Chinese investors are now gearing to set up manufacturing industries worth billions of shillings in Kenya and in other African countries.
Through the African Chapter of the American Chinese CEOs Society (ACCS) that was launched in Nairobi on Friday last week, the investors said that they will engage executives and decision makers of Kenyan companies as an entry point to establishing more manufacturing companies in the country.
According to the Society’s President Robert Sun, the huge interest to invest in the country has been informed by Kenya’s over reliance on the agriculture sector, whereas there is a huge potential for industrialization in the country.
“The purpose of our mission is to work together with the government and local companies to bring the Chinese manufactures into Kenya for industrialization. We find Kenya is still an agricultural country and it imports a lot of agricultural products. Our target is to have Chinese industrialists who have trade connections with the United States of America because they can benefit from Kenya’s treaty with America through the African Growth and Opportunity Act (AGOA),” he said.
Under this treaty, eligible Sub-Saharan African countries are provided with duty-free access to the U.S market for over 1,800 products. This is in addition to the more than 5,000 products that are eligible for duty-free access under the Generalized System of Preferences program.
Last week, President William Ruto attended the Forum on China-Africa Cooperation Summit in Beijing China where he called on the Asian country to scale up its cooperation with Africa by helping countries access concessional funding for development.
In response to this appeal, Chinese President Xi Jinping announced a 10-point partnership action plan for Africa for the next three years which will provide Africa with Ksh 6.5 trillion of financial support. The plan will cover modernization of industrialization, agriculture, trade, investment, training and infrastructure.
Accordingly, Sun says that ACCS is in discussion with the Kenyan government through the ministry of trade to facilitate the realization of the society’s development agenda in the country which complements President Xi’s undertaking.
“We have learnt that Kenya is an open forum when it comes to international investments. It offers some special treatment in regards to taxation especially around Export Processing Zones (EPZ) and also the subject of land policy guiding the foreign investors. Kenya has also a good accessibility to the African market given that most of the trade barriers in the African countries have been dealt with,” he notes.
With more manufacturers coming on board, Kenya will reduce the importation capacity, as more products will be produced locally. Consequently, prices for most of the products in the country will be reduced for Kenyan consumers. According to data published by the Kenya Trade Network Agency (Kentrade), in the first quarter of the financial year 2023/2024, Kenya imported goods and services worth Ksh 258.7 billion. This figure represents imports of 10 products that play a pivotal role in sustaining Kenya’s multifaceted needs ranging from energy resources to agricultural staples.
Mr. James Gitundu, the ACCS Director in Africa, underscores the importance of enhancing the manufacturing sector in Kenya, says that the manufacturing industry would provide solutions to the state of joblessness among the youth.
“Through this society, we are going to empower small companies, especially those in the Juakali sector. This means that most of the products that Kenya imports will now be exported,” he said.
The Kenya National Chamber of Commerce and Industry (KNCCI) has shown a positive reception of ACCS saying that the creation of a formidable business infrastructure from the Chinese investors will open the global markets for locally manufactured goods.
KNCCI’s Chairperson of the Diaspora Affairs Mr Simon Nyaga says that, “it is a great opportunity when Chinese CEOs partner with African counterparts. We will support the organization because it will improve the livelihood of Kenyans and Africans at large.”
The heightened lobbying of China to invest in Kenya comes in the wake of a report released by the Kenya National Bureau of Statistics this year which indicates that there is a substantial drop in direct investment in Kenya from china with statistics indicating that Beijing’s investments in Kenya fell by more than a third over the last three years, yet, investments over the same period from the US increased slightly to 7.4% from 7.1%.
Further, the data shows that between 2020 and 2022, Chinese expenditures in Kenya’s construction sector, which is China’s leading area of foreign investment in the country, dropped more than 34%.
