How Kenya can benefit from US-China row
Last November, US senators raised the alarm over a Chinese company’s involvement in the management of Port of Djibouti, a move that brought Chinese and US interests in the East African nation in extremely close proximity to one another. A month later media reported that the Chinese government could be entitled to revenue from Mombasa port should the Kenyan government fail to service debt obligations on the loan for the standard gauge railway (SGR).This came as part of growing concern among international media over Beijing’s so-called “debt-trap diplomacy”.The term is loosely defined as burdening developing countries with predatory loans with clauses that also involve the mortgaging of key sovereign assets such as ports and power stations. In this context, US diplomats stated that not only are loans from China likely to saddle African countries with unsustainable debt burdens, but will also threaten US interests on the continent.Washington has grown wary of China’s inroads in Africa over the last decade, using massive funding for mega infrastructure projects — particularly under the multi-trillion-dollar Belt and Road Initiative (BRI).In Kenya, projects such as the SGR, expansion of Lamu port and several road projects have largely fallen under the BRI. In a bid to counter the influence of China on the continent, last December US National Security Adviser John Bolton announced a new Africa policy.African governments responded to the policy announcement with some skepticism. However, governments across the continent looking to attract wider investment will have welcomed the US’ shift in focus away from security, development assistance and human rights, and towards commercial ties.Kenya is in a good position to benefit from the expected increase in US commercial interest. Building on their extensive security relationship, Kenya and the US are likely to step up trade-related talks in coming years.
In addition, US companies are also likely to be incentivised and supported to invest further in the Kenya.Meanwhile, China has been an important infrastructure development partner for Kenya in recent years.In the year ahead we are likely to see attempts by China to diversify away from infrastructure projects.Amid a growing requirement for Chinese firms to demonstrate a return on investment, companies will look for other sectors to invest in. In this regard, manufacturing and information technology are likely to be a priority. This will tie in well with President Uhuru Kenyatta’s “Big Four” agenda which places focus on manufacturing as key to job creation.Given these existing relationships, Kenya is in a prime position to leverage ties with both countries to attract investment.The main challenge for Kenya will be to avail well-thought out projects for investors from both the US and China, while balancing an investor-friendly regulatory environment with local concerns over employment opportunities.