Ruto secures KSh38bn China loan for the expansion of Kiambu road
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Ruto secures KSh38bn China loan for the expansion of Kiambu road into a dual carriageway
Ruto secures KSh38bn China loan for the expansion of Kiambu road into a dual carriageway.
Kenya has a contract for a Sh38.3 billion loan from China to build a dual carriageway on Kiambu Road.
This is the first significant debt Nairobi would take from Beijing in the last three years as Beijing has become more cautious about financing in Africa since 2020.
The 25-kilometer dual road, which runs through Muthaiga, Kiambu, and Ndumberi, is anticipated to cost $286 million (Sh38.3 billion), including Sh7.4 billion for land purchase and utility relocation in an area where car yards predominate.
The project would be sponsored by the Kenyan government in collaboration with China through the China Exim Bank, which also provided funding for the Mombasa-Naivasha standard gauge rail (SGR) line, Roads Principal Secretary Joseph Mbugua said Parliament.
The most recent China Exim Bank agreement comes at a time when Kenya’s stock of Chinese loans has decreased, from $7.05 billion in June 2021 to $6.56 billion in December, putting an end to the steep increase in debts associated with Beijing that began almost two decades earlier.
China has taken a more cautious approach to financing in Africa, where some countries have used up all of their available borrowing capacity and default is a real possibility.
For the purpose of carrying out the dualling of Kiambu Road, the Kenya Urban Roads Authority (Kura) and M/s Sinohydro Corporation Limited of China have signed a memorandum of understanding (MoU).
“The concept notes, feasibility studies, preliminary engineering designs, and environmental impact assessment have been completed and submitted to the National Treasury which has granted Kura the approval to proceed with the project preparation within the existing legal and regulatory framework,” Mr Mbugua said.
“The timelines on implementation of the plans will be determined once the requisite legal regulatory and funding approval clearances are completed.” The dualling of Kiambu Road will hand motorists and commuters a big relief from the unending traffic snarl-ups experienced during peak hours on the motorway that feeds traffic in and out of the populous Nairobi and Kiambu counties.
It is one of 11 infrastructure projects that the Kenyan government delegation showcased to global investors during the two-day Belt and Road Forum for International Co-operation in Beijing, China, in May 2017.
Nairobi has been a major beneficiary of China’s loans for the development of mega infrastructure such as roads and a modern railway over the past decade, making Beijing the largest bilateral creditor since 2015.
Chinese loans grew from $3 billion in 2016. The IMF in 2020 listed more than 20 African countries, including Kenya, as being in, or at high risk of, debt distress.
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In response, lenders, including China Eximbank and China Development Bank, China’s two main policy banks, have adopted increasingly hardline lending terms.
Chinese President Xi Jinping reinforced that caution in a video speech at the triennial Forum of China-Africa Cooperation held in Senegal in November 2021.
Over the next three years, the Chinese president said, the country would cut the headline amount of money it supplies to Africa by a third to $40 billion and, he implied, redirect lending away from large infrastructure towards a new emphasis on SMEs, green projects and private investment flows.
China’s influence on Kenya’s mega projects started gathering steam with the construction of the Thika Superhighway between January 2009 and November 2012 at a cost of nearly Sh32 billion in the last term of former president Mwai Kibaki.
China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, has since bagged the lion’s share of Kenya’s mega projects — at least two railways, two ports and 23 road projects.
They include the $3.5 billion (Sh469 billion) for SGR, a $398 million (Sh53.3 billion) oil terminal at the Mombasa port and road projects such as the Southern and Eastern Bypass in Nairobi.
While Kenya has cut down on Chinese loans over the past two years, it has stepped up borrowing billions of shillings from the IMF and the World Bank, a key plank being direct lending for the budget to top up the public purse for items like paying civil servants’ salaries.
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