China Square: Why we should 'square' the economy

China Square shopping centre at Kenya University’s Unicity Mall along Thika Superhighway, Nairobi.  [File, Standard]

Last week, I stopped by China Square along the Thika Superhighway to confirm its existence.

Why would a single building stoke so much controversy, culminating in a demonstration against what protestors called Chinese infiltration of small businesses, better known as hustling?  

Let’s rise above emotions and try to explain China Square, which has been accused of selling items cheaply when everyone is complaining about high prices.  

Let’s start with the location of the business premises; it is on the Kenyatta University grounds.

Would that not be a plus considering that universities are being asked to be enterprising and get alternative sources of revenue? Who would have thought such a location, away from Nairobi’s Central Business District (CBD), would be a money minter? You can put up a hospital, a school or a factory in the far-flung Mandera or Lodwar regions of northern Kenya and you will get customers if they get value for their money. Don’t we travel abroad to seek medical attention or for schooling?  

Three, let us accept that the Chinese long realised we love low prices; other things are secondary. Are some Kenyans buying the items at China Square to sell at higher prices elsewhere? Could China Square be the local Guangzhou?  

Why are the Chinese selling cheaply? One possibility is that they are able to control the supply chain.

They can source from the Chinese factory and bypass the middlemen. The other possibility is focusing on volumes. 

There is, however, the riddle of how the media know how much “Charlie,” the Chinese trader makes in a day. Was that meant to show who is taking the hustlers’ money and make them angry? Politically, that was clever, you can shift the blame on joblessness to someone else—the Chinese. 

There is more than meets the eye in China Square. Let me explain or rather, speculate.  One is our economic thinking.

A Cabinet minister’s statement that China should manufacture not retail left my head spinning.   You make more money manufacturing than retailing. There is less competition compared with retailing.

Why should we stick to retailing? Why not move up the value chain and start manufacturing? Do we still believe at such a high level of the government that 60 years after independence we can’t manufacture?  

It’s not surprising that the contribution of the manufacturing sector to GDP has not changed much in the last 60 years, yet it’s captured in the Vision 2030 economic blueprint and the now-defunct Big Four agenda.

Why should we be happy at the tail-end of the supply chain, just retailing? Has value addition not been our economic gospel?  

The second big issue is our relationship with China. It seems the new regime is shifting from the East, getting back into the western orbit, with the International Monetary Fund (IMF) and the World Bank getting more mentions. Is setting us against China through demonstrations part of that agenda? 

Big firms

Why were there no demonstrations against sex scandals in tea farms, some of which are not owned by Kenyans? 

Many big firms have closed shop in Kenya. They now manufacture elsewhere and just trade in Kenya. Why are we not angry?  

A statement from the Chinese embassy in Nairobi tells it all. And why should we rattle China when it has so much leverage in our debts? Third, China Square shows the need to square our economy.  

We need to grow it and make money with Kenya “squares” all over the world. But how?  One, the debt hurdle has been removed in our quest for economic growth. The debt ceiling is now a percentage of GDP at 55 per cent. To keep it at that level, we can rack up more debts but grow the GDP (economy). Without cooking the data, we need not worry about debt any more.  Taxes can now be balanced against debt. Remember with higher growth, taxes will go up too. It’s a win-win situation.

Without so much pressure on raising tax revenues, taxes can be used as incentives to grow the economy with reliefs, refunds or even lower tax rates.  

Growth is driven by the adoption of more innovations and technology to increase productivity. Wages and salaries go up too, weaning ourselves off hustling and anger against a single person. Growth is driven by national confidence when the vast majority believe things can only get better.

And you are rewarded for going beyond the call of duty when meritocracy counts. Leaders build that confidence with new policies and national projects. What’s the successor to Vision 2030 or Big Four?

Why are we not celebrating 60 years of independence with pride and confidence? 

Why not drink from our glorious past to inspire our tomorrow? Freedom without the long shadow of fear also catalyses growth. 

Growth is driven by investors and their money. Before you demonstrate against China Square, you need to visit China and see the level of foreign direct investment.

Which global brand is not in China? Let’s also tell the truth: there are lots of other “squares” in Kenya, and we are quiet about them. Why?