3 FOREIGN DIRECT INVESTMENT IN KENYA

# **3.2.4 Chinese firms employ a large share of local workers**

Contrary to the popular belief that Chinese companies only hire Chinese workers, 93 percent of companies report hiring Kenyan employees; private enterprises are more likely to hire locals than state enterprises. In addition, larger firms are more likely to hire Kenyans than smaller firms: 40 percent of micro enterprises and all small, medium and large enterprises hire Kenyans (SACE 2014). Of the companies surveyed, Kenyans represent 78 percent of full-time and 95 percent of part-time employees. The companies had an average of 360 local employees: 252 were part-time (70 percent) and 108 were full-time (30 percent) (SACE 2014). All foreign manufacturing companies in Kenya had 127.8 full time workers and 19.3 part-time workers on average. Manufacturing and construction companies are larger employers, hiring 762 employees on average compared to 45 in the services sector; all foreign manufacturing firms hire 158.3 full-time workers and 47.3 part-time workers on average (World Bank Enterprise Survey 2013). Chinese companies in the services sector hire 71 percent full-time employees, but the manfacturing and construction sectors hire only three percent full-time employees. 90 percent of manufacturing employees are local, and 82 percent of service sector employees are local. Chinese companies also hire more Kenyans over time: they had 102 full-time local employees upon establishment, and by the time of the BPI survey, they had hired 214 full-time local employees. 63 percent of Chinese companies said they had a policy of replacing Chinese employees with locals (SACE 2014). Larger firms were more willing to replace Chinese workers than smaller firms, and private enterprises were more willing to replace Chinese workers than state enterprises. A local technician is much cheaper than a Chinese technician because a work permit costs US $4,597. Local employees also receive basic insurance from Chinese companies: 44 of 68 companies noted that they offer basic insurance for all employees. Again, larger companies are more likely to provide basic insurance than smaller employers. 84 percent of manufacturing and construction companies offer insurance for Kenyans, and 72 percent of service sector companies offer insurance for locals. Overall, there are 663 foreign and 20,790 local workers in managerial positions, 781 foreign and 87,589 local employees in skilled positions, and 633 foreign and 131,618 workers in unskilled positions. The average number of unskilled workers in foreign manufacturing companies is 49, or 37.3 percent of the workforce; detailed information about the workforce of Chinese companies is unavailable (KNBS 2013).

**Chinese companies create the most jobs in communications** Figure 26a presents the number of jobs that Chinese companies have created in each sector. Chinese companies have created 2,170 jobs, 5.3 percent of the total 40,646 jobs created through FDI. The greatest number of jobs came from the communications sector at 931 jobs, followed by 500 jobs in the automotive original equipment manufacturing (OEM), and 342 jobs in the metals industry. Chinese companies have focused more on Automotive OEM than other countries. It makes up 23 percent of China’s overall jobs created compared to only 11.4 percent of total overall jobs. As figures 27 and 28 highlight, manufacturing takes the largest share of employment for both Chinese FDI and total FDI. Chinese manufacturing FDI created 1,600 jobs with 266.7 jobs on average, and manufacturing in total created 21,119 jobs with 357.9 jobs per project. Other major employers were customer contact centres, creating 2,218 jobs and 443.6 jobs per project.

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