KENYA-SINO RELATIONS

Uhuru, Raila’s China visit redefines debt trap narrative

In Summary

• The Chinese loans and the predatory and the weaponised loans narratives is one issue that comes to the fore in the wake of this historic visit by the president and the opposition chief.

• The trip has conspicuously been about Raila Odinga accompanying the President.

President Uhuru Kenyatta and China's Xi Jinping in Beijing on April 25, 2019
President Uhuru Kenyatta and China's Xi Jinping in Beijing on April 25, 2019
Image: REUTERS

In the last one week we have witnessed an uproar over President Uhuru Kenyatta’s visit to China for the second Belt and Road Initiative forum.

The hullabaloo has had very little to do with BRI and thanks to the media for muting conversations around what is touted to be the real globalisation that will connect the continents of Africa, Asia and Europe.

Be it as it may, the trip has conspicuously been about Raila Odinga accompanying the President and of course the fact that Beijing declined the request for the Sh368 billion loan.

Both the social and legacy media have been awash with vox pops of disillusioned Kenyans who have expressed reservations, nay, opposition, to this newfound unity of purpose in securing loans from China. A lot has been said and some assertions have been quite frivolous and spurious.

Granted, Kenyans have a right to question this new-found unity in the quest for more loans given that less than two years ago NASA and Raila’s rallying call was the unsustainability of Chinese loans, which they averred were channeled to economically unviable procurement driven mega infrastructural projects. These projects, they said, were conduits for grand corruption and a number of critics and a big-name economist have corroborated the same. The current sentiments thus seem to question whether Raila is now part of the people behind “the procurement driven mega-infrastructure” and more significantly, whether the new SGR line, which is expected to extend from Naivasha to Narok, Bomet, Sondu and finally Kisumu is as they described it.

Asking these questions and interrogating the rationale of all these should not necessarily give us answers, but we certainly need to mull the whole scenario against the backdrop of the handshake. It is in such interrogation that we get to understand more and ask the right questions.

The Chinese loans and the predatory and the weaponised loans narratives is one issue that comes to the fore in the wake of this historic visit by the president and the opposition chief. You see, when politicians say something, and we follow blindly, we run the risk of losing the essence of citizenship and our civic duty to contribute to the wellbeing of our country.

Citizenship demands that we question issues, political utterances and the politicians’ position on issues that affects us. Such interrogations should not just be driven by the quest to have answers or to be prescriptive but to seek and arrive at a broader and deeper understanding of issues.

What the visit says about Chinese loans is fairly profound. Perhaps we imbibed the Western propagated weaponised loans and debt trap narrative based on misinformation. Kenya’s debt to GDP ratio is somewhere around 57.1 per cent and when the debt traps narrative was bandied around with the alarming story that China is giving us weaponised loans to take over Mombasa port, we did not interrogate and realise the 57 per cent is below the 60 per cent red line.

In fact, they did not tell us that Japan has a debt to GDP ratio of 235 per cent and that the US has 196 per cent or the interesting fact that the largest economy in Europe, Germany, has a debt to GDP ratio of around 56 per cent.

 

Raila’s narrative of unsustainable debts two years ago and his current position clearly put a lot into perspective and moving forward, we should trust ourselves to a pedigree position of interrogating politicians’ remarks.

So, what is the fuss with the GDP to debt ratio and should we be worried? The answer is no. At 57 per cent, we are doing fairly well and to save China the flack, it is not the only country Kenya owes. We have repeatedly failed to discuss some of these issues to a point of understanding. The fact that the Chinese government is mulling over advancing a further Sh368billion should be put into perspective.

I am not an economist, but during a recent visit to China, I hunged out with two big-name economists in Kenya and South Africa: Anzentse Were and Duma Gqubule. My interactions and curiosity led me to the realisation that it is not so much about the sovereign debts as it is about the ability to service external and internal debts. Therefore, as a matter of urgency, we need to focus our discourse on the debt servicing to revenue collection ratio, which is around 33 per cent. Economists will tell you that if you are spending more than 30 per cent of your revenue then you are operating along a red line, which cannot sustain economic growth unless substantial profitable investments are made to increase the revenue collection base.

The 33 per cent debt servicing to revenue collection ratio probably explains why in the last financial year, our economic growth dropped from 5.9 per cent to 4.9 per cent. Underscored herein, against the backdrop of Uhuru and Raila’s visit to Beijing, is China’s willingness to advance us the much-needed capital to increase our revenue collection base because that is what SGR to Kisumu will do.

But even as we mull the gesture by China to either advance the loan or otherwise, we need to continually interrogate the newfound working relationship between the president and the opposition chief and critically ask ourselves whether the loans and the capital investments they were or are intended to fund are projects with the hidden intention of stealing or meant to change the lives of Kenyans for the better. We must engage to a point of greater understanding. It is our noble role as civic citizens.