Why China is not bothered that Kenya might not be able to pay the Chinese Loans

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Kenya Loans
  • 3 years ago
  • Posted: August 6, 2018 at 1:00 pm

Central Bank of Kenya Governor Patrick Njoroge in June this year came out strongly against the intense and continued borrowing Kenya has been doing since 2013. According to the Governor, Kenya loans have reached a point where she cannot afford to take any more loans as the mega infrastructural projects the loans are funding are not yielding any revenues that would be used to repay the loans.

China, despite knowing that Kenya is reaching a point where she cannot pay her loans, most of which will be due as from the 2019/2020 financial year, is not showing any signs that she is about to slow down her lending rate to Kenya. This is not the first time China has done this, as despite knowing that countries like Venezuela, Sri-Lanka, and Djibouti would be unable to repay their loans, the Asian economic giant continued to give  loans to these countries.

Well, in December last year, Sri-Lanka was forced to part with their Hambantota port to appease the Chinese who had come on their throats on loan repayment. Djibouti, according to major global financial analysts, will soon part with something of national importance to also appease the Chinese, as Djibouti has accumulated Chinese loans worth close to 90% of their GDP. Venezuela on the other hand has been hurting for years after China essentially took over the Venezuela’s oil sector.

The Chinese loans aren’t just bad on the basis of China lending to countries that are unable to pay, but also because the terms and conditions that come with the loans are one way – all in favor of China. Over the weekend we at Kachwanya.com sat down to briefly explain, in layman’s terms, the implications of the Chinese loans and how the loans  themselves work. Have a look at the YouTube video below.

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