Much anticipation surrounds Kenyatta-Trump talks

August 24, 2018 in Business, Companies, Finance, Infrastructure, Investment, Trade & Industry, Transport by Editor

August 24, 2018—There is much anticipation among regional economic analysts over the outcome of President Uhuru Kenyatta’s meeting with President Donald Trump on Monday at the White House.

Authorities in Beijing, Kenya’s biggest bilateral creditor will also be keenly watching what happens. Kenya’s debt to China has risen to $5 billion since 2016 when it was at about $3 billion, but the country needs to continue to modernize its infrastructure to remain competitive.

Uhuru desperately needs a balancing force and Trump is eager for a photo opportunity to show that Africa really does matter to United States interests.

Uburu will be the first leader of the six-member East African Community (EAC) to meet Trump on a scheduled one-on-one basis and have the chance to measure up the man who has largely ignored Africa as a foreign policy priority and even described some countries in expletives. How Uhuru is received and treated at the White House will matter a great deal to the rest of sub-Saharan Africa.

As the host, it is Trump who will have to switch on the charm, although by many accounts his sense of being ‘presidential’ often baffles, because he gets easily distracted. His recent tweets on the South African land issue reflects a President who shoots from the hips.

No doubt though Trump’s handlers will have also briefed him about the Deal.  Getting Uhuru to sign off on Bechtel building the new $4 billion Nairobi-Mombasa superhighway using borrowed US money, would be a huge lift for his ‘America First’ doctrine. It would also be a nice way to hit at the Chinese. Trump is in the middle of trade spat with China because he doesn’t think they are playing fair, a point Uhuru may have some sympathy with.

In spite of the Chinese dominance in modernizing Kenya’s transport infrastructure, relations with the United States have always been important to Kenya.  The country has always been seen by Washington as a good and valued friend though trade between the two countries has slipped even as Kenyans buy more from China.

According to the US figures, in 2017 Kenya-US trade totaled nearly a billion dollars with the East African country importing $454 million worth of goods and services while exports to America stood at $572 million. Between January and June this year Kenya sold $256 million to US buyers while the import bill was $201 million.

In contrast total imports from China during the same period topped $3 billion, but exports barely touched $100 million. A recent analysis in the mainstream China Daily, stated that Kenya was importing an average of $348.9 million worth of goods from China per month.

It is this situation that has made the Kenya government reluctant to sign a China-EAC trade pact being peddled by Beijing for fear that it would mean trampling over domestic manufacturing and industry. The same reasons why Tanzania difficulties singing the Economic Partnership Agreement with the European Union and caused technocrats in Brussels much anguish during the past two years.

The US already has a trade pact in place and Kenya in recent years has been a leading beneficiary. The African Growth and Opportunity Act (AGOA), which offers quota/duty-free access to the American market has allowed Kenya to sell over $350 million in apparel/ garments in 2017. Adding all the exports of the other EAC countries under AGOA, does not measure up to even 20 pc of what Kenya is annually shipping to the US.

This explains why Kenya jumped ship early in the day when the EAC leaders during 2016, announced proposals to restrict imports of secondhand clothing. An umbrella of American second hand clothing dealers immediately launched a campaign to have the East African countries lose their AGOA eligibility. Kenya caved in, soon to be followed by Tanzania and Uganda, but Rwanda has held out. Not one for protocol, Trump may even ask Uhuru why this is and it would be a perfect moment to invite the US President to East Africa to understand exactly why.

Quite rightly, there are laws in the US and the EU against bribing to win foreign contracts and more often than not, in also the same countries where these tenders are being advertised. Invariably people will try to side-step them and usually succeed. However, the Chinese are much more aggressive, because the stakes are high.

No matter how you look at it, Africa in terms of natural resources, population dynamics and an aging problem in the leading industrialized countries, still holds immense potential as both a maker of goods and a  market for them as well. The Chinese see it very well. Perhaps Uhuru should remind Trump about the saying, ‘late comers eat bones’.