Japan, China rivalry leaves Kenya with contract billions

Kenya has become the latest beneficiary of the battle heating up between Japan and China for control of Africa’s economic landscape, raking in billions of shillings in new project finance and grant funds in the past two years.

Though China has been the more brazen hunter of opportunities in the country’s vast infrastructure and natural resources sectors, the scales have been tilting in favour of Japan in recent months as the Asian economic powerhouse unleashed its corporate giants for pieces of the action.

With the support of their government, Japanese firms are making few but high strategic entries into East Africa, targeting the expected windfall in mineral extraction and consumer goods markets.

Japan has for decades defined its presence in Kenya through aid, but is now widening its scope to the private sector— a move that places it in a head-to-head battle with China.

“It’s a fight that involves both economic and political dominance. Japan has been here for long, but is now stepping up its efforts upon realisation that China is fast increasing its influence in key economies such as Kenya,” he added.

Both embassies declined to comment.

Japan’s profile in Kenya has been gradually diminishing in the past decade as an increasingly assertive China clinched multi-million infrastructure deals and doubled its development aid to the country.

Japan’s recent actions indicate that it is keen on replicating the Chinese model as it plays the catch up game. Its main goal is to encourage private investments through loans from its state-controlled banks and to scale up its lending to government.

Tokyo is targeting infrastructure projects, agribusiness and natural resources, notably oil exploration in Southern Sudan, Uganda and Kenya.

In recent months, Japanese corporate executives and leaders have been making whirlwind tours of Africa with Kenya as a regular item on their itinerary.

Japan’s Crown Prince Naruhito on his first trip to Sub Saharan Africa was in Kenya early this month after visiting Ghana as part of plans to boost Japanese profile on the continent.

Last week, Toyota Tsusho, the carmaker’s trading arm, announced plans to build a $1.5 billion (Sh112 billion) oil pipeline from South Sudan to the Kenyan coast, complete with an oil export terminal.

China also has interests in Lamu project, which includes rail and port facilities, and it remains to be seen how the bidding for the project between the Asian rivals plays out.

Both countries have interests in Southern Sudan where they have been granted rights to explore oil and China has struck a deal to put swathes of land in the region under food crop production, in what has come to be commonly known as Africa’s land grab.