Kenyan MP seeks for­eign firm cap

Leg­is­la­tor pro­poses firms be pre­vented from bid­ding on con­tracts val­ued at up to 1-bil­lion shillings amid ‘Chi­nese in­va­sion out­cry’

Business Day - - INTERNATIONAL COMPANIES - Agency Staff

A leg­is­la­tor from Kenya’s gov­ern­ing party has pro­posed lim­it­ing for­eign in­volve­ment in pub­lic con­tracts af­ter what he said was an out­cry about an in­flux of Chi­nese busi­nesses driv­ing out lo­cal com­pa­nies.

China has be­come Kenya’s big­gest trad­ing part­ner, ac­count­ing for 17% of the an­nual trade by value, or more than $4bn, heav­ily tilted in China’s favour.

That im­bal­ance, to­gether with grow­ing Kenyan bor­row­ing from China, which is es­ti­mated at 21% of Kenya’s to­tal pub­lic debt of 2.51-tril­lion shillings ($24.67bn), has started to ruf­fle feath­ers among Kenyans. A re­cent wave of Chi­nese in­vest­ments in the coun­try’s real es­tate, re­tail and road con­struc­tion sec­tors has added to the un­ease.

“The hue and cry has been brought about by what I call the Chi­nese in­va­sion,” Ri­gathi Gach­agua, an MP from cen­tral Kenya, told Reuters by phone. He is propos­ing amend­ments to the Pub­lic Pro­cure­ment and As­set Dis­posal Act of 2015, to pre­vent for­eign com­pa­nies from bid­ding for any con­tract val­ued at up to 1-bil­lion shillings.

Gach­agua said the pro­posal is go­ing through the leg­isla­tive process and he aims to bring it to par­lia­ment for de­bate in early 2019. The pro­posal has al­ready gar­nered wide­spread sup­port in the gov­ern­ing Ju­bilee party and other par­ties, he said.

Spokes­peo­ple for Ju­bilee and Kenya’s trade min­istry did not im­me­di­ately re­turn calls and emails re­quest­ing com­ment.

The gov­ern­ment is­sued a no­tice in late Oc­to­ber to ban tilapia fish im­ports from 2019, a move widely in­ter­preted as tar­get­ing China, a ma­jor source of tilapia im­ports to Kenya.

China’s em­bassy in Nairobi de­clined to com­ment on Gach­agua’s ini­tia­tive but said it hopes the is­sue of fish im­ports will be re­solved am­i­ca­bly for the sake of the broader ties be­tween the two na­tions.

“As a strate­gic part­ner of Kenya, China will not be en­gaged in a trade war with Kenya, or even as­so­ciate the is­sue of fish im­port with other co-op­er­a­tive projects,” the em­bassy said in a state­ment.

Like other African na­tions, Kenya has turned to China over the past few years for funds, tech­nol­ogy and equip­ment to de­velop its in­fra­struc­ture, in­clud­ing its big­gest project since in­de­pen­dence: a $3.2bn rail­way link­ing Mom­basa to Nairobi, which was opened in 2017. The grow­ing re­liance on Chi­nese fi­nance has caused anger among many Kenyans, with crit­ics say­ing it places an un­bear­able debt bur­den on fu­ture gen­er­a­tions.

Gach­agua said that China is us­ing its po­si­tion as a lender to give its com­pa­nies an un­fair ad­van­tage over their lo­cal coun­ter­parts when it comes to com­pet­ing for con­tracts.

“They have taken all the busi­nesses and they are also buy­ing all the goods from China,” he said.

KENYAN BOR­ROW­ING FROM CHINA, WHICH IS ES­TI­MATED AT 21% OF KENYA’S TO­TAL PUB­LIC DEBT, HAS STARTED TO RUF­FLE FEATH­ERS

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