Kenya takes leaf from China playbook

Officials looking at how Beijing used reforms to propel a poor nation into the world's top economic tiers

Kenya can learn critical lessons from China on strategies to balance security and economic reforms to spark the type of quick and sustainable growth witnessed in the Asian country in the past several decades, officials say.

China's economic reforms in the late 1970s and early 1980s saw the country implement programs that moved its people from farms to factories and open the taps of foreign investment. For two decades, the economy grew at an average of 9 percent annually.

It is a feat Kenya aims to emulate. In the ambitious economic blueprint Vision 2030, the nation envisioned double-digit growth starting in 2010.

It is, however, growing at a healthy but less dizzying 5 percent, according to the World Bank, which predicts growth of 6 percent next year, while the International Monetary Fund predicts it will achieve growth of 6.5 next year, supported by robust agricultural, manufacturing, real estate and services sectors.

However, insecurity has been partly to blame for setbacks. Instability in South Sudan and Somalia has encouraged smuggling of small arms into Kenya and attacks by groups such as the al-Shabaab jihadist terror organization.

This has devastated tourism, the second-largest foreign direct earner in the country, contributing about 12 percent to GDP.

Gituro Wainaina, acting director general of the Vision 2030 Delivery Secretariat, says China succeeded in maintaining stability, which spurred a wave of investment opportunities for companies around the world.

"Double-digit annual growth requires investment. China achieved this and it is a reference point we can look up to."

Wainaina was speaking at an investment forum on infrastructure. It attracted about 100 participants and was opened by Kenyan Deputy President William Ruto, accompanied by Cabinet Secretary Phyllis Kandie of the Ministry of East African Affairs, Commerce and Tourism.

Chinese delegates were among the biggest group in attendance, which also saw delegations from 30 countries including the United Kingdom, Japan, India, Denmark, the United States, South Africa, South Korea, the Netherlands, Spain and Colombia.

Kenya continues to be regarded as a good investment destination. It is quickly expanding its infrastructure, has a rising middle class and is the biggest economy in East Africa. Its average GDP per capita was $1,418 last year and it has a total GDP of $58.1 billion.

Saying that large, government-sponsored infrastructure projects are envisioned to propel the country into middle-income status, Wainaina says the LAPSSET program aims to develop the northern corridor that has in the past had a security problem. LAPSSET is the Lamu Port Southern Sudan-Ethiopia Transport corridor project that would be Kenya's second major transport corridor when complete.

"Development in these marginalized areas will lessen incidences of insecurity that may be nurtured by poverty," Wainaina says, adding that development will expose untapped opportunities.

The aim of the project is to build a road, rail and pipeline linking Lamu Port to South Sudan and Ethiopia. "The pipeline and road are key," he says, noting that the feasibility study and designs for the road are complete while the designs for the pipeline are at their initial stage. "The average return for this project is 21 percent," he says of the northern corridor of economic development.

"I believe this will promote regional integration and growth of the East Africa region."

Another ambitious project he highlighted was transforming Isiolo, in central Kenya, into the country's capital city, like "what was done in Nigeria and Tanzania".

In those cases, Abuja, a centrally planned city, became Nigeria's capital in 1991, replacing Lagos. Dodoma replaced Dar es Salaam as Tanzania's capital because of its central location.

"Food security is also at the top of the government agenda and that is why we have invested in an irrigation scheme," Wainaina says.

President Uhuru Kenyatta's administration launched the $247 million Galana project to cut the country's reliance on rain-fed agriculture by employing modern technology to boost yields.

In addition, he mentioned the standard-gauge railway linking Kenya's port Mombasa to Uganda, Rwanda and Burundi, and the need for a second runaway at Jomo Kenyatta International Airport and a metro-commuter train system.

Stanley Kamau, director of the Public Private Partnership Unit, under the Ministry of Finance, says 183 proposals for energy projects have been received. "Energy production is top of the government's priority as this will bring down the cost of production, thus improving the county's competitiveness," he says.

Kamau says the sector is lucrative for private business, leaving the government with the role of facilitation. Private participation is needed to inject innovation and efficiency into public projects, he says.

He says the government is in the process of searching for a private operator to run the second berth at Mombasa port and to manage incidents while promoting safety at the new Thika Superhighway.

"We are developing a tolling policy that will see users contribute to the maintenance of several roads. Feasibility studies have been completed.

"We are also in the process of finalizing the development of 6,000 modern units to house civil servants, who total about 200,000 in the country." A 20-year contract includes the development and maintenance for the houses, which would be owned by the state workers, he says.

Kamau reiterated the government's commitment to solving land acquisition issues that have been a challenge to investors.

"It is an emotive issue but we are looking at strategies such as land-banking, where the land owners get equity in the planned projects to ensure sustainability and amicable settlement of land transfers."

Another issue investors raised was the skill level of local workers. Two directors explained the system in which learners are in the field for three days and in class for two days. "This will effectively link theory learnt with market needs," Kamau says.

lucymorangi@chinadaily.com.cn

(China Daily Africa Weekly 11/27/2015 page20)