Diversification Of External Sources Of Financing Development In Africa: Impact Of Kenya’S Relation With India And China

Abstract

African countries face varied complex issues that the western countries have failed to address since independence. However, after the end of the cold war, there was a high transformation in the aid architecture, with the emerging donors coming on board with favorable aid conditionality’s that are more attractive to African countries. The diversified external sources of finance have proven to be more efficient in solving African issues directly, unlike traditional donors. To this end, this study evaluated the diversified external sources of financing development in Africa, assessed strategies that are employed by African countries in seeking external finance, and critically analyzed the impact of external sources of financing development from China and India on Kenya’s growth. Based on the nature of the study, it used a mixed methodology design in both data collection and analysis. Primary data was derived from interactive interviews and administration of questionnaires from officials in the Ministry of foreign affairs and international trade, China, and India officials in their Embassy in Kenya. Secondary data were sourced from a collection and review of published and unpublished material, journals, academic papers, and periodicals. These were taken through intensive and critical analysis. Qualitative data was analyzed using content analysis while quantitative data was analyzed by the use of SPSS software. Quantitative data were presented in tables and pie charts with interpretations done using percentages. Qualitative data was thematically presented based on the study objectives. The study relied on the dependency theory and borrowed some tenets from the realism theory in explaining Africa countries' reliance on external sources of finance. The study established that Africa diversification of external sources of finance is a result of its changing needs and failure of traditional donors in addressing its complex issues. The study also revealed that the emerging donors in aid architectures provided loans with favorable conditionality’s, respected recipient countries sovereign, and they were channeled where they are needed most. In addition, Findings indicated that Kenya benefited extensively from India in health sectors, technical areas, and infrastructure development loans. The study also revealed that the majority of China's financing means was done through infrastructural development. Findings showed that the Africa-Asia relationship has helped revamp the continents' economic growth. African governments have created promising avenues for Diasporas to remit money back home. Findings showed that one of the challenges overcame by external sources from India and China was health problems and eliminating transport congestion. Chinese companies' road expansion has solved most of the transportation challenges, such as traffic jams. Finally, findings established that infrastructural development was the main economic advancement from China. China was mainly involved in the construction of roads, railways, dams, and energy projects. The study recommends that African countries should come up with suitable projects that need funding. Donors should make it mandatory for public-private partnerships before they give out any forms of assistance. Public participation should be emphasized by the donors for the value of the money to be realized.