Kenya’s economic trajectory has increasingly aligned with China’s modernization in recent decades, forging a symbiotic relationship that is transforming Kenya’s infrastructure, trade, and industrial sectors.
As China expands its global influence through modernisation and industrial innovation, Kenya has strategically positioned itself to benefit from these developments. This partnership is particularly visible in large infrastructure projects, trade expansion, and technology transfer, making it a vital component of Kenya’s growth agenda.
Perhaps the most visible manifestation of Kenya’s collaboration with China is in infrastructure development, which forms the bedrock of economic growth. Since 2014, the Standard Gauge Railway (SGR) – funded through loans from China Exim Bank and constructed by the China Road and Bridge Corporation – has become a symbol of Kenya’s modernisation ambitions. Costing approximately $3.6 billion, the SGR connects Mombasa to Nairobi, reducing freight and travel time, significantly cutting transportation costs, and boosting trade across East Africa.
Beyond the SGR, China’s expertise has been instrumental in upgrading roads, airports, and ports. The Lamu Port-South Sudan-Ethiopia Transport corridor is being developed with Chinese support to create a comprehensive trade network. This project, worth about $24 billion, promises to increase Kenya’s connectivity to neighbouring countries and open new trade routes across Africa and beyond. Such investments provide the necessary infrastructure to accelerate Kenya’s trade, manufacturing, and tourism sectors.
Kenya’s partnership with China is not limited to infrastructure; it has also fostered the growth of Kenya’s industrial sector. China’s modernisation is driven by advancements in manufacturing and industrial capabilities, and Kenya has benefited from this through Chinese investments in Special Economic Zones and industrial parks.
The Athi River Export Processing Zone (EPZ) serves as an example of this industrial cooperation. Chinese companies have invested heavily in textile, manufacturing, and food-processing industries within the EPZ. This has resulted in the creation of over 40,000 jobs and has driven Kenya’s export capacity, particularly in the textile and apparel sectors.
Kenya’s apparel exports to the United States, through the African Growth and Opportunity Act, have surged due to these investments, contributing to an increase in export revenue from $330 million in 2015 to $485 million by 2020.
Additionally, Chinese technology transfer and expertise in industrial production have enabled Kenyan industries to enhance efficiency and output, driving growth in local manufacturing. This supports Kenya’s broader vision under the Big Four Agenda, where manufacturing is a key pillar alongside universal healthcare, affordable housing, and food security.
China’s influence in Kenya’s trade has been on a steady rise. Since China became Kenya’s largest trading partner in 2015, bilateral trade has grown significantly. According to Kenya’s National Bureau of Statistics, China accounted for 21.7 percent of Kenya’s total imports in 2022, making it a crucial supplier of machinery, electronics, and construction materials.
However, the trade imbalance remains a challenge. Kenya’s exports to China were only valued at $184 million in 2022, while imports from China stood at $3.4 billion. To address this, efforts are being made to diversify Kenya’s export base and increase market access for agricultural products such as tea, coffee, and avocados.
In 2022, Kenya signed agreements to export avocados to China, opening up a potentially lucrative market. This diversification of exports will help Kenya capitalise on China’s growing demand for high-quality agricultural goods.
Furthermore, Kenya’s strategic position along the Indian Ocean and its status as a regional trade hub make it an attractive partner for China as it pursues its Belt and Road Initiative. Kenya has emerged as a key player in this global initiative, with Mombasa serving as a vital port for Chinese goods entering East and Central Africa.
China’s advancements in technology and digital infrastructure have also benefited Kenya, particularly in the telecommunications and financial sectors. Huawei, a leading Chinese tech giant, has played a major role in the development of Kenya’s 4G and 5G networks. The company has partnered with Kenyan telecoms such as Safaricom to expand digital connectivity, which is critical for the growth of Kenya’s digital economy.
Moreover, Chinese innovation in mobile payments and e-commerce has inspired the expansion of platforms such as M-Pesa, which has revolutionised financial inclusion in Kenya. Chinese companies are also investing in e-commerce platforms like Kilimall, further boosting the growth of Kenya’s digital economy and providing access to affordable goods for millions of Kenyans.
While the benefits of this partnership are undeniable, challenges persist. Kenya’s rising debt to China, which stood at $6.8 billion in 2023, has raised concerns about long-term sustainability.
However, Kenya has taken steps to manage this debt, including renegotiating payment terms and seeking to diversify its funding sources. Additionally, Kenya requires that Chinese investments contribute more to local job creation and technology transfer, in addition to pushing for fairer terms in trade and investment agreements.
Kenya’s alignment with China’s modernisation efforts has positioned the country as a leader in East Africa’s economic transformation. As both nations continue to deepen their partnership, they are strategically navigating the opportunities and challenges presented by this relationship to ensure sustainable growth and Kenya’s self-reliance in the future.
