President William Ruto is scheduled to embark on a diplomatic mission to China, where he will engage in negotiations concerning the repayment terms of a substantial Chinese loan extended to Kenya. This development was disclosed by Deputy President Rigathi Gachagua during an interview with Inooro FM on October 6, 2023.
The primary reason for President Ruto’s visit to China is the pressing issue of stalled road projects within Kenya, which have ground to a halt due to the financial obligations owed by the Kenyan government to various contractors. It is worth noting that these road construction projects had received financing from China, with the majority of the contractors involved being Chinese companies.
In addition to seeking an extension of the loan repayment period, Deputy President Gachagua revealed that President Ruto intends to request further financial assistance amounting to $1 billion (USD), equivalent to Sh148 billion, for the purpose of settling the outstanding debts owed to these contractors. Gachagua emphasized the government’s acknowledgment of its indebtedness to China and its firm commitment to fulfilling its financial obligations. He stated, “The President is set to travel to China to negotiate an extension of the repayment period for the loan we owe China. He will also request an additional $1 billion (USD), equivalent to Sh148 billion, in funding to settle the contractors’ debts. We acknowledge our indebtedness to China, and we are committed to honoring our financial obligations. The President will engage in discussions to explore the possibility of extending the repayment period.”
It is important to note that this decision seems to run counter to the Ruto administration’s previously expressed intention to reduce the nation’s borrowing. At present, Kenya carries a substantial debt to China, exceeding $8 billion (approximately Sh1.19 trillion), which was primarily incurred for financing critical infrastructure projects, including railways and roads.
Deputy President Gachagua voiced concerns about the burden placed on Kenyan citizens, who are subject to heavy taxation and levies to cover debt payments, particularly for infrastructure projects from which they may not directly benefit. He explained that these foreign debts were accrued during the tenure of former President Uhuru Kenyatta, during which Dr. Ruto served as Deputy President. Gachagua noted, “We are repaying debts for roads that are incomplete. Many of these projects were initiated during the presidency of His Excellency Uhuru Kenyatta and were funded through loans.” He further highlighted that road construction had come to a standstill once the borrowed funds were depleted, leading to numerous unfinished projects. “Contractors stopped working until their dues were paid. We need to get these projects back on track.”
The Sh148 billion sought by President Ruto through this diplomatic mission will be allocated to settling the outstanding debts owed to contractors and providing additional funding to ensure the resumption and completion of vital infrastructure construction projects.