I am prompted to write this column by the remarkable statement of a scholar in Hong Kong on a recent visit there that China was on the verge of bankruptcy.
Consequently countries that depend on loans from Chinese authorities are ill advised, as it is likely to be a device to trap the borrower. Some Hong Kong-based scholars were critical of another aspect: The integrity of Mainland China. It had reneged on the 1984 agreement between China and Britain guaranteeing Hong Kong’s autonomy as the condition for the transfer of sovereignty over Hong Kong back to China.
Last year, when I was in Sri Lanka, I was told that country had made a serious error by moving its primary relations from India to China, for Chinese will exact a heavy price for its “grants or assistance”. I began to worry about the price we in Kenya will have to pay for huge loans and other “assistance” that our government had obtained from China — not least that has gone into the SGR, which the government never tires of advertising in the media as a great success. The Chinese government has also started making public declarations that it is “not increasing the public debt burden of African countries”.
SRI LANKAN EXPERIENCE
On the way back from Hong Kong, my anxieties about our government’s flirtation with China (to the extent of sending its officers to train in China on how to run government — about the time that country’s rubber stamp parliament amended its constitution to declared its president as leader for life!) increased. I read on the front page of New York Times the headline, “Paying China with territory: Deeply in hock to Beijing, Sri Lanka gave its ally a strategic port for 99 years” — elaborated over three pages.
The gist of the article is China’s ambitious use of loans and aid to gain influence around the world — and to be tough when it comes to the recovery of the debt. It assisted the party in power in Sri Lanka to win the elections, and then started to tighten the screws to achieve its control over government policies. Sri Lanka has to pay on a yearly basis to China over 90 per cent of its revenue. In Kenya, loans are used by China, as is the case in Sri Lanka, to achieve political influence over the government — and an active role in elections. In Kenya China may not have become as closely attached as in Sri Lanka, where vast sums of money were granted to the government to fight elections, but many Kenyans believe China played a not insignificant role here.
China had established a special relationship with the Sri Lanka president, which enables it to use the port for strategic purposes, particularly targeting India — no doubt putting Sri Lanka in a difficult relationship with its long term ally and close neighbour. Kenya may not be as critical to China as South Asia, but the US and Europe think Kenya is of strategic value — and that is enough for China to want to build a considerable degree of control over our government.
When a newly elected Sri Lankan government wanted to establish its independent local and overseas policies, it found itself restrained by the huge loans given and no doubt controlled by China. An official economist said it was impossible to get out of the net of Chinese control in which the new government found itself.
“We inherited purportedly run-down economy — the revenues were insufficient to pay the interest charges, let alone capital repayment…We did keep taking loans. It is a relay: you need to take them until economic discipline is introduced” (My reaction on reading this bit is the same as what I am sure every Kenyan would have: “So that is what explains our last budget: A bundle of lies and deception, and a huge burden of taxes on Kenyans, including through taxes on basic necessities, especially food — so much for Henry Rotich, a dear friend of the President”).
SGR: A CHINESE PROJECT?
China has played a key role in the building and now the running of the SGR — a project dear to our President, though, to be fair to him and the Chinese it was invented before them. It has always been a controversial project, especially as the old line merely needed some repairs to be perfectly usable — saving us billions of shillings, as the estimates came close to three times the international standard and four times the original estimate. Professional studies showed the benefits to accrue from this project would be minimal. The loan from China came to about 80 per cent of the total money — and has greatly exposed Kenya to pressure of various kinds from it.
Another matter of considerable concern has been the routing of the rail line through the Nairobi National Park — the pride of the town and a source of considerable revenue for the country. Vigorous and repeated attempts by experts and the general public achieved little. It seemed Nema ignored all objections from conservationists and other experts, as well as members of Maasai community — as the government ignored the protests of the people. The veteran defender of the Constitution, Okiya Omtatah argued the construction through the park would expose its fragile ecosystem to continuous and irreversible damage and degradation. The courts did provide some assistance but it seems that the government ignored their orders restricting development through the park. It seems the constitutional rights of the people were effectively ignored — and the construction has begun.
Another problem has disturbed the public — the suspicion the sale of lands necessary for the rail was engineered to allow the friends of the government to make huge profits, in the Kenya style. Lands were bought cheaply from their original owners, unaware of its sales value — which were reaped by cartels. There is the feeling the availability of Chinese money and labour has enabled the government to proceed with a dubious scheme. The government claims the SGR has already made many gains; the evidence is that operates increasingly with state protected monopolies upsetting the rights of other agencies. Meanwhile its debts to China keep increasing. Should we worry about it?
Of late, there has been discussion about the vigorous policies of China in most parts of the world — including Africa, where it has found greater reception than most other places. Various explanations are provided for its global engagements as the second most powerful state in the world, developing its economy; increasing its influence. As far as Africa is concerned, it is particularly concerned about its dominance and, minimising the influence of the West. Its reception by African states may be explained in different ways: Africa wanting to ease off Western influence, which has weighed on it for years, finding China an easy lender of money and technology, and perhaps feeling at ease with another authoritarian regime, and a lifelong president! There is no doubt China is determined to be the leading world power, in which case its interest in African could decline — though its economic interest may continue. It is important for our government to fashion its Chinese policy with care, so that we do not become completely dependent on it — another imperial power?
DOES CONSTITUTION HAS ANYTHING TO SAY?
Article 201 sets out some principles about public finance, several of which seem to have been violated by this saga. The first is the requirement of openness and accountability. Another principle is sustainable development: “The burdens and benefits of the use of resources and public borrowing shall be shared equitably between present and future generations”. Neither present nor future generations have had much input into this huge commitment. Finally, “Public money shall be used in a prudent and responsible way”.
If we turn to quite a different Article (131(2)) we find “The President shall…safeguard the sovereignty of the Republic”. Is exposing our territory and assets to foreign seizure compatible with this?
Prof. Yash Pal Ghai
The author, a director of Katiba Institute, is grateful to Jill Cottrell Ghai for her assistance in writing this article