Banking in Kenya dates back to the pre-colonial periods. The first banks largely concentrated on financing international trade along the Europe-South Africa–India axis, but later diversified operations to tap the opportunities for profitable banking created by a growing farming settler community and pioneer traders in the local economy to whom they provided deposit and credit facilities.
Indian money lenders operating quasi bank services as early as the 18th century were probably the first bankers but the first recognisable bank was Jetha Lila Bankers from India, which was established in Zanzibar in 1880. In 1889 the National Bank of India appointed the trade house of Smith Mackenzie to be their agent in Zanzibar. Smith Mackenzie had a Mombasa branch in 1887 which was taken over by the Imperial British East Africa (IBEA) in 1888. The National Bank of India established its own office in Zanzibar in 1892. In July 1896 the National Bank of India established a branch in Mombasa renting premises from Sheriff Jaffer.
In April 1909, the East Africa Post Office Savings Bank Ordinance was passed and in April of the following year, the Ordinance for the Regulation of Banks established in the East Africa Protectorate was passed. The former Ordinance established the first bank in the formal sense while the latter enabled the National Bank of India to become the first commercial bank. By 1911 there were only three banks: The National Bank of India, The Standard Bank of South Africa that came in December 1910 which later merged with Anglo-Egyptian Bank Ltd to form Barclays Bank in 1926 and Kathiawad and Ahmedabad Banking Corporation which had a short-lived presence in Mombasa from 1910 to 1915.
In 1920 the East Africa Protectorate was declared a colony of the British Empire and its name changed to Kenya. The new colonial starters helped the Banks grow rapidly mainly through European Deposits and Asian customers. The banking services were not available to Africans, the only banking sources for Africans was the Post Office savings bank which started in 1910 as a department of the Colonial Postal service, even then the service was only available in places where Officials of the colonial service were stationed and therefore did not reach the majority of Africans who resided in rural areas.
The steadily growing economy in Kenya would soon lead to an influx of new banks between 1950 and 1959. In 1951 the Dutch bank Nedelandsche opened a branch in Nairobi. It was followed by the Bank of India which opened its first branch in Treasury square in Mombasa on January 17th 1953 and the Bank of Baroda on December 4th of the same year with its first branch also in Mombasa. The Pakistan based Habib Bank AG Zurich Ltd came in 1956 while the Ottoman Bank and Commercial Bank of Africa (CBA) rounded off the rush by establishing branches in the country in 1958.
After Indian attaining independence from Britain in 1947 and the subsequent hiving off of Pakistan, India changed its name in 1958 to National Oversees and Grindlays bank later called National and Grindlays Bank following its merger with Grindlays bank another landing based bank which traced its roots to Calcutta India. By 1951 the Banks had expanded its branches considerably but employment opportunities for Africans in the Banking industry took a long time to materialize. Indeed, it was not until June 1963 a few months before the country attained independence that the first African manager of a Bank branch Peter Nyakiamo was appointed.
After independence, the changing landscape of banking began to note the entrance of fully indigenous banks. In June 1965 the first fully locally owned Commercial Bank, the Cooperative Bank of Kenya was registered as a Cooperative Society; initially, it served the growing farming community. Cooperative bank as it came to be known commenced its operations as a Bank on January 10th 1968. The first fully Government-owned Bank the National Bank of Kenya was established on June 19th 1968. In 1971, the Kenya Commercial Bank was formed following the merger of the National and Grindlays Bank, with the government owning a 60-per cent majority stake. It took the poll position as the largest of the country’s commercial banks in terms of deposits and number of branches.
The formation of the Government-owned Banks had the desire to fight the speeding of the provision of affordable banking services to the majority of the population. It also prompted Foreign-owned bank to take measures to remain relevant in the Kenyan markets and beyond. Today, according to the Bank supervision annual report 2017, Kenya currently has 44 banks. 31 of the banks are locally owned while the remaining 13 are foreign-owned. Among the 31 locally owned banks, the government of Kenya has a shareholding in three of them, 27 of them are commercial banks and one is a mortgage finance institution, known as Housing Finance.
Of the 44 banks, ten are listed on the Nairobi Securities Exchange with respect to the names of their shareholders namely Barclays Bank of Kenya Ltd, Stanbic Bank Kenya Limited, Equity Bank Ltd, Housing Finance Ltd, Kenya Commercial Bank Ltd, NIC Bank Ltd, Standard Chartered Bank (K) Ltd, Diamond Trust Bank Kenya Ltd, National Bank of Kenya and Co-operative Bank of Kenya Ltd. The shareholding structure of these banks constitutes, one that is state-owned, six locally owned and three that are foreign-owned.
Together, they act as representatives of local, foreign, state, single and block shareholding in Kenya.
In 2016, in the wake of the collapse of three lenders —Dubai, Imperial and Chase banks — precipitated by weak corporate governance practices that allowed irregular issuing of loans to politically connected customers, wanton insider lending and running of parallel banks, the Central Bank of Kenya issued orders for banks to disclose top shareholders on their websites. An outcome of this has been greater transparency and public trust. However, as this analysis illustrates, is a network of individuals, companies and banks who are the major shareholders of Kenyan banks.
Let us examine this?
The National Bank of Kenya’s two key shareholders are the National Treasury of Kenya and the National Social Security Fund (NSSF). The NSSF holds 48.1% of the ordinary shares as well as 20.7% (253 million) of the non-cumulative preference shares in the Bank. The National Treasury holds 22.5% of the ordinary shares as well as 79.3% (900 million shares) of the Bank’s non-cumulative preference shares. The remaining 29.5% of the ordinary shares are held by the general public through the NSE namely, Kenya Reinsurance Corporations, Best Investments Decisions Ltd, Co-op bank custody a/c 4003a, Craysell Investments Limited, NIC Custodial Services a/c 077, Equity nominee Ltd a/c 00084, NBK Client a/c 1( Anonymous) and Eng. Ephraim Mwangi Maina who has 0.3% shares.
Co-operative Bank of Kenya public and was listed on December 22nd 2008.
Shares previously held by the 3,805 Co-operative Societies and unions were ring-fenced under Co-op Holdings Co-operative Society Ltd which became a strategic investor in the Bank with a 64.56% stake (3 Billion shares), followed by Gideon Maina Muriuki with 1.9% shares, Kenya Commercial Bank nominees a/c 915B 0.8% shares, NIC Custodial Services a/c 077 0.7% shares,Stanbic Nominees Ltd a/c Nr 1030682 0.5% ,Aunali Fidahussein Rajabali and Sajjad Fidahussein Rajabali 0.4%, Amarjeet Balooobhai Patel and Baloobhai Chhotabhai Patel, Old Mutual Life Assurance Company,Kenya Reinsurance Corporations and Standard Chartered Nominees Resd a/c ke11443 hold 0.3% shares each.
Co-op bank custody a/c 4003a (anonymous) has shares in two banks, National Bank of Kenya and Standard Chartered.
On 31st December 2014, Equity Group holdings PLC finalized an internal restructuring that culminated in its conversion into a non-operating holding company, Equity Group Holdings Limited (EGHL) in order to further meet its objectives. The Bank arm was founded in 1984 as Equity Building Society (EBS). In 2006, the Bank was listed at the Nairobi Securities Exchange where it has become the largest Bank by market capitalization. The listing also attracted Helios, a strategic investor, to invest USD 185 million in 2007.
Arise BV is the top investor at Equity Bank Limited with 12% shares. Aris-constituting Norfund, FMO and Rabobank-paid kes17.6 billion for a share of Equity Group Holdings KES147 billion market valuation. Aris took over the shares held by Norfininvest.
Other shareholders include James Mwangi and British American Investment Company Kenya Ltd with 127 Million shares, Standard Chartered Nominees with 121 Million shares, Equity Bank ESOP 117 Million shares, Standard Chartered Kenya Nominees Ltd a/c 107 Million Shares, Fortress Highlands Ltd 101 Million shares, Equity nominees Ltd a/c 93 Million shares, Stanbic Nominees Ltd a/c and Aib Nominee a/c Solidus Holdings Ltd hold 92Million shares.
Kenya Commercial Bank, Eastern Africa is the oldest and largest commercial bank started its operations in Zanzibar as a branch of National Bank of India In 1896. The bank extended its operation to Nairobi in 1902, which had become the headquarters of the expanding railway line to Uganda. In 1975, The Government of Kenya acquired majority shareholding and changed the name to Kenya Commercial Bank. In 1988, the Government sold 20%of its shares at NSE through an IPO that saw 120,000 new shareholders acquire the bank. The National Treasury is the top investor at Kenya Commercial Bank with 17.5% shares, followed by National Social Security Fund (NSSF) with 173 Million shares, Standard Chartered Nominee a/c with 69 Million shares, Standard Chartered Nominees Ltd a/c with 63 Million shares,CFC Stanbic Nominees Ltd a/c with 61 Million shares, Standard Chartered Kenya Nominee a/c with 58 Million shares, Standard Chartered Kenya Nominees Ltd a/c with 52 Million shares ,Standard Chartered nominees a/c ke002382 with 46 Million shares, Standard Chartered nominees a/c ke9688 with 45 Million shares and Standard Chartered Kenya nominees non-resd a/c 9069 with 36 Million shares.
Amalgamated Banks of South Africa (ABSA) Group Limited formerly known as Barclays Africa Group Ltd has the highest shares, 68.5% at Barclays Bank of Kenya, followed by Standard Chartered Nominees Resd a/c ke8723 e with 75 Million shares, Standard Chartered nominees resd a/c ke11401 with 46 Million shares, Kenya Commercial Bank Nominees Limited a/c 915b with 41 Million shares,Standard Chartered nominees resd a/c ke11450 with 38 Million shares, Kenya Commercial Bank Nominees Limited a/c 915a with 34 Million shares, Standard Chartered nominees a/c 9230 and Standard Chartered nominees non-resd. a/c 9913 hold 23 Million shares, Goodwill (Nairobi) Limited a/c 94 with 21 Million shares and the Jubilee Insurance Company of Kenya Limited with 20 Million shares.
Standard Chartered Bank Kenya Limited was established in 1911 with the first branch opened in Mombasa Treasury Square. The Bank was listed on the Nairobi Securities Exchange in 1989. The public shareholding is just over 25% (remainder held by Standard Chartered PLC) and comprises over 30,000 shareholders. Standard Chartered Holdings is the top shareholder with 73.5% shares and operates as a subsidiary of Standard Chartered Holdings International B.V. Standard Chartered Holdings (Africa) BV is an Overseas UK company opened on 17 May 2002. Kabarak Limited follows with 3.5 Million shares, Co-op Bank Custody a/c 4003A with 1.9 Million shares , Standard Chartered Kenya Nominees – a/c KE002382 and Standard Chartered Nominees – resd a/c KE11450 they both hold 1.7 Million shares, Standard Chartered Nominees – a/c 9230 they both hold 1.5 Million shares, Kenya Commercial Bank Nominees Limited – a/c 915B and Standard Chartered Africa Limited, they both hold 1.4 Million shares, Old Mutual Life Assurance Company Limited with 1.3Million shares and Standard Chartered Nominees – resd a/c KE11401 holds 1.1Million shares.
Standard Chartered Kenya Nominees Ltd a/c (anonymous) has almost equal shares in two banks, Equity Bank limited and Kenya Commercial Bank.
Standard Chartered nominees a/c ke002382 (anonymous) has shares in two banks, Diamond Trust Bank and Kenya Commercial Bank.
Standard Chartered nominees a/c ke11450 (anonymous) has shares in two banks, Housing Finance and Barclays Bank of Kenya
Stanbic Bank Kenya Limited (SBK) was established in 1958 when Ottoman Bank incorporated its first subsidiary in the region. In 1969, Ottoman Bank sold its Kenyan operations to National and Grindlays Bank (NGB Kenya) making its exit from the East African market. Stanbic nominees ltd a/c nr00901 is the top shareholder at Stanbic bank with 60.0% shares, followed by Standard Chartered nominees non-resd. a/c 9866 with 34 Million shares, Standard Chartered nominees non -resd. a/c 9867 with 13 Million shares, Standard Chartered Kenya nominees Ltd, a/c ke20510 with 9 Million shares, Standard Chartered Kenya nominees Ltd a/c ke002012 with 8 Million shares, Standard Chartered nominees Ltd non-resd a/cke11663 with 7 Million shares, Standard Chartered nominees non-resd. a/c ke9053 with 5 Million shares, the Permanent Secretary to the Treasury of Kenya with 4.3 Million shares, Standard Chartered nominee account ke17661 with 4.1 Million shares and Standard Chartered Kenya nominees ltd a/c ke23050 with 3.6 Million shares.
Diamond Trust Bank Group is an African banking group active in Burundi, Kenya, Tanzania, and Uganda. It has operated in East Africa for over 70 years. It is an affiliate of the Aga Khan Development Network (AKDN) and the flagship of DTB Group is Diamond Trust Bank (Kenya), which was founded in 1946. Aga Khan Fund for Economic Development is the top shareholder at Diamond Trust Bank with 16.5% shares, followed by Habib Bank Limited with 45 Million shares, The Jubilee Insurance Company of Kenya Limited with 27 Million shares, Standard Chartered Nominees a/c KE18965 and ,Standard Chartered Nominees a/c KE18972 have 5.2 Million shares, The Diamond Jubilee Investment Trust (U) Limited with 3.8 Million shares, Standard Chartered Nominees a/c KE002382 with 3.5 Million shares, Aunali Fidahussein Rajabali and Sajjad Fidahussein Rajabali with 3.3 Million shares, Standard Chartered Nominee Non Resd a/c KE11752 and CFC Stanbic Nominee Limited a/c NR1873738 have with 2.7 Million shares.
Housing Finance Limited is a large mortgage finance company in Kenya. The company was established in November 1965, to promote a savings culture and homeownership among the citizens of newly independent Kenya. Major investors in the company include the Commonwealth Development Corporation (CDC), whose shareholding at one time was as high as 60%, and the Government of Kenya, which at one time owned 50% of the company. CDC has since divested from Housing Finance Limited and the Kenyan Government has substantially reduced its shareholding.
In 1992 Housing Finance Company of Kenya became listed on the Nairobi Stock Exchange.
Britam Investment Company (Kenya) Ltd is the top shareholder at Housing Finance with 19.9% shares, followed by Equity Nominees Limited a/c 00104 with 44 Million shares, Britam Insurance Company (Kenya) Ltd with 33 Million shares, Britam Insurance Company (Kenya) Ltd with 23 Million shares,Standard Chartered Nominees Resd a/c KE 11401 with 14 Million shares, SCB a/c Pan African Unit Linked FD with 11 Million shares,Permanent Secretary Treasury with 8 Million shares,Kenya Commercial Bank Nominees Ltd a/c 915B with 5 Million shares,Standard Chartered Nominees Resd a/c KE11450 and Kenya Commercial Bank Nominees Ltd a/c 915A have 4 Million shares.
Investments & Mortgages Limited was formed as a private company providing personalised financial services to business people in the Nairobi area. In 1980, I&M, as the company was known at that time, was registered as a Financial Institution under the Banking Act. Following changes in the regulations of the Central Bank of Kenya, I&M became a commercial bank in 1996. In 2013, I&M Bank created I&M Holdings Limited, as the holding company of all the group’s businesses and subsidiaries. The holding company’s shares of stock are listed and publicly traded on the Nairobi Securities Exchange under the symbol I&M. Minard Holdings Limited is the top shareholder at I&M Holdings with 19.9% shares, followed by Tecoma Limited with 76 Million shares, Ziyungi Limited with 73 Million shares, Standard Chartered Kenya nominees Ltd a/c ke002796 with 41 Million shares.
Kenya Reinsurance Corporation has shares in two banks, Cooperative Bank and National Bank of Kenya.
National Social Security Fund (NSSF) has shares in two banks, National Bank of Kenya and Kenya Commercial Bank.
NIC Custodial Services a/c 077 (anonymous) has shares in two banks, Cooperative Bank of Kenya and National Bank of Kenya.
The National Treasury has shares in two banks, Kenya Commercial Bank and National Bank of Kenya.
The Jubilee Insurance Company of Kenya Limited has shares in two banks, Diamond Trust Bank and Barclays Bank of Kenya.
Banks play an important role in the economy of a country. When banks efficiently mobilize and allocate funds, this lowers the cost of capital to firms, boosts capital formation, and stimulates economic activities. Thus, weak governance in the banking sector can have far-reaching consequences to the economy of a country. In the recent past, the banking sector in Kenya has witnessed a number of corporate governance issues that sent jitters among millions of bank customers resulting in a confidence crisis. While banks have begun to adhere to disclosure requirements spelt out in the prudential guidelines issued by the Central Bank of Kenya (CBK) much more needs to be done, particularly pertaining to competition policy and regulation to put checks and balances on the monopolisation of the banking sector in Kenya.
This story was produced in partnership with Code for Africa’s iLAB data journalism programme, with support from Deutsche Welle Akademie.
Alarming: Cancer Is No Longer a ‘Rich Man’s Disease’
1 min read. Cancer is now the 3rd leading cause of death in Kenya, killing more than HIV/AIDS and just as much Malaria. Deaths due to cancer increased by 97% in 2018 alone.
ALARMING: #Cancer is no longer a ‘rich man’s disease’. It is now the 3rd leading cause of death in #Kenya, killing more than HIV/AIDS and just as much Malaria.
Deaths Due To Cancer Increased by 97% in 2018 Alone. Its Time Take This Disease Seriously pic.twitter.com/GIunnTk5KM
— Odipo Dev (@OdipoDev) August 5, 2019
Source: Globocan, KNBS, Our world in data, National Cancer Control strategy 2017-2022, WHO
Odipodev is a data analytics and research firm operating out of Nairobi. They can be contacted on firstname.lastname@example.org
Counting the Dead: Suicide Rates in Kenya (2006 – 2017)
2 min read. The number of suicide cases reported in the media has increased in the last several years, but do we have the numbers to make a case for national concern.
The World Health Organisation (WHO) reports that the number of suicides reported in Kenya rose by 58 per cent between 2008 and 2017 to reach 421. Out of the 421 suicide cases in 2017, 330 involved men compared to 91 women. On average, 317 people commit suicide every year.
The data reveals that the lowest incidents of suicide recorded were in 2010 at 75 cases, while the highest recorded cases were in 2013, 2007 and 2017 respectively. Though no study to find a causal link between suicide and elections has been conducted, it is worth mentioning that the years Kenya has recorded the highest rate of suicide have also been the years that General elections were held in Kenya.
The World Population Review ranks Kenya at position 114 among 175 countries with the highest suicide rate. Furthermore, Kenya’s suicide rate is at least 6.5 suicides per 100,000 people, a figure echoed by the World Health Organisation.
According to a world health organization 2017 report, Kenya has no vital registration data well enough for the direct estimate of suicide rates, due to the lack of proper data on the causes of death. In a study conducted by Mary Bitta, a researcher at KEMRI-Wellcome Trust, a health research institute in Kenya, the criminalisation of suicide in Kenya undergirded in the penal code and cultural stigma against suicide are the main reasons for the poor state of data on suicide. Moreover, misclassification of deaths by other causes such as accidents and a lack of suicide report verification using coroner certificates are other reasons for the scanty data on suicide rates.
Indeed, without a specific place to get reliable data on suicide, the government and the citizenry are ill-equipped to fully comprehend, diagnose and tackle the issue of suicide in Kenya. In this regard, more must be done within our health, legal and criminal systems to improve data collection, reporting and handling of suicide and suicide cases in Kenya.
Infographic by Mdogo and written by Joe Kobuthi.
China In Africa: It’s a Numbers Game
8 min read. Over the past two decades, China has grown into the undisputed champion of Africa’s infrastructure financing needs but as the popular adage goes, there is no such thing as a free lunch.
China’s growing global dominance got a publicity boost this April 2019 with the latest Forum on Belt and Road International ( BRI) Cooperation. The annual event brought world leaders from 37 countries, 5000 delegates from 150 nations and representatives of 90 international organisations to Beijing for the BRI conference that culminated in a resolution to continue strengthening ties and promoting global growth and economy through policy coordination among participating economies, infrastructure connectivity, trade investment and industrial cooperation
To Africa in particular, China has become a significant economic partner. China has catapulted from being a relatively small investor in the continent to becoming Africa’s largest economic partner, providing infrastructure and investment loans that have helped the continent record massive expansion of roads, rail and other utilities. Obviously, the forum is crucial in strengthening existing relationships and opening new opportunities for cooperation.
To date, it is difficult to understand the full extent of China’s blueprint in Africa due to the data knowledge gap that exists. This vacuum has fueled urban legends and sensational stories, everything from charges of neocolonialism, persistent yet unfounded rumor that Chinese firms use convict labor en masse, to even a Chinese settler colony in Africa. However, to dispel or confirm these narratives Africa must take a critical review, audit and examination of its principal relationship with China and what it portends for Chinese influence and footprint in the continent.
Since the turn of the 21st century, China has catapulted from being a relatively small investor in the continent to becoming Africa’s biggest economic partner. Africa-China trade increased from $13 billion in 2001 to $188 billion in 2015—an average annual growth rate of 21 percent. China has far surpassed Africa’s longstanding trade partners such as France, Germany, India, and the United States. According to a McKinsey and Company report dubbed Lions and Dragons in 2015, total goods trade between China and Africa amounted to $188 billion—more than triple that of India.
Statistics from the General Administration of Customs of China, in 2018, indicate that China’s total import and export volume with Africa was US$204.19 billion, a year-on-year increase of 19.7%, exceeding the overall growth rate of foreign trade in the same period by 7.1 percentage points. Among these, China’s exports to Africa were US$104.91 billion, up 10.8% and China’s imports from Africa were US$99.28 billion, up 30.8%; the surplus was US$5.63 billion, down 70.0% year on year. In December last year, China’s total imports and exports with Africa were US$18.27 billion, up 15.5% year on year and 2.1% month on month. Among these, China’s exports to Africa were US$9.55 billion, up 3.9% year on year and 3.0% month on month; China’s imports from Africa were US$8.72 billion, up 33.7% year on year and 2.2% month on month; the trade surplus was US$840 million, down 68.7% year on year and up 13.5% month on month. In 2018, the growth rate of China’s trade with Africa was the highest in the world.
China and Infrastructure
China has a long history of infrastructure investment in Africa, and this remains the country’s most visible legacy to this day. In the 1970s, China constructed the 1,710 km Tanzania-Zambia railway (Tan-Zam Railway completed in 1976), which linked landlocked, mineral-rich Zambia to the Indian Ocean. China’s aid for the project consisted of a nearly one billion interest-free loan, over one million tons of machinery and materials, and 50 thousand laborers to undertake construction efforts. Zambia’s first president, Kenneth Kaunda, hailed China’s support, and claimed the railway served as “a model for south-south cooperation.”
However, one of the megatrends of our times has been the growing presence of China in Africa’s infrastructure sector. Over the past two decades, China has helped to meet some of Africa’s infrastructure financing needs and is now the single largest financier of African infrastructure,financing one in five projects and constructing one in three mega projects.
Most funded projects are in the Transport, Shipping and Ports sectors (52.7 per cent), followed by Energy and Power (17.6 per cent), Real Estate (15 per cent, including industrial, commercial and residential real estate) and Energy and Power (13.1 per cent)
To date China has participated in over 200 African infrastructure projects. Chinese enterprises have completed and are building projects that are designed to upgrade about 30,000km of highways, 2,000km of railways, 85 million tonnes per year of port output capacity, more than nine million tonnes per day of clean water treatment capacity, about 20,000MW of power generation capacity, and more than 30,000km of transmission and transformation lines.
Foreign Direct Investment
China is poised to become Africa’s largest source of Foreign Direct investment. At the current growth rates, China will be Africa’s largest source of FDI stock within the next decade. China’s financial flows to Africa are around 15 percent larger than previous estimates. This discrepancy is found because official figures, which rely on banking-system data, do not cover informal money-transfer methods often used by smaller businesses. These methods include “mirror transfers,” in which a local payment is made into the Chinese account of an associate or family member, who in turn makes a local equivalent payment in Africa to the beneficiary’s bank account.
China is the second- or third-largest country donor to Africa Chinese official development assistance (ODA) and other official flows (OOF) to Africa together amounted to $6 billion in 2012. Chinese foreign aid expenditures increased steadily from 2003 to 2015, growing from USD 631 million in 2003 to nearly USD 3 billion in 2015. The United States promised somewhat more—$90 billion in the same period—but Chinese aid is more sought after. Unlike Western assistance, which comes mainly in the form of outright transfers of cash and material, Chinese assistance consists mostly of export credits and loans for infrastructure (often with little or no interest) that are fast, flexible, and largely without conditions. Thanks to such loans, the International Monetary Fund estimates that, as of 2012, China owned about 15 percent of sub-Saharan Africa’s total external debt, up from only 2 percent in 2005. And McKinsey & Co. reckons that, as of 2015, Chinese loans accounted for about a third of new debt being taken on by African governments.
Most of China’s loans to Africa go into infrastructure projects such as roads, railways and ports. China’s loan issuance to Africa has tripled since 2012. New debt issuance by Chinese institutions to African governments increased dramatically in the past five years, rising to some $5 billion to $6 billion of new loan issuances each year in the 2013–15 period. The McKinsey report suggests that in 2015, these loans accounted for approximately one-third of new sub-Saharan African government debt. Most of these loans are linked to infrastructure projects, such as China EXIM Bank’s $3.6 billion loan to finance the Mombasa-Nairobi Standard Gauge Railway in Kenya. From 2000 to 2017, the Chinese government, banks and contractors extended US $143 billion in loans to African governments and their state-owned enterprises (SOEs).
In 2015, the China-Africa Research Initiative (CARI) at John Hopkins University identified 17 African countries with risky debt exposure to China, potentially unable to repay their loans. It says three of these – Djibouti, Republic of Congo ( Congo-Brazzaville) and Zambia – remain at risk of debt distress derived from these Chinese loans. In 2017, Zambia’s debt amounted to $8.7bn (£6.6bn) – $6.4bn (£4.9bn) of which is owed to China. For Djibouti, 77% of its debt is from Chinese lenders. Figures for the Republic of Congo are unclear, but CARI estimates debts to China to be in the region of $7bn (£5.3bn). Angola is the top recipient of Chinese loans, with $42.8 billion disbursed over 17 years. Yet, Chinese loans are currently not a major contributor to the debt burden in Africa; much of that is still owed to traditional lenders like the World Bank.
According to the McKinsey report , there are about 10,000 Chinese-owned firms operating in Africa today. Around 90 percent of these firms are privately owned. State-owned enterprises (SOEs) tend to be particularly in specific sectors such as energy and infrastructure, the sheer multitude of private Chinese firms working toward their own profit motives make Chinese investment in Africa a more market-driven phenomenon than is commonly understood. Chinese firms operate across many sectors of the African economy. Nearly a third are involved in manufacturing, a quarter in services, and around a fifth in trade and in construction and real estate. In manufacturing, an estimated 12 percent of Africa’s industrial production—valued at some $500 billion a year in total—is already handled by Chinese firms. In infrastructure, Chinese firms’ dominance is even more pronounced, and they claim nearly 50 percent of Africa’s internationally contracted construction market.
One-third of Chinese firms based in Africa reported profit margins of more than 20 percent in 2015. They are also agile and quick to adapt to new opportunities and they are primarily focused on serving the needs of Africa’s fast-growing markets rather than on exports.
According to CARI China has acquired 252,901 hectares of land in Africa. Cameroon alone accounts for 41% of all lands actually acquired: driven by two large purchases of existing rubber plantations (over 40,000 hectares each) in 2008 and 2010.China has also established 14 agricultural centres across Africa.
China has also taken an increasingly hands-on role in its work and investment related to African agriculture, leasing and developing land and in many instances being accused of “grabbing” large swathes of it. But as Deborah Brautigam’s reports the assumptions about China’s role in Africa are often not borne out in reality and the areas of land “grabbed” for investment are small compared to the vast areas identified by some.
Over the past decade China’s role in peace and security has also grown rapidly through arms sales, military cooperation and peacekeeping deployments in Africa. Today, China is making a growing effort to take a systematic, pan-African approach to security on the continent.
China is now the second-largest contributor to the peacekeeping budget. Chinese personnel have served on missions in Africa for decades, but until 2013 they were small contingents in unarmed roles such as medical and engineering support. China now provides more personnel than any other permanent member of the Security Council – they numbered 2,506 as of September. Chinese peacekeepers now serve in infantry, policing and other roles in Africa.
In 2017, China established a 36 hectare Djibouti military facility.with a ten-year lease at $20 million annually. It has been described as a support base for naval anti-piracy operations in the Gulf of Aden, peacekeeping in South Sudan and humanitarian and other cooperation in the Horn of Africa, but has also been used to conduct live-fire military exercises.
Labour and Population
The number of Chinese immigrants in Africa has risen sevenfold in under two decades, The Annual Report on Overseas Chinese Study said the African continent was home to more than 1.1 million Chinese immigrants in 2012, compared with less than 160,000 in 1996, adding that 90 percent of the current total arrived after 1970. Initially, most labourers coming to Africa were from retail industry but today with the closer relationships with Africa, Chinese intellectuals and skilled professionals have settled in Africa.
The number of chinese workers by the end of 2017 was 202,689. In 2017, the top 5 countries with Chinese workers are Algeria, Angola, Nigeria, Ethiopia, and Zambia. These 5 countries accounted for 57% of all Chinese workers in Africa at the end of 2017; Algeria alone accounts for 30% of the numbers. These figures include Chinese workers sent to work on Chinese companies’ construction contracts in Africa (“workers on contracted projects”) and Chinese workers sent to work for non-Chinese companies in Africa (“workers doing labor services”); they are reported by Chinese contractors and do not include informal migrants such as traders and shopkeepers.
There has been a significant increase of Chinese media on the African continent in recent years. This has taken place across various levels, including infrastructure development, training of journalists, production and distribution of media content, and investing directly in African media houses and platforms. The increased media footprint is widely seen as a way for China to extend its ‘soft power’ on the continent. But this is not the first time that China has established a media presence on the continent. As far back as the 1960s and 1970s, Chinese media was active in Africa.
However, since 2012, state-run media outlets have also pitched up in the continent, among them the Africa bureau of China Global Television Network (CGTN based in Nairobi) and China Daily Africa newspaper. China also takes African journalists to Beijing for training, while state-linked firms have made investments in local media outlets including buying a 20% stake in South Africa’s Independent News and Media firm (INMSA). The Beijing-based StarTimes Group has also become one of Africa’s most important media companies, increasingly influential in the booming pay-TV market. As it spread its foothold in Africa, the company has embarked on a project to provide solar-powered satellite television sets to 10,000 villages across Africa.
China has not “taken over Africa”; she has merely joined with earlier groups of imperialists in grabbing a part of the African bounty. As a newcomer, her presence is more visible, but not yet as substantially deep-rooted as the long-standing European imprint.
She comes with two key differences: first, China does not yet have the military and diplomatic capacity to replace any of those Western powers in physically securing and enforcing the various trade routes and treaties needed to keep the global trade machine, upon which they all depend, running. Second, therefore, this venture cannot be implemented remotely, but by human displacement. Even a settler-overlord project may not work. What could work is one where millions of Chinese people are steadily shipped over to “yellow” Africa as a continuation of the anti-black ethnic cleansing and encroachment the Asians began centuries ago in South Asia.
The Africa of the ordinary people must therefore assert itself and force its concerns on to all public agendas. The struggle now is to hold a public conversation independent of these various imperialists and their allies.
Sources: McKinsey and Company report. Compiled by Mdogo.
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