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Tuesday, April 2, 2019
Fact Checker: Trade with China skewed against Kenya
Frankline Sunday
Foreign Affairs Chief Administrative Secretary
Ababu Namwamba (second left) flanked by Chinese Economic and Commercial
Counsellor Guo Tse (left), Charge d’Affaires Li Xuhang mark 55th
anniversary of Kenya-China relations last year. [David Njaaga, Standard]
China’s engagement with Kenya has been a subject of much debate over the
past decade dating back to 2012 when then President Mwai Kibaki signed a
deal to build the Standard Gauge Railway (SGR).
In the following years, the project was hyped by government officials
who said it would increase Kenya’s Gross Domestic Product (GDP) by
almost Sh100 billion upon completion. So far, this promise has not
materialised.
Instead, Kenyan taxpayers are forking out Sh1 billion monthly to
subsidise the railway that has also failed to persuade the majority of
traders in the region to shift from the costly but convenient trucking
options.
Nevertheless, China is keen to paint its relationship with Kenya as one
of mutual benefit. China’s Economic and Commercial Counsellor Prof Guo
Tse underscored this point when he met business leaders in Nairobi last
month.
“China’s nonfinancial direct investment to Kenya more than doubled in
2018 to $520 million (Sh52 billion),” he said. Tse noted that trade
volumes between the two countries have reached $3.74 billion (374
billion) and that “China is Kenya’s largest trading and investment
partner.”
This is not accurate.
Data from the Kenya National Bureau of Statistics (KNBS) indicates in
the last six years, Chinese exports to Kenya have shot up from Sh167
billion to Sh390 billion - representing an average annual growth of Sh37
billion. Kenya’s exports to China, on the other hand, have grown at a
more subdued rate from Sh4.1 billion in 2013 to Sh9 billion in 2017
representing an average annual growth of Sh1 billion. The bulk of the
imports from China involve materials used in the construction of the SGR
as part of the deal signed by Mwai Kibaki.
This has robbed Kenya’s local manufacturing sector the opportunity to
plug into the giant infrastructure project for example through the
revival of the dormant Numerical Machining Complex (NMC) that was
expected to provide steel for the SGR.
The World Bank states that Kenya’s contribution to the global
manufacturing output has declined drastically by 900 per cent in the
last three decades partly due to irregular tariffs and high production
costs.
In 2015 for example, the World Bank states that the average Kenyan
exporter exported just Sh15 million worth of goods annually — less than
other African economies such as Egypt (Sh58 million), South Africa (Sh26
million) and even Tanzania (Sh16 million).
Recent trends in boosting the volume of Chinese imports in commodities
such as fish that can be farmed locally indicate the trade balance is
projected to widen or at best, remain skewed in favour of China.
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