President Uhuru Kenyatta has had progressive trade negotiations with leaders of the United Kingdom and the United States, two of the largest economies in the world. His participation in the UK-Africa Investment Summit in January and subsequent meeting with US President Donald Trump has laid the foundations for further private sector investments in Kenya.
This is taking place alongside discussions regarding the formation of a new US-Kenya trade deal.
These efforts continue the government’s approach to trade that has defined Uhuru’s presidency, with the aim of improving the living standards of the country’s citizens. It also has a bigger picture of increasing Kenya’s profile on the international economic stage.
During the 2017 Jamhuri Day celebrations, Uhuru unveiled his plan for Kenya’s development under the so-called Big Four Agenda – enhancing manufacturing, promoting food security, introducing universal health coverage and building affordable housing. By committing to achieve these ambitious milestones, however, the government set itself up for a bumpy ride.
The transformation of the Kenya into an industrialising middle-income economy has faced a host of challenges. Despite numerous bilateral as well as regional trade agreements in place, such as the East African Community common market, the volume of exchanged goods and services has barely increased.
Furthermore, Kenya’s trade balance remains negative, meaning that it imports more from other countries than it exports. This means that more money is leaving the country than coming in.
As the World Trade Organisation observed in the past, this was largely the result of the poor quality of infrastructure in Kenya and East Africa. The lack of expansive networks of high-quality roads and railways hampered the movement of goods.
Directly stemming from this was increased cost of Kenyan goods that made them less competitive in the global market.
Uhuru’s policies now seem to be built on realisation that the negotiation of new deals with partners abroad has to be complemented by the improvement of business conditions at home. He has fostered friendly relationships with all major powers on the international scene. Close cooperation with China, for instance, helped finance the standard gauge railway.
In addition, the government in partnership with the World Bank and other development institutions has sponsored the expansion of the country’s road network.
As a result of the government’s ongoing efforts, we have seen the steady rebalancing of our trade flows, with exports gradually increasing in comparison to imports. Co-operation with countries such as the UK and the US has meant that Kenya can make use of cutting-edge productive technologies to enhance its manufacturing sector. With an ever-evolving infrastructural background, our country is now seeing increased competitiveness of its products.
Continued foreign direct investment into Kenya’s manufacturing sector as well as infrastructural development is necessary for bolstering the economy. Only with a strong and competitive economy can we hope to see what Uhuru and his government pledged to bring as part of the Big Four plan. As the country continues on its current path set out by the leadership, there is no doubt that the goals will be realised.
- The writer is a banker and comments on topical issues