Chinese firms' investments in Kenya have multiplier effect

Investments from China in East Africa, and Kenya in particular, have had a salutary effect on the region's global image, according to Peter Kagwanja, CEO of the Africa Policy Institute, a diplomacy think tank in Kenya.

"Unlike before, Kenya has options to work with other development partners who are now eager to participate in the growth of the country," says Kagwanja, who has done extensive research on Sino-African relations.

The effect has been particularly valuable during a time when there has been a general slowdown from traditional investors.

Recent developments have seen a diversification from mining into manufacturing, infrastructure and hospitality in several countries. Kenya's investments from China has grown over the years despite the East African country having to overcome image problems from security gaps, poor infrastructure and an unfavorable business climate.

The two countries' relationship started over five decades ago when Kenya was exporting tea to be processed in China, and then bringing in textiles and light machinery from China. Currently, the trade between the two countries stands at over $2 billion, with civil engineering machinery as the main import.

Kenya's transport sector is receiving a makeover using Chinese funds and construction firms. "This is considered low-hanging fruit," says Kwame Owino, executive director of the Institute of Economic Affairs in Nairobi. "They were ready for the picking, and it is an area that China had advanced technology," he says.

Progress in this sector has made the economy resilient to global recession, experts say. Lemma Senbet, executive director of the African Economic Research Consortium, a think tank based in Nairobi, says the new road network has improved farmers' access to markets. "I believe that the 5 percent economic growth recorded by Kenya is directly attributed to China's investment in the country."

Initially, the funds targeted telecommunications infrastructure in rural Kenya, a fact that improved connectivity and the country's investment climate. Chinese money then found inroads into the transport and energy sector.

The multiplier effect of modern networks has made a difference in economic growth. According to the economic survey report released by the Kenya National Bureau of Statistics in 2015, agriculture, construction, and wholesale and retail trade were among the major drivers of the economy in 2014.

"The building and construction sector registered an accelerated growth of 13.1 percent in 2014 compared with revised growth of 5.8 percent in 2013. This was mainly attributed to an increase in funds allocated for construction of roads and railways coupled with rehabilitation of the existing road network," the report says.

lucymorangi@chinadaily.com.cn

(China Daily Africa Weekly 03/18/2016 page17)