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Economy

Major trade deals top agenda as China PM visits Kenya

A section of Thika Superhighway. Chinese companies have built major roads in the country. Photo/FILE
A section of Thika Superhighway. Chinese companies have built major roads in the country. Photo/FILE  

Chinese Prime Minister Li Keqiang is expected in Nairobi Friday afternoon at the start of a three-day visit whose agenda is topped by a possible signing of multi-billion- shilling deals and a review of the existing commercial relations.

The Foreign Affairs ministry said Mr Li would use his three-day visit to tour Chinese-sponsored projects and hold bilateral talks with President Uhuru Kenyatta.

His visit comes at a time when China’s profile as Africa’s economic partner has continued to rise, making the Asian giant the top financier of key sectors such as infrastructure development.

Kenya is among the four countries that Mr Li is visiting in a journey that analysts see as mapped out on the footprints of Beijing’s most important economic interests in the continent.

Premier Li began his visit in Addis Ababa, before moving on to Abuja where he addressed the World Economic Forum – Africa summit and will move on to Luanda on the final leg of his journey.

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Kenya’s Foreign Affairs ministry said in a statement that Mr Kenyatta and his guest would “explore co-operation in trade, investment, infrastructure development, energy, finance, agriculture, aviation, space technology, information and communication,” during the visit.

“The leaders will further cement the Comprehensive Co-operation Partnership that exists between the two countries,” the statement added. 

Though a major recipient of concessional loans for infrastructure development, Kenya has been a legal land mine for Chinese firms a number of which have run into strong procurement headwinds that remain unresolved.

The construction of a Sh320 billion Mombasa-Nairobi Standard Gauge Rail (SGR), the Sh56 billion Nairobi Greenfield International Airport Project and Sh8.5 billion Police Surveillance Communication Command and Control system have all been hit by legal challenges, delaying their commencement.

Last week, Mr Li was quoted in international media as having instructed Chinese firms to abide by African tendering laws and protect the interests of communities in their areas of operation.

“There are isolated cases that go against our policy of equality and mutual benefit, but the government is willing to sit down with African countries to resolve them,” Mr Li told Chinese news agency Xinhua ahead of his Africa tour.

Data from the Chinese Embassy in Nairobi indicates that some 50 Chinese companies are executing 80 road, railway, housing, water processing, power upgrading, geothermal well and ports projects valued at Sh170 billion ($2 billion).

Mr Li’s visit comes amid increased activity by Somali-based Al-Shabaab terrorist group, who have carried out at least four bomb attacks in the past two weeks alone, adding agency to the police surveillance equipment project.

Kenyan businesspeople hope the visit will see a renewal of trade relations between the two countries and open new areas of co-operation.

China has in recent years shown a growing appetite for unprocessed commodities from Africa including leather and skin, vegetable textile fibre, copper and plastics, ores and concentrates, fish, tea, and coffee.

The goods are no match to the multi-billion- shilling machinery, electronics, vehicles and the spare parts,  iron and steel, plastic and rubber, apparel, footwear and furniture that Kenya buys from China every year.

Last year, Kenya paid an import bill worth 182 billion to China against export receipts of Sh4.2 billion opening one of the Nairobi’s largest trade imbalances ever.

“We know that a country that exports only raw materials is doomed to fail,” said Charles Mborogo, a former diplomat and chief executive of Kenya National Chamber of Commerce and Industry.

“Even where we don’t get joint ventures, we are thinking of attracting Chinese firms to invest and do value addition here because this creates more jobs,” Mr Mborogo said.

The local business community hopes their interaction with the Chinese delegation will boost access to the Sh14.5 billion ($170 million) Special Loan facility for small and medium enterprises (SMEs) that China has set up for Africa.

In Kenya, the fund has so far benefited SMEs in tea production, power generation, rural power grids and regional aviation, information from the Chinese Embassy in Nairobi says.

Lately, China has emerged as an important source of tourists for Kenya as visitors from traditional western markets decline.

A total of 41,000 Chinese tourists visited Kenya in 2012, pushing the Asian country to top 10 tourist source markets for Kenya globally and the second-largest source market in Asia.

The Kenya Tourist Board (KTB) projects the figure will grow steadily in the coming years, hitting 100,000 by 2016.

“Kenya attracts tens of thousands of Chinese tourists each year because of its unique natural and cultural resources,” said Mr Gu Xiaorun, an official at Information and Public Affairs Section of Chinese Nairobi Embassy.

Throughout his visit, Mr Li has been trying to assure Africa that its partnership with the continent is different from what it has had with Europe.

The Chinese premier on Thursday pledged “no strings” support for Africa’s development, saying the world’s second-largest economy would not meddle in the continent’s internal affairs.

“All China’s support for Africa will come with no political strings attached,” Mr Li said, speaking at the World Economic Forum on Africa in the Nigerian capital Abuja.

“We will not interfere with Africa’s internal affairs or ask something impossible of Africa,” he added.

On Monday in Addis Ababa, Mr Li unveiled extra aid for Africa totalling at least $12 billion, and offered to share advanced technology with the continent to help with development of high-speed rail.

Additional reporting by agencies.

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