CHINESE DEBT TRAP DIPLOMACY: IS MOMBASA NEXT ??

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For a long time, Kenya’s Mombasa Port has ranked among the most strategic assets in Kenya, generating $480 million in revenues and $125 million in profits in 2019 alone. It not only facilitates the country’s shipping trade but serves as a strategic asset for the East Africa region in its entirety.

Chinese economic goals in Africa, as well as other parts of the world, are often termed as a “Trojan horse”. Some analysts have voiced harsh objections over the multi-billion dollar Belt and Road Initiative (BRI). Beijing has been accused of setting ‘debt traps’ in the process, shadowed under the project.

To understand Kenya’s debt to China, we’ll have to delve into the terminals in the port. The African port, with 19 terminals totally, operates two container terminals that manage 1.1 million Twenty Equivalent Units (TEUs) annually. Out of these two container terminals, the Mombasa Container Terminal (Berth 19) was built by the China Road and Bridge Corporation (CRBC) in 2013. The other terminal in question here, the Kipevu Container Terminal, completed in 2016 was financed by the Japan International Cooperation Agency (JICA).

Sri Lanka lost its Hambantota port on defaulting its loan to China, with the latter seizing the port for 99 years. Media reports have been suggesting for years now that Kenya’s Mombasa will likely follow in the steps of its South Asian counterpart if it defaults on its payment of Kenya Shilling 71.4 billion ($705 million).

Recently, Kenyan authorities have put aside fears of port seizure on defaulting the loans it took to fund the loss-making Standard Gauge Railway (SGR).

Ukur Yatani, the National Treasury cabinet secretary recently said that Kenya did not offer the strategic national asset as collateral for the $3.2 billion loans it took from the Export-Import Bank of China (Exim China) for funding the SGR project.

He further clarified it, “The port of Mombasa has no adverse exposure to any lender or category of lenders through existing loan agreements with the government.”

Posted in Container Shipping by Ankur Kundu on Mar 24, 2021 at 14:23