Will China loan lower cost of doing business?

Thika Road is one of the flagship projects constructed by the Chinese.

By NICHOLAS WAITATHU

The high cost of doing business has continued to slow down investments in Kenya despite various efforts to ease the situation.

More foreign investors have halted investments, fearing the huge costs incurred — necessitated by poor infrastructure, insecurity, escalating energy cost, and cumbersome business registration. 

 But last month’s visit by President Uhuru Kenyatta to China has renewed hopes of building mega infrastructural projects to up the performance of key sectors of the economy.

Uhuru concluded eight deals worth Sh425 billion (US$5 billion) with the Chinese government — which analysts say will increase investments in the country.

Uhuru explained that huge part of the funds will finance infrastructure development, power generation, and cooperation between the foreign ministries.

  However, even though the new administration is upbeat with the deal secured from the Far East economic power house, the breakdown of projects the amount would be financing is not clear and whether the total amount includes past projects. 

But sketchy information filtering through indicates that the funds will aid wildlife protection, funding roads, railway line and power projects.

 Viewed as a strategy aimed at seeking more funding from the East over the traditional investment sources in Europe and the US, Uhuru explained the plan is geared towards widening Kenya’s scope offriends.

 By extending the financial support China President Xi Jinping his country is ready to support Kenya’s quest for industrialisation.

 The Kenya Private Sector Alliance (KEPSA) has been calling on the Government to advance the business climate to encourage high economic growth.

 In an earlier interview, KEPSA chairman Vimal Shah claimed it takes less than a week to transport cargo from Egypt or Malaysia to Mombasa. The same load takes more than two weeks to be transported to Nairobi.

 Foreign investors have avoided Kenya while scouting for hospitable investment destinations. This has led to high level of unemployment, low revenue generation and low production in the general economy among other bottlenecks.

  Of the China goodies, some Sh340 billion (US$4 billion) will be committed to finance economic partnerships, wildlife protection, and the standard gauge railway linking Mombasa and Malaba. The railway line will also open up the hinterlands of Uganda, Rwanda, Burundi and eastern Democratic Republic of the Congo.

 “We expect the rail project will contribute to job generation, in addition to urbanisation growth.  The rail link will also save our major roads from destruction, and help safeguard infrastructure. It will make movement of goods faster and will make our ports more efficient,” Uhuru explained.

 He added the envisaged modern railway will enhance the country’s profile as it joins the league of more developed countries, and puts more modes of transport at our disposal.

 In June this year, the head of State and his Uganda counterpart Yoweri Museveni agreed to revamp the existing railway network and also construct new standard gauge railway line. The line will be extended to Rwanda, including joint mobilisation of resources.

 The construction of the standard gauge line will ease cargo transportation from Mombasa to various segments within the region.

 The Government also agreed to source for funds together as well as pursue individual financial plans.  The State has already introduced a 1.5 per cent railway development levy expecting to raise Sh22 billion to fast track the railway development.