China Eximbank provides RMB 188.3 million government concessional loan for Phase 1 of Technical And Vocational Training Laboratories (TIVET) Project (Linked to Record ID#59494)

Project narrative

In 2009, Kenya’s Ministry of Education decided to invest in revamping technical and vocational education and sought help from the Chinese Government. The Chinese Embassy in Nairobi recommended AVIC International as an industry partner. Then, on March 18, 2011, China Eximbank signed an RMB 196 million government concessional loan (GCL) loan agreement with the Government of Kenya for Phase 1 of the Kenya-China Technical And Vocational Training Laboratories (TIVET) Project. The face value of the loan was subsequently revised to RMB 188,359,677.88. The borrowing terms of the loan were as follows: a 2% interest rate, a 20 year maturity, and a 7 year grace period. The loan was scheduled for repayment in semiannual installments between March, 21, 2018 and March 21, 2031. The borrower was expected to use the proceeds of the loan to finance a $30 million (KES 3.3 billion) commercial contract between AVIC International (中航国际) and the Government of Kenya's Ministry of Education (肯尼亚高教部), which was signed in January 2010. The borrower made principal repayments worth RMB 7,534,387.10 between July 1, 2020 and June 30, 2021 (Fiscal Year 2020-2021) and RMB 15,068,774.20 between July 1, 2021 and June 30, 2022 (Fiscal Year 2021-2022). The loan’s amount outstanding was RMB 165,756,516.10 as of June 30, 2020, RMB 150,687,741.87 as of June 30, 2021, and RMB 135,618,967.64 as of June 30, 2022. The purpose of the project was to establish 10 vocational and technical institutes — including Coast Institute of Technology, Kabete National Polytechnic, Kenya Coast National Polytechnic, Nyeri National Polytechnic, and the Technical University of Kenya — and provide training to 15,000 students. Training subjects were to cover electrical/electronic engineering, mechanical engineering and rapid prototyping manufacturing. The project also involved the provision of teaching materials and equipment (including diesel generators). AVIC International was the contractor responsible for project implementation. The originally scheduled implementation start date of the project was July 2, 2012, and the originally scheduled project completion date was June 30, 2017. Project implementation actually commenced in January 2013 and ended in April 2017. The official project handover date was on or around July 19, 2017. As of March 2016, AVIC International had sent 54 teachers and trained 15,000 local students. An ex-post review of the project by Kenya's Auditor General revealed that 1 university and 9 technical training institutes were supplied with electrical/electronic engineering, mechanical engineering, rapid prototyping manufacturing laboratories, and diesel generators (at a cost of $29,281,624 or approximately KES 2,490,159,083), but a physical verification of the equipment in all ten of the vocational and technical institutes revealed that the equipment had not been utilized to full capacity and the generators had not been put to use. The Auditor General identified a lack of power supply to operationalize the equipment as a key constraint on its use. To address the problem of equipment disuse, AVIC International also launched a skills development initiative called the Africa Tech Challenge. According to Mr. Shikoli Isalambo Benard of the Kenyan Ministry of Education, he told an AVIC International project manager that ‘you’ve given us huge equipment, but the equipment is just here. We’re not utilizing it. So if we have a competition to support this equipment, then really, you’ll be helping us as a country to build the confidence of our students, that they can make things which can actually go out there.’