How many jobs are the Kenya-China deals creating for Kenya’s youth?

Investing is not about figuring out what has already happened, but predicting where trends are heading,  and leveraging such knowledge to create a future in more investments grow from the initial one.

This, I hope, is what is informing our President’s decision to look East and push through almost 17 deals whose specific terms and conditions are largely unknown to Kenyans.

The furore around the China deals has been interesting with both media and financial analysts missing the point . We seem to be looking at the whole thing based on political inclinations.

Those in favour of these deals support them because it’s being done by a Jubilee administration. Those who oppose them do Some detractors are doing so purely for the same reason.

If another political coalition were in office, would things be different? 

 Does China have better interest rates on loans given out to developing countries better than Western countries like the USA, or other more favorable conditions?

During the signing ceremony, Ugandan President Yoweri Museveni spoke of China never mixing political accountability with business, betraying a possible reason why our leaders in Africa and more so in Kenya look East for developmental capital.

The lending interest rate in China was last measured at 6 per cent in 2012, according to the World Bank. Lending interest rate is the rate charged by banks on loans to prime customers or preferred customers.  

Is Kenya one of China’s prime customers, and is this the rate at which the loans will be repaid ?Are we equal trade partners of trade? Data prepared by the Trade Ministry shows that Kenya exported goods worth Sh4.8 billion to China in 2011 against an import bill of Sh270 billion.

Three years ago China removed non-tariff barriers such as import quotas, licensing and designated bidding as well as more than 400 tariff lines for their African partners more than 400 tariff lines for their African partners.

According to Yao Chenxi, economic and commercial counsellor at the Chinese Embassy in Nairobi, Africa’s industrial products now attract only 8.9 per cent tariff while agricultural ones face 15.2 per cent.

However, Kenya being a predominantly agricultural producer,  faces tough conditions in trade with China. Our analysis of the trade agreements has been more political than economic, which shows how urgently the dealings should be analyzed. 

Do we as a country produce anything that we can comfortably sell to China? Do we need favours to be able to trade with her?

Looking at the deals that are being signed, one is left with no choice but to reminisce about the history around the scramble for Africa in the 1800’s. The colonialists came for our resources and cheap labour. The railway line was used to transport these to the port and forward to their destinations.

They say those who forget their history are bound to repeat it. China seems to have perfected the art of seducing us African for that what matters to us and history is seemingly repeating itself as we watch and fight about Jubilee this and Jubilee that.

China has certainly been contributing to Africa’s economic growth, both in terms of trade and with building infrastructure but to whose benefit because the trade imbalance is very clear, in favour of the red dragon. All over the continent, China has built roads, railways, ports and airports.

China’s interest in Kenya is to leverage lacking but urgently needed infrastructure, to extract the minerals that we have and export them back to her home country.This seems to be the strategy across the continent.  For example the rehabilitated 840-mile Benguela railway line, now connects Angola’s Atlantic coast with the Democratic Republic of Congo and Zambia. We have nothing we can offer China other than our raw minerals and a market for its products.

When the Chinese Premier spoke during the signing of the deals, he spoke in Mandarin and used a Chinese interpreter to pass their message. It was very clear who was boss. When the East African presidents spoke, they used English. If indeed they wanted make clear that they were equal trade partners keen on mutual benefit, they could have spoken in Kiswahili. The fact that they did not betrays our true position in the dealings and just how much muscle we have.

How many jobs are going to be created, and where are they mentioned in those 17 multi-billion dollar deals? Interestingly, the Chinese investments across Africa are not in labour-intensive sectors of the economy. Infrastructural developments do create jobs but not to the level that sectors in agriculture, manufacturing and retail do and unfortunately these are sectors that the Chinese have the least interest.

Yet our government can push for such dealings to address the key challenge of unemployment, not just merely trying to teach the West a lesson by ignoring them in business dealings. Kenya needs to encourage Chinese investment into more labor intensive sectors to create jobs.

Kenya’s population is growing faster than this government can create jobs. If jobs cannot keep up with the growth of our workforce, we can expect a large, growing population of frustrated, jobless youth.