China has frozen disbursements of active loans to Kenyan projects amid debt reprieve bid. Executives at State-owned firms say the projects risk delays due to the funding hitch.
According to a CEO of a State corporation who spoke on condition of anonymity, the Chinese lenders, especially Exim Bank, are uncomfortable with the terms of the Kenyan request for extension of the debt service suspension beyond June.
“Payment to contractors working on Chinese projects and paid under direct method have delayed since last month. We are told Chinese banks are not settling invoice because of the moratorium,” said the CEO.
The direct method involves Kenyan firms with Chinese loans sending notices for supplier payments to Chinese banks through the Treasury. China is one of Kenya’s biggest foreign creditors, having lent Sh758 billion as at April 2021 to build rail lines, roads and other infrastructure projects in the past decade.
China’s influence
China’s influence on Kenya’s infrastructure development, however, started in earnest with the construction of the Thika Superhighway between January 2009 and November 2012 at a cost of nearly Sh32 billion during the last term of President Mwai Kibaki. Chinese embassy in Nairobi acknowledged the funding hitch and said matter was being addressed by officials of the two countries.
“To my knowledge, the relevant parties of the two sides are in close communication on specific issues under the DSSI framework. The two countries are in communication with each other on this matter also under the framework of DSSI (Debt Service Suspension Initiative (DSSI),” said Huang Xueqing, the Chief of Information and Public Affairs section at the embassy.
