Kenyans started the month on a low after the Treasury Cabinet Secretary Henry Rotich announced the delayed implementation of the a VAT related Act by parliament was coming to an end and fuel and its products will now draw an additional 16% cost for VAT. This has been received with condemnation as the fear of inflation spike increases.
One of the reasons attributed by the increased taxation by government is meeting a high loan repayment bill, which now stands above $50 billion (5 Trillion shillings). While a high wage bill and a runaway corruption has been mentioned, the highest consumer of public money is foreign loans which Central Bank of Kenya rates
The bad news is that the appetite for foreign debts is not easing. Before President Uhuru Kenyatta traveled to China, his Cabinet Secretary for Transport James Macharia hinted that the financing of the extension of the SGR rail from Naivasha to Kisumu and Busia will feature at the FOCAC meeting.
Now the kind gesture has been extended with China unveiling a new $60 billion kitty for Africa’s development as part of a raft of new measures to strengthen Sino-Africa ties.
The money will be channelled to projects aligned to the Chinese government’s Belt and Road Initiative covering telecommunications, construction of roads, bridges and sea ports, energy, and human capacity development.
The funding is broken down into several parts with $15 billion being categorised as government grants, $15 billion as interest free loans and 20 billion dollars of credit lines and USD 5 billion for financing imports from Africa.
Though there has not been any confirmation of what amount Kenya will receive, various projects are lined up to take a portion, the leading one being the SGR railway as well as the Lamu Port and the South Sudan, Ethiopia transport corridor.
The summit kicked off with a further call by President Jinping for greater representation of the developing world in global governance. He also challenged Chinese private companies to directly invest upwards of $10 billion in Africa in the next 3 years.
“China and Africa can forge a stronger comprehensive and strategic partnership. China promises to engage with Africa on a principle of sincerity and real results,” said President Xi Jinping.
“China’s 1.3 billion people and Africa’s 1.2 billion want a shared future,” said the Chinese leader as he promised that no obstacle will be allowed to hold back the ‘joint march’.