China bets big on Kenya

• As Africa turns to the East for trade and aid, Chinese firms are establishing base in lucrative businesses

At every ground breaking ceremony of a Chinese-backed project in Kenya, the dragon dance is part of the entertainment. Sneaking its way among the guests, it has become a familiar scene just like their projects.

The onslaught of the Chinese in Kenya is evident through their commitment to funding and the zeal with which they go about the projects.

“The continent is turning East and in many regards, it is clear that policies and trade with Beijing is now of more importance to us than those in Washington,” says Nairobi Stock Exchange data vendor Aly-Khan Satchu.

Experts say Chinese have taken a longer-term approach and this has in turn allowed the continent to lock in longer term cash flows and unlocked a great deal of development type capital.

As its economy booms, China is intent on getting the resources needed to sustain its rapid growth, and is taking its quest to lock down sources of oil and other necessary raw materials across the globe.

Kenya does not have mineral resources that have attracted Chinese firms elsewhere. But China has extensive oil interests in Sudan, it is an important lender to Ethiopia and Chinese contractors are gaining a dominant position in public works in Kenya.

It is estimated that more than 50 per cent of construction activities in Nairobi both private and public have been captured by Chinese construction firms usually preferred for projects ranging from roads, water systems, power generation and hospitals.

Kenya and China are mulling a huge project to develop a port on the Kenyan coast and a corridor creating a new export route for China’s oil in Sudan’s secessionist south.

China’s involvement would come as an alternative to a project floated last year in which Qatar would have invested $3.5 billion in the port in exchange for a lease on a huge tract of land to grow crops.

State controlled China National Offshore Oil Corporation is sinking a $26 million oil well in Boghal in Isiolo, in a move designed to keep Africa’s natural resources flowing to China.

Oil experts estimate that up to $300 billion has so far been sunk in oil and gas exploration projects in Africa. Kenya last week sent a delegation at the second ministerial conference on Forum on China Africa Co-operation in Sharm El Sheikh, Egypt, from November 5-8, at which more deals could be sealed.

“The continent used to face an egregious demand side to its equation. They have balanced the demand side which was previously in disequilibrium. Before their arrival, the continent was in a ‘hand to mouth’ situation in that the west typically entered into very short duration contracts and this resulted in the continent finding itself very much in a boom bust cycle, says Mr Satchu.

“One serious advantage the Chinese have is that they do not carry any colonial baggage. In fact, their experience is a great deal closer to ours.”

While China is often characterised as a monolithic actor in Africa, experts say Chinese trade with Africa has diversified beyond state-directed enterprises in recent years.

Mr Martyn Davies of Frontier Advisory, a South Africa-based consultancy for investors in emerging African markets, says China has eclipsed the US as the continent’s biggest trading partner.