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Partnership poised for further economic growth

By OTIATO OPALI in Nairobi, Kenya | China Daily | Updated: 2023-05-26 11:09

Sino-Kenyan trade figures in a decade

With the global financial scene evolving as Kenya pushes for stronger bilateral ties with its key trading partners, China remains among the top business and development partners for the East African economic powerhouse.

According to data from an economic survey conducted by the Kenya National Bureau of Statistics, China remained the single leading source of Kenya's imports in 2021 and 2022, accounting for 20.5 percent of total imports valued at over $4.03 billion in 2021.

Despite some analysts pointing out a significant trade deficit when it comes to imports and exports between the two countries, experts have argued that exports from Kenya to China have markedly improved over the past decade, signaling an increase in trade.

The Kenya National Bureau of Statistics indicates that in 2013, the country's exports to China stood at slightly below $50 million but rose to more than $200 million in 2021.

Timothy Odongo, a manager in charge of investment at the Kenya Private Sector Alliance, said that investments from China have been steadily increasing in the last 10 years since China's Belt and Road Initiative was established.

"China-Kenya trade is poised for further growth as the economy recovers from COVID-19 effects and international freight costs drop further this year. We expect to see lower import prices because shippers are reporting freight costs in the shipping industry have fallen by up to 50 percent on key trading routes like Asia," Odongo said.

He added that in the past 10 years, trade between China and Kenya has improved not just in terms of quantity but also in terms of the type of merchandise being traded between the two countries.

Odongo said that in 2013, Kenya was mainly exporting fabrics, textiles and fertilizers to China but 10 years later, the number of products being exported to China has increased to include ores, minerals and a wide array of agricultural products.

"The same is true if you look at the products we import from China. Back in 2013, our main imports from China were machinery and consumer goods such as electronics. However, in 2021, Kenya's main imports from China included nuclear reactors, industrial boilers, iron, steel and vehicles," Odongo said.

He added this shows that over the past decade, trade between the two countries has played a big role in establishing facilities that can help Kenya improve its status as a manufacturer. This is because imports from China are shifting from consumer goods to capital goods, which can be used in manufacturing other goods.

Nancy Muthoni Githaiga, a Kenyan scholar and researcher, said it is clear that China is a major source of Kenya's imports, mainly of manufactured goods, while Kenya's exports to China are minimal and consist mainly of raw goods, with a very small percentage of manufactured goods.

Multiple factors

"Various factors could explain the rapid increase in the import of industrial goods to Kenya from China. The first is increasingly large-scale infrastructure projects in Kenya, most of which are funded by China. The growth of the infrastructure sector in Kenya has increased significantly over the past decade with the implementation of significant energy and transport infrastructure projects under Kenya Vision 2030," Githaiga said.

"A significant number of such projects are carried out by Chinese companies, such as the Standard Gauge Railway connecting Mombasa and Nairobi by China Road and Bridge Corporation, the construction of Lamu Port berths by China Communications Construction Company and Northern Corridor Integration projects among others," she added.

Despite China's minimal imports from Kenya, Githaiga said that exports of manufactured goods from Kenya to China have gradually increased since the implementation of the Belt and Road Initiative. This could be explained by factors like China's zero-tariff policy on exports from the least developed countries with which it has diplomatic relations.

"As the two countries strive to bridge the bilateral trade gap, Kenya needs to add value to its exports. China offers opportunities that Kenya should take advantage of like developing the infrastructure needed for the desired competitiveness, technology transfer, an increase in the commodity market, and entrepreneurial skills development," Githaiga said.

To attain this, she said the two countries can share experiences, particularly the teachings emanating from China's development and industrialization process.

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