On firmer footing

Kenya has excellent credentials to attract more Chinese investment, ambassador says

Liu Guangyuan, China's ambassador to Kenya, believes that the stable economic and political climate seen in Kenya and other African countries will propel more Chinese companies to spread wings in Africa.

The strong growth momentum in Africa can be gauged from its growing demand for industrial products, agricultural machinery and infrastructure projects, says Liu.

"The rapid pace of industrialization in Africa should be sweet music for Chinese companies in sectors like manufacturing, tourism, clean energy and agriculture."

Among all the African nations, Kenya has one of the best credentials to attract more Chinese investment due to its stable economic and political climate. Besides it is a major transportation hub for the rest of Africa and also has one of the most receptive labor force on the continent, he says.

"They are open to new ideas and also keen on shaping Africa's prowess in industries like manufacturing and services," the ambassador says. "Chinese companies engaged in sectors like financial services, communication and transportation services stand to gain the most from Kenya's industrialization push."

Sitting in the main hall of the Chinese embassy in Nairobi, in what is called the diplomatic enclave, Liu says that the Kenyan government has come out with several supportive regulations to attract more foreign investment.

According to Kenya Vision 2030, the development plan covering the period 2008 to 2030, the government has set a goal of transforming Kenya into a middle-income country and provide high quality life to all citizens by 2030.

To achieve this goal, the Kenyan government has formulated 36 laws and regulations to protect the interests of foreign investors. It has also signed bilateral investment and trade protection agreements with more than 15 countries including China, the United Kingdom and the Netherlands.

"Unlike most of its peers, Kenya has excellent geographical linkages with other regions in Eastern and Central Africa. Chinese companies should utilize these advantages and make Kenya their first port of call in Africa."

Kenya has one of Africa's biggest ports, the Mombasa port, with 21 deep-water berths, handled more than 2,200 tons of cargo last year. Nearly 70 percent of the imports made by African countries like Uganda, Rwanda and Burundi came through the Mombasa port. Traders from other nations such as Ethiopia, Somalia, Sudan and Congo also source most of their goods from Kenya for further sale in their markets.

It is precisely these kinds of growth opportunities that have prompted big Chinese companies like computer maker Lenovo, heavy machinery maker Sany and commercial vehicle maker Beiqi Foton to make Nairobi the fulcrum of their African operations.

"The 2010 East African Common Market Protocol signed by the members of East African Community, an intergovernmental organization comprising five Eastern African countries - Kenya, Burundi, Tanzania, Rwanda and Uganda, has also created a huge marketplace for Chinese companies," he says.

Patterned on the lines of the European Union, the agreement allows unrestricted movement of labor, capital, goods and services within the EAC countries. This also means that foreign companies have direct access to a huge market of more than 120 million consumers.

But the biggest draw for Chinese companies should be the keenness of the EAC countries to attract more investments in advanced technologies.

"Kenya has been focusing on attracting more investment in industries with technical content. It has also outlined a major infrastructure program along with plans to further enhance industrial production capacity and create a conducive investment environment for foreign companies," Liu says.

The ambassador, who was earlier the minister at the Chinese embassy in Washington, says that unlike European or US companies, Chinese enterprises are better equipped for the long haul in Africa as they have the adequate resources and price advantage to remain competitive.

Last year, China Road & Bridge Corporation signed a contract worth $3.8 billion for constructing Mombasa-Nairobi Railway with standard gauges, which will be part of Africa's goal of interconnection and interworking. Currently, there are more than 200 Chinese companies operating different businesses in Kenya.

According to Economic and Commercial Counsellor's Office of the Chinese Embassy in Kenya, in 2012 China's contracted investment to Kenya reached $470 million and the actual investment hit $379 million. The investment covered vehicle assembly, real estate development, household electrical appliances, light industry, building materials, resources survey and exploration as well as tourism. The combined contract value of the Chinese enterprises in Kenya was around $2 billion, covering nearly 100 projects.

Business ties aside, Kenya also has enough attractions to woo Chinese tourists, Liu says. China now accounts for the second-largest chunk of tourists from Asia in Kenya, after India. According to the Kenya Tourist Board, of the 1.78 million tourists that visited Kenya in 2011, nearly 37,000 were from China, a 32 percent growth over the previous year.

More and more Chinese tourists visit Kenya and the figure was expected to reach 60,000 in 2012.

According to Liu, Chinese companies can also invest in Kenya's hotel business, tourism infrastructure construction, development of eco-tourism and new tourism products, as they are proficient in carrying out various high-level services and marketing strategies in a new market.

Some African countries such as Kenya, Ethiopia, Rwanda, Chad and Angola are also keen on learning from China and its development experiences to provide a new direction for their economic development.

Liu says that though China has been studying Africa for decades, Africa has started to study China only recently. However, this situation is fast changing and some nations such as Kenya have already taken the lead to improve their relations with China.

"Kenyans have clearly realized that learning the Chinese language is not enough to build close bonds. They have realized that they also need to learn Chinese culture and technology, so that they can gain through scientific collaborations, investment and trade negotiations."

Steps in this direction have already been made with the setting up of a Confucius Institute at the Nairobi University. The institute started offering certificate and diploma courses in 2005, but now also offers four-year undergraduate degree courses. It plans to offer postgraduate degree courses and new business courses to local students this year.

Last year, nearly 64 Kenyan students were chosen to receive a full scholarship provided by the Chinese government for undergraduate and postgraduate-level studies in China, which is double the number in 2011. Kenya's Egerton University is going to open the third Confucius Institute in the country, which will be the world's first Confucius Institute with a strong agricultural academic background.

The second Confucius Institute is in Kenyatta University in Nairobi.

The economic growth championed by China's special economic zones has also been a major inspiration for several Kenyan enterprises. Kenya has decided to create special economic zones in most of its major coastal cities and has already sent a number of delegations to learn experiences from special economic zones in Shenzhen and Zhuhai.

"All these economic and cultural exchanges will lead to better political and business ties, and also help identify the priority areas that China and Kenya need to work together. This is important as deliberations and discussions can find solutions to several problems like food shortage, health care, education, urban modernization and scientific development," he says.

"China's growing ties with Kenya are a win-win situation for both sides. There is a lot that China can do to make living conditions better for Kenyans," he says.

zhongnan@chinadaily.com.cn

(China Daily 02/08/2013 page24)