Chinese firms dominate Kenya’s construction industry

A Chinese construction supervisor mentors youths in Nairobi. PHOTO/FILE
A Chinese construction supervisor mentors youths in Nairobi. PHOTO/FILE
Kenyan contractors are losing out to Chinese firms that are grabbing lucrative construction tenders for private projects as they diversify from public infrastructure deals.

In May and July, two Chinese firms secured tenders for multi-billion-shilling private projects in Nairobi causing jitters among their local rivals.

China Wu Yi was in May unveiled as the contractor for the University of Nairobi’s 22-storey complex valued at Sh2.3 billion.  The firm is also building the Sh2.1 billion KCB Plaza, a 21-storey office block in Upper Hill, which will host the bank’s headquarters.

On the other hand, China Jiangxi International was in July awarded the contract to build what is set to be the tallest building in Nairobi – Hazina Trade Centre.

The 39-storey tower, which will be built atop the building housing the Nakumatt Lifestyle along Mokhtar Daddah and Monrovia streets in Nairobi, is owned by the NSSF and will cost Sh6.7 billion.

ICPAK Complex

China Jiangxi is also building the Sh1.3 billion ICPAK Complex on Thika Highway. The project by the Institute of Certified Public Accountants of Kenya (ICPAK) comprises an ultra-modern 12-storey office block, shopping mall, conference facility, hotel and furnished apartments.

Both the KCB Plaza and ICPAK Complex are said to be well ahead of schedule.

“Chinese firms’ dedication to their work, coupled with skilled workmanship, and the timeous execution of the projects, has won the respect and admiration of many Kenyans,” says Peter Ngari a lecturer in urban planning at the University of Nairobi.

In addition to private and public tenders, Chinese firms have been quietly snapping up church construction deals across the country.

(READ: Chinese ‘grab’ church construction projects in Kenya)

At the Holy Family Basilica Cathedral in Nairobi, for example, Zhongxing Construction Company of China is currently building the Cardinal Otunga Plaza, an 18-floor office block for the Nairobi Archdiocese.

Another Chinese firm Fubeco Ltd is building the Catholic Church of Our Lady of the Rosary in Kiambu County, which is aimed at reaching out to the lost souls in the wealthy county. The same company had earlier built Luther Plaza along Nyerere Road, the headquarters of the Lutheran Church of Kenya.

But even with the current discontentment, many experts agree that Chinese firms hold a technical and financial edge over the local contractors.

“Most foreign companies have an edge over local companies because their rates of finance are much lower, at 3-4 per cent versus 17-18 per cent for local contractors,” says KSC International’s Okpar Ubhi.

In April, Kenyan road contractors and engineers moved to court seeking to have Chinese and other foreign contractors barred from handling government-funded road projects.

The contractors accused the government of setting a Sh500 million ceiling for tenders to be awarded exclusively to local firms yet they had the capacity to handle projects exceeding Sh5 billion.

(Kenyan contractors fight off Chinese builders in court)

The case is yet to be determined, but the National Construction Authority (NCA) chief executive Daniel Manduku recently said the guidelines to effect minimum participation for local firms were already in Parliament.

“At least 30 per cent of the monetary value of a project should go to locals. This will be through joint ventures or sub-contracting,” Mr Manduku said.