The road from Nairobi to the airport takes twelve minutes now. In 2011 it took forty-five minutes on a good day and two hours on a bad one. This is the most visible physical evidence of what Chinese infrastructure investment has done to Kenya in the fourteen years I was away.
The Nairobi Expressway, the standard gauge railway, the bypass roads — these are real infrastructure. They move people and goods faster. They reduce the friction cost of economic activity. The physical evidence is not in dispute.
The Debt Question
What is in dispute is the financial architecture of the investment. Kenya’s external debt now stands at approximately 40 percent of GDP, with Chinese lenders — primarily Exim Bank of China — holding a significant portion of the infrastructure debt. The terms of these loans were not fully public at the time of signing and remain partially opaque.
The Chinese infrastructure model is not aid. It is debt financing at commercial or near-commercial rates for infrastructure whose revenue-generating capacity is, in most cases, lower than the debt service it requires. Kenya is not unique in this position — Zambia, Ethiopia, and Angola have all encountered similar dynamics. The infrastructure is real and valuable. The question is whether the terms under which it was financed are also good for Kenya, or primarily good for China.
Macho-ya-Wananchi, the parliamentary monitoring tool in this project, tracks how this debt has been debated in the National Assembly and Senate. The answer is: less than you would expect, given the scale of the obligation.
Responses