25 August 2012

Kenya: China - Are We in or Out of the Global Economy?


It was on Facebook, and so it must be true: a picture of a Chinese man selling roast maize from a jiko by the roadside. A few days before, media reported threatening leaflets in Nairobi's CBD found outside shops owned by Chinese traders.

According to the Star's reporting, the leaflets even included threats that 'anyone who buys goods from them will disappear together with the Chinese trader.' And then there was a demonstration by several hundred city hawkers to protest against the Chinese influx.

I figured that a Chinese roast maize seller can't be too much of a threat - if you want patriotic maize, just walk on and surely there will be other cobs of maize sold by more ethnically suitable vendors in the vicinity? And if this man had fallen on hard times, shouldn't we be grateful that he is willing to do this to keep himself alive? But the rest was quite intriguing to me for a number of reasons.

First of all, the charming tendency to resort to threats of physical violence and murder, not just to Chinese traders, but also to their clients. Not that this is uncommon: We've just seen it on a large scale in the Tana Delta, we'd seen it on an even larger scale in early 2008, we see it on a smaller scale when local councillors get physical and throw chairs at each other (seriously now!). Conflict resolution mechanisms could clearly do with an overhaul, and threats of murder aren't quite the way to run a competitive market economy.

I understand that hawking isn't exactly a cushy business - often, I suppose, it's a survival activity more than an actual business, and many people are only just scraping by. But I am also still trying to figure out if this is really just about hawkers: The demonstrators may have been hawkers, but those are not exactly business owners, and the Star mentions a 'Kenya Worldwide Importers & Traders Association' expressing concerns that 'unregulated entry of the Chinese traders in the small scale sector will kill their businesses.' This 'association' has disowned the leaflets, but I'd think more pressure would come from shop owners than from roadside hawkers.

In another article, a protester was quoted: 'The Chinese must go. Let them come and build roads. We don't want them to manufacture goods, export them to Kenya, and engage in wholesale, retail and even hawking the goods.' Now that's an interesting take as well. Where do you draw the line? As it stands, China's prolific low-cost manufacturing sector is certainly dangerous competition to the local manufacturing industry, but has been incredibly useful for many consumers.

Yes, you can argue that the quality is often low, but hey, the prices are even lower, and sometimes that's the consumers' preference. Choice, right? And if you want to protect local traders and manufacturers, why don't you then also want to protect local construction and road contractors?

A surprising dose of moderation and common sense came from Minister for Trade and Industry Moses Wetangula, pointing out that Kenyans also lived, worked and possibly even hawked in other countries. Look at the steadily increasing remittances from the Kenyan diaspora to understand how much Kenyan potential actually resides abroad. Of course every country has the right to regulate who it will let in, and you can argue that a small trader will contribute less than, say, a construction firm CEO.

But there is also an interesting deeper issue: East Africa's growing economies are no longer looked at as basket cases. Part of what comes with this positive development is that growth attracts people. Not just big firms, but also individuals. The EAC countries don't really have a social welfare system worth mentioning, so it's not likely that you'll find people from around the globe seeking entry to make sure that their housing, basic upkeep and basic medical services are covered. There are actually a lot of people who simply see business opportunities, big and small. So what do you do? Kenya and Tanzania have decided to raise the work and residency permit fees.

This is less of an issue for large corporates, but a much bigger problems for the self-employed, those with a business idea, those who'd just like to live here and work here. And in the corporate sector, too, there's some sympathy for keeping people out, like the unwelcome traders and the unwelcome manufacturers. I'd think that competition can be quite useful. That foreigners - whether from Nigeria, Fiji or the UK - could bring in some fresh ideas and useful skills. That employers will go for the person who's best qualified and best value for money.

Tanzania, in addition, actually more in need of skills imports, seems to be shutting itself off further. Many Kenyan corporates who have invested next door say that it is practically impossible to get work permits, and when visiting Tanzania, their staff now hold secretive meetings in hotels rather than in their own offices. Global economy: one day you're in, the other day you're out (pretend I'm saying this with Heidi Klum's accent).

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