Beyond the Debt Trap: Analysis of Chinese Investment and Elite Incentives in Kenya
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Authors
Nayonikaa Singhaal
Issue Date
2026
Type
Language
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Abstract
This paper examines China’s strategic objective when investing in Africa using its Belt and Road Initiative (BRI), as well as its impact on the domestic politics of African countries. The study conducts a dynamic panel econometric analysis of Chinese investment across 53 African countries from 2005 to 2021, comparing pre- and post-BRI periods. The results reflect that Chinese investment is strongly path dependent where once a country is “in,” future investment depends mainly on maintaining the relationship and not on governance quality or reforms. China uses path dependency as a tactic to pursue its objective of creating "strategic dependency," which is a form of indirect control where leverage operates through the promise of future investment flows instead of military bases or colonial occupation. Unlike the common narrative of debt-trap diplomacy, strategic dependency emphasizes how host countries become constrained in their policy autonomy because disrupting relations threatens access to continued capital, making it a more enduring form of influence. China purses its objective of strategic dependency for multiple reasons. First, to secure strategic locations like ports and trade routes by giving anchor state status to countries like Kenya. Second, China uses path dependency to control maritime corridors to offset Western influence in regions close to American military bases. Lastly, China aims to shape host countries’ foreign policy to align with its own as a way to implement long-term strategic influence.
This study then applies the concept of strategic dependency to understand why Kenyan elites weaken sovereignty and environmental and labour protections in Chinese projects despite facing sustained public pushback. Compared to other African countries, Kenya is not a resource dependent economy with natural resource rents <2% of GDP compared to the 12% average for African countries. Kenya exemplifies that Chinese investment follows strategic rather than extractive logic. This makes Kenya a perfect case study as its value lies in geographic positioning and regional connectivity. This strategic positioning combined with path dependency constructs a system of multi-layered dependency manifested through fiscal obligations, infrastructural integration, and digital lock-in, revealing Kenyan elites’ incentive to minimize oversight. Despite possessing institutional capacity to enforce labour and environmental laws and facing sustained public opposition where 87% of Kenyans believe borrowing is excessive, Kenyan elites weaken protections for Chinese projects while rigorously enforcing standards on non-Chinese projects. For Kenyan elites the non-accommodation with China jeopardises the chances of future investment flows which is essential for their Vision 2030 development strategy. This selective enforcement pattern reveals that elites rationally choose continued accommodation because the costs of disrupting Chinese relations exceed the costs of incremental institutional erosion. This demonstrates how China and Kenya interact in the form of strategic dependency, which impacts Kenya’s democratic accountability and policy autonomy.