President William Ruto’s visit to China comes with a wish list that will enable him to obtain cheaper concessional loans and funds for key infrastructure projects, further increasing the country’s crippling debt.

The national debt stood at 10.56 trillion shillings in June this year, up from 8.58 trillion shillings in June 2022, just three months before President Ruto took office.

The debt is expected to rise further this year as the government plans to borrow 761 billion shillings in the 2024/25 financial year, a significant increase from the 597 billion shillings it planned to borrow before the rejection of the 2024 Finance Bill.

As a result, the budget deficit in relation to GDP will increase from 3.3 to 4.2 percent.

Standard we can report that the head of state, who has rarely left Nairobi since June this year, mainly due to the Generation Z protests, went to China with big dreams of gaining financial support for key sectors, including regional security.

China is also expected to benefit both countries, with a particular focus on trade, investment and regional security as Kenya seeks to expand its pool of foreign financing.

The President, accompanied by senior government officials, is attending the 9th Forum on China-Africa Cooperation (FOCAC) at the invitation of his Chinese counterpart, Xi Jinping.

President Ruto held bilateral meetings with various leaders and private entities to discuss ways to increase investment in Kenya.

He is seeking new public-private partnerships to boost the country’s development in areas such as Jomo Kenyatta International Airport, which is already in the midst of a major crisis following efforts by India’s Adani government to negotiate a 30-year takeover deal.

Yesterday, the Head of State announced on his X account that Kenya has formally joined the Asian Infrastructure Investment Bank (AIIB) as a fully contributing member.

According to Ruto, membership will enable Kenya to access preferential financing for infrastructure, climate change action, connectivity, regional cooperation and technology-based projects and programmes.

“The Asian Infrastructure Investment Bank is a multilateral development institution with 109 members and a capitalisation of $100 billion,” Ruto said.

“Kenya is very proud to join its family of very distinguished members. We look forward to working with the bank to develop infrastructure and improve the well-being of our citizens,” he added.

China has frozen loans to Kenya over the past five years, negatively impacting the country, which in the last financial year earmarked 152 billion shillings to fund Chinese debt.

As of October last year, Kenya was estimated to owe China $8 billion. Most of that money was spent during President Uhuru Kenyatta’s term to fund infrastructure projects, most of which have since been put on hold.

During a meeting with AIIB President and Chairman of the Board of Directors Jin Liqun and other officials at the bank’s headquarters in China, President Ruto cited infrastructure, climate change action, connectivity, regional cooperation and technology-based projects and programmes as opportunities for funding.

It is expected that preferential loans, offered on preferential terms compared to commercial loans, will significantly contribute to securing debt sustainability and also support projects with long waiting periods.

Following Kenya’s accession to the AIIB, the country is expected to jointly guarantee panda bonds with the African Development Bank.

Earlier reports indicated that Kenya was trying to raise billions of dollars by selling panda bonds in China this fiscal year, which it said would be used to finance its budget deficit.

The AIIB supports climate change action and helps its members achieve their environmental and development goals in line with the United Nations Sustainable Development Goals and the Paris Agreement.

The bank aims to direct 50% of its approved financing to climate-related initiatives by 2025. It is also focusing on projects including roads and railways, airports, energy pipelines, ports and telecommunications networks.

Similarly, the AIIB is developing innovative solutions to attract private capital in collaboration with other multilateral development banks and partners, including co-financing arrangements.

At the same time, Ruto said FOCAC is the cornerstone of the Kenya-China strategic partnership, which provides a platform to explore opportunities for a people-to-people and mutually beneficial relationship between the two countries.

He added that the partnership is characterised by practical infrastructure projects such as the Standard Gauge Railway (SGR), the Kipevu Terminal in Mombasa and the Nairobi Expressway.

“Kenya and China enjoy excellent and cordial diplomatic relations. These ties have been beneficial to both our countries, phenomenally transforming Kenya’s rail, road and port infrastructure and deepening people-to-people exchanges,” Ruto said.

Ruto noted that bilateral cooperation with China has seen the construction of the Mombasa-Naivasha Standard Gauge Railway, the Nairobi Expressway, as well as many rural roads, which has opened up the country and made Kenya a key transport hub not only in East Africa but across the continent.

Ruto said that during talks with President Jinping at the Great Hall of the People in Beijing ahead of the FOCAC summit, it was agreed that Kenyan agricultural products would be allowed to enter the Chinese market.

It was also agreed to discuss regional infrastructure projects such as the expansion of the SGR and the Rironi-Mau Summit-Malaba dual carriageway.

He added that Africa’s huge infrastructure needs require closer collaboration with the private sector to harness the continent’s potential in mineral resources, renewable energy and agriculture.

Kenya will also seek support for its key projects, such as the completion of Phases 2B and 2C of the Standard Gauge Railway (SGR). Both the Kenyan and Chinese teams are expected to jointly discuss short- and medium-term recommendations.

Phase 1 saw the completion of the 472 km Mombasa-Nairobi railway line, which was followed by Phase 2A, which saw the construction of an additional 120 km line from Nairobi to Naivasha, which has been in operation for several years.

SGR Phase 2B covers about 262km and runs from Naivasha to Kisumu, while Section 2C is to cover Kisumu to Malaba and cover 102km, linking the border town with Uganda.

In April, the Northern Corridor Integration Projects (NCIP) SGR cluster regional meeting was held in Mombasa to accelerate the implementation of the SGR by partner countries, including Uganda, Kenya, Rwanda, South Sudan and the Democratic Republic of the Congo, in order to improve connectivity to the port of Mombasa.

The government will also seek support for the establishment of the Kenya Railway Institute and Special Economic Zones (SEZs) to enable the Chinese to continue investing in various sectors, including pharmaceuticals.

Other projects earmarked for implementation include the Africa Data Center for iCloud and the construction of new wharves at Lamu Harbour.

The public-private partnership has revealed that more opportunities can be explored, with particular emphasis on programmes such as the Belt and Road Initiative (BRI), which aims to make Kenya a major economic hub for the East African region.

House of Representatives Spokesperson Hussein Mohamed said on Sunday that Kenya’s commitment to the BRI had resulted in groundbreaking infrastructure projects including the SGR, the Nairobi Expressway, the Kipevu Oil Terminal and various bypasses in Nairobi.

“President Ruto was honoured to co-chair the session on ‘Pursuing High-Quality Cooperation on BRI: A Modernisation Platform from Plan, Build and Share Benefits’ at the high-level BRI event,” Hussein said in a statement.

Expected benefits include a strategic partnership with China, a joint commitment to building a Kenya-China community, an agreement to support infrastructure development including the construction of rural roads across the country, an intelligent transportation system in Nairobi, the Bosto Dam water supply project, and Phase III of the equipment upgrade at vocational training workshops.

At the same time, the government will seek to resolve pending applications for other projects such as the Northern Bypass, the Muthaiga-Kiambu double track line, and the Hola-Garissa transmission lines.

Kenya is also interested in further political, economic, security and technical cooperation.

Kenya also expects to secure a financing agreement for about 15 rural roads, with support from the China Development Bank and lobbying to ensure Chinese banks operate in Nairobi.

On credit insurance, Kenya is likely to partner with Sinosure, a Chinese financial institution with a policy focus, to further open up the country’s public and private sectors to trade and investment.

Kenya is also looking for cooperation in the health sector, which could involve the establishment of a pharmaceutical park for the production of medicines, vaccines and medical equipment, as well as the creation of cold storage facilities.

The China-Africa Entrepreneurs’ Conference will also provide a platform for leaders from Africa and China to explore investment opportunities in sectors such as infrastructure, healthcare, manufacturing, ICT, e-mobility, agriculture and value-added.