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Kenya too falls into Chinese debt trap
By S Venkat Narayan,
Our Special Correspondent
NEW DELHI. Kenya is one of China’s largest trade partners in Africa. It owes $6.5 billion to China, which is 22 percent of its total external debt. China’s interest payments represent 87 per cent of the cash used to service debt expenditure in 2019. Kenya is yet to work out an arrangement with China, but has been reluctant to seek debt relief amid reports that it was concerned it could hurt its ability to tap capital markets.
Kenya and neighbouring Ethiopia, according to the World Bank’s international debt statistics, are among the world’s most indebted countries. Kenya’s external debt rose four times over the last decade, only second to Ethiopia that saw its debt increase five-fold during the decade.
Analysts say the $3.2-billion contract with China in 2014 to build the standard gauge railways connecting Kenya’s capital Nairobi and the port city of Mombasa symbolised the problem. The railway line was expanded in 2015 to Naivasha town 75 miles northwest of Nairobi, raising the project cost by another $ 1.5 billion.
The railway line made a loss of $ 90 million in its first year. The government promised a profit in 2019. It ended up in the red again. The government has been forcing businesses to move their cargo on the railway to ensure it generates enough cash for operations but the project still recorded a loss of $200 million over three years. In September, a panel of lawmakers nudged the government to renegotiate the loan deal and cut operating expenses by half. Kenya hasn’t had its way yet.
The overpriced project, hugely criticised by independent observers right from the time it was first announced, has also been in the spotlight after Kenya’s appellate court ruled in June that the contract had been signed in violation of the rules and was illegal.
In the end, Kenya doesn’t have an option but to pay back the money.
Or Kenya could stand to lose the lucrative Mombasa port that was pledged as collateral when the huge loan was accepted.
Mombasa is counted as east Africa’s largest and most valuable port. It is not just the gateway into Kenya, but also its landlocked neighbours; Burundi, Congo, Rwanda, South Sudan and Uganda. Also, Kenyan media has reported, Nairobi could also have to give control of the Inland Container Depot that could bring thousands of port workers under Chinese lenders.
Zambia has finally received a six-month reprieve from China Development Bank on repayment of its debt due in October, the government in Lusaka announced last month after a desperate SOS that it was on the verge of a default.
Lusaka had already been attempting to restructure and refinance its Chinese debt when SARS-CoV-2, the virus that causes Covid-19, first reached Africa and rapidly spread across the world, infecting over 52 million and wreaking havoc on global economies. It has only gotten worse.
Kenya and Zambia’s story repeats itself across Africa, Asia and Latin America. According to the Financial Times (London), China has transferred nearly $150 billion to governments and state-owned firms in Africa alone to secure commodity supplies and fund its global network of infrastructure projects, President Xi Jinping’s signature Belt and Road Initiative (BRI).
Beijing is already the world’s largest non-commercial lender, more than the International Monetary Fund (IMF) and the World Bank. China’s share of bilateral debt owed by the world’s poorest countries to members of the G20 has risen from 45 percent five years ago to 63 percent last year. A recent World Bank report estimated China’s external loans and trade credits at $1.6 trillion, or close to 2 percent of global gross domestic product.
China watchers in New Delhi, quoted by the Hindustan Times, speak about how Beijing has expanded its footprint and influence in South Asia too by pouring billions of dollars in pricey infrastructure projects that mostly serve Beijing’s strategic interests and have to be executed by Chinese companies and Chinese workers.
Like the China Pakistan Economic Corridor (CPEC) that eventually will be paid for by Islamabad. Or the rail and deep-sea port projects along an economic corridor to Myanmar that will link China’s south-western interior to the Indian Ocean.
Because the loans are not based on the economic feasibility of the projects in the first place and are opaque, they are also seen to fuel allegations of corruption and autocratic behaviour.
Beijing has its grip on Sri Lanka to an extent that when US Secretary of State Mike Pompeo was in the country to campaign against China’s debt diplomacy. Colombo—-which is in the middle of negotiations with Beijing for another tranche of loans—-politely made it known that it is not going to change its approach to China.
In 2017, Sri Lanka had already handed over the strategic port of Hambantota on the country’s southern coast to China on a 99-year lease when it had trouble repaying its initial loan for the port.
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PCoI on Easter Sunday attacks:
By Shamindra Ferdinando
Attorney General Dappula de Livera, PC is not bound by recommendations made by the Presidential Commission of Inquiry (P CoI) into the 2019 Easter Sunday carnage, or presidential directives in that regard, according to authoritative sources.
They said that the AG couldn’t under any circumstances initiate legal proceedings until he had received the full PCoI report.
President Gotabaya Rajapaksa received the PCoI report on Feb 1. The President’s Office delivered a set of PCoI reports to Speaker Mahinda Yapa Abeywardena on Feb 23, a day after the report was presented to the cabinet of ministers. The Island raised the matter with relevant authorities in the wake of a section of the media reporting the PCoI recommending punitive measures against former President Maithripala Sirisena, Defence Secretary Hemasiri Fernando, IGP Pujitha Jayasundera, Chief of State Intelligence Senior DIG Nilantha Jayawardena, Chief of National Intelligence retired DIG Sisira Mendis and All Ceylon Makkal Congress (ACMC) leader and Samagi Jana Balavegaya MP Rishad Bathiudeen et al over the Easter Sunday carnage.
Sources pointed out that due to the inordinate delay in sharing the PCoI report with the AG, the department hadn’t been able to take preliminary measures required to initiate the proceedings. Sources said that a team of officers would take at least six weeks or more to examine the report before tangible measures could be taken.
With the AG scheduled to retire on May 24, 2021, even if the AG Department received the P CoI it would be quite a tough task to initiate proceedings ahead of retirement, sources said. However, in terms of the 20th Amendment to the Constitution enacted in last October, both the AG and the IGP could receive extensions beyond 60 at the President’s discretion.
Dappula de Livera received an Acting appointment as the AG a week after the Easter Sunday carnage whereas his predecessor Jayantha Jayasuriya, PC, was elevated to Chief Justice.
Responding to another query, sources said that the Attorney General two weeks ago requested Secretary to the President for a copy of the P CoI. However, the AG was yet to receive one, sources said. In spite of the AG not receiving a P CoI copy, the AG had instructed the IGP to obtain a copy of the report when he requested the police to complete investigations into the Easter Sunday carnage. The AG issued specific instructions after having examined police files pertaining to the investigations.
The IGP, too, hadn’t received a copy so far though some sections of the report were in the public domain.
Agriculture Minister Mahindananda Aluthgamage displayed at a live political programme on Derana a copy of the P CoI report he received at the cabinet meeting earlier in the day.
Sources said that the Attorney General’s Department couldn’t decide on a course of action in respect of the Easter carnage on the basis of a section of the report. In terms of the Commission of Inquiry Act (Section 24), the AG enjoyed significant powers/authority in respect of investigations; sources said adding that the Department urgently required both the P CoI report and police investigations report. The Attorney General’s Department has raised the delay in receiving a P CoI report amidst the Catholic Church attacking the government over the same issue.
Sources said that ministerial committee appointed to study the P CoI report couldn’t decide on how to proceed with the recommendations and the matter was entirely in the hands of the AG. Sources pointed out that the delay on the part of the government to release the report had received the attention of sections of the international media, including the New York Times. Public Security Minister retired Rear Admiral Sarath Weerasekera having met Malcolm Cardinal Ranjith at the Bishop’s House on Dec 8, 2020 said that the AG would get a copy of the P CoI report once the President received it. Minister Weerasekera said that the CID had handed over the relevant files after having completed investigations into eight blasts. Referring to the Parliamentary Select Committee (PSC) report on the Easter Sunday carnage, the former Navy Chief of Staff said that all such documents would have to be brought to one place and considered before initiating legal proceedings. Acknowledging that there could be delays, lawmaker Weerasekera said that on the instructions of the Attorney General a 12-member team of lawyers was working on the case. The minister vowed to expose the mastermind behind the Easter Sunday attacks. Investigations continued while some of those wanted were overseas, the minister said.
The minister acknowledged that the Attorney General couldn’t proceed without the P CoI report. Minister Weerasekera reiterated that once the President received the P CoI report, it would be sent to the Attorney General. The minister said that there were documents two to three feet high that needed scrutiny. The minister assured comprehensive investigation. The minister said that investigations pertaining to eight blasts had been completed and the reports handed over to the AG. However, the Attorney General had found shortcomings in those investigations.
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By Saman Indrajith
The Presidential Commission of Inquiry on the Easter Sunday bombings had failed to identify the mastermind of , the JVP said yesterday.
Addressing the media at the party headquarters in Pelawatte, JVP Propaganda Secretary MP Vijitha Herath said that the PCoI report had levelled accusations against former President Maithripala Sirisena, former IGP and head of intelligence for their dereliction of duty, shirking of responsibilities and not taking action to prevent the attacks and negligence. There were reference to the causes of the terror attacks and actions to be taken to avoid such attacks and the influence of extremist organisations. “However, there is no mention of the mastermind of the attacks, the handlers of the attackers and those whose interests the carnage served. It is also not mentioned whether there has been any foreign or local organisation behind those attacks. As per the PCoI report the attack took place as a result of culmination of extremism.
“According to the PCoI the extremist activities were a result of the prevailing political situation then. The entire nation was waiting to see who was responsible and who masterminded those attacks. The PCoI has failed to identify the true culprits responsible for the terror attacks. The report says that the leader of the suicide cadres killed himself in the attacks and it was a puzzle. That means those who are actually responsible for the attacks are still at large. The report does not provide exact details of the sources of the attacks. The PCoI had sittings for one year and five months. It summoned various persons and got their statements but it has failed to shed any light on the terror attacks. Everybody knows that the top leaders of the government and heads of security and intelligence establishments failed in their duties. Ranil Wickremesinghe was the second in command and he too is bound by the responsibility but the PCoI report fails to identify him as one of the persons against whom legal action should be instituted. The PCoI has treated Wickremesinghe and former President Maithripala Sirisena differently. We are not telling that this report is a total failure but we cannot accept this as a complete report. The PCoI handed over its report to the President on Feb 1. After 23 days it was sent to Parliament. Now, a copy of the report is there in the parliamentary library for the perusal of MPs.”
Herath said that the PCoI did not have powers to take punitive action. “It only has powers to name those responsible and recommend action to be taken against those named.
