THE IMPACT OF CHINESE CONSTRUCTION COMPANIES ON AFRICA’S PROPERTY MARKET

Catherine Kariuki and Nicky Nzioki

AfRES from African Real Estate Society (AfRES)

Abstract: Rumours abound about China’s loan programme in Africa. Where, why, and how are Chinese banks financing African development? Are African countries risking a new debt crisis? It has been said that Chinese grip on the Kenyan infrastructure project is a concern for both local contractors and the African Development Bank (AfBD). The bank stating that Chinese dominance in government projects could undermine Kenya’s economic growth since majority of funds invested in projects are not spent in the country. Some of the reasons for this dominance include the fact that Chinese firms hold a technical and financial edge over local contractors. The purpose of this paper is to investigate the impact of the Chinese Construction Companies on Africa’s property market with a view to provide data that would inform both the public and private sector industry. Data to answer the paper’s initial questions will be presented from AfBD evaluation reports and other western institutions who have become concerned over the significant political and economic roles China is playing in the African continent. A significant source will include a review of current database of Chinese loans to Africa. Factors identified as the main reasons for choosing construction companies from China from literature range from access to cheap finance and that Chinese firms have superior technical knowledge and better work ethic. As a result of this skilled workmanship, they are able to execute projects faster and on time. Though the Chinese companies were initially interested in large public infrastructure projects, there is now evidence that some are venturing into construction of institutional buildings and private homes in Kenya. The paper serves to provide information on the impact of foreign contractors (specifically the Chinese) on the real property market. This leads to the question of the need to reduce the cost of money for the construction companies and an increased focus on the education of contractors, artisans and related skills, both at the polytechnics and at Universities.

Keywords: construction companies; construction finance; Education; planning approvals; Property Market; technical knowledge (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-09-01
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Persistent link: https://EconPapers.repec.org/RePEc:afr:wpaper:2019-096

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