Kenya discloses loan documents of Chinese-built railway amid looming debt crisis

Kenya's new President William Ruto released loan documents related to a controversial Chinese railway project that his predecessor's government fought a years-long battle in the courts to keep classified. Ruto, during his presidential campaign before August 2022, had promised to bring more transparency between Nairobi and Beijing. Multiple stakeholders of Kenyan polity — politicians, civil society, and others — blame Beijing for burdening the East African country with massive debt.

The development also marks a rarity in Africa, where large-scale infrastructure deals remain under the radar.

The $5 billion loan agreement, signed between the two sides in 2011, was undisclosed until Kenya's Transport Secretary, Kipchumba Murkomen released selected pages on Sunday.

“As promised I have released the SGR (Standard Gauge Railway) agreements to the people of Kenya,” Transport Minister Kipchumba Murkomen said in a tweet.

One of the clauses of the deal with the Export-Import Bank of China, concerning a cross-country railway project, says that 'any major dispute over the railway would be decided in Beijing', and therefore, not in Nairobi. It remains unclear if this means that Chinese officials would have the final say in such disputes.

Some lawmakers of Kenya have demanded to know whether Kenya put up public facilities as collateral in the deal.

Chinese state-owned lenders committed to lending $9.3 billion to Kenya between 2000 and 2020, according to Boston University. Kenya’s total debt is almost 70 per cent of the gross domestic product. The country's debt rose from $16 billion in 2013 to $71 billion in 2021. As a result, Kenya spends nearly 30 per cent of its revenues on interest payments. The World Bank and Eurobond holders account for nearly half of Kenya's external debt at 28 per cent and 20 per cent respectively.

The contracts for the railway, which began operating from Mombasa to Nairobi in 2017 and was extended two years later, have long been a subject of controversy, with the previous government citing confidentiality clauses when a court ordered their publication earlier this year.

China has lent billions of dollars to countries in Asia, Africa, and Latin America over the past two decades, much of it for large infrastructure projects linked to its Belt and Road Initiative.

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(With inputs from agencies)