Assessing Chinese Manufacturing Investments in East Africa: Drivers,Challenges, and Opportunities

OUR FIELD RESEARCH FOUND A CONSIDERABLEdisparity between official registration information and on-the-ground investment activities. Neither the Chinese government nor the local investment authorities have been able to monitor small investment projects that are “flying under the radar” or keep track of any subsequent changes to investment plans. Moreover,Chinese investments in the manufacturing and agricultural industries in Kenya and Tanzania are dominated by private,migrant entrepreneurs, who have mainly been driven by market considerations, such as production cost and market proximity,rather than government incentives in home or host country.Regulatory uncertainty, gaps in policy implementation, and underdeveloped local supply chains in host countries have posed the main restrictions to further of development of the manufacturing industry. We have found evidence of knowledge transfer from Chinese investments to the local industry, including job training, supply chain development, sub-contracting, and technology cooperation with local governments and firms. The establishment of a few large manufacturing projects in the past few years may provide more opportunities for employment creation and knowledge transfer, but more practical policies and coordination plans on behalf of host governments are required before systematic knowledge transfer can take place.