According to Moody's, assets in Kenya may be seized by Chinese

Kenya is one of the countries most at risk of losing strategic badets to China because of the heavy debt it owes to Beijing, the global rating company Moody's Investor Service said in a recent report published that has thrilled the circles of public finances.

In its report, Moody's indicates that China's response to sub-Saharan African countries facing liquidity problems has not been uniform and transparent, meaning that the predictability of credit implications is less clear.

"Countries rich in natural resources, such as Angola, Zambia and the Republic of Congo, or endowed with infrastructure of strategic importance, such as ports or railways such as the Kenya, are most at risk of losing control of significant badets in negotiations with Chinese creditors, Moody's warns.

These countries may also be offered liquidity relief through larger resource concessions, which would only reduce the value of future export earnings.

"Even though debt restructuring eases the immediate pressure on liquidity, the loss of income from natural resources or other badets is negative for credit," adds Moody's.

Outside sub-Saharan Africa, China obtained land in return for debt relief in Tajikistan and took control of Hambantota port in Sri Lanka.

Recent data from the National Treasury show that China's debt amounted to 554.88 billion shillings, or 73.4 percent of the total bilateral debt of 756.28 billion shillings at the end of September.

Much of the debt is tied to the construction of the Standard Gauge Railway (SGR).

"In general, a concentrated exposure to a single creditor, with little transparency on debt restructuring decisions, increases the risks of deferral and weakens the budget profile," said Moody's.

According to the rating agency, for countries with narrow export bases, such as Kenya or Uganda, an increase in China's external loan-related debt may not generate in the future of sufficient and stable earnings in foreign currency.

In addition, according to Moody's, China's loans have relaxed terms, such as no call for structural reforms to improve governance and competitiveness, thus jeopardizing the benefits of these loans for growth in China. long term.

This differs from the development badistance provided by the World Bank and the European Union, which is often linked to the achievement of objectives related to governance, socio-economic development and democratic principles.

China's loans to African countries reached more than $ 10 billion (1 trillion shillings) a year between 2012 and 2017, compared to less than one billion dollars (100 billion shillings) in 2002.

Angola (30%), Ethiopia (10%) and Kenya (7%) received nearly half of China's investments in the continent between 2000 and 2017, according to Moody's.