Economy · August 3, 2022

The role of China at the center of the Kenyan electoral campaign

The two men who will compete to become Kenya’s next president agree on one thing: China is at the center of next week’s elections.

For Vice President William Ruto, it’s the spread of Chinese citizens to cities, many of whom try to make a living by selling local street food dishes. And former Prime Minister Raila Odinga made much of the high cost of borrowing the East African country from Beijing, which it is now struggling to serve.

Their attention highlights the central role that China occupied during the election campaign. Chinese workers are an increasingly common sight in cities, and much of the debt repayments accumulated over the past decade are due to Chinese lenders. Total debt service absorbs 3% of the country’s gross domestic product.

China has embarked on a 20-year lending run that has made Beijing the largest source of development finance in Africa and a major lender of legacy infrastructure projects in Kenya under current President Uhuru Kenyatta, who resigned after serving two terms and is supporting Odinga after falling out with Ruto.

Speaking to the Financial Times, Ruto defended his harsh criticism of some Chinese arrivals, including the threat to expel those who start small retail businesses or sell popular street food dishes like roast corn.

“This is my position,” he said, reaffirming comments he made at a campaign event in Nairobi in June that “we have enough airplanes to take them back to where they came from.”

A senior Ruto aide who has been in contact with Chinese officials admitted that the comments went badly in Beijing.

Ruto, who was vice president for nearly a decade, said: “They [the Chinese] they want to protect jobs for their people. We want to do it too “.

His comments come as Kenyans are struggling to cope with the rapid rise in the cost of living, with inflation at a five-year high of 8.3% in July.

Presidential candidate Raila Odinga arrives at an election rally
Presidential candidate Raila Odinga arrives at an election rally © Ed Ram / Getty Images

Odinga, who is in his fifth attempt to be elected president, has focused on Chinese loans to Kenya, which have increased from $ 4.1 billion to $ 6.4 billion over the past five years, according to official numbers.

As prime minister, he has negotiated deals with China, including a $ 3.8 billion railroad connecting the port of Mombasa with Nairobi, criticized for allegedly opacity in its financial conditions.

Odinga said he intended to renegotiate loans with some creditors, including China, if he won. Some loans could be converted for longer repayment periods and lower interest rates to release money for new development projects, he suggested.

Ruto, on the contrary, made it clear that “he is not trying to negotiate any debt”, referring to the existing loans.

Kenya’s total external public debt exceeded $ 36.7 billion, or 34.4 percent of GDP, at the end of last year, putting the country at “high risk of distress,” according to the IMF. China is among the leading lenders, but lags behind multilateral creditors.

An Afrobarometer poll from late last year showed that 87% of Kenyan respondents believed their country had borrowed too much from Beijing.

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Just last week, Kenyatta inaugurated the country’s first public-private partnership road project, a $ 588 million highway in Nairobi with pagoda-shaped toll booths designed, financed and built using Chinese funds.

The Chinese ambassador to Kenya, Zhou Pingjian, said at the opening of the highway that the “brotherly relationship” between Beijing and Nairobi has reached “a new height without equal in history”.

Any change in Nairobi’s stance towards Beijing would mark a change in tone and policy, analysts say, making Tuesday’s vote one of Africa’s most important elections this year.

Despite the China-focused campaign, Hannah Ryder, chief executive of Development Reimagined, an Africa-focused consulting firm based in Beijing, said there were still no signs of anti-Chinese sentiment in Kenya.

“China remains a potential source of funding and Kenya still needs funding. So, China is going to be really important, “she said.

Beijing has recently cut its lending to Africa as it has become more skeptical of some countries’ ability to repay.

However, Chinese banks still account for around a fifth of all lending to the continent, concentrated in a few strategically important or resource-rich countries that also include Angola, Djibouti, Ethiopia and Zambia.

“I would be surprised, very surprised, if whoever gets elected didn’t quickly try to get China involved,” Ryder said.

Ruto and Odinga traveled to London and Washington, where they met with officials and turned to think tanks, but not Beijing due to pandemic-related restrictions in the country.

The elections in Kenya in the past have been marked by deadly violence and allegations of fraud that have destabilized a regional power.

Opinion polls put candidates in a stalemate and analysts expect a ballot after the election. To win outright, a presidential candidate must get 50% plus one vote, while also securing 25% of the votes in the majority of Kenya’s 47 counties.

As the elections approached, the candidates tried to clarify their differences. While they may agree that China is a key issue, Odinga suggested that he would opt for the expulsion dialogue if he became the country’s next president.

“If the Chinese offer better conditions and also better prices for the goods and services we want, we will continue to deal with the Chinese,” he said. “We don’t see China as a threat.”