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UK finally smells the coffee over tepid Kenyan ties

By Macharia Kamau | Published Sun, September 2nd 2018 at 11:20, Updated September 2nd 2018 at 11:24 GMT +3

President Uhuru Kenyatta and Rt. Hon. Theresa May, Prime Minister of the United Kingdom witness the signing of agreements at State House, Nairobi. [Photo: Standard]

Former colonial master Britain has watched helplessly as relations between it and Kenya deteriorate.

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Countries such as China and India have over the time toppled the United Kingdom and her cousin the United States of America as Kenya’s leading trading partners.

Even its European neighbours have smelt the coffee, switching gears in their engagements with East Africa’s largest economy, with countries such as France and Italy shifting from aid to loans in their relations with Kenya and Africa as a whole.

And now, the United Kingdom has complicated this relation further after its citizens voted to leave the European Union, a decision that many analysts say might be detrimental to Kenya.

However, the current administration led by Prime Minister Theresa May believes that the decision by the UK to exit the European Union (EU) will, on the contrary, help reboot the waning UK-Kenya relations.

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When the British PM was in the country for an official visit this past week, she promised to deepen bilateral relations on various issues from trade to security.

While China and some European countries have opted to give loans to Kenya, the UK continues to play the Big Brother’s role by giving grants rather than loans.

In the current financial year, the UK will give Kenya about Sh2.3 billion in grants while advancing no loans. Part of the money will be used for the establishment of a one-stop border post at Taveta Border Crossing and another one at Busia.

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A huge chunk of the money, Sh2 billion, will be used for the betterment of the arid and semi-arid lands (ASALs).

But the funds, though given for free, pale in comparison to the Sh71 billion that the country will receive from China for the construction of the Standard Gauge Railway from Nairobi to Naivasha in the financial year ending June 2019.

This will push China’s debt stock to over Sh600 billion, with much of the loans having been spent on infrastructural projects.

France, Italy and other European countries have over the recent past opted to give loans rather than grants to Kenya.

It was not until 2015 that the UK ended its bilateral aid programme to South Africa after 21 years. May notably also made a stopover in Cape Town.

President Uhuru Kenyatta might have given voice to the frayed relations when he noted that it was three decades since a British PM last visited Kenya.

After his meeting with May, the President said Kenya was grateful that the UK “honoured our invitation to come and see for yourself our country and continent that has changed since the last visit by a UK prime minister.”

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Indeed, immediately after meeting the British Premier, the President left for China to attend the Forum on China-Africa Cooperation (FOCAC) Summit.

Chinese influence, not just in Kenya but in Africa, has grown significantly, with China having funded mega infrastructure projects in different countries.

Gerrishon Ikiara, an economics lecturer at the University of Nairobi, said British companies have diverse and widespread investments in Kenya.

“Many of them stayed as they know the country very well.”

The impending divorce of Britain from the European Union and the effect this would have on relations between Britain and Africa is also top on May’s agenda.

“What she is projecting is that Africa could still continue doing business with Britain either within or outside of the European Union,” Ikiara explained.

When Britons voted to leave the European Union, there were fears that Kenya’s investment environment would be shaken as capital flew out of the country.

The PM will try to assuage Kenya that instead there will be increased financial inflows from London to Nairobi.

“It’s going to affect all of us and there’s no insurance, no position we can take to manoeuvre ourselves to be in a better position,” said Central Bank of Kenya Governor Patrick Njoroge on the possibility of Britain exiting the EU.

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He added that CBK is prepared to handle any shocks with foreign reserves of $5.6billion (Sh560 billion), enough to cover five months of imports.

Still, a weaker Kenyan shilling will make imports more expensive for a country whose import bill has been increasing more than 10 per cent a year over the last five years.

May and Uhuru announced several areas of cooperation, including the pact on the UK assisting Kenya in recovering stolen funds stashed in Britain as well as assistance in security.This will include setting up a cybersecurity centre and enhanced capacity in fighting terrorism.

The areas of cooperation will mainly enhance security and bring about other tangible benefits.

Washington visit

This is in comparison to the reported deals between Kenya and the US during President Uhuru’s visit to Washington where business pacts worth Sh24 billion were signed.

China will also in the next few days sign an agreement with Kenya to finance the Naivasha – Kisumu of the Standard Gauge Railway.

Trade with the UK, a huge market for cut flowers and tea, has stagnated over the recent years. 

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Last year, Kenya exported goods with a value of Sh38.5 billion to the UK, according to the Kenya National Bureau of Statistics (KNBS). This is in comparison to Sh37.6 billion in 2013.

Over the five years, there have been instances where the value of exports to the country dipped.

The value of imports from the UK to Kenya has been on a steady decline over the last five years, going to Sh30 billion last year from Sh49 billion in 2013.

The number of tourists from the UK to Kenya has also posted marginal growth.

The country is, however, still the largest tourist source market for Kenya, with the country receiving 168,000 British nationals last year. The UK is eyeing to be the top investor in Africa over the next four years, which seen as a mechanism for the country to shield itself from the likely impact of exiting the EU.

 


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