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How Foreign Affairs CS Amina Mohamed can help tame debt

FINANCIAL STANDARD
By Mbatau wa Ngai | December 5th 2017
By Mbatau wa Ngai | December 5th 2017
FINANCIAL STANDARD
Foreign Affairs CS Amina Mohamed

Foreign Affairs Cabinet Secretary Amina Mohamed holds the key to Kenya’s economic future in the wake of the country’s growing debts — local and foreign.

According to the International Monetary Fund’s Regional Economic Outlook for sub-Saharan Africa, Kenya’s public debt has grown from Sh1.8 trillion in 2013 to Sh4.5 trillion as of September this year. The country’s ratio of debt to Gross Domestic Product (GDP) increased from 44 per cent in 2013 to 52.6 per cent last year.

The obvious conclusion is that the country it has been unable to produce goods and services fast enough to keep pace with the rate at which it is accumulating debt to fund development of infrastructure projects.

To his credit, President Uhuru Kenyatta has recognised the challenge facing the country and pledged to spend his last term in office focusing on adding value to cash crops. It is noteworthy that the President made the pledge when commissioning the Sh19 billion Thiba Dam Project in Kirinyaga County. The President said the first step would be to address the plight of tea, coffee, milk and rice producers.

But to take this first step, particularly for export crops such as coffee and tea, the State would have to negotiate and reach agreements with the importing countries many of which are loath to allow processed and ready-to-market imports.

This is where Cabinet Secretary Amina Mohammed comes in with her negotiating skills honed over years of working with the World Trade Organisation at a senior level. Her success would earn the country not only huge dividends estimated to be over ten times the farm-gate prices the farmers earn today but add job opportunities created across the entire value chain.

Negotiations process

Evidence on the ground suggests that the CS would be equal to the task especially if the President reappoints her. The down-side to this proposition is that the negotiations process would take time because the CS would be working with foreign governments whose first instinct is to protect their own nationals’ jobs.

The good news is that the process can be shortened by borrowing a leaf from Nyeri County where a Norwegian company, last year, teamed up with a coffee co-operative society to process coffee for sale in European markets.

One lesson to be learned from the Denmark Consumer Co-operative Society’s modest investment of Sh400 million in Africa Coffee Roasters is that money is not what has kept the country away from value addition.

Even the country’s fiercest critics would have to admit that Kenya’s diversified financial markets can rustle up enough money to finance several such start-ups.

[Mbatau wa Ngai, [email protected]]

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