The latest US cable released by Wikileaks scorns Chinese ICT companies doing business in Kenya as “re-colonising Africa” with “good and cheap” equipment, even if the after-sales service is described as s***.
The US embassy cable, from Nairobi to Washington, says Chinese firms selling into Kenya's ICT sector are “throwing a lot of money around” and influence may be so great “that it is distorting important investment decisions in the country”, according to industry contacts.
“Putting aside corruption, Chinese ICT vendors are difficult to beat on price and quality, and therefore often win government procurement tenders. However, companies that buy Chinese equipment often find that they end up paying the piper later due to poor after-sales service,” the leaked cable reads.
Dated November 30, 2007 and released by Wikileaks today, the cable quotes former Safaricom CEO, Michael Joseph, as saying "the Chinese are re-colonizing Africa for natural resources”.
During a briefing on Kenya’s NBN-equivalent, the FONN (fibre optic national network), Joseph said the project is an example of how “the Chinese are driving the ICT agenda in Kenya”.
He said, the FONN was deliberately “poorly planned” so Chinese companies could get “fatter contracts”.
Two Chinese firms and one French firm have been awarded contracts to construct the network, according to the cable, which Joseph believes will not cover areas where it is needed the most.
“Joseph went on to describe the use by Chinese ICT vendors of concessional credits from the Chinese government to lock up contracts - nothing new there,” the cable reads. “He said the quality of the ICT equipment provided by companies like Huawai (sic) and ZTE is pretty good, and their prices are low. But he used a monosyllabic expletive beginning with ‘S’ to describe after-sales service.”
Huawei has been successful in the Australian market, and the Chinese vendor will supply core networking equipment to mobile carrier, Vodafone, thanks to a recent deal.
According to Joseph, when there are problems with equipment “the Chinese run for the door”, and matters are made worse by the language barrier.
Safaricom purchased equipment last year [2006] from Huawei, but “the deal was too good to be true”.
“Huawei effectively reneged and only delivered half the equipment promised in the contract. Joseph went to China personally, eventually got the Huawai (sic) CEO to admit that the company had lied, and then forced it to cancel the contract,” the cable reads.
Joseph also believes Chinese IT companies are “funding the political agenda” of Kenyan politicians and ministers.
After he cancelled the Huawei contract, Kenya’s minister of information and communication told Joseph “the cancellation put all Chinese foreign assistance to Kenya at risk”.
Joseph said whenever he met with a Chinese firm, “within 20 minutes” he received calls from various Kenyan ministers or members of parliament lobbying on behalf of the company.
He also said a Telekom Kenya fixed wireless project was unilaterally awarded to Huawei without going to public tender.
The cable goes on to name others in the Kenyan government that are seeking more opportunity for US companies to supply technology equipment to government departments in the country.
According to the cable, Joseph’s testimony puts “flesh on the bones” of the contention that Chinese companies “play dirty”.
“Most disturbing in this case is the idea that Chinese influence is so great that it's actually distorting critical investment decisions in Kenya's all-important ICT sector. For further investigation is the role of the Chinese government. We wonder if it simply turns a blind eye to the dirty work of Chinese firms, or if it actively contributes to the problem.”
A spokesperson for Huawei in Australia could not provide comment at the time of writing.
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