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Kenya too falls into Chinese debt trap

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By S Venkat Narayan,

Our Special Correspondent

 NEW DELHI. Kenya is one of China’s largest trade partners in Africa. It owes $6.5 billion to China, which is 22 percent of its total external debt. China’s interest payments represent 87 per cent of the cash used to service debt expenditure in 2019. Kenya is yet to work out an arrangement with China, but has been reluctant to seek debt relief amid reports that it was concerned it could hurt its ability to tap capital markets.

Kenya and neighbouring Ethiopia, according to the World Bank’s international debt statistics, are among the world’s most indebted countries. Kenya’s external debt rose four times over the last decade, only second to Ethiopia that saw its debt increase five-fold during the decade.

 Analysts say the $3.2-billion contract with China in 2014 to build the standard gauge railways connecting Kenya’s capital Nairobi and the port city of Mombasa symbolised the problem. The railway line was expanded in 2015 to Naivasha town 75 miles northwest of Nairobi, raising the project cost by another $ 1.5 billion.

 The railway line made a loss of $ 90 million in its first year. The government promised a profit in 2019. It ended up in the red again. The government has been forcing businesses to move their cargo on the railway to ensure it generates enough cash for operations but the project still recorded a loss of $200 million over three years. In September, a panel of lawmakers nudged the government to renegotiate the loan deal and cut operating expenses by half. Kenya hasn’t had its way yet.

 The overpriced project, hugely criticised by independent observers right from the time it was first announced, has also been in the spotlight after Kenya’s appellate court ruled in June that the contract had been signed in violation of the rules and was illegal.

 In the end, Kenya doesn’t have an option but to pay back the money.

 Or Kenya could stand to lose the lucrative Mombasa port that was pledged as collateral when the huge loan was accepted.

 Mombasa is counted as east Africa’s largest and most valuable port. It is not just the gateway into Kenya, but also its landlocked neighbours; Burundi, Congo, Rwanda, South Sudan and Uganda. Also, Kenyan media has reported, Nairobi could also have to give control of the Inland Container Depot that could bring thousands of port workers under Chinese lenders.

 Zambia has finally received a six-month reprieve from China Development Bank on repayment of its debt due in October, the government in Lusaka announced last month after a desperate SOS that it was on the verge of a default.

 Lusaka had already been attempting to restructure and refinance its Chinese debt when SARS-CoV-2, the virus that causes Covid-19, first reached Africa and rapidly spread across the world, infecting over 52 million and wreaking havoc on global economies. It has only gotten worse.

 Kenya and Zambia’s story repeats itself across Africa, Asia and Latin America. According to the Financial Times (London), China has transferred nearly $150 billion to governments and state-owned firms in Africa alone to secure commodity supplies and fund its global network of infrastructure projects, President Xi Jinping’s signature Belt and Road Initiative (BRI).

 Beijing is already the world’s largest non-commercial lender, more than the International Monetary Fund (IMF) and the World Bank. China’s share of bilateral debt owed by the world’s poorest countries to members of the G20 has risen from 45 percent five years ago to 63 percent last year. A recent World Bank report estimated China’s external loans and trade credits at $1.6 trillion, or close to 2 percent of global gross domestic product.

 China watchers in New Delhi, quoted by the Hindustan Times, speak about how Beijing has expanded its footprint and influence in South Asia too by pouring billions of dollars in pricey infrastructure projects that mostly serve Beijing’s strategic interests and have to be executed by Chinese companies and Chinese workers.

 Like the China Pakistan Economic Corridor (CPEC) that eventually will be paid for by Islamabad. Or the rail and deep-sea port projects along an economic corridor to Myanmar that will link China’s south-western interior to the Indian Ocean.

 Because the loans are not based on the economic feasibility of the projects in the first place and are opaque, they are also seen to fuel allegations of corruption and autocratic behaviour.

 Beijing has its grip on Sri Lanka to an extent that when US Secretary of State Mike Pompeo was in the country to campaign against China’s debt diplomacy. Colombo—-which is in the middle of negotiations with Beijing for another tranche of loans—-politely made it known that it is not going to change its approach to China.

In 2017, Sri Lanka had already handed over the strategic port of Hambantota on the country’s southern coast to China on a 99-year lease when it had trouble repaying its initial loan for the port.

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Sajith blames ‘Viyathmaga doc’

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Cause of Mahara Prison riot:

By Saman Indrajith

The recent Mahara Prison riot erupted as 120 inmates afflicted with COVID-19 had been taken there from the Welikada prison at the behest of a Director in charge of prisoners’ health, who was a Viyathmaga member, Opposition Leader Sajith Premadasa told Parliament yesterday.

“Many explanations have been given by ministers about the riot at Mahara Prison. The number of deaths is not yet known and around 120 are wounded. One minister said that there was an invisible hand behind the clashes. Another said the motive was to bring the government into disrepute internationally. A theory was concocted that prisoners had taken some narcotic tablets called Reverse and they and fought because they wanted to see blood. But the truth is otherwise. The real cause is that 120 inmates infected with coronavirus were transferred to Mahara from the Welikada prison at the behest of a director in charge of prisoners’ health. That director is a member of the Viyathmaga. Those who were transferred to Mahara prison caused a cluster of 183 persons. As the infection spread fast there was unrest and tension. That was the reason for Mahara riots.”

He said that ministers had their own theories, but one day the truth would surface. “I hope that the ministerial committee appointed to probe the riots will conduct an impartial investigation and they will reveal the truth.”

“Prisoners have rights. I do not wish that this country would permit the perpetuation of the killing culture and state terrorism. The government members should keep in mind that there is a concept called rule of law and we all are expected to uphold it. So, we should dump those theories of Reverse tablets and strive to find the truth.”

Public Security Minister Rear Admiral Sarath Weerasekera: The health officer in charge of Mahara Prison is not a member of Viyathmaga.

Opposition Leader Premadasa: I did not say so. What I said was that 120 inmates were transferred from Welikada prison to the Mahara prison violating COVID-19 protocols. That order to transfer those had been given by a doctor who is a member of Viyathmaga. I do not mention his name. You can easily find it.

Chief Government Whip Highways Minister Johnston Fernando said that the Opposition leader talked of lofty ideals of prisoners’ welfare but the yahapalana government had failed to construct at least a single prison to ease the congestion in the prisons. “When I was incarcerated by your government, I was in a cell with 51 other inmates. There was no place to sleep. In the Kegalle prison, they put 225 in a hall enough for 50 inmates. The former government pre-occupied with the task of constructing new courts to imprison its political enemies but did not build a single prison for the benefit of inmates.”

Opposition Leader Premadasa: We did not want to build prisons, we built schools. Mahatma Gandhi has once said that when you open a single school, thousand prisons could be closed. We followed that.

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‘It will take four years to ensure quality of drinking water from small projects’

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By Saman Indrajith

The safety of drinking water from small scale community drinking water projects could guaranteed only after the implementation of a project to check the quality of water and that would take four years, Water Supply Minister Vasudeva Nanayakkara told Parliament yesterday.

The Minister said so, when Matara District SJB MP Buddhika Pathirana pointed out that although the safety of drinking water from the National Water Supply and Drainage Board was guaranteed the same could not be said of water from small scale projects.

“There are many harmful elements in water such as lead, cadmium and mercury. We know that Water Board supplied water is purified, but water from small scale project could be contaminated with them. It is said that mercury in a CFL bulb has the potential to pollute around 6,000 litres of ground water and causing kidney diseases. This is a dangerous situation. One trillion rupees have been allocated for the Water Supply ministry. Apart from the COVID-19 threat, the biggest threat to the lives of people in this country is from non-communicable diseases. Can the ministry introduce a mechanism to provide each district with at least a single testing unit to ensure the safety of drinking water supplied by the small scale community drinking water projects.”

Water Supply Minister Vasudeva Nanayakkara said that safety of water from the Water Board was guaranteed owing to sophisticated purification methods employed by treatment plants. He said that it would take at least four years to provide testing units to ensure drinking water from the small scale community drinking water projects countrywide too is safe from harmful elements.

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Teachers’ Union boss Stalin accuses govt of attempting Akila’s failed stunt

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By Rathindra Kuruwita

There was an attempt to create a new post, Director General – Sports, at the Ministry of Education and to appoint a political henchman, Ceylon Teachers Union (CTU) General Secretary, Joseph Stalin told The Island yesterday.

“According to the Education Administrative Service minute, any appointment has to be made through a competitive exam. However, this post has been created through a Cabinet paper and an SLPP henchman is to be appointed to it.”

The CTU General Secretary said that during the yahapalanaya administration, then Education Minister Akila Viraj Kariyawasam had tried to appoint a UNP henchman to the post of Director – Sports at the Ministry. Kariyawasam had been compelled to back off due to the stiff opposition of the education sector unions, Stalin said.

“The court has also ruled that people should be appointed in keeping with the Education Administrative Service Minute. The President came into power promising to uphold the rule of law, but this government, too, is attempting to undermine the education system by appointing unqualified people to high posts.”

The post of Director General – Sports would have the same perks of an Assistant Secretary and the person to be appointed was a person representing a government affiliated union, Stalin said.

“95% of unions of the education sector will oppose if the government creates this post for the benefit of a henchman. We will resort to trade union and legal action.”

Minister of Education, Prof. G. L. Peiris was not immediately available for comment.

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