logo
ADVERTISEMENT

KIBII: Why Chinese investors are jittery about doing business in Kenya

Al Shabaab attacks in Lamu county and the Northeastern region are derailing Lapsset project progress.

image
by ELIUD KIBII

Siasa12 November 2023 - 07:19
ADVERTISEMENT

In Summary


  • • China Embassy in Nairobi late last month issued a security advisory, which is uncommon compared to the US and the UK. 
  • • The embassy advised Chinese in Kenya to be cautious when traveling to Mandera, Wajir, Garissa and Lamu counties and other Kenyan border areas. 
President William Ruto and Rotating Chairman of Sany Group Xiang Wenbo during an Investors' Roundtable in Beijing, China on October 17, 2023

While Nairobi senators were calling out Public Service CS Moses Kuria over his tweet on Governor Kawira Mwangaza’s impeachment proceedings, some Chinese investment risk analysts in Beijing were discussing his infamous post about China Square. 

In this informal meeting, my new friends wanted to know my thoughts about the business environment in Nairobi, from political stability to the general attitude of the Kenya Kwanza administration towards China.  

There has been an observation that President William Ruto’s foreign policy orientation is more inclined to the West, the US in particular, compared to the East, notably China.

It is against this background that CS Kuria’s tweet came up. In this tweet of February 24, Kuria, then Trade, Investment and Industry minister, called for the shutdown of China Square one-stop shop owned or run by Lei Cheng. 

“I have today given an offer to Prof Wainaina, the Vice-Chancellor of Kenyatta University, to buy out the lease for China Square, Unicity Mall, and hand it over to the Gikomba, Nyamakima, Muthurwa and Eastleigh Traders Association. We welcome Chinese investors to Kenya but as manufacturers not traders,” Kuria tweeted, or X’d. 

The post drew the attention of Foreign Affairs Principal Secretary Korir Singóei as well as National Assembly Defence, Intelligence and Foreign Affairs Committee chairman Nelson Koech. 

PS Singoei said no lawful investment actor, whatever their nationality, should be apprehensive about discrimination.  

Koech said, “Investment can go anywhere. The government’s job is to attract it. As soon as we start implementing the laws haphazardly or to suit a certain narrative, we totally lose our competitive advantage.” 

Another interesting question was about the anti-government demos, which culminated in the ongoing dialogue talks.  

Where am I going with this?

How events in Kenya are disincentivising investments.  

While Kuria’s tweet – especially given the sensitivity of the docket he held – was obviously not a Cabinet position, but a typical Kuria remark, it sent a negative signal that is still being discussed almost nine months later. 

It is the same case with the political protests, which were in not more than five counties of the 47. In fact, even within Nairobi County, there are areas where businesses went uninterrupted. 

However, the question was what the then trade chief’s remarks meant, interpreted as an extension of the administration’s Western stance. And in the worst case scenario, the protests case, the perception that Kenya was burning, unsafe for investors, Chinese or otherwise. The fear is that, already-established businesses are being pushed away due to the political stability and uncertainty. 

The Business Daily recently reported that 6,256 foreign investors fled the Nairobi Securities Exchange across nine months to the end of September. 

In another meeting, the security issue came up following the al Shabaab attacks in Lamu county and the Northeastern region. 

These particular friends were concerned by terror attacks, which have in recent past claimed lives including those of security officers.

The March 2022 attack, in which five people were killed and three others, including a Chinese national, wounded at a Lapsset construction site in Lamu was of particular interest.

The attackers destroyed a bridge under construction and torched two tipper lorries and motorbikes at the camp. They also held hostage two Chinese foremen but released one later. Shabaab claimed responsibility. 

Thus, it didn’t come as a surprise when the China Embassy in Nairobi late last month issued a security advisory, which is uncommon compared with the US and the UK, which regularly issue security updates. 

The embassy advised Chinese in Kenya to be cautious when traveling to Mandera, Wajir, Garissa and Lamu counties and other Kenyan border areas. 

Lamu and the Northeastern region cited in the advisory, which are vulnerable to these attacks, are of particular interest to the Chinese contractors and investors because of the Lamu Port-South Sudan-Ethiopia-Transport Corridor. 

It is East Africa’s largest and most ambitious infrastructure initiative that brings together Kenya, Ethiopia and South Sudan. Lapsset consists of seven key infrastructure projects. They include a 32 berth port in Lamu, interregional highways, crude and product oil pipelines, interregional SGR lines, three airports, three resort cities and the Multipurpose High Grand Falls Dam along the Tana River. 

Kenya National Highway Authority and China Communications Construction Company in April 2021signed a Sh17.9 billion deal to construct the 257km Lamu-Ijara-Garissa section, as well as the 113km Hindi-Bodhei-Basuba-Kiunga section, and the 83km Ijara-Sangailu-Hulugho road. The company also built the Lamu port. 

In January 2022, CCCC was forced to withdraw its workers from projects after eight vehicles worth more than Sh42 million were burnt by suspected al Shabaab militants.

It is clear why there is a huge concern, and why if the security situation is not controlled, the delivery timelines of this critical project will not be met. There will be further reluctance to operate in these areas by other investors. 

Insecurity has also hurt tourism in the coastal region of Lamu.  

During the recent visit by President Ruto to the Coast region on November 4, he declared his administration would intensify the war on al Shabaab militants terrorising the county.  

In his State of the Nation Address on Thursday, the President acknowledged that "the spectre of terrorism is a continuing threat" and that armed lawlessness has besieged and devastated communities in, among other regions, Northeastern and the Coast.

Interventions in the war against terror need to start bearing fruit before it is too late.


ADVERTISEMENT

logo© The Star 2024. All rights reserved