Knowledge is Power Issue No. 34, AF E RICA ITUT May 2018 POLICY INST Africa Research Notes Africa Policy Institute Kenya’s president, Uhuru Kenyatta, 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 KENYA. 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 Nairobi 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 Mwai Kibaki 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 South Africa 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 South Sudan. 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.