Kenya plans to attract more companies from China to set up shop locally to help bridge the balance of trade gap that is in favour of Beijing. Increased investment in infrastructure would be complemented by investors from China, said a Kenya Investment Council director, Mr Derrick M’Mbijjewe. “We want to take stock of Chinese investments in the country. China is ready to fund companies that want to set up base in Kenya,” he said. Mr M’Mbijjewe spoke at a workshop on China’s impact investment at Norfolk Hotel. Bilateral trade between Kenya and China increased from $1.5 billion in 2009 to $1.8 billion in 2010, which is heavily skewed in favour of China. He said the country should use its strategic position to attract investors from the Far Eastern country. With the most developed capital market in the region and trained personnel, Kenya was suited to attract more companies, he said. Have local partner The model preferred by most companies from China is to have a local partner to mitigate “political risks” though some local outfits are unable to raise the required capital. There is therefore a need to encourage more direct foreign investments. Companies investing in Africa from China are partly or entirely owned by the government. Capital Markets Authority chief executive Stella Kilonzo said ways to attract venture capitalists to mobilise resources would be explored between regulators in the two countries. Over concerns of China undertaking nearly all the infrastructure projects, experts said, it was about providing the most competitive technical and cost elements during the tendering. Mr M’Mbijjewe said companies from China mostly provided better prices for implementation of projects compared to those from the West. “Chinese are investing cautiously in Africa knowing they will benefit into the future. Even when there is a problem in Kenya, they do not slow down their projects. They are more flexible to risk than the West,” he said. In 2006, Kenya and China signed six agreements on economic and technical cooperation that included concessional loans and air services that allowed national carrier, Kenya Airways, landing rights in the country. China has also set up a fund to encourage companies to import black tea, coffee, rose seeds and sisal.
While not much can be done to decrease or slow down trade that is in China’s favor (supply and demand economics), Kenya needs to look at reducing barriers for multinationals whether that is taxation and or tariffs. With China, maybe Kenya needs to use some Chinese methods and demand that Chinese firms train and hire local workers just as the China does to any foreign company wanting to enter the Chinese market.