Chinese Multinational Enterprises And Economic Diversification In East Africa

Economic diversification is one of the recent measures adopted by African countries as a means of that will help address the challenge of the level of economic growth faced by the continent. This study analyses the evolving China-East Africa investments from traditional aid related investments to new forms investments. The main research question is to examine how Chinese investments in Kenya and Uganda have evolve under the new globalization era resulting into the diversification of Chinese investments in East Africa and what role have emerging Chinese companies played in the process. The study has applied the transformationalist wave to establish a link between emerging multinational companies and investment diversification in the new globalization era. The theory stresses the new role of MNCs as sources of FDI and how the emergence of MNCs from developing countries has led to an increase in FDI flows to nontraditional sectors. The conclusion from this study is that although Chinese companies are still at the initial stage of internationalization which started less a than a decade ago they have to a great extent diversified in Chinese investments in East Africa a region which attracted less foreign investments in relation to other rich resource Sub-Sahara African countries like south Africa, Zimbabwe, Nigeria and Egypt, Morocco, Algeria in North Africa. Kenya and Uganda in the past twelve years has witnessed an increase in the volume Chinese investments expanding from traditional development aid projects to direct investments in construction, manufacturing, telecommunication, extraction, agriculture sector, banking, tourism and other service sectors. The further study shows that despite this positive trend Chinese Companies and Investments in East Africa rise major concerns in terms of economic implication to Individual country interests and region as a whole, while facing various challenges as later comers in international corporate business. My conclusion is that with this new crucial role being played by Chinese companies in expansion of foreign investments in various sectors of Africa in recent years, it is important to give Chinese companies special attention while studying contemporary Sino-Africa Relation under fast globalization era.Attracting foreign direct investments in various sectors of the African economy has become an important measure to address the slow economic growth and underdevelopment problems which continues to affect the African continent in the new century. The aim of this study is to further examine various sectors targeted by Chinese foreign direct investment by focusing the recent investments made by Chinese MNCs in East Africa. The study adopted the transformationalist wave for an academic and scientific research to test the subject in question how EMNCs investments are connected to economic diversification in the new globalization era and how can it be applied to China-Africa economic relation.East Africa is chosen as a case study, as it provides very unique opportunity to investigate Chinese MNCS investments. Both cases Kenya and Uganda although established diplomatic relations with China immediately after independence direct investments began to pick up at the beginning of the new century. Also East Africa is not a rich resource region making it a less attractive global FDI in comparison to other sub-Sahara countries including Congo, Nigeria, Sudan, Zimbabwe, Zambia and South Africa thus less research has been carried out concerning Chinese investments into East Africa. However Chinese investments into East Africa have grown rapidly and expanded to various sectors which include traditional forms of investment like infrastructure, agriculture development projects to new sectors such as manufacturing, tourism and service sectors covering telecommunication, banking, and pharmaceuticals among others as discussed in length in chapter four.Therefore the term economic diversification in this study, means not stopping or diverting away from traditional investments but expansion of Chinese investments to other sectors of the East African economy. Thus it is very important to take into account past experiences and literature about Chinese investments in Africa and East Africa in general and the study will proceed in six chapters as show below.Chapter One which is the introduction of the study includes various parts such as background of study which will briefly discuss the history and challenges faced by the African governments to attract global foreign investments in post-independence period. Another discussion in this Chapter is the research problem of the study which investigating what comprises of Chinese investments in East Africa? How much and what sectors have been targeted? Followed by the aims and objectives of study, which include identifying Chinese MNCs and investments Kenya and Uganda to determine to what extent of Chinese MNEs investment have impacted the region’s economic diversification. The Significance of the study is to point out the role and challenges faced by Chinese MNCs in promoting Sino-Africa relations in the new economic globalized era. The research methodology in this study is largely qualitative where by information was collected from secondary data sources related to Chinese MNCs and investments in Africa and applied to the case of study of two countries of East Africa Kenya and Uganda.Chapter Two is theoretical framework of the study, is globalization school of thought and transformationlist wave which emphasizes the close relationship between MNCs and FDI under the new economic globalization. Pointing out that under the globalized economic era MNCs from emerging countries have had a great impact on the amount and forms of global FDI flows.Chapter three comprise of discussion about the emergency of Chinese MNCs and an overview of their presence in Africa this include outlining the facts that motivates their expansion to foreign markets.Chapter four and five are the heart of this study will start brief view of global FDI flows to East Africa, Then followed by a comparative analysis of China-East Africa engagements and Chinese MNCs investments in Kenya and Uganda respectively. And lastly establish Chinese sector investment distribution and factors driving this investment trend.Chapter five, will point out the key issues concerning Chinese MNCs and Investment, this will include discussing potential impacts of Chinese investments in East Africa economy and will provide answers to the question of how and when are Chinese investments are contributing to the African economic growth and lastly challenges faces by Chinese MNCs will then be addressed.The last chapters six will summary major findings of the study, as well as pointing out limitations encountered during the research, followed by contribution and conclusion of the study.