terms with Kenya in the wake of the Covid-19 crisis that is taking a heavy toll on the economy, ANC leader Musalia Mudavadi has said.

Mudavadi said China – Kenya’s single largest creditor – should give waivers on interest, restructure the debt and defer some repayment.

“China has a moral obligation to accede to a fresh look at Kenya’s debt portfolio. An agreement with Kenya’s Treasury is of the greatest essence,” he said in a statement on Wednesday.

Kenya owes China close to Sh3.5 trillion in loans, with some of them having fallen due and others just about to mature.

But with the prevailing situation, the former finance minister urged China, where the deadly Covid-19 started in December last year, to re-look at Kenya’s portfolio and relax the repayment terms.

Mudavadi further outlined a raft of measures to the government to protect the economy and cushion Kenyans from the adverse effects of the virus that has killed about 20,000 people globally.

He criticised a section of Kenyans he said were ignoring the warnings and guidelines issued by the government, adding that the party would not hesitate to recommend a lockdown to prevent the spread of the disease.

“I wish to restate that the present casual attitudes will hurt us grossly. If Kenyans cannot respect and obey simple guidelines regarding such things as public gatherings, funerals and other assemblies, then we as ANC will not only support the possibility of a shutdown of the country, we will in fact, urge the government to seriously consider this option,” he said.

Mudavadi asked President Uhuru Kenyatta to introduce food relief programmes, review taxation on petroleum products and provide farm inputs to farmers to safeguard the agricultural sector – the backbone of the country’s economy.

“We have entered what would ordinarily be the planting season in the country’s food basket zones. Covid-19 has set us back in this respect,” he said.

Mudavadi warned the country’s economy risked going to the dogs if clear proactive contingency measures were not put in place to cushion critical sectors like agriculture.   

He asked the government to provide essential farm inputs - fertilisers and seeds - and access to agricultural credit and extension services to farmers.

“If this thing knocks the agricultural sector and it does not produce, we will be in a terrible fix. We cannot possibly leave this to chance as we seem to be doing. Going forward, Kenya needs a clear plan on how to secure agriculture and food for tomorrow,” he added.

Mudavadi called on the government to roll out a relief food programme for vulnerable groups in urban and rural areas who may suffer the most when a lockdown is declared.

“You cannot fight a virus if you are malnourished and your immune system is compromised. Malnutrition leads to compromised immunity, among other challenges. We have children and elders who are malnourished. These are some of the most exposed populations,” he said.

Mudavadi called for enactment of a shutdown law that will cushion Kenyans should a lockdown be declared.

“These is need to look at taxation on petroleum products a fresh in order to give Kenyans some level of relief. It is known, for example, that slightly over 50 per cent of the price of fuel prices at pump goes to taxes and levies. The government should give citizens some relief.”

He added: "A crisis or even shutdown law may need to be urgently enacted for this purpose, with the possibility to tax accruals where landlords and banks will be obliged to extend such relief to Kenyans and file this as part of their tax relief from the state.”

Edited by Henry Makori