Infrastructural Development as a Determinant of Kenya – China Economic Relations

Abstract

This study sought to establish if Kenya’s purposeful infrastructure investment anchored largely on Chinese financial support has led to improvement and modernization of Kenya’s infrastructure network, economic growth and has been the single determining factor in Kenya-China economic relations. The study was based on a Rational Choice Theory as the guiding theoretical framework, and used longitudinal research design to determine the effects of infrastructural development on economic growth and intensified Kenya-China economic relations. It was also anchored on a qualitative design technique and applied case study approach to analyze the causality of processes at all levels. The study adopted multiple sources of information ranging from primary data to secondary data. The study found that foreign direct investment was an essential stimulant to economic growth. It also found that for Kenya to improve and expand its infrastructure network it needed massive resources that it was unable to provide autonomously, forcing the country to resort to external support. In this regard, China has become a major source of financial support to Kenya. The study found that compared to methods applied by other bilateral donors in development projects, the Chinese approach was starkly different. The speed of completion stands out and this is attributed to the fact that project cycles are relatively shorter. In the Chinese case, identifying the project to completion and handing over never goes beyond five years, whereas in the European Union or Japanese cases the process could take up to 10 years. The study further found that Chinese companies were discriminate providers of employment as they tended to employ mainly non-professionals and casual workers, thus affecting expected technological spillovers. China’s FDIs also distorted local saving potential which could render Kenya perpetually dependent and hostage to China’s conditionality. The approach to local content was also spurious. The study also established that as far as cost performance measure was concerned most projects suffered cost overruns because standard economic parameters that underpin viability of projects seem not to have been met. The study concludes that poorly managed infrastructure investment manifests economic and financial woes bedeviling Kenya today. Unless Kenya adopted investment growth policies targeting high-quality but less debt - dependent infrastructure investment model Kenya was bound to experience economic and financial instabilities. The Chinese infrastructure investment model must be tempered by archetypes embraced by progressive market-based economies. This notwithstanding, Kenya-China economic relations have been on the rise.