This archive report was first published on 24 June 2020.
Published on June 24, 2020, a recent Court of Appeal ruling on the standard gauge railway has sparked concerns and foreboding in the corridors of Exim Bank of China, which financed the project.
The ruling, which declared the construction contract as both illegal and unconstitutional, has major implications for Kenya's relations with China.
However, the implications of the ruling go beyond Kenya's relations with China. The ruling raises questions about the constitutionality of 'contractor negotiated loans' and 'tied aid' arrangements, where participation in tenders is closed to contractors from countries that have lent the money.
These arrangements are common in mega infrastructure projects, including the proposed Nairobi-Mombasa Express Highway, which was funded by the American company, Bectel, and other foreign entities.
The ruling has also exposed the practice of 'brokered projects,' where Chinese contractors, with their local allies and agents, approach government officials to hawk projects that have not been budgeted for by Parliament.
These projects are often secured through MoUs and commercial contracts, which are then used to secure financing from the Chinese government.
The ruling has significant implications for the Jubilee administration, which has been embroiled in a viciously fought political battle over the opportunity to broker big projects.
