Kenya’s China dilemma: between foreign investment and dependency
While Kenya’s government is targeting Chinese investors to establish manufacturing plants in its special economic zones to boost exports, thousands of local traders have protested in the capital Nairobi against the ‘unfair” competition from Chinese traders.
The government is offering Chinese investors a value proposition that the East African country is the premier investment destination for foreign investors in Africa. It is part of the government’s initiative to transform Kenya itself into a newly industrialized, middle-income country by 2030 and establish 10 special economic zones across the country. Kenya is seeking to attract Chinese investors to establish manufacturing plants in its special economic zones as part of its push to boost exports. It is targeting Chinese investors in the electronics, textiles, pharmaceutical, and medical devices, as well as the lift and escalator sectors. The hope is that Chinese manufacturers will help Kenya diversify its exports and move away from agricultural products.
But, at the same time, many Kenyan businesses feel that Chinese owned companies receive preferential treatment and are able to operate with fewer regulations and lower costs, disadvantaging their local equivalents.
The recent protests in Nairobi against the superstore China Square have highlighted Kenya’s dichotomy between foreign investment and dependency. The demonstrations were held in the wake of controversy elicited by the coming of China Square, a giant Chinese retail outlet of general merchandise, whose prices are on average 45% lower than those prevailing in locally-owned enterprises. China is Africa’s top trading partner and more than 1 million Chinese are estimated to reside on the continent. Kenya’s relationship with China was in focus during last year’s presidential election, won by William Ruto. Ruto promised to publish government contracts with China agreed upon under his predecessor and to deport Chinese nationals working illegally.
