Chinese investors are gearing up to establish manufacturing industries worth billions of shillings in the country. This move is being spearheaded by the African Chapter of the American Chinese CEOs Society (ACCS), which recently launched its operations in Nairobi. The society’s President, Robert Sun, emphasized that Kenya’s reliance on agriculture presents a considerable opportunity for industrialization and manufacturing growth.
Sun highlighted Kenya’s economic landscape as predominantly agricultural, pointing out that the country imports a substantial amount of agricultural products. The ACCS aims to leverage Kenya’s trade agreements with the United States to bolster its industrial sector. Specifically, Kenya benefits from the African Growth and Opportunity Act (AGOA), which provides duty-free access to the U.S. market for over 1,800 products. This, combined with the Generalized System of Preferences program that offers duty-free access for more than 5,000 products, creates a compelling case for increased manufacturing investment.
President William Ruto’s recent attendance at the Forum on China-Africa Cooperation Summit in Beijing underscores the growing partnership between Kenya and China. During the summit, President Ruto urged China to enhance its support for African nations by facilitating access to concessional funding for development projects. In response, Chinese President Xi Jinping unveiled a 10-point action plan aimed at strengthening ties with Africa over the next three years. This plan includes a substantial financial commitment of Ksh 6.5 trillion to support industrialization, agriculture, trade, investment, training, and infrastructure development across the continent.
The ACCS is actively engaging with the Kenyan government through the Ministry of Trade to align its objectives with President Xi’s action plan. Robert Sun praised Kenya’s investment climate, noting its favorable taxation policies, especially in Export Processing Zones (EPZs), and its progressive land policies for foreign investors. Kenya’s strategic location and reduced trade barriers within the African market further enhance its attractiveness for industrial investments.
The influx of Chinese manufacturers into Kenya is expected to have a transformative impact on the country’s economy. By reducing reliance on imports and boosting local production, Kenya can decrease its import capacity and lower the prices of various products. Data from the Kenya Trade Network Agency (Kentrade) reveals that Kenya imported goods and services worth Ksh 258.7 billion in the first quarter of the financial year 2023/2024. These imports included essential products spanning energy resources and agricultural staples, underscoring the need for increased local production.
James Gitundu, ACCS Director in Africa, emphasized the societal benefits of this investment, particularly in addressing youth unemployment. He highlighted plans to empower small businesses, including those in the informal “juakali” sector, suggesting that these ventures could significantly reduce Kenya’s reliance on imports and bolster export potential.
The Kenya National Chamber of Commerce and Industry (KNCCI) has welcomed the ACCS’s initiatives, recognizing the potential for enhanced global market access for Kenyan-made goods. Simon Nyaga, Chairperson of Diaspora Affairs at KNCCI, lauded the collaboration, noting that it could improve the livelihoods of Kenyans and contribute positively to the broader African economy.
This renewed interest in Kenya’s manufacturing sector comes amid a recent decline in direct Chinese investments in Kenya. According to a report by the Kenya National Bureau of Statistics, Chinese investments in the country fell by over a third in the past three years, while investments from the U.S. saw a slight increase. Additionally, Chinese expenditures in Kenya’s construction sector—a key area of Chinese investment—dropped by more than 34% between 2020 and 2022.
Despite these challenges, the ACCS’s commitment to bolstering Kenya’s manufacturing sector represents a promising opportunity for economic diversification and growth. With continued support from both the Kenyan government and Chinese investors, Kenya stands to benefit significantly from this evolving industrial partnership.
