What in the World is China Doing in Kenya? - Global Trade Magazine
  May 24th, 2016 | Written by

What in the World is China Doing in Kenya?

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  • China finances more infrastructure projects in Africa than the World Bank.
  • Chinese imports cause problems for Kenyan manufacturers.
  • Chinese companies hire Kenyans for 78 percent of full-time and 95 percent of part-time jobs.

China’s presence in sub-Saharan Africa has risen markedly in recent years. Research from Johns Hopkins University notes that Chinese investments in Africa has outpaced every other nation except South Africa.”

“China finances more infrastructure projects in Africa than the World Bank,” said the Johns Hopkins paper, “and provides billions of dollars in low-interest loans to the continent’s emerging economies. These loans and investments are typically made in exchange for securing access to natural resources.” China’s development activity in Africa differs from that of the West in that, not surprisingly, it is not conditioned on participating in initiatives like democracy promotion and corruption reduction.

“The Chinese model,” the paper concluded, “with no colonial past or explicit political agenda, is a legitimate challenger to the Western aid status quo.”

China’s involvement in African economies has not been without controversy. A recent World Bank report noted that “many fear that China spells doom for the Kenyan economy.” Local manufacturers face more competition from China. Some argue that China will simply exploit Kenya’s resources. If the development of a manufacturing sector fails, it will be harder to alleviate the country’s poverty.

Like elsewhere in Africa, China is financing key railway and port infrastructure projects in Kenya. According to the World Bank report, Chinese imports offer affordable and diverse products for Kenyan consumers. Kenyan retailers also benefit by selling low-cost Chinese products.

“Even if local producers may struggle,” the report said, “critics often overlook the boon to consumers from China.”

The paper also examined the allegation that Chinese investments fail to create jobs in Kenya because “China brings in all of its own people.” A 2014 survey showed that Chinese companies hire Kenyans for 78 percent of full-time and 95 percent of part-time jobs. Ninety-three percent of percent of Chinese companies reported hiring Kenyan workers. The survey also concluded that employment of Kenyans by Chinese companies was growing over time.

“Chinese firms have taken interest in more than natural resources in Kenya,” said the World Bank report. In 2014, the communications sector in Kenya benefited from $150 million in investments from China, and automotive manufacturing received $68 million.

“Many private Chinese companies are looking to access the domestic market or to produce goods for export to other countries,” the report concluded. “The size, operations, and financing of Chinese firms is quite diverse.”

Problems with Chinese involvement in Kenya include corruption and the increasing debt burden. Questions have been raised over the high cost of one of the railway projects.

“But despite many problems, China’s involvement in Kenya is a net positive, as most trade relations in the world tend to be,” the report concluded. “If Kenya leverages Chinese know-how and uses relatively cheap imports to satisfy the basic needs of the population, it could at the same time jump start its export engine in areas of comparative advantage such as tea, cut flowers, or chemicals. That would make trade for both China and Kenya even more of a win-win.”