Kenya has declined to make public the loan contracts for its Chinese-built railway notwithstanding a court petition by two activists, stating they have non- disclosure clauses and that releasing them would amount to breaching a bilateral agreement, impairing bilateral relations with China. This reveals the secrecy surrounding Chinese deals with developing countries, which experts say complicates debt renegotiation.According to Kenyan officials, releasing the documents would undermine Kenya’s national security, “since terms in the contract touch on foreign government information with implications on national security and foreign relations”.The Kenyan government is reportedly finding the repayment of debts related to China- funded infrastructure projects increasingly difficult. The debt servicing surged to 135.5% in the current year. Amidst growing energy crisis and increasing food prices due to Russia-Ukraine conflict along with Covid-19 shocks, Nairobi is facing difficulty in servicing the Chinese debt due to foreign exchange constraints and falling government revenues.Earlier in December 2021, Beijing rejected Nairobi’s application for deferment of the debt obligations as Kenya had intended to avert the bulk payment that was due to China in the first half of the current financial year, ET has learnt.Chinese lenders were also uncomfortable with Kenya’s application for extension of the Covid-induced debt service suspension programmes as reflected by subsequent delay in disbursements of active China funded projects, mostly in the power transmission sub-sector. Nairobi was compelled to drop a request for suspension of debt service apprehending Chinese displeasure.Fearing loss of control, Beijing has sought to negotiate its debt relief deals with poor countries separately from the G20 framework though it applied the same terms. Separate negotiations were preferred to ensure Beijing’s reserved right to decide the loans & size to be subjected to the repayment moratorium.Kenyans have frequently alleged that the China funded projects are secretive, high in cost and debt creating. While these projects have put extra burden on the people, state assets are at risk due to chances of failure in debt servicing, given limited flow of revenue from these projects.According to AidData, a US research lab, the terms of Beijing’s loan deals with developing countries are usually secretive and require borrowing countries to prioritize repayment to Chinese state-owned banks ahead of other creditors. It has also observed that the contracts had become more secretive over time and all Kenyan contracts since 2014 had a confidentiality clause.The World Bank President also noted that China needs to improve its lending practices in the developing world, especially in terms of transparency in lending programmes. The International Monetary Fund persistently warns African and other third-world countriesthat mounting Chinese debts are dangerous. It stresses that Chinese creditors often create instability and vulnerabilities in the recipient countries.Like other developing countries in need, the Kenyan government has shown increasing appetite for Chinese funding for its large infrastructure projects without giving much consideration to its long-term economic implications. This often leads to an unsustainable burden of debt servicing.Kenya’s debt problem was aggravated after the country became a lower-middle- income economy resulting in drying up of highly concessional loans from development lenders such as the World Bank Group. Since 2014, Kenyan government has mostly sought Chinese loans for large infrastructure projects like roads, bridges, power plants, and the standard gauge railway (SGR). This reliance on near commercial term Chinese loans has put extra burden of debt servicing on the Kenyan government, it has been learnt.The SGR is Kenya’s most expensive infrastructure project and since its inception the project has been marred by accusations of being overpriced and damaging to the environment. Further, cargo owners are avoiding SGR for reasons including higher fees and more time in clearing goods when compared to using trucks, ET has learnt.There are several other controversies related to Chinese loans in Kenya. In September 2021, Kenyan State Department of Labor had failed to pay China Jiangxi for work on a shopping mall. The Kenyan government was forced into compensation negotiation in July 2021 after cancelling a proposed airport terminal project. There are also concerns regarding taking over of the Mombasa Port by the Chinese developer if Kenya fails in repayment of the loan, although Beijing has denied any such clause in the contract, ET has learnt.The Kenyan Directorate of Criminal Investigation had even summoned a Chinese contractor for failing to complete a Ksh (Kenyan currency) 1.2 billion water project in Siaya County, irking the Chinese government. The investigations were initiated over concerns of the contractor’s ability to complete the project.Churchill Ogutu, an economist with IC Asset Managers, an African-focused investment bank, noted “Chinese debt has reached or is near the point of diminishing returns if the big-ticket public expenditures in Kenya, for example, are anything to go by”.Meanwhile, Beijing’s lending to Kenya is already showing a declining trend. It is projected to decline to Ksh 29.46 billion for the fiscal year 2022-23 from Ksh 140.03 billion in the 2015-16.President Xi Jinping also disclosed that China would reduce investments in Africa by a third in three years during the Eighth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) in November 2021. China appears to be feeling the heat of its ill-conceived projects aimed at gaining strategic access to natural resources of Africa.