Investment Windfall

　　Chinese Premier Li Keqiang’s arrival in Nairobi in May on the last leg of a four-nation Africa trip seemedto be a bail-out for Kenya economically. Kenya was inneed of funds to build a new railway line， improve energyproduction， boost water supply to homes， protectendangered wildlife and establish a research center.

　　Premier Li’s visit addressed these and other issuesafter three days of bilateral talks in Nairobi， a safari at theNairobi National Park and multilateral talks with leadersfrom Uganda， South Sudan and Rwanda. In the process，many agreements and MoUs on infrastructure， anAfrica-wide research center to be based in Nairobi andenvironmental cooperation were signed. The agreementsinvolved China’s promise to help finance andprovide expertise in infrastructure development.

　　Despite Kenya getting the lion’s share of investment，the impact of these agreements was regional. For astart， it means East Africa’s vision of a modern railwayline will now become a reality， starting this October，when the China Road and Bridge Corp. (CRBC) embarkson building 609 km of metallic road from Mombasa.

　　Vital infrastructureThe construction of this $3.8 billion line， dubbed the“standard gauge railway” (SGR)， is a result of an agreementsigned in May before Premier Li’s first ever visit toAfrica.

　　Consequently， leaders from Uganda， Kenya， Rwandaand South Sudan signed what they called Protocol onthe Development and Operation of the SGR which willbe a guide on the timeline， coordinate policy and ensuresufficient resource allocation to the project.

　　The first phase of the project will cover609 km from the Coastal city of Mombasato Nairobi， while the entire project， saidto run from Mombasa to Kisumu， andthen on to Kampala of Uganda， Kigali inRwanda and Juba in South Sudan， will becompleted in 2018. The new line is expectedto speed up cargo and passenger transportationin the region.

　　“This agreement breathes life into thecommercial contracts relevant to theproject，” said Steven Xiong， Deputy ManagingDirector for CRBC charged with the SGR project.“We will partner with Kenyan suppliers， national andcounty governments and communities to deliver a highquality product within set timelines and with the higheststandards of accountability.”

　　This means that trade in the region will be easier infive years or so， but local observers are seeing effectsbeyond ease of doing business.

　　“It has helped President Kenyatta to deliver on oneof his key pledges especially after others had gone intoa lot of problems. This visit will also tilt the way the Westdeals with Kenya and Africa in general. That is， they willreduce the conditions so they can have a share of tradeon the continent，” Stephen Mutoro， Secretary Generalof the Consumer Federation of Kenya， told ChinAfrica inNairobi.

　　“The signing of these agreements hasdemonstrated the Chinese seriousness inuplifting Kenya’s development， because forKenya to develop and move to Vision 2030，infrastructure is key，” said Javas Bigambo， aconsultant at Interthoughts Consulting， aregional think-tank on public policy andgovernance. Bigambo was referring toKenya’s economic blueprint set to make thecountry a middle-income earner by 2030.Bigambo thinks China is a vital role player inAfrican development.

　　“China is very important in economicmatters， but that is not enough， we shouldsee that it is involved in every other aspectthat affects the continent.” Indeed Li also pledged $10million to help fight poaching and protect wildlife. Giventhat tourism is the second highest income earner forKenya， wildlife campaigners were excited with this announcement.“It is a welcome gesture by the Chinese Government.

　　We appreciate it because it demonstrates the commitmentby the government to help combat poachingwhich is now a global problem，” Josephat Ngonyo， ChiefExecutive of the Africa Network for Animal Welfare， toldChinAfrica.

　　Trade balance needed

　　As China’s role in development grows in Africa， there arethose who still think there is a need to better balancetrade. Premier Li， who also toured Ethiopia， Nigeria andAngola， clarified that his country was keen on mutual respectand would rectify the mistakes committed earlier.

　　“Kenya is the last stop of my trip to four Africancountries and we in China believe that the best is savedfor the last，” he told reporters at a joint press conferencewith his host President Uhuru Kenyatta.

　　He used the occasion to clarify China’s ambitions inengaging with Africa， insisting that any obvious imbalancein trade is bad for the Chinese economy， too.

　　“It is true there is a trade imbalance between our twocountries， but let me say here that China has no intentionsto deliberately pursue a trade surplus with Kenya.

　　Rather China has been taking steps to balance tradewith Kenya，” he told journalists in Nairobi.

　　“If trade imbalance persists， it will make sustainablegrowth of trade very difficult， and from ourChinese perspective， the overall trade surpluson our products has already exerted significantpressure on the Chinese Government’s exerciseof micro-economic regulation.”

　　The premier’s response was hinged on figuresreleased by the Chinese Embassy in Nairobithat indicated Kenya had imported fromChina goods worth $3.2 billion and exported$50 million to China in the past year. Kenya’ssales to China mainly included tea， coffee，leather and horticultural products， and importsconsisted mainly of electrical and mechanicalequipment from China.

　　Official figures indicate trade betweenKenya and China has grown from $137 millionin 2000 to $3.27 billion last year. Yet theChinese Premier told media his country hadlearned from earlier mistakes.

　　“Honestly speaking， the substantial foreignexchange reserves in China have alreadybecome a burden for the Chinese Governmentbecause it needs to be reflected in the increaseof money based in the country and that willadd on the inflationary pressure，” said PremierLi.

　　China’s model of creating more trade balancewould be based on two points： providing conveniencemarketing for African (Kenyan) products in theChinese market， as well as helping Kenyan businesseskeep up with the quality demands of Chinese consumers.

　　The second point will be encouraging Chinesecompanies to collaborate with Kenyan firms to raisecompetitiveness in both Chinese and global marketsthrough what he called industrial parks.

　　Some economists though think Kenya should notcomplain for now about the trade imbalance sinceChina’s industrial development is beyond Kenya’s reachat the moment.

　　“We should understand that Kenya is a net importerof goods so we have to buy more from China. Oureconomy is basically agricultural，” Paul Gachanja， aneconomist at Kenyatta University， told ChinAfrica. “Let usboost our agriculture and target China’s large markets.We may not see that currently， but the future is bright ifwe boost our agricultural economy.”

　　Kenya’s real benefit arises from the fact that China’scontracted direct investment to Kenya has reached$537 million. Besides， China is now Kenya’s second largestfinancier with loans totaling $750 million， excludingthe deals Premier Li signed in May.

　　President Uhuru Kenyatta told a joint media briefingin Nairobi after signing the 17 deals with China that China’sassets could have a big impact on East Africa. “Chinapossesses substantial political， diplomatic and financialassets which， if fully applied， would be a game-changerin the region’s peace and security effort，” he said.

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