Many Kenyan businesses feel that Chinese owned companies receive preferential treatment and are able to operate with fewer regulations and lower costs, disadvantaging their local equivalents.
The recent protests in Nairobi against the superstore China Square have highlighted Kenya’s dichotomy between dependency and foreign investment. China Square is a giant Chinese goods supermarket in the Unicity Mall owned by the University of Kenya.It was opened at the end of January and reportedly its takingseven ona bad day were US$77,000. Hundreds of local tradesman and retailers who were selling similarly sourced Chinese products accused China Square of stealing their business through an unfair advantage, they held a protest resulting in China Square being temporarily closed.
Cabinet Secretary for Trade Moses Kuria suggested that China Square and Chinese investment hadmade unhealthy competition for entrepreneurs and small scale traders.ManyKenyan businesses feel that Chinese owned companies receive preferential treatment and are able to operate with fewer regulations and lower costs, disadvantaging their local equivalents.
The Chinese Embassy in Kenya issued a statement hoping for practical cooperation from the Kenyan government.
MrCheng Lei, the proprietor of China Square appeared before the Kenyan Parliamentary Departmental Committee on Trade, Industry and Cooperatives to explain China Square’s business model. He assured the Committee that China Square was transparent in its dealings and had no intention of harming local businesses. He said he believed in healthy competition for the benefit of all business stakeholders and called on co-existence with other businesses; China Square was reopened after a week of closure.
This is the latest episode in an anti-China series. Many Kenyans feel exploited by China’s dominance in their lives. Hitherto China has invested deeply in Kenyan infrastructure, roads, railways, airports, bridges and ports, now manufacturing and supply chains are becoming an issue and the Kenya administration is wary not to look like it is picky about where investment comes from. China accounted for 20.5% of Kenya imports in 2021-22; machinery, equipment, iron and steel were among the growth products. China is an important partner to Kenya as Kenya exports everything from titanium ores to avocados.
China sees Kenya as leading the opportunities in east Africa.Kenya could become a manufacturing and assembly hub for all sorts of Chinese products that could then be exported across Africa; there is also a synergy between Kenya and China in solar power production.
Kenya is the biggest economy in east Africa but like the rest of the world Kenyans are suffering the cost of living. According to the Kenya National Bureau of Statistics, Kenya has recorded the highest cost of living since 2017. Global inflation, the war in Ukraine, the dreadful drought and the aftermath of Covid have all played their part; recently National Treasury Principal Secretary Chris Kiptoo said, China accounts for 67% of Kenya’s Sh1.21 billion bilateral debts, bilateral debt accounts for 26% of all Kenya debt.
President William Ruto and his running mate RigathiGachagua campaigned for radical changes in China policy and to protect Kenyan jobs; overall the Ruto-UDA government is perceived as leaning more towards the US than did the previous Kenyatta government. It is interesting to note that during Jill Biden’srecent and first visit to Kenya as US First Lady she emphasized the need to preserve democracy,just as Russia and China have made inroads into Africa.“One out of every three major infrastructure projects in Africa is built by Chinese state-owned enterprises, and one out of every five is financed by a Chinese policy bank,” said Paul Nantulya of the Africa Center for Strategic Studies, an academic institution within the US Department of Defense; and Russia, a key arms exporter to Africa, is also making forays into the continent including through mining projects granted to the Wagner group.The trouble is when African countries cannot repay the loans,China helps itself to the asset it financed.
An interesting recent developmentto note is that an association has been established to provide assistance to Taiwanese businesspeople in Kenya through the joint efforts of three government agencies.The Taiwanese Emergency Assistance Association in Kenya was jointly established by the Taiwan Representative Office in Somaliland, the Overseas Community Affairs Council and the Taiwan Trade Center in Nairobi.It was set up against a backdrop of rising sentiment that is critical of China in Kenya due to Beijing’s economic practices.
In another development the Reserve Bank of India has approved bilateral trading in national currencies for 18 countries, including Kenya. This week the Hon. Justice Martha Koome, Chief Justice of the Republic of Kenya and President of the Supreme Court visited New Delhito hold talks with Satya Pal Singh Baghel, Minister of State for Law and Justice.Baghel suggested Kenya use the Delhi-based India International Arbitration Centre to settle its trade-related disputes and also encourage other African partners to choose the forum for international arbitration. Justice Koomeagreed to collaborate in the areas of judicial training, geospatial mapping of judiciary infrastructure, enhancement of ICT and people centred justice solutions.On International Women’s Day Justice Koome met President DroupadiMurmu, to address the special justice needs of women and girls, especially in the area of sexual and gender-based violence.