The National Treasury in its budget estimates for the financial year beginning July listed Japan as its largest source of loans and grants, taking over China which has been a key financier for the past decade.
This comes after China cut financial commitment to President Uhuru Kenyatta’s legacy projects by nearly four times in seven years putting China behind Japan on the list of bilateral lenders to Kenya for the second year in a row.
China had been projected to lend Kenyatta’s administration Sh29.46 billion for the fiscal year 2022/23 which is a sharp reduction from Sh140.03 billion in the 2015/16 budget.
Data from the Treasury shows that Beijing will be trailing Tokoyo for the second year running having committed Sh21.25 billion in the current year ending against Japan’s Sh36.49 billion.
Kenya’s total public debt stands at Sh8. 8 trillion by June 2022 with its servicing costs projected to rise sharply to Sh1. 36 trillion (10% of the country’s Gross Domestic Product (GDP) in the 2022/23 financial year, a 77% growth from the Sh765.
Debt has ramped up under President Kenyatta’s rule making it a key political issue, with his potential successors warning that it has reached unsustainable levels.
Deputy President William Ruto who is among top presidential contenders in the August 9 polls blames the handshake between President Uhuru Kenyatta and ODM leader Raila Odinga for the country’s debt crisis.
He argues that the debt before the handshake was Sh4.5 trillion, but the figure has ballooned and now stands at Sh11.7 trillion.
Ruto in his campaigns has continued to drum up support for ‘bottom-up’ economic model which aims at creating jobs, expand tax base and is expected to benefits than the trickle-down economic model which breeds cartels.
Azimio La Umoja presidential flag bearer Raila Odinga who is now in bed with government also raised similar concerns before 2017 general election when he criticized Uhuru’s appetite for loans, saying Jubilee was “over-borrowing, over-spending and over-stealing.
But as the national debt continues to bulge due to reckless borrowing by the current administration, China still remains the largest bilateral creditor due to mega project deals it has signed with Kenya within the last decade.
Latest data from the Treasury also shows that Kenya owed China Sh799.25 billion ($6.95 billion) and Japan Sh162.3billion ($1.42 billion) last December.
But President Kenyatta had to seek borrowing alternative elsewhere after China President Xi Jinping disclosed last November that China would reduce its investments in Africa by a third three years.
Mr Jinping who spoke at the Eighth Ministerial Conference on the Forum on China-Africa Cooperation (FOCAC) had committed $40 (Sh4.6 trillion) to Africa which is a 33.3% drop from the $60 billion in the last two summits.
But according to Treasury budget estimates, more than half of the projected loans from China (Sh15.62) will be put in power transmission infrastructure, Energy ministry, Roads, ICT and Water Sanitation.
Loans from Japan have been earmarked for projects under infrastructure Department (Sh17.66 billion) Energy (Sh9.17 billion) and Treasury (Sh2 billion). Treasury CS Ukur Yatani wants Sh120.44 billion as loans from wealthy nations starting July.
Yatani in his budget speech on April 7 lied that he would scale back on expensive short term commercial borrowing and favor concessional multilateral and bilateral loans into the future.
Kenyans have been pleading with regime to consider debt containment measures to ease repayment load on taxpayers as the government uses half of the tax receipts to pay creditors.
Uhuru’s administration was heavy on concessional and semi-concessional loans from China in the first term to 2017 when it built SGR and bridges with inflated budgets.
The trend to China gained momentum after the construction of Thika Highway between 2009 and 2012 at a cost of Sh32 billion in President Mwai Kibaki’s last term.
It was built by China Road and Bridge Corporation (CRBC), a subsidiary of China Communications Construction which bagging lion share of scandalous mega projects in Kenyatta’s government including two ports and 23 road projects.
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