Knowledge is Power Issue No. 34,

AF E RICA ITUT May 2018 POLICY INST Research Notes Africa Policy Institute

Kenya’s president, , shakes hands with Fenjian Chen, president of China Communications Construction, next to a model of a locomotive, Mombasa PHOTO | JEFF ANGOTE | NATION MEDIA GROUP

RIDING THE DRAGON: CHINA’S EXPANDING DEVELOPMENT FOOTPRINT IN .

Peter Kagwanja

The Chinese and Kenyan dreams met way back in the 15th century. Today, Kenya is home to a small settlement of people of Chinese ancestry, the oldest in Africa. But the two dreams have not always matched. China was the fourth country to open an embassy in on 14 December 1963.

Africa Research Notes, No. 34, May 2018 Issue No. 34, Africa Research Notes May 2018 2

But two years later, Beijing scaled down its mission framework for the socio-economic transformation to chargé d’affaires level. In 1965, Kenya adopted over the next 50 years. Kenya is not endowed with its Sessional Paper No. 10 on African Socialism abundant natural resources. Typically, it would and its Application to Planning, taking a distinctly not make the cut for an economic partner of capitalist path of development and a pro-West China whose strategy in Africa is to access natural foreign policy. At a time, the Chinese dream was resources that Western companies considered mired in the post-1949 revolutionary politics, insignificant in size, geographically too remote or when ideology trumped development. politically risky to exploit. But Kenya is a gateway to Eastern Africa, has the largest economy in the China’s ‘development turn’ in the wake of Deng region, a large pool of employable skills and one Xiaoping’s far-reaching market-economy reforms of the largest expatriate communities in Africa. It after 1978 changed all this. Beijing began to foster is, therefore, pivotal to China’s economic strategy, stronger ties with Kenya. President Daniel Arap Moi which required massive financial outlay in oil visited Beijing thrice (in September 1980, October exploration, mines and supportive infrastructure 1988 and May 1994); President once in such as pipelines, roads, railways, power plants August 2005; and President Uhuru Kenyatta twice and power transmission lines. China has become in 2013 and 2017. Nairobi saw the Chinese Premier Africa’s most favoured development partner. A Li Keqiang’s visit in May 2014 as the long-awaited 2015 Pew Global Attitudes survey, showed that “white smoke” that confirmed Kenya as a pivotal 70% of African respondents had a considerably state in China’s African strategy. more positive view of China than of Europe (41%), Asia (57%), or Latin America (57%). Kenya is riding the the dragon, believed to be bold and benevolent This begs the question: does and to possess the qualities of great power, dignity, fertility, wisdom, auspiciousness. Kenyatta’s Jubilee formation possess the requisite political The Dragon’s Gifts capacity to enable him Over the last two decades, China has become Kenya’s largest bilateral lender and main source endorse and persuade his of development assistance (loans and aid). During Mount Kenya backyard to back President Kenyatta’s visit to Beijing in 2013, China and Kenya signed deals worth US$5 billion. In his Deputy, William Samoei 2015, Kenya attended the Forum on China-Africa Ruto, as his successor in 2022? Co-operation (FOCAC) Summit in where President Xi Jinping pledged to invest China has developed a solid strategy on Africa, US$60 billion in Africa by the end of 2018. By the which governs its economic relations with Kenya. end of 2017, Kenya had received Sh361.6 billion But Kenya, like Africa’s other 54 countries, has ($3.62 billion) from China, amounting to 19.4 per not developed such a strategy. Its much hyped cent of the country’s total external debt. “Look East” policy is an eclectic mélange of the Kenya Vision 2030, the country’s development Expanding the Market programme from 2008 to 2030 and the ruling party’s (Jubilee) Manifesto, recently abridged to the Kenya trade with China has grown over the “Big Four” agenda (affordable housing, universal years. China exported US$180.576 million to health coverage, increased share of manufacturing Kenya. However, China imported only US$5.798 in the economy, and improved food security) that million worth of Kenyan goods, mainly black President Kenyatta unveiled in December 2017. But tea, coffee, and leather. China’s investment is the Kenyan dream also meets the Chinese dream in spurring industrialization and manufacturing. the African Agenda 2063, the continent’s strategic Chinese investors launched a multi-billion-shilling Issue No. 34, Africa Research Notes May 2018 3

industrial park in the Export Processing Zone (EPZ). it outlawed ivory processing and selling activities, Two Chinese companies are investing Sh20 billion significantly enhancing the protection of wildlife. in the Sino-African Incubation Park, which will be located in Athi River. Opening Up Africa for Commerce

In May 2017, China Wu Yi injected Sh10 billion China is focusing on infrastructure to open up ($100 million) to set up an industrial park with a Africa for investments as part of its Belt and Road precast production base to supply local demand Initiative (BRI), Xi’s grandiose vision of building for the technology. Deployment of the technology land and maritime routes to connect China and in Kenya is expected to bring down the cost of the rest of the world. Since the 1980s, Kenya has construction by 15 per cent. China is opening benefited from China’s funding for infrastructure Kenya for mining. Early in 2006 Chinese President Hu Jintao signed an oil exploration contract with Kenya. A year later, the Jinchuan Group, a state- owned metal manufacturing group, became the Deployment of the technology first Chinese company to enter Kenya’s mining sector, purchasing a 20% stake in Tiomin Kenya in in Kenya is expected to April 2007. China has also offered Special Loans bring down the cost of for the Development of African small and medium enterprises (SMEs) in Africa, focusing in the areas construction by 15 per cent. of tea production, power generation, rural power China is opening Kenya for grids and regional aviation. In 2017, Foton and its Kenya-based distributor, Pewin Motors, signed mining. Early in 2006 Chinese a Memorandum of Understanding to distribute the Chinese-made cars. In 2017, China surpassed President Hu Jintao signed an Europe and America as the biggest source of oil exploration contract with foreign direct investment for Kenya. China’s foreign direct investment in the country reached an all- Kenya. time high in 2017, and is likely to increase in 2018 due to favorable business climate. China’s footprint is strongest in construction, is increasingly going projects in Africa, focusing on the sectors of into the real estate sector. It weakest in the area of power generation, transport, ICT sector and consulting services, where their current share of water projects. In May 2014, Premier Li Keqiang the African market is a mere 3 percent. and President Kenyatta witnessed the signing of 17 multi-billion deals in Nairobi to fund multiple Tourism and Wildlife Protection infrastructural projects and various agreements. In 2017, Kenya secured Sh21.9 billion ($291 million) Tourism is the newest and growing frontier in financial assistance from China for infrastructure Kenya-China economic relations. Chinese business development and drought mitigation. magnate, Jack Ma, visited Kenya July 19, 2017. The visit coincided with the launch of mobile Chinese constructors have been building roads, online training for travel agents in China by the including major highways and bypasses. In 2012, Kenya Tourism Board (KTB) to create top of mind three Chinese companies, including China Wu destination awareness and spur interest for travel Yi, completed the expansion of the ultra-modern among the Chinese. China ranks fifth in Kenya’s eight lanes, 50 kilometers long Thika Highway tourist sources. A total of 69,000 Chinese tourists linking Nairobi and Thika. Between 2010 and 2017, visited the country in 2017. In April 2014, China Chinese constructors upgraded and reconstructed stepped up its wildlife protection, providing Sh880 the Nairobi Southern bypass and Nairobi Eastern million for wildlife Conservation. On January 2017, bypass, Nairobi Northern bypass, the expansion Issue No. 34, Africa Research Notes May 2018 4

of section of Langata Road into a dual road and of the Naivasha-Kisumu phase, which will include expansion of Nairobi Outering road, JKIA-Uhuru the development of a new high capacity port at Highway-Gigiri (Unep) Roads. They also completed Kisumu. The final leg is the construction of the the Gambogi-Serem Road in Vihiga County in Kisumu –Malaba section. Western Kenya. China is also financing and supplying ICT equipment to Kenya, mainly through two of its ICT Five Chinese companies—China Road and firms, Huawei Technologies and ZTE (Zhongxing Bridges Cooperation (CRBC), China Wu Yi, Shengli Telecommunications Equipment Corporation). Engineering Construction Group and Synohydro Since 2014, Fiber Home Technologies Group has Corporation—have been working on the Northern been operating in Kenyan. Recently, it has revealed corridor road project linking Mombasa and Nairobi plans to help Kenya to digitize its economy through to Ethiopia and . And in January 2018, supplying modern telecom equipment. Further, China Wu Yi won a Ksh14.2 billion ($142 million) to Chinese media company StarTimes launched a upgrade and reconstruct the Buhimba-Nalweyo- satellite digital television project in Kenya in 2018. Bulamagi and Bulamagi-Igayaza-Kakumiro roads in Western Kenya.M China has invested in railways Powering Development to opening up Africa. In 2013-2014, the four Governments of Kenya, Uganda, Rwanda and One of its largest Chinese financing in Kenya is Southern Sudan signed and ratified a Protocol going to the power sector, with commitments to build a high capacity, high speed Standard estimated at more than US$5.3 billion. In October Gauge Railway (SGR)for passenger and freight 2008, Kenya awarded a US$65 million contract transportation within the Northern corridor. Each to Synohydro Corporation to build a new 20MW country committed to develop the section of the hydroelectric power plant (HEP), the Sangoro plant railway line within its borders in what has evolved in Western Kenya, completed in 2011. as Africa’s first grandiose regional railway project connecting the port of Mombasa to Kampala, China has also been funding the Kenya Power Kigali and Juba. Distribution, Upgrading and Strengthening Project and the Olkaria Geothermal Field Production. Kenya committed to developing the Mombasa It has provided affordable batteries in the East –Malaba section of the entire proposed railway Africa region to promote uptake of green or network in two phases. In 2014, Kenya and China renewable energy solutions such as solar and wind signed a Sh314 billion Standard Gauge Railway energy. Chinese company, Ritar Power, signed (SGR) deal. The first phase of Standard Gauge an agreement with Chloride Exide to promote Railway line from from Mombasa to Nairobi renewable energy in Kenya. was completed in 2017 at a total cost of Ksh380 Housing a Healthy and Skilled Work Force. billion ($3.8 billion). On May 30, 2017, the Freight Chinese companies are preparing to support the Service commissioned while the passenger train, Government’s Big Four Agenda. One of these is the codenamed Madaraka Express was inaugurated provision of affordable housing. Twyford Ceramic on 31 May 2017. A year after its launch, the number Company has established a ceramic factory in of passengers using the Mombasa-Nairobi SGR Kajiado county to produce floor tiles. The factory, train have hit a record high of over 2,000 daily. the largest of its kind in East Africa, is producing The new railway line is expected to raise Kenya’s a total of 25,000 square meters of tiles daily, and Growth Domestic Product by 1.5 percent, drive the employing 1,500 local Kenyans. development of related industries and promote China Wu Yi (Kenya) Precast Co has completed Kenya’s foreign trade, and create no less than work on its factory, based in Athi River, Machakos 30,000 jobs. Phase two of the Standard Gauge County, for precast building materials. The Ksh10 Railway is being constructed in three sub-phases. billion ($100 million) project is officially preparing The second phase from Nairobi to Naivasha, now to produce construction materials in Kenya. It is is underway, will pave the way for the construction equipping its local technical workers with required Issue No. 34, Africa Research Notes May 2018 5

skills before the launch of official operations. for cooperation in higher education. Since 1982, Annual production of precast concrete will be China has been providing Egerton University 50,000 cubic meters which will be enough for with apparatuses for teaching and researches and 20,000 apartments for public servants, with each provided two teachers to work there. China has occupying between 80 to 100 square meters. also provided at least 10 scholarships to Kenyans Sino-Kenya economic relations have also centered every year with Kenyan students studying in China on improving health. In the 1980s, China funded reaching 58 by 2002. the project that effectively expanded Eldoret During the 2015 FOCAC Summit, Chinese Hospital. It also funded the construction of the Companies operating in Africa committed to Malaria Prevention and Treatment Centre and the provide scholarships, support technical, industrial, Mama Lucy Kibaki Hospital in Nairobi, constructed vocational, and entrepreneurship training projects in 2011 but officially opened in 2013. Beijing also as well as rural primary schools. Chinese firms provided Ksh158 million (10 million RMB Yuan) have been training Kenyan railway technicians worth of medical supplies and equipment to the in Chinese institutions. Huawei Technologies will hospital. be funding the training of 30 Kenyan youth in In 2011, China provided a concessional loan to ICT in the 2018/2021 period. The China Road and finance the construction of the Bridges Corporation (CRBC) has been funding fully Teaching, Research and Referral Hospital Project, funding 100 Kenyan high school students to study which is now completed. In 2018-2022, Chinese in China and 60 others in the Beijing Jiaotong companies are expected to play a key role in the University in 2016-2017. Inexorably, with China’s implementation of the health pillar of Kenya’s expanding economic footprint it has increasingly ‘Big Four’ agenda. However, China’s total financial raised its security profile to secure its investments commitments to water and sanitation, a key health in Kenya as elsewhere in Africa, exemplified by its issue in Kenya, remains relatively small. opening of a “logistics support base” in Djibouti in Another frontier in Sino-Kenyan economic relations 2011. is food security, one of the big four agenda. In early April 2017, Beijing announced a donation (This article is a contribution to Special Issue of of 21,000 metric tons of rice worth Ksh2.25 billion China Investment (Africa Edition) on “The Economic ($21.9 million), which was distributed to hunger- Development Road in Kenya and the Role China ravaged Kenyans in 23 counties. China has been Plays” Commemorating the 55th Africa Liberation involved in dam projects not only to generate Day on May 25, 2018 (May 25, 2018). hydro-power, but also irrigation as part of Kenya food security initiative and improve water storage Professor Peter Kagwanja is a former and supply. Government adviser and currently the Chief Sino-Kenya relations have also focused on executive of Africa Policy Institute and Visiting education, capacity building and skills training. In Scholar at the . the 1980s, Kenya and China signed an agreement Issue No. 34, Africa Research Notes May 2018 6

API Africa Research Notes Series publishes scientifically valid research outputs that cannot be considered as full research or methodology articles. Its aim is to provide a forum for sharing data, useful information and perspectives on topical issues of concern to the policy and research communities. Articles published under this series cut across disciplines, and include some short articles or opinion pieces that have already been published by the experts of the Africa Policy Institute. Some are brief publications, updates to previous work, abridged versions of research agendas or concept notes or brief reports of policy forums.

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