Kenya turns to China for more investment, trade

Kenya is eager to tap more investment from China and close the trade imbalance, even as it seeks strategic deals with the United States, Western markets and Gulf nations.

This, as the China-Africa Economic and Trade Exhibition (CAETE) comes to the continent for the first time, with a three-day forum in Nairobi, a strategic move by China to strengthen its control over the continent.

The move comes in the wake of increased attention on the continent, where Europe, the United States, the Middle East and other Asian countries are pushing for a bigger share.

Kenya is considering investments in special economic zones and export processing zones with a focus on agricultural processing and value addition, in a strategy to reduce the export of raw materials.

Priority areas in the agricultural sector include value chains in crops and livestock with specific sub-sectors including leather, textiles and clothing, dairy, edible oils, tea, coffee and rice.

Speaking at the Expo yesterday, Rebecca Miano, CS of Investment, Trade and Industry, called Kenya the gateway to East Africa and the continent, adding that the country is also interested in attracting investments in healthcare (including investments in pharmaceuticals), manufacturing, affordable housing, MSMEs, digital commerce and e-commerce, ICT and creative economy.

His ministry has been tasked with doubling Foreign Direct Investment (FDI) in the medium term, from $800 million (Sh105.2 billion in FDI attracted last year) to at least $1.6 billion (Sh210,400 million shillings).

“Next year, we will look to double what we will have achieved this year and looking at the numbers, the momentum we feel, forums like this one where we recently had AmCham, we saw a lot of appetite from American companies, we have been to Tokyo and other destinations , I am sure that we will meet the objective that the President has set for us,” said Miano.

China remains Kenya’s largest source of imports, exporting goods worth $7.9 billion (Sh1.03 trillion) last year.

It is the country’s largest contractor in key areas of roads, ports, railways, building and construction, among others.

Vice Governor of the People’s Government of Hunan Province Cao Zhiqiang said China will continue to implement President Xi Jinping’s African policies.

“China will implement agreements agreed with African leaders, including those in the energy, manufacturing and agricultural sectors, to improve security,” Zhiqiang said.

For the past 14 years, China has remained Africa’s largest trading partner and has been the main destination for African exports.

In 2022, trade in goods between China and Africa increased by 10.9 percent, reaching $282 billion (Sh37.1 trillion), with Keya enjoying a considerable share.

Kenya’s exports to China amounted to $269 million (Sh35.4 billion), including key products such as coffee, avocado, tea, macadamia, flowers and fruits.

In contrast, China is Kenya’s largest exporter, accounting for 18 percent of its total imports, which include electronics, machinery and textiles.

More than 10 agreements were signed between China and African countries on the first day of the Nairobi expo, with Kenya securing an agreement on agricultural processing.

The foreign policy of President William Ruto’s administration is seen as striking a trade and investment balance with both East and West, unlike his predecessor who gave more weight to China.