German envoy protests over Kenya bias towards Chinese firms

What you need to know:

German ambassador says favouritism was at the expense of quality by German contractors.
Private sector chairman Patrick Obath: “The issue of quality is no longer important because China is now giving us good quality, the cost of credit is one of the most important factors that developing countries must consider"
Gerishon Ikiara, a lecturer of international economics at the University of Nairobi says European companies have also lost competiveness by virtue of their being too expensive.

The government of Germany has complained to Kenya over what it termed as undue advantage accorded to Chinese companies due to financing by the government of China.

Speaking at a meeting with key Kenyan government officials, German ambassador Margit Hellwig-Botte complained that favouritism was at the expense of quality by German contractors.

“I know that you won’t like what am saying but there is preferential treatment given to Chinese companies without considering that Germans deliver quality work,” said Ms Botte amidst loud applause from German investors.

Ms Botte said that unlike Chinese firms which get support from their government, most German companies are usually on their own.

She was speaking to senior officials including the chairman of Vision 2030 James Mwangi during a German-Kenya business conference which was opened by Prime Minister Raila Odinga.

European and African companies have been unable to compete for local tenders due to stringent tendering procedures which the bidders are required to meet such as affordable financing.

Mr Mwangi however said that apart from the fact that the number of German bidders is small Kenya also needs the cheaper capital that Chinese bidders come with.

The head of Kenya Private Sector Alliance (KEPSA) Patrick Obath however said that even aid from European countries has often come with strings attached where it benefits their companies and the same thing is happening to China.

“The issue of quality is no longer important because China is now giving us good quality, the cost of credit is one of the most important factors that developing countries must consider,” said Mr Obath adding that European companies should consider getting credit from China as Kenya cannot do much about it.

For instance during the tendering of the Sh55 billion airport tender two Chinese firms, Anhui Construction Engineering Group and Chinese Construction Engineering Group mobilised state resources to meet the tender requirements.

The second group, with an annual turnover of Sh232.9 billion had a financing pledge for the project from state-owned China Exim Bank.

Anhui had a letter from state-owned China Development Bank pledging to finance the construction of JKIA’s Greenfield Terminal to completion.

The bidders for large construction projects are normally required to provide tender surety of hundreds of millions, show evidence of handling similar high-profile contracts in the past, and provide a letter of intent from financiers to fund the works.

Germany Embassy is currently hosting 200 German and Kenyan companies and Kenyan officials at the business meeting that will lead to partnerships and new ventures.

Germany has about 70 companies operating in various fields in Kenya ranging from engineering, energy, pharmaceuticals, mechanical, and import and export companies.

The German delegation is in Kenya at a time of increased interest by foreign investors in the country and less than two weeks after tens of Chinese companies visited Nairobi.

Gerishon Ikiara, a lecturer of international economics at the University of Nairobi says European companies have also lost competiveness by virtue of their being too expensive.