China makes its mark in EA's construction sector

China's presence in Africa's construction sector has been growing significantly, with Chinese firms undertaking a substantial percentage of major projects in the region. As of June 2015, China was responsible for building 14 percent of all major projects in Africa and 31 percent of the 51 projects in East African countries. This development has been facilitated by the relocation of low-end manufacturing from China to Africa, driven by changes in China's macroeconomics. Walter Ruigu, the Managing Director of CAMAL Trade and Investment Kenya, joined CNBC Africa to discuss the implications of China's influence on East Africa's construction sector. Ruigu addressed concerns about Chinese companies potentially displacing local firms in the region, emphasizing the need to evaluate each project on a case-by-case basis. He pointed out that attributing the success of Chinese firms solely to low-end manufacturing overlooks other key factors such as low-cost financing from Chinese banks and access to cost-effective manufacturing and management resources. The conversation shifted to the issue of corruption, with Ruigu acknowledging that corruption is a challenge faced by Chinese, local, and foreign firms operating in Kenya. He stressed the importance of addressing corruption at the governmental level to improve the investment and business environment for all entities. Regarding the impact of China's changing macroeconomics on African firms, Ruigu highlighted both positive and negative implications. While China's shift towards higher value-added production could benefit African firms through access to cost-effective manufacturing and high-quality products, there are concerns about how this transformation may affect existing projection plans. He encouraged African firms to engage directly with Chinese manufacturers to explore the value propositions and opportunities arising from China's evolving economic landscape. In conclusion, China's growing influence in East Africa's construction sector presents a complex and multifaceted dynamic that requires a nuanced understanding of the competitive factors at play. The interaction between Chinese and local firms, the role of financing and manufacturing resources, and the challenges of corruption and changing macroeconomics all shape the construction landscape in the region. As African countries navigate these dynamics, strategic engagement with Chinese partners and a focus on innovation and quality could pave the way for mutually beneficial collaborations and sustainable development in the construction sector.