Kenya needs both the West and East to grow her trade and investment portfolio

BY BENARD AYIEKO Much has been said about Kenya’s relationship with the West and the East. More often than not the discussions around the two cardinal points of the compass have generated antagonistic discourse that have pointed to the relationship between Kenya and Asia – predominantly with China vis-à-vis that of Kenya and her traditional partners in Europe and Upper America. As a country, we enjoy good relationship with both the West and East. This is the kind of a relationship that a country needs for sustainable growth and development especially in this era of economic diplomacy, which deals with the nexus between power and wealth in international affairs. But why this hullaballoo about Kenya – West – East? Every foreign investor begins by concluding that Kenya is a regional hub for business in Eastern and Southern Africa. As such, Kenya remains a gateway and an important trade and investment hub in the region. The reasons being that Kenya is the largest economy in East Africa with robust industries, developed manufacturing sector, skilled labour, solid infrastructure and versatile Information, Communication and Technology facilities. In 2014, Kenya adopted a new formula for calculating its GDP making her fourth largest economy in sub-Saharan Africa behind Angola, South Africa and Nigeria. Today, Kenya’s GDP at market prices stands at $60.94 billion, which opens up the economy to high impact trade and investment activities. As the largest economy in East Africa, Kenya is among the leading countries with the highest volumes of exports within the East African Community and by extension, in the Comesa trading bloc. No wonder, in the last few years we have witnessed an influx of giant Multinational Corporations (MNCs) such as Pepsi, GE, Delonex Energy, Google, Visa, Mastercard, KFC, Travelport, Dow Chemicals, among others who have either set up shop or are willing to do so. In 2014, Frontier Strategy Group – a US based emerging markets advisory services firm ranked Kenya as the second most preferred destination in Africa for MNCs behind Nigeria. With a relatively competitive manufacturing sector (that accounts for 14% of GDP, 25% and 15% of employment), dynamic ICT sector, growing financial services sector and modern infrastructural facilities including the soon-to-be-completed Standard Gauge Railway, Kenya remains the highway on which every investor wants to use to reach the remotest markets of the region. This is why the Kenyan trade and investment pie remains attractive to both the East and West – and for the unforeseeable future. Therefore, the debate should not be about Kenya looking East or West but rather what kind of trade and investment are we attracting and what impact do they have on our economy. Looking at the trade and investment landscape for the last five years, Kenya’s value of total exports by destination to Europe and Asia stood at $1.4 billion and $1.2 billion in 2012 according to the Economic Survey 2013 report published by the Kenya National Bureau of Statistics. In Europe, UK leads as Kenya’s exports destination market with 7.8% followed by Netherlands and Germany – Europe’s largest economy. Conversely, the value of total imports by country of origin from Europe and Asia stood at $2.8 billion and $9.9 billion respectively during the same period. Further trade analysis of the figures above points to Kenya’s trade balance with Asia being $8.7 billion while the trade balance with Europe stood at $1.4 billion. During the same period, the current trade between Kenya and Asia stood at $11.1 billion while that of Kenya and Europe was recorded at $4.3 billion. This means that Kenyan exports have more markets in the West than the East while the East’s exports find their markets in Kenya as imports than Kenya’s exports finding their markets in the East as imports. Kenya’s current trade swings to the East while the trade balance pendulum falls to the West. The trade-off points to a balanced portfolio in terms of risk management. Most European countries have large investment and supports social services while Asian companies have largely taken up Kenya’s pie in road construction and retail businesses. All these investments from West or East play a significant role to the growth of our economy. They employ our youths and women who earn income that becomes seed capital for setting up SMEs – a sustainable economic empowerment model in the long run. Kenya’s ties to both the East and West complements our growth agenda as espoused in the Vision 2030 economic blueprint.

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