The coronavirus epidemic is raising the scale of indebtedness in Africa.
In Kenya, the pandemic has slowed down economic growth from an initial projection of 6.2 per cent to 3.4 per cent – the slowest since 2009.
Moreover, an array of social-distancing protocols to contain the spread of Covid-19 has severely disrupted economic activity, diminishing Kenya’s capacity to meet all its debt obligations. The disease has also raised external debt by Sh158 billion ($1.58 billion).
Even after the coronavirus cloud has passed, its impact will haunt efforts to modernise structures and guarantee social and political stability in low-income countries like Kenya.
China, which is entering its post-Covid-19 phase, is by far Kenya’s largest bilateral lender. This raises the question: how can China help Kenya cope with the impact of coronavirus debt?
Kenya’s debt portfolio is complex. The country’s total national debt reached an all-time high of Sh6.3 trillion by the end of March 2020, very close to the 70 percent of the Sh9 trillion ($90 billion) national debt ceiling. Its debt to China stood at Sh660 billion ($6.6 million) as of end of March 2020.