Chinese companies eye Kenya’s roads

Road repairs. Kenya’s infrastructure has significant untapped potential for Chinese firms. Photo/FILE
Road repairs. Kenya’s infrastructure has significant untapped potential for Chinese firms. Photo/FILE 

China is pushing for a greater role in the development of Kenya’s infrastructure— an area with significant untapped potential for Chinese firms, says Zhai Jun, the assistant foreign minister.

He told Business Daily in Beijing, that China has so far invested about US$70 million in Kenya.

“The figure is not very large. We’ll continue to encourage the Chinese business community to invest in Kenya in areas such as infrastructure.”

The official spoke ahead of a high-level ministerial conference opening in Egypt this weekend where China will roll out a new package of aid and soft loans aimed at boosting Africa’s development.

Promises made

It will also review promises made to the continent’s leaders at the China-Africa summit in 2006— including the doubling of aid, provision of $5 billion in soft loans and preferential buyer’s credits and a new investment fund to increase Chinese presence on the continent.

Beijing sees infrastructure as key to economic development and much of the aid and soft loans issued in the past three years have supported investment in this area.

Kenya received about $381 million in interest-free and preferential loans, with a portion going towards the Nairobi ring road.

It also got grants worth around Sh3.3 billion, according to Mr Zhai, a small slice of the roughly Sh165 billion of free aid allocated to Africa since 2006.

Some of this money was spent on a road project in the Western province as well as a highway to the UN headquarters and a stadium project.

Mr Zhai and others say there is room for more infrastructure investment in Kenya.

Henry Liu, a director of the East Africa department of the China-Africa Development fund (CAD), which was launched after the 2006 summit to help channel more Chinese investment into Africa, said his team is working hard to identify suitable projects in Kenya.

The fund is currently ‘screening’ proposals to improve tourism-related infrastructure, he said, with new investments possible in 2010.

Beijing’s drive for a greater presence in Kenya comes after University of Nairobi researchers warned last week that Chinese investment may not bring long-term benefit to the economy because of limited local ownership in Chinese-backed projects.

But Liu stressed that CAD’s aim is for a “win-win” partnership.

Chen Jian, an assistant minister of commerce, also claims that China is looking out for both parties.

Responding to a reporter’s question earlier this week about Chinese firms bringing many of their own workers to Africa, he said: “We seek common development for both China and African countries. We try to pursue common prosperity of both sides.”

He added that China’s strong ties with Africa have provided many countries with “high quality projects, reduced construction costs” and faster construction times.

The trend for growing investment on the continent certainly looks set to increase.

Mr Chen said that “the Chinese business community has bucked the trend” this year, investing $875 million in Africa in the first nine months, an increase of 77.5 per cent over the same period of 2008. In total, China had invested $7.8 billion in the continent by the end of 2008.

China will continue to support Africa’s energy sector, which takes up about a third of its overall assistance to the continent, said Mr Chen. Agriculture, healthcare and education will also receive ongoing support while projects to help tackle climate change are expected to get new commitments from China at this weekend’s conference.

“We will announce new measures to adjust to climate change and protect the environment. We are working together on solar, biogas and geothermal,” said Mr Zhai.

He pointed to a recently approved grant of $100 million for the Ol-Karia geothermal project as evidence of the kind of projects likely to get Chinese aid.

China also wants to help Africa cope with the impact of the financial crisis though the officials gave no detail on how it would do this.

Trade volumes between China and the continent have surged in recent years but they declined about 25 per cent in the first nine months of this year and huge imbalances remain for many countries.

Kenya’s exports to China hit the 2 billion shillings mark in 2008 but Chinese imports grew faster and the gap has stretched to 62.5 billion, up from 44 billion in 2007, according to data from the Centre for Business Information in Kenya.