tyres into East Africa, saying
the cheaper Asian products
undercut them, posing a
threat to their business.Sameer Africa early this month
announced closing of its Yana
manufacturing factory in Nairobi due to increased cheaper
imports. Kenya took in Sh6.2
billion worth of railway construction materials from China
between January and June, up
from Sh53 million last year for
the Sh327 billion standard
gauge railway being built by
China Road and Bridges Corporation (CRBC).
Clothes imports from China,
however, shrunk marginally in
the review period to Sh2.9
billion from Sh3.1 billion.
The KNBS statistics show that
Chinese
imports
totalled
Sh150 billion in the year to
June, up from Sh149 billion in
the same period last year. This
is equivalent to 22 per cent of
Kenya’s total import bill that
stood at Sh689.8 billion in the
period.The growth indicates
that Kenya’s imports from Beijing are poised for a further
rise this year, and is likely to
exceed last year’s Sh320
billion in imports.
The bilateral trade is, however,
heavily skewed in favour of the
world’s second largest economy, denying Kenya the
much-needed hard currency
inflows. Nairobi earned less
than Sh5 billion from its
exports to Beijing last year.China grew its cement sales to
Kenya 10-fold in the first half of
the year. Chinese contractors
control the majority of Kenya’s
multi-billion shilling infrastructure projects including the
standard gauge railway, highways, ports and real estate.The
Asian nation sold to Kenya
Sh2.2 billion worth of the construction materials in the year
to June compared to Sh201.6
million in a similar period of
2015.The Chinese cement
import growth comes in a
period when prices in Kenya
have dropped significantly on
increased imports and expansion by established and new
players,
creating
excess
supply. The entry of imports
from Ethiopia courtesy of
Nigerian businessman Aliko
Dangote is further expected to
drive down prices.
Local firms produced 3.2
million tonnes of cement in the
year to June against a consumption of 2.9 million tonnes,
leaving a surplus of 300,000
tonnes.
Fierce price wars
The average retail price of a
50-kg bag of cement has
dropped to Sh670 from the
peak of Sh740 in 2008 due to
fierce price wars.
Asian manufacturers enjoy
lower energy costs and are
entitled to State subsidies,
allowing them to gain market
share in East Africa where
cheaper products are in high
demand.
The World Bank has warned
that cheap Chinese imports
may hurt Kenya’s bid to join
the elite club of industrialised
nations as projected in its
Vision 2030 economic blueprint.“Because Kenya produces and trades few intermediate goods, researchers have
concluded
that
Chinese
imports could lead to a de-industrialisation,” the World
Bank said early this year.
Kenya’s fledgling manufacturing sector has stagnated at an
average of 11 per cent to the
gross domestic product (GDP)
in the past 10 years. This has
created room for imports of
goods that cannot be manufactured locally, pushing up
the country’s import bill, which
towers above exports, and
piling pressure on the shilling.
Analysts reckon that the Chinese import growth is being
driven by local traders’ preference for fast-moving cheaper
stock, including those that can
be made here, posing competition to local companies.
There is need for a policy
rethink on imports that can be
produced locally to avert possible suffocation of local
industries, says X N Iraki, an
economics lecturer at the University of Nairobi.
China has also been pushing
for adoption of Chinese
language in Kenyan universities through Confucius Institute
alongside
Mandarin
cuisines in hotels.The KNBS
data shows, however, that
Kenya deeply cut its imports
of Chinese vehicles and spare
parts to Sh2.4 billion in the year
to June compared to Sh11.9
billion in a similar period last
year and Sh3.1 billion in 2013.
Chinese motorcycle imports
also shrunk to Sh1.4 billion in
the review period from Sh1.6
billion in the year to June of
2015 and Sh1.5 billion in 2013.