Kenya faces uncertain future amid cheap influx of Chinese goods
Mar 30, 2022
Nairobi [Kenya], March 30 : Kenya is facing an uncertain future amid the cheap influx of Chinese goods as handmade kitchen products, which are the livelihoods of a large population of Kenyan artisans, are losing their earnings.
The charcoal stoves (jikos in the local language Swahili) and other kitchen items are the latest victims of cheap Chinese imports, reported The HK Post.
Chinese non-stick items are cheap and attractive to domestically available handmade steel/aluminum pots and pans.
The Kenya National Federation of Jua Kali Associations disclosed that Chinese cheap consumer goods had devastated the regional market of traditional handmade products.
Nairobi spent USD 4 billion on imports from Beijing in 2021 against its export earnings of USD 1.5 billion from that country. The trade balance is heavily tilted in favour of Beijing. Apart from this, Kenya spent Sh 107.5 billion in debt repayments to China, reported The HK Post.
Added to this, Nairobi is facing the problem of under-invoicing in importing Chinese goods. Though Beijing's exports to Kenya were estimated at Sh 738.9 billion (around USD 6.73 billion) by China's General Administration of Customs in 2021, it was just Sh 441.5 billion according to the Kenya National Bureau of Statistics (KNBS), thereby Sh 297.4 billion worth of Chinese goods avoiding taxes in Kenya.
This discrepancy has baffled economists who suspect "misreporting" as tax evasion. Both merchants and customs officers were allegedly involved in under-invoicing, thereby deceiving the exchequer with revenue losses as well as cheap imports hitting the local artisans, reported The HK Post.
Nairobi sought economic development by attracting foreign capital, especially from Beijing. By 2018, China held close to USD 10 billion in Kenya's overall debt (73 per cent), the highest for any country in Africa.
In spite of Chinese external debt tripling between 2013-2018, Kenyan President Uhuru Kenyatta defiantly declared: "I will continue to borrow to develop Kenya." However, Chinese investment had not contributed to any significant transformation of the Kenyan industrial sector.
Chinese projects have also become a liability for the country. Kenya's Standard Gauge Railway (SGR) project heavily favoured Chinese partners. The loan for the first stage of the construction of SGR project was disbursed by Beijing at a very high-interest rate with a quick repayment period.
