Bigger, better endowed China firms edge Kenya’s firms out of construction

By MOSES MICHIRA

KENYA: China Jiangxi International has won a tender to develop NSSF’s shopping mall in Nairobi, which has been billed the tallest real estate project in Kenya. This confirms a trend that contractors and developers from the Asian economy are becoming frontrunners in all major developments here.

Cementers Ltd, a local firm, had initially won the tender in a procurement process that was later faulted to have been irregular, prompting a review that handed the project to the foreign firm.

The multi-billion shilling block that houses Nakumatt Lifestyle outlet, marks more than three decades of soaring interest of Chinese contractors in local construction sector since the grants that was Moi International Sports Centre-Kasarani in 1982.

Since then, the influence of the Chinese has never been more evident than the steady redevelopment of most residential estates, especially in Nairobi where high-rise apartments are fast replacing single dwelling units.

.

Keep Reading

•  Government splashes Sh100m for tourists comfort zones in counties
•  All our constitutional reform initiatives have been on roller coaster
•  Human cases of bird flu 'an enormous concern': WHO
•  Ruto in Times 100 most influential people
•  EACC recovers Sh100 million land in NakuruPremium

The competition

It is now the norm rather than the exception that another Chinese firm would be behind the next biggest real estate project, with the help of easier access to financing back at home and superior technology, tending to shove aside their local counterparts.

However, their dominance in the construction scene is now sending shockwaves among local developers who view their foreigner competition as gaining from the support of their Government to beat them to contracts in the private and public sectors here.

“Chinese firms have the support of their Government. They easily access very cheap loans to fund construction projects,” says Steve Oundo, the chair of National Construction Authority. “If a foreign contractor has access funds back home, then it would be impossible for locals to compete for the same job.”

Quality of work

He proposes laws should be amended to ensure all foreign contractors and developers have local partners to ensure there is technology transfer that would raise the profile of the local firms.

Ensuring the foreign firms have local shareholders would mean only a portion of the profits are repatriated, Oundo said, rather than the present case where the mega profits from the booming housing and infrastructure developments end up in China.

While local developers have to borrow from banks at high interest rates, the Chinese can access nearly interest-free loans from their State-owned lenders which are structured to help private firms doing business abroad.

Daniel Biwott, who runs a real estate agency says the Chinese developers are literally rewriting the rules in construction, in the pace of execution of projects and the magnitude.

It is, however, clear the Chinese deliver a better job, according to Biwott, whose only fear was that the local firms had been edged out unfairly.