Chinese Companies have a positive Influence on Kenya’s Economy

Chinese companies and businesses have become more visible in Kenya and are making an even greater impact on the country’s economy than most of us can comprehend. China’s investment in trade with the country is steadily rising and Chinese goods are flooding the Kenyan market, as they are doing in the rest of the world.

The enormous volume of the two-way trade between China and Kenya has inevitably caused some problems. Local traders are facing stiff competition from Chinese investors who they accuse of selling their goods at cheaper prices and driving them out of business. However, we need to interrogate how the Chinese investors and traders thrive above us and are able to sell cheaply and still make profits. Nonetheless, these challenges cannot outweigh the positive impact that Chinese companies and businesses have had in the country.

There seems to be a constant attempt to portray China’s expansion in Kenya and the rest of Africa as a threat to our economy and a case of economic domination. There is also the notion that Chinese investment is predominantly in natural resources. However, the truth is that this is a win-win situation where each party gets the best of what it bargained for.

What creates fear for Chinese companies and businesses is that they have the numbers, technology and innovations. But these are the exact attributes that our country needs for our economic take off. Investors should create jobs and probably add value by bringing in the kind of skills that we still don’t have in our country. Therefore, Kenyans should fairly compete with their Chinese counterparts and learn from them and together drive the Kenyan economy to greater heights.

As China’s relationship with Kenya shifts from being essentially government to government cooperation to business to business cooperation, enormous potential has been seen in the manufacturing industry, retail in Chinese products and ICT sectors. Chinese companies are increasing their investment in other sectors, such as food processing, the service industry and telecommunications and ICT.

More and more Chinese companies and businesses are looking at Kenya as a new destination for investment, trade harbor and manufacturing base. Kenya is the gateway to the region and an ideal regional base for Chinese investors to expand their business in the region and the rest of Africa. Many Chinese companies and businesses have set up their headquarters in Nairobi with an aim of expanding into the region. They have created job opportunities to Kenyans, increased the levels of local production and reduced the cost of machinery, electronics and automobiles in the region. Kenyans can now buy phones, laptops other home appliances from China due to affordability. Previously, these modern gadgets were such a luxury and too expensive for many Kenyans.

The flocking of Chinese investors and businesses in Kenya has played a big role in promoting Kenya’s economic development. China-Kenya cooperation continues to expand, bringing more benefits to both sides. The bilateral trade volume between China and Kenya hit a record 2.841 billion USD in 2012; a 16.7% increase compared to 2011. Our trade volume has continued to increase at an annual rate of 30 percent since 2010.

China’s accumulative investment to Kenya amounted to USD 280 million by the end of 2012. Its increased investment has seen it become the second-largest source of foreign direct investment in Kenya last year. Compared to assistance, investment in business is a more constructive way to achieve common development on a much larger scale. This is achieved by bringing in technology, skills, management conceptions and employment opportunities to Kenyans. 

China’s investment to Kenya mainly covered real estate development, vehicle assembly, household electrical appliances, light industry, building materials, resource survey and exploration, food and beverages, tourism among other sectors.

Chinese companies have played a major role in improving the local conditions for economic growth and self development capacity by building transport, communication and energy infrastructure which are catalysts to the fast growth of our economy. They have completed the construction of Moi International Sports Centre, JKIA-Uhuru Highway-Gigiri (Unep) Roads, Gambogi-Serem Road, and a number of rural primary schools. Other projects include the new Unit 4 Passenger Terminal at Jomo Kenyatta International Airport, and Berth No.19 at the port of Mombasa. All these projects are aimed improving the Kenyan economy.

Why Sino -Africa Cooperation is not a lopsided tokenism festival

The new Chinese president’s visit to Africa was not only significant but symbolic. It was his first foreign trip as president and he chose to come to Africa. Although many view this visit as a good gesture and a demonstration of Africa’s importance to the world’s second biggest economy, skeptics are raising questions as to what intentions China has in Africa.

China’s association with Africa is longstanding. It started long before the colonialists came to Africa. It improved slightly during Africa’s liberation struggle in which China played a supporting role. However, when China eventually entered into the development arena proper, to establish a new type of strategic relationship with Africa, many viewed it with a lot of suspicion. Understandably, Africa had misgivings considering the after affects of colonialism. The continent was not ready to open up to another foreign nation whose agenda in Africa it could not tell. 

Nevertheless, China offered Africa friendly assistance with no political strings attached, initiated huge infrastructure projects with efficiency and cost effective ways and established a cooperative mechanism where African leaders and Chinese leaders could dialogue and pursue their common interests. A results oriented culture of development cooperation was nurtured and the country gradually gained the trust of the African people and established a blossoming development momentum in Africa.

China made a strategic choice to partner with Africa to achieve both Africa’s development and its own development. From the onset, the Asian giant made it clear that it needs Africa to develop and averred that its development is hinged on Africa’s development. The establishment of the Forum on China Africa Cooperation, which meets at the summit level every three years, has helped to coordinate the rapidly expanding engagement between China and Africa. 

Since its inception in 2000, China has earnestly implemented all its cooperation commitments made at the various FOCAC ministerial and Beijing Summit. The benefits for Africa include debt cancellation, tariff exemption, provision of concessional loans and the scheme of special loans designed to help small and medium sized African enterprises. These achievements, which have been well received by the African states, are practical and evident for everyone to see. China has focused on concrete programmes such as infrastructure, livelihood projects, education, healthcare etc, from which the African people can see and feel, and can benefit directly.

China is of course looking out for its own interests but so long as these interests are compatible with African interest and mutually beneficial, then Africa has no reason to shy away.  Former Zambian President Rupiah Banda well put it when he said, "The Chinese have selfish interests, naturally," He said. "We are prepared to do this with anybody else. It is not that this is reserved for China. It is that they are the only ones who seem to see it the way that we see it." He added that “China understands Africa better than most of the world and has proved it’s a trusted ally.”

China is now Africa’s largest trading partner and one of the world's leading investors in Africa. Annual trade between China and Africa reached about $200 in 2012 and Chinese imports from Africa have soared 20-fold in a decade.  However, Pang Zhongying, an Africa specialist at Renmin University in Beijing warns that China has to demonstrate that it is not repeating the old practices of the European powers. 

Naturally, increased engagement comes with its own challenges. Some African officials have voiced fears that China’s dominance as an exporter of cheap garments, appliances and other goods, and its appetite for unprocessed raw materials, have skewed economic ties and undermined African hopes to advance into industrial prosperity. 

This has been acknowledged by China’s new president and in his tour of Africa last week, he sought to assure African countries that his government would heed complaints that competitive Chinese companies were suffocating African efforts to nurture industry and jobs, and he promised aid, scholarships and technology transfers in an effort to counter those fears. He added that “China has and will continue to work alongside African countries to take practical measures to appropriately solve problems in trade and economic cooperation so that African countries gain more from that cooperation.”

Despite the balance of trade titling towards the Chinese side, Africa has made great strides by reaping huge benefits particularly when it comes to moving up the manufacturing value chain, increasing productivity, infrastructure development and fostering private enterprise. China is helping its African partners to industrialize both by building infrastructure such as roads, telecommunications, and power stations that cut the cost of doing business, and by investing in manufacturing. Its investments are bringing in technology, skills, management conceptions and employment opportunities.