BY LEONARD WANYAMA
Lately, Kenyan news is painting an overall triumphal picture of economic diplomacy. Indeed, the country has been very successful in the hosting of international events and dignitaries.
This was exemplified by World Trade Organization (WTO), United Nations Conference on Trade and Development (UNCTAD) and quite recently, the Tokyo Investment Conference on African Development (TICAD). It is also captured from the notable visits by important personalities namely Presidents: Barrack Obama, Jacob Zuma, Recep Tayyip Erdogan; Prime Ministers Benjamin Netanyahu, Matteo Renzi, Narendra Modi, Shinzo Abe among others.
Technically, in one form or another most G20 countries have shown a considerable and growing interest in Kenyan prospects.
Further, news that German carmaker Volkswagen is coming back to assemble its cars at the Kenya Vehicle Manufactures (KVM) facility after an almost 40 year hiatus is extremely welcome. This closely follows the 2013 opening of Toyota Kenya’s Sh500 million assembling plant in Mombasa.
It also comes after Honda Motorcycle Kenya also opened a motorcycle assembly plant worth Sh450 million and news that Dangote Cement has begun importing its products and set up plans in Kitui that will establish its full productive activities in 2019.
Nonetheless, the devil is always in the details and Kenya cannot brush over its struggle to become an attractive destination for investment in light of competition from other countries including its immediate neighborhood.
Hasty fawning over Kenya’s fortunes cannot hide the fact that we also need to be aware of cases like Sameer Africa, Eveready and Cadbury. These companies have faced steep competition from cheap Chinese and Indian products.
They have also been dealt with high energy costs, domestic tax challenges and sales dips especially in their East African Community (EAC) focus. This therefore puts a spotlight on Kenya’s industrial policy. It has also exposed the chink in the armor of our current economic diplomacy-the low regard for commercial diplomacy.
While it is important that Kenya encourages firms to invest within, it is also vital that the country promotes more of its local industrial companies, products and activities across our borders especially within the region.
Sameer’s case to move its operations is obviously an issue of leveraging the benefits of globalization but it seems a bit absurd how a company in a developing country with equal if not somewhat similar advantages as China or India has to outsource its production to them.
A Brookings Institution analysis recently noted Kenya’s grapples by highlighting Ernst and Young’s Africa Attractiveness Program 2016 report, which looked at gains over the year 2015. While Kenya has even gone on to overtake South Africa as the continent’s leading investor in Africa the stagnation of agriculture and challenges in manufacturing a clear for all to see.
These improvements in investment are therefore mostly focused on Kenya’s services sector. Consequently it is still too early to term the emerging Kenyan economic diplomacy as transformational because it is yet to structurally alter reallocation of economic activity across the country’s traditional and key sectors.
Real attractiveness would arise when the Kenyan economic conversion is able to facilitate: greater inclusion in production; a higher share of manufacturing to the Gross Domestic Product (GDP) through improved value chains and; conversion of informal sector activities so they can improve the overall economic outlook.
Unfortunately Kenya’s struggle for investment attractiveness is showing risk because of a current account deficit and growing public debt. These two have serious implications in the fight against poverty and inequality.
Therefore, a country in which a prominent manufacturer becomes a landlord-thereby depending on rental income as its main source of income from its Sameer Business Park offices- cannot claim, what is essentially a matter of historical default, hegemony in the region.
Prosperity and progress across Eastern African countries is therefore perceived to be cordially enhanced when, despite competition among themselves, economic gains are proportionally distributed so that no one country is strong enough to dominate all others.
Consequently, if Kenya would shift away from its tendency of hubris to more collaborative means of engagement with its neighbors it could end current stalemates such as those with the Economic partnership Agreements (EPA). This is because a shrewd strategic outlook and good diplomacy demands making alignments with the interest of its competitors such as Rwanda, Uganda and Tanzania.
This will accommodate their issues rather than contesting them while continuing to propel the country’s strategic status in relation to prospects within the Tripartite Free Trade Area (TFTA).
We should therefore cautiously consider the words of the late Professor Emeritus Clifford Geertz of Princeton’s Institute for Advanced Study, “… instincts should always [be] against people who want to fasten some sort of hegemony onto things.”
