October 12, 2008

China Consolidating Investment in Kenya

Text of report by Gakuu Mathenge entitled "Chinese takeover" published by Kenyan privately-owned daily newspaper The Standard website on 12 October; subheadings inserted editorially

During KANU's [Kenya African National Union] reign, China-Kenya relations were frosty. Under former President Moi's rule even a superficial association with China was sufficient to make one a political outcast.

Relations with communist China have been partly blamed for the vicious fallout between founding President Mzee [honorary] Jomo Kenyatta and Jaramogi Oginga Odinga.

However, after KANU lost power in 2002 elections and President [Mwai] Kibaki assumed office, Kenya has done a clear 360-degree turn, embracing China tight, like a long lost brother.

Reactions have been mixed, from muted apprehension, at least locally, to outright opposition. Then there are unapologetic optimists who feel the Sino-Kenya relations are dignified and respectful.

Trade between China and Kenya has grown rapidly since President Kibaki took over power with delegations flying between Nairobi and Beijing to talk business. What is clear though is that six years into the Kibaki rule, trade between China and Kenya has grown rapidly with high level delegations flying between Nairobi and Beijing and big money for mega projects, donations and investment funds.

President Kibaki made two state visits to China during his first term, and none to former colonial master and leading trading partner, Britain, to date.

Kibaki made a five-day state visit to Beijing in August 2005, and returned there in November 2006 to attend China-Africa Co-operation Summit attended by 41 heads of state, and 48 representatives from 53 African countries.

In August, Vice-President Kalonzo Musyoka led the Kenyan Olympic delegation to Beijing, during which he attended several official functions hosted by the Chinese government.

Communist Party chairman

During the visit, Communist Party Chairman Mr Jung Jiuri praised Kalonzo for his role in fostering Kenya-China relations since he led a KANU delegation to China as KANU national organizing-secretary in 1989.

China President Hu Jintao visited Nairobi in April 2006, during which he and Kibaki signed some lucrative agreements, including a 20- year multi-billion oil exploration deal currently going on in Isiolo District [Eastern Province, central Kenya] and offshore blocks covering 115,343km square off the Kenyan coastline. Among other deals sealed then included economic and technical cooperation, health research and the urban development of Nairobi.

Underneath these chummy interactions, China has made an unprecedented entry into Kenya, consolidating its presence in some of the lucrative sectors such as civil engineering projects. It has edged out big boys from Europe who dominated the sector for decades and, in the process, left a sour taste among local companies.

Local and foreign companies can only look with envy as Chinese companies gobble up contract after contract, which some estimate to be worth 150bn shillings [about 2bn dollars] of government jobs at the moment.

In the Ministry of Roads and Public Works alone, Chinese firms hold contracts worth 80bn shillings [about 1bn dollars] in road and bridge construction and rehabilitation works.

Just to list a few, here is sample of Chinese presence in Kenya:

Late 2006, Chinese Defence Minister Mr Liang Guanglie announced that China would help Kenya modernize its military; modernization is understood to mean equipment and training to boost capability and preparedness.

China National Petroleum Pipeline Engineering Corporation has been awarded a 43.6m dollars tender by the Kenya Pipeline Corporation to expand and modernize the Mombasa-Nairobi pipeline.

The contract involves construction of pump stations to double the current capacity to 880 cubic metres of oil from Mombasa refinery. The project aims at improving oil delivery to meet growing demand in Nairobi and eastern Kenya;

Chinese Corporation, Wu Yi Inc, has been contracted to construct the virgin 526km tarmac road from Isiolo to Moyale, on the Kenya- Ethiopia border. The firm is already on site constructing the first phase of 136km from Isiolo to Merille River in Marsabit District. The government of Kenya, the European Union and the Africa Development (ADB) fund the contract.

Wu Yi Co Ltd also bagged the 10bn shillings [about 137m dollars] Jomo Kenyatta International Airport expansion contract two years ago.

The expansion is aimed at boosting capacity of JKIA to accommodate 1,500 cars, modernize airfield lighting, apron floodlights and parking stands for 43 aircraft from the current 23.

China Road and Bridge Corporation is about to complete the multi- billion expansion and rehabilitation of Nairobi-Mombasa Highway, doing the 150km Maji ya Chumvi-Miritini stretch. The Nordic Development Fund financed the project.


In August 2005, during President Kibaki's visit to China, Chinese telecommunications giant, Huawei, signed a deal to expand telecommunications services to rural Kenya, using loans provided by the Chinese government.

Telkom Kenya runs its newly launched Telkom Wireless telephony on Huawei's CDAMX technology, competing with the two other mobile phone service operators, Safaricom and Zain.

China's Jinchuan Group last month acquired majority shareholding in Tiomin Resources Inc, to mine Titanium in Kwale District [southeastern Kenya].

The deal stipulates that if oil is found, it would be shared between CNOOC and National Oil Corporation, (KNOC).

In return, China is to fund rehabilitation of Nairobi roads, street lighting and refurbish Moi International Sports Centre, Kasarani, which they built in 1987.

Around the time Hu was in town, the World Health Organization pushed the Ministry of Health hard to change the Malaria drug policy to adopt Artemisinin-based drugs as the first-line anti-malaria treatment.

Artemisia, the raw material used in manufacturing the drug, is grown commercially in China. Hu also donated half a billion shillings [about 6m dollars], for use in malaria programmes.

Local and Western companies grumble that unless something is done urgently, they have no chance against China, which uses political influence to secure business for Chinese firms.

"You have zero chance when you are competing for a tender with a Chinese company that turns up in Nairobi in the company of chairman of the Communist Party of China. These officials not only pay courtesy calls to all big offices, but also host our government officials when they go to China. If you did the same, you will be accused of canvassing and corruption," a senior engineer with a local construction company said.

Originally published by The Standard website, Nairobi, in English 12 Oct 08.

(c) 2008 BBC Monitoring Africa. Provided by ProQuest LLC. All rights Reserved.