Motorists drive on Mombasa road, next to the ongoing construction site of the Nairobi Expressway, undertaken by the Chinese contractor China Road and Bridge Corporation (CRBC), in Nairobi, Kenya, July 12, 2021. Photo AFP

NAIROBI — Kenya's President Uhuru Kenyatta has defended the country's China-backed infrastructure projects, which critics say are secretive, high cost, and put state assets at risk. Kenyatta made the comments Thursday at the site of the Nairobi Expressway toll road, which a Chinese company is building and will operate for 27 years.

The Kenyan government has come under criticism for its appetite for Chinese money to fund large-scale infrastructural projects worth billions.

While inspecting a construction site for the 27-kilometer Nairobi Expressway, Kenyan President Uhuru Kenyatta said the country benefits from the Chinese.

“Our partnership with China is one that is mutually beneficial, that is based on win-win and we are very grateful to the Chinese government and the Chinese people for the support they continue to render not only to our country but to the rest of Africa," said Kenyatta.

Chinese companies are building the expressway at a cost of $575 million. The road is expected to be finished in March.

Chinese companies also built Kenya’s $3.6 billion Standard Gauge Railway, which opened in 2017.

The Kenyan government’s critics say most deals between the two countries remain secret and could cause harm to the Kenyan economy.

Kenya has borrowed $50 billion to fund its infrastructure projects in the past few years and some fear the country’s Mombasa port could be given to China to operate if the country defaults on its loan repayments.

In 2015, when Angola failed to repay a loan to China, it used its oil to make the payment, leaving the country with little oil to export to other markets.

James Shikwati is an economist based in Nairobi. He says if a country fails to repay its loan, China can take over the country’s assets for some years.

“All these developed countries have specific vehicles that guide how they finance a project," said Shikwati. "The most popularly known is the public-private partnership and now the Chinese have that, but they seem too big on build-operate-transfer approach. So, it's not necessarily they are taking away your port, but they have to operate it until its optimal level, then they let you take your port. It's just a financing vehicle.”

Like other African countries, Kenya has witnessed slow economic growth due to the COVID-19 pandemic, making it difficult to meet financial obligations.

Harriet Muganda worked in Mombasa port. She lost her job when the government began sending all the ship containers to Nairobi for processing.

She fears more jobs could disappear if China were to take over the running of the port.

We fear a lot, she says. At the moment, the government is the one running the Mombasa port and there is not enough work for us. She asks, what if China is the one running it? It means we won't have any employment here, she adds.

Shikwati says African countries can pay off their loans and not lose national assets if their leaders exercise good governance, and stick to a smart political and economic vision. - Mohammed Yusuf, Voice of America

Entrance gate at Mumias sugar company. PHOTO ISAAC WALE/Nation Media Group

Assets of the ailing Mumias Sugar Company have been leased to Uganda-based conglomerate Sarrai Group, the miller’s receiver-manager Pongangipalli Venkata Ramana Rao has disclosed.

The 20-year lease, however, excludes assets in the firm’s ethanol and cogen plants, which recently were seized by Pan-African lender Ecobank and French development financier Proparco from KCB Group.

“Although the lessee is not in sugar production in Kenya, he has a proven track record of running three sugar factories, a distillery and power generation in Uganda and is committed to commence rehabilitation of assets immediately to ensure revival of operations within the shortest period,” said Mr Rao.

The KCB-appointed receiver-manager said the lease agreement “is in the interest of all stakeholders and in conformity with the recent court ruling dated November 19, 2021.”

The Sarrai Group is owned by the billionaire Rai family, which among other installations, owns sugar and plywood businesses in Uganda and Malawi. The group also operates Rai Cement in Kenya.

Sarrai runs Kinyara, Hoima and Kiryandongo sugar factories in Uganda.

The Rai Group in Kenya owns three millers - West Kenya, Sukari Industries, and Olepito Sugar.

Mumias had received revival bids from a number of investors, including businessman Julius Mwale, steel tycoon Narendra Raval and the Rai family, through Sarrai.

Unlike the other State-owned sugar firms where the bidding was through public tendering, the receiver-manager said the Mumias Sugar issue was handled through a private treaty between the investor and the bidders.

Mumias, which used to be Kenya’s leading producer at more than 250,000 tonnes a year, was beset by poor management, heavy debts, and years of mounting losses, prompting its closure.

The miller was in September 2019 placed under receivership by KCB to protect its assets and maintain its operations.

KCB was, however, barred from auctioning the plant to secure assets used as security for other loans, prompting it to turn to the lease option.

“We hope to see the original glory of Mumias back soon,” said Mr Rao.

Sarrai Group chairman Sarbi Singh Rai said the firm’s immediate focus would be to rehabilitate the machinery and engage outgrowers and the workforce to ensure effective collaboration to revive the factory.

“Mumias Sugar was the most respected sugar company not only in Kenya but the entire region, and it is our firm commitment to all the stakeholders that we shall use all our experience and resources to make sure that we revive the company and take it back to the heights it once enjoyed,” said Mr Rai. - ANTHONY KITIMO, The EastAfrican

The Tanzanian government is now looking to develop its own cryptocurrency to follow the path of other African countries. According to Bloomberg, the Bank of Tanzania already kicked off with the preparations of a central bank digital currency (CBDC) amid a ‘FOMO’ or Fear of Missing Out’s feeling among the authorities regarding the crypto sphere.

“To ensure that our country is not left behind the adoption of central bank digital currencies, the Bank of Tanzania has already begun preparations to have its own CBDC,” Florens Luoga, Bank of Tanzania’s Governor, commented on the matter. With that being said, Tanzania is also joining Nigeria in the CBDC development within Africa, which was the first country to do so with its forthcoming eNaira.

However, as with eNaira, Tanzania doesn’t plan for now to make its CBDC a legal tender but a complement to its existing currency, Tanzanian shilling. Still, the Tanzanian authorities remain cautious with any crypto-related investment and keep warning people about its risks, citing volatility concerns.

At mid-year, Tanzania was showing an inclination towards the adoption of cryptocurrencies. The country’s President, Samia Suluhu Hassan, urged the central bank to prepare for cryptocurrencies. Though her remarks were not direct, she said that the adoption of cryptocurrency and blockchain technology as a whole is rising, and her country should pave the way for such developments.

Africa and Cryptos

While rich nations are worried about the rise of digital currencies and trying to curb the industry more and more, emerging nations are becoming torchbearers of digital currencies. In addition, a few island nations have beat large economies to issue their own central bank digital currency (CBDC) in partnership with private players.

Countries like Nigeria are witnessing a mass adoption of cryptocurrencies due to the country’s failing economy. Earlier, the country’s central bank barred lenders from working with crypto exchanges, which forced crypto users to conduct their business on peer-to-peer platforms. - Felipe Erazo, Finance Magnates