When a deficit becomes a big plus

China can cash in on shortage of infrastructure, senate speaker says

China has a competitive edge in infrastructure construction in Africa, so Chinese companies do not necessarily need to diversify into other sectors, says Ekwee Ethuro, the speaker of the Kenyan Senate. Instead they should be looking for a long-term future in infrastructure, he says.

Speaking from his offices in Kenya's Parliament Buildings, the first speaker of the senate says the huge infrastructure deficit in Africa provides a great opportunity for China.

"This is an investment for the next 50 years for China, and it should not lose this by diversifying," says Ethuro, who is also an economist.

China's engagement with African governments gives it a head start in clinching more infrastructure deals, he says.

"The continent will indeed benefit from China's technological advancement and thus will be happy with continued engagement."

China also has the financial muscle for long-term funding of such projects, he says.

"When I was a young parliamentarian, we visited the country and marveled at its hefty reserves. Many governments are operating on deficits, and thus China, through institutions such as the Exim Bank of China, is able to extend long-term affordable credit to Africa to fund its infrastructure projects."

There are numerous such projects in Kenya alone, he says, from a 1,000-kilometer road funded by the World Bank that will connect Kenya to South Sudan to its ambitious 5,000 megawatt energy upgrade.

"We have worked with (Chinese) companies on major projects such as the Mombasa-Nairobi Standard Gauge Railway, and we are happy with their tenacity and dexterity."

The partnership has burnished the country's credentials with international lenders, such as the World Bank and the International Monetary Fund, he says.

"I know that they are happy with the progress so far and have noted that it is far ahead of schedule."

In May last year Ethuro led a delegation to China on behalf of the China-Africa Friendship Association. It visited Beijing, Yangzhou, Nanjing and Xuzhou over eight days.

In Beijing the delegation attended the China International Friendship Conference as it marked its 60th anniversary.

Among the delegation's aims was to cement people-to-people relations. The visit also acted as a precursor to 17 agreements Premier Li Keqiang signed when he visited Kenya later in May.

"While in China, we witnessed technological advancements, such as the fast train, which gave us a hint of what to expect from the standard-gauge project," he says.

"We also proved that contrary to some perceptions, most Chinese companies are highly professional and do not stint on quality."

He says that while meeting China Road & Bridge Corp executives, the company that is working on the new railway, it was agreed that its senior vice-president will exclusively focus on the Kenyan project. Moreover, skills transfers will be an important element in the engagement, in which most of the workers will be locals, he says.

"I understand the project will employ about 30,000 Kenyans," Ethuro says.

"Besides creating much needed employment, it also creates a pool of experienced professionals It will also inform the curriculum development in our institutions of higher learning, thus readying our graduates for the job market.

"Kenyans will be able to build and also maintain their own infrastructure. We want to avoid the post-colonial era situation where most projects ground to a halt once expatriates left the country. This is not the relationship we want with China."

Continued engagement with China will speed up Africa's integration, he says, adding that Africa has been operating under economic blocs, but borders are dissipating as regions realize the opportunities of a single bloc.

"We will create a market similar to that of China as countries such as South Africa, Nigeria and Ghana come together. A bigger market will be beneficial not only to Africa, but also the rest of the world as this continent has a growing middle class and a youthful population."

East Africa is already realizing these benefits. Infrastructure projects are taking place in Rwanda, Uganda, Tanzania, Burundi and South Sudan, creating a market of more than 140 million people.

"By 2024 the East Africa Common market protocol will effectively make it seamless to move people, trade and services across our borders. Already there is a single visa permit that enables tourists to visit Kenya, Uganda and Rwanda."

But Ethuro acknowledges the need for Africa to grow other industries.

"Africa is a growing economy. We require a lot of capital, resources and capacity building. This is where we can partner with China's private sector."

This has been made possible by local government reorganization in Kenya, he says.

A constitution promulgated in 2010 created 47 counties or local governments that are able to engage directly with their Chinese counterparts.

"Devolution is the best thing to happen as it promotes cohesion between Kenyan and Chinese cities. We are currently working on regional blocs based on specialization, thereby making ready markets for specific Chinese companies. For example, a fertilizer company can confidently invest in an agricultural growing area like the Rift Valley."

Ethuro says teething problems bedeviling these units are being dealt with by government institutions.

"I know agreements have already been signed between sister cities in China and Kenya, but it is too early to gauge progress on the ground.

"The objective of devolving governance is to bring essential services closer to the people. Our counties need to improve their water supply services, their health services and even education. These are prime opportunities for Chinese companies, especially as they consider relocating their industries."

Ethuro says Kenya is a prime destination as its people are skilled and have a good work ethic.

"What we lack are resources and advanced technology that China has. Partnership will therefore be easy. We are ready."

Kenya urgently needs agricultural processing industries, he says.

"This will not only increase the country's revenues, but will also directly benefit small-scale farmers. Firms dealing with farm equipment and machinery are also needed. Manufacturing, China's mainstay, particularly in construction materials such as cement and steel, will be important as the continent continues to focus on construction.

"More opportunities abound as Kenya discovers natural resources, such as oil and gas. These are areas Chinese companies should vie for."

Kenya continues to be attractive to international investors because of its growing economy, he says. "The rates of return on investment are healthy. We are also very friendly people, and there is a general acceptance of Chinese in the country."

Referring to the forthcoming visit of US President Barack Obama to Kenya, he says: "We have historical links with the US and Europe but we can have as many friends as possible. The US and China have a lot in common such as trade, and are also permanent members of the UN Security Council. I believe these countries have different areas of interest in Africa, hence they can all work together to make a better Africa."

Contact the writers through lucymorangi@chinadaily.com.cn

( China Daily Africa Weekly 06/05/2015 page32)