World Bank research shows 400 Chinese firms operate in Kenya

Money Markets

World Bank lead economist for Kenya Apurva Sanghi. PHOTO | FILE 

By GEOFFREY IRUNGU

In Summary

• The Asian giant’s foreign direct investment (FDI) in Kenya’s manufacturing ranges from automotive components, food, consumer electronics and communication equipment among others.
• China also tends to create more jobs per project, but they also have a lower number of projects in total.
• Kenya manufactured exports have also found their way into China. Such goods include chemicals and plastics. But in general Kenya’s exports to China have little value addition and are mainly sisal, tea, coffee and scrap metals.

China has about 400 companies operating in Kenya with the largest number invested in manufacturing, research by the World Bank Group shows.

The Asian giant’s foreign direct investment (FDI) in Kenya’s manufacturing ranges from automotive components, food, consumer electronics and communication equipment among others.

Chinese involvement in roads and railways construction is considered as projects that will come and go rather than FDI though.

“Chinese firms focus on manufacturing in Kenya. Manufacturing was 64 per cent of total investment for Chinese companies,” said the World Bank study.

The sector has also created the largest number of jobs with the communications subsector leading with 931 people, 500 jobs by automotive original equipment manufacturing and 342 in the metals industry.

The research was conducted by two World Bank Group staff, Apurva Sanghi, who is the lead economist for Kenya, Uganda, Rwanda and Eritrea and Dylan Johnson who is a consultant for the Group.

“Medium-sized private Chinese firms have a sizeable share of investment, and they tend to operate in the manufacturing sectors, creating many low-skilled manufacturing jobs,” said the study.

China also tends to create more jobs per project, but they also have a lower number of projects in total.

Kenya manufactured exports have also found their way into China. Such goods include chemicals and plastics. But in general Kenya’s exports to China have little value addition and are mainly sisal, tea, coffee and scrap metals.

“Major exports to China include hides and skins, scrap metals, and sisal; coffee and tea were major exports in the food and live animals category… Value-added products such as chemicals and plastics have also reached China,” said the report.

The report further says that Kenya’s exports to China have low prices on international markets.

“For crude materials, titanium ores and concentrates exports were the highest, followed by copper, vegetable textile fibres such as cotton, hemp, or sisal, and plastics. Kenya’s exports feature minimal value addition, and the prices of Kenya’s major exports to China are low on international markets,” said the report.