The benefits of Kenya-China relations are huge. However, there are some challenges associated with the partnership including de-industrialization. Kenya needs to strategically plan how to work with China to transfer skills to Kenyans.
It is every government’s ambition to provide affordable goods to its citizens as this will ensure that they meet their every need efficiently thus, contributing positively to the overall growth of the nation.
According to a report published Thursday by the World Bank Group, Kenya has benefited from the relations it has with the Chinese government, one way being through the shipping of affordable goods to Kenyan consumers.
What’s more, the report argued that partnerships such as the construction of the Standard Gauge Railway which will link Nairobi and Mombasa is another way in which Kenya-china relations have benefited the East African Nation.
According to the World Bank report titled ‘Deal or No deal: Strictly Business for China in Kenya,’ “China’s loans compete with loans from traditional donors that attach conditions of good governance and transparency."
The report added that China continues to fund major infrastructure projects in Kenya, without so much interest in the country’s politics.
Further, the report noted that Chinese firms in the country employ a majority of local workers, both full-time and part-time, giving them a source of income to enhance their lives. This demystifies stereotypes that Chinese firms only use Chinese labor.
The report argued that Chinese firms in the country could offer more than the current basic skills training, safety and hygiene if Kenya promotes local capacity building and technology transfer.
The economic slowdown in China and the transition to a consumption-based economy will be a big boost to Kenya’s exports especially cut flowers.
Figures from the Kenya National Bureau of Statistics indicate that imports from China by Kenya stood at Sh295.39 billion in 2015.
The report is optimistic that the fact that Kenya is an oil-importing country, it will be shielded from china’s slowdown and could even see an increase in their exports.
"Kenyan exporters of services such as tourism will fare well as China transitions to a consumption based economy by 2030."
“Kenya can enhance its growth in manufacturing if it continues to attract foreign direct investment from China.”
Despite these positive outlooks, the ‘good’ relations with China could affect Kenya’s economic plans especially the Vision 2030, which aims at industrializing the country.
The report pointed out that Kenya’s manufacturing industry could be delayed if it continues to give China a huge advantage over locally manufactured products.
“Because Kenya produces and trades few intermediate goods, researchers have concluded that Chinese imports could lead to a de-industrialization.
Many suspect a premature decline of industry because manufacturing growth was only 3.4 percent in 2014, down from 5.6 percent in 2013,” the report noted.
Currently, the manufacturing sector accounts for 10 percent of GDP, half of what is contained in the government’s Vision 2030 program.
According to the report by the global lender, Kenya needs to promote more foreign direct investment into manufacturing, increase labor productivity and infrastructure, lower transport costs, and lighten the regulatory burden on trade, to boost exports and the share of manufacturing in GDP.
It also calls on the country to bridge gaps in Kenya’s balance of trade by putting an end to the over-reliance on agricultural and commodity exports and boost the manufacturing industry.
Image credit: REUTERS / How Hwee Young
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