Industry

China firms churn out 127,000 jobs for Kenyans

Launch of train wagons by a Chinese company. FILE PHOTO | NMG
Launch of train wagons by a Chinese company. FILE PHOTO | NMG  

Chinese firms operating in Kenya have created 127,000 jobs in the formal sector, a new report by global consultancy firm McKinsey & Company has showed.

The report released on Tuesday indicates that there are 396 Chinese companies operating in Kenya, with nearly 90 per cent of their workforce being locals.

However, less than half of these workers have employment contracts, with the majority working as casuals.

Chinese companies, both private and State-owned, have been increasingly eyeing Africa for trade opportunities, with their direct foreign investment into the continent totalling $66.4 billion (Sh6.9 trillion) between 2005 and 2016.

The study found that there are over 10,000 Chinese firms operating in Africa.

80 per cent of the companies operating in Kenya are privately-owned enterprises.

“Chinese firms already primarily hire locals — 89 per cent of their employees are African — and underlying labour-cost trends in Africa and China suggest this figure will continue to increase,” says McKinsey in the report.

“In some markets, Chinese firms employ a notable share of the workforce already: for example, we estimate that Chinese firms account for approximately five per cent of total formal employment in Kenya.”

Kenya National Bureau of Statistics (KNBS) data shows that by the end of last year, there were 2.55 million formal jobs in Kenya, accounting for 16 per cent of total employment in the country.

Most of the jobs created by Chinese firms are in the manufacturing and services sectors, which account for 62 per cent of the total number of Chinese firms operating in Kenya.

These companies are however sourcing most of their supplies from China, meaning local firms are largely missing out on the opportunity to gain from the inward investment.

Chinese firms get 51 per cent of their supplies from their home country, 44 per cent from Kenya and the rest from other countries. The local content average for the continent stands at 47 per cent.
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