Analysts see Chinese companies shifting from infrastructure
Chinese firms are likely to diversify from infrastructure projects in Kenya in the coming year to sectors such as manufacturing and ICT, which have clear financial returns. This is according to global consultancy firm Control Risks whose analysts in its 2019 report notes that Kenya and other African countries are set to become new battle grounds in the US-China rivalry that will likely affect their respective investments.“Given the plethora of existing and planned infrastructure projects with unclear financial returns, companies will look for other sectors to invest in. In this regard, manufacturing and information technology are likely to be a priority,” said Control Risks East Africa senior partner Daniel Heal on Wednesday.“In other sectors, for example manufacturing or ICT, it is relatively easier to justify financing. Moreover, amid rising wages elsewhere in the world, there is a push to find low-cost manufacturing hubs; Africa’s large population will likely provide cheaper production options for Chinese companies,” Patricia Rodrigues, an analyst with Control Risks, said.Chinese firms moving away from the key infrastructure projects may offer a sigh of relief to local firms who have been missing out on big contracts in the country. The Asian country’s growing influence has seen its companies edge out local counterparts for lucrative multi-billion shilling tenders in Kenya.Some of the contracts that Chinese firms have won include building the Sh32 billion Thika Superhighway and University of Nairobi Towers by China Wu Yi Construction Limited. China Road and Bridge Corporation is building the second phase of the standard gauge railway (SGR).