Chinese workers inspect the Nairobi-Naivasha SGR line. FILE PHOTO | NMG
Chinese expatriates and earnings from China firms in Kenya have dipped as Beijing continues to recalibrate its relations with the continent amid high debt levels in most African countries, new data shows.
The data from Johns Hopkins’ China Africa Research Initiative shows that the Chinese firms in Kenya raked in revenues of Sh274.1 billion ($2.106 billion) from the various projects they had in the country by the end of 2022.
This was less than half of their peak earnings of Sh591.8 billion ($54.55 billion) in 2016, pointing to a slowdown in Chinese activities in KenyaBecause most of the financing from Beijing for various projects and contractors come together, the number of Chinese workers on contract dropped to a nine-year low of 3,351 in the review period even as China grapples with an economic crisis triggered by the Covid-19 pandemic and aggravated by recent trade hostilities it has with the US and Europe.
The data, which was published in March, shows that the last time Kenya had a lower number of Chinese workers contracted on various projects was in 2013 when the country had not begun the construction of the standard gauge railway (SGR), China’s largest infrastructure in the country.
At the height of the Chinese construction boom—which started with the building of Thika Superhighway before scaling up to the $5.1 billion SGR—the number of Chinese nationals working on various infrastructure projects hit a record high of 8,503 in 2018 before slowing down as Beijing trimmed its debt financing, the data shows.
Since then, China has been shifting from financing the big-ticket projects that characterised the 10 years of retired President Uhuru Kenyatta’s presidency. The debt-financed projects consisting of roads, ports, railways, and power stations contributed to the Sh11.25 trillion debt load which has forced China to go slow on mega infrastructure projects, including the financing of the third phase of the SGR from Naivasha to Malaba.
China’s infrastructure financing across the continent has dropped to about $1 billion in each of the last three years from a peak of $28 billion in 2016, said Professor David Shinn, an adjunct professor at the Elliott School of International Affairs at George Washington University and co-author of “China and Africa: A Century of Engagement.”
“When financing goes down, construction and labour goes down,” said Professor Shinn, who is also a former US ambassador to Burkina Faso and Ethiopia.
Financing from China has reduced significantly, with the share of Chinese loans in Kenya’s debt stock reducing from $6.95 billion in December 2021 to $6 billion by end of December last year, official data shows.
“In the previous administration, they did the heavy projects and heavy borrowing from China, and especially on infrastructure wiping out the ceiling for the next administration,” said Dr Caroline Saroni, an international trade and investment expert and director at Afritrade Consulting Group.
Left without headroom to borrow, Dr Saroni said the William-Ruto led administration had resorted to public-private partnerships (PPPs) to finance most of its agenda.
Chinese labour has also been in decline due to pushback by Africans who want to see more Africans hired for these jobs because eventually, it is them who will pay for the Chinese loans, explained Prof Shinn.
“Some of the decrease in financing is being driven by Africans who are concerned about taking on too much debt from China or any other source such as the World Bank or bondholders,” he added.
China has also been refocusing its efforts on the continent from the “spectacles” of mega debt-financed infrastructure into the “small but beautiful” projects such as digital connectivity, food security and health even as the Asian nation continues to grapple with a slowdown in its economy, said Cavince Odhere, an independent analyst on international relations with a focus on China-Africa development co-operation.
“The “small but beautiful” concept is an initiative that is now being pushed by China to focus on low-hanging fruits that have the most impact, rather than going for spectacle,” said Mr Odhere.
The shift by China is also towards “more environmentally-friendly projects” that do not carry a significant debt burden, said Ken Gichina, an economist.
Despite the drop in Chinese financing, Beijing still remains Kenya’s most critical development partner in infrastructure development, not only due to its deep pockets and risk aversion but also the ability to deploy its technology and technical capabilities in Africa, explained Dr Saroni.
No comments :
Post a Comment