By Dominic Omondi
Kenya’s trade relationship with China has been severely skewed, with the Asian nation receiving more but giving less in the last decade. China has stretched Kenya’s hospitality, taking advantage of the country’s open-door policy to flood the market with all manner of goods. Construction machinery, building materials, used clothing, onions, tilapia, tooth picks, toilet paper – no sector is safe from the ‘Sino-invasion’.
To paraphrase words of one Chinese state official, cited in a 2017 McKinsey report, Kenya and other sub-Saharan peers such Nigeria and Tanzania, have simply been tactless in their engagement with the world’s second largest economy.
“These three governments recognise China’s importance, but they have yet to translate this recognition into an explicit China strategy,” read the McKinsey report. “Each has several hundred Chinese firms across a diverse set of sectors, but this presence has largely been the result of a passive posture relying on large markets or historical ties; much more is possible with true strategic engagement.” Even as China has eaten into Kenya’s hard-to-come-by foreign currency reserves with a high import bill, valued at around Sh500 billion, and debt repayments, it has not returned the favour.
The Chinese have not consumed as much of Kenya’s products as the latter has avariciously spent on Chinese goods. At Sh9.9 billion, exports to China in 2017 were dismally low compared to imports of Sh390.6 billion, according to the Kenya National Bureau of Statistics (KNBS). The United Nations values the imports at around Sh500 billion. “Kenya exports little to China because it is an oil importer and relatively resource-scarce. With fewer natural resources, Kenya has been unable to take advantage of the commodity boom from China’s growth,” said a World Bank paper, titled; Deal or No Deal: Strictly Business for China in Kenya? “What’s more, the growth does nothing for Kenya’s agricultural sector because it lacks a comparative advantage in China’s main food imports (wheat, corn, beef, soybeans), making it difficult for Kenya to increase its exports of agricultural products,” added the report done by Apurva Sanghi and Dylan Johnson.
According to the United Nations World Tourism Organisation (UNWTO) Chinese tourists overseas spent $261.1 billion (Sh26 trillion) in 2016, up from around $10 billion in the 2000. The spend for 2017 is likely to top $300 billion. Few African countries have reaped this cash from Chinese globe-trotters. Thailand, Japan, Vietnam, South Korea and Singapore, Italy and United States have been the main beneficiaries. Huge debate There is a huge debate on whether or not the inundation of the local market with cheap Chinese goods is to blame for the slow death of the country’s manufacturing sector, which has in turn consigned millions of young Kenyans into joblessness.
If Kenya imported fish from China 10 years earlier, then it must have been negligible as the item never featured in the United Nations’ trade tabulation. Kenya, whose comparative advantage is agriculture, also imported onions worth Sh640 million. Chinese products have not only rattled local manufacturers in their own market, they have also elbowed them out of Uganda, Tanzania and Rwanda, with the East African countries ditching Kenya’s products for the cheaper Chinese alternative. The 2016 working paper by the World Bank cited earlier noted that China’s foray into the region might have hurt Kenya’s exports into the four East African countries. It noted that Kenya’s exports to Uganda and Tanzania were falling. “Chinese goods may have also hurt Kenya’s exports to its neighbours. Exports to Tanzania and Uganda are quite similar to China’s, compared to both countries’ exports to the United States or the UK,” read the report. Many African leaders have also been endeared to China by the latter’s deep pockets, most of whom have grown wary of lectures from their traditional donors from the West. China’s cash comes with no strings attached. But critics have argued that China has only contributed to burdening African countries with more debt. The Asian giant denies this, saying that those pushing this narrative are naysayers who have failed to help Africa improve its infrastructure.