Kenya seen as regional industrial hub

Chinese task force says East African country has best business environment in area

The growing relationship between China and Kenya will be given a further boost by proposals by a Chinese team on a fact-finding mission in three African countries, officials say.

Members of the team, who have been in Kenya this month, said recently that Kenya is poised to greatly reform its business environment through its Special Economic Zones law, expected to make the nation more attractive to investors than Tanzania or Ethiopia. The law was passed in Parliament this year and is awaiting implementation by the government.

The Chinese delegation proposes to make Kenya a regional and continental industrial hub through industrial parks and manufacturing zones.

"We are confident Kenya's legal mechanism, a one-stop shop and incentives framework will attract and retain Chinese investors as a strategic conduit to the African market and larger Chinese market," Lin Songtian, director-general of the Department of African Affairs in China's Ministry of Foreign Affairs, says.

The new Kenyan legislation reduces taxes and duties for manufacturers in the special zones, and makes it easier to import goods, obtain work permits, repatriate profits and otherwise operate businesses in an effort to boost Kenya's exports.

Lin, the former envoy to Zambia, also says Chinese investors have been showing interest in setting up industrial parks and special manufacturing zones along the 416-kilometer standard gauge railway corridor being built by China from Mombasa to Nairobi.

Kenya's Industrialization and Enterprise Development Principal Secretary Wilson Songa, who was with the team, said the manufacturing zones will spur bilateral trade between the two countries as well as help balance a trade deficit that now tilts in favor of China.

Songa said Kenya enjoys a 23-year advantage in the development, operation and management of special industrial zones over both Tanzania and Ethiopia.

China developed industrially largely through the creation of special economic zones.

While speaking to African journalists in December at the International Press Center in Beijing, Lin singled out Kenya among several African countries for its change in foreign policy that now engages China more on the basis of trade than on aid.

He urged other African nations to emulate Kenya to achieve rapid economic growth. According to Chinese Ambassador to Kenya Liu Xianfa, China became Kenya's largest trading partner last year in Africa, overtaking its closest neighbor and oldest trading partner, Uganda.

Liu said bilateral trade rose by 53 percent, while signed agreements between the two countries rose by 10.2 percent to reach a peak value of $592 million. These figures are, however, expected to rise even more this year.

Meanwhile, a monthly index undertaken by a leading financial information service provider and a bank showed that business conditions in Kenya improved significantly in February.

The monthly Purchasing Managers Index report was released recently by Markit and CFC Stanbic Bank. It indicates that export business grew rapidly last month. Over 400 manufacturing and construction companies were surveyed.

The report card is aimed at giving foreign investors a clear economic outlook every month by providing a calculated average of the following components: new orders, output, suppliers' delivery times and stocks to facilitate their business.