Uhuru’s Visits:What’s in it for Kenyans?
|The Ngong Tunnel of SGR: |
Could spawn Industrialization Binge
Meeting three Heads-of- state in 10 days spread across the globe! That is a tight schedule for Uhuru Kenyatta, Kenya’s President. And we would be right to ask; what’s in it for us? Plenty seems to be the answer.
Let’s start with the US where the President is meeting President Donald Trump. What’s in it for us? Economics: Trade, investment. No begging bowls. Trade and investment –Quid pro Quo. Uhuru is there to market Kenya as an investment destination for American investors – not Government and NGOs.
Kenya needs power, good roads and other infrastructure to unleash its growth potential and create jobs, reduce poverty and improve the standards of living in the country. It targets being a middle-income country (per capita income above $5000) in the near future. To achieve this, she needs investors to build industries in Kenya to put the youth to work.
To attract investors, she needs enabling infrastructure and enabling infrastructure is expensive. Foreigners, both in the West and East have the financial muscle to support such investments for a return.
Africa Development Bank, in its Economic Outlook 2018, says that Africa needs to invest $170 billion a year over the next seven years in productive and profitable infrastructure in order to industrialize. The continent can only raise US$50 billion of these from tax revenues, leaving a yawning gap of $108 billion.
Out there, fund managers, commercial banks, and sovereign funds are sitting over US$100 trillion seeking for investment avenues. Africa can tap into the well by crafting bankable debt instruments, says AfDB.
Which brings me to Uhuru’s goal in his visits with three foreign heads-of-state in the next ten days- Trade and investment. And on this one, there is congruency of purpose with his peers. He is shopping for investors (and lenders) to invest in Kenya, they are looking for trade and investment opportunities (and borrowers) in Africa, “the rising continent.”
We have sunk billions of dollars in infrastructure development raising our national debt to previously unknown highs. In the process, it has generated hue and cry in Kenya. So how do we make those investments repay the debt and how will the ordinary taxpayer benefit?
Attract investments in industrialization in order to create more taxpayers to help foot the bill. Also, expand the markets for our current products. Kenya is famous for growing flowers and exporting them to Europe but now we need to explore new markets. The US is one such market that was shielded by distance. But now with Kenya Airways gearing to fly to the US in two months’ time, that market is only 15 hours away. More flowers sold means more people employed, bigger profits and more taxes for the exchequer.
In the US, there is a campaign to transfer the supply chain from Asia back home. But the campaigners miss one point: The firms moved their productions plants to Asia because of the high cost of labour. Has it declined at home? The answer is probably No.
That means the firms will have no incentive to return their production lines to the US. Probably, they will go elsewhere and that elsewhere is Africa, Kenya included. Africa was sidelined in the past because of poor infrastructure. Now the Chinese have invested in infrastructure making Africa a viable option.
|Proposed Konza Techno City|
So such investments that some commentators have dismissed as white Elephants could soon become the goose that lays the golden egg. Among these is the SGR which has everyone shouting “white Elephant.” It could spawn an industrialization binge that will have them eat the humble pie.
In our highly competitive world, speed is everything. Markets need efficient delivery of products and efficient delivery needs good transport systems- be they airports, roads, seaports or Railway lines. And Kenya has invested and continues to invest in such enabling infrastructure.
So the proposed widening of the Mombasa road to a six-lane highway, which critics say is unnecessary, could turn out to be the selling point for Kenya in terms of attracting investment. The proposed Konza City could soon just live up to its ambition of becoming Africa’s silicon savannah. Why? Because it is served by high-speed roads and Railway.
To attract investments, these are the infrastructure the President has to showcase in order to widen our trade portfolio and markets. According to a document by Uganda’s Ministry of Transport, the country’s goal is to produce High-end products for high-end markets by 2040. To achieve that, the Ministry recommended that Uganda builds its SGR from Malaba to Entebbe. That way, it shall have a seamless transport within 24 hours to the Port of Mombasa. Consequently, the Ministry rejected the Dar-es-Salaam link because it could not guarantee such speeds. The Central Corridor has the Lake Victoria to grapple with.
Kenya is way ahead in that exports will reach the Port in 10 hours. Kenya is therefore also angling to produce high end products for high end markets. That is in addition to our traditional exports, coffee, tea, cut flowers, Horticultural produce including Macadamia nuts, avocados and vegetables.
|Kenyan Cut flowers: Need wider Market|
Britain and the US are significant sources of investment funds for industrialization and some investments in infrastructure. But give infrastructure to China. They have proven competent by completing their projects in time, nay, ahead of schedule and at cost.
China, the second largest economy in the world is creating more millionaires a year than the West, and is thus a potential market for our flowers and other “luxury goods.”
Kenya’s literacy level is 89 per cent. That makes it a potential investment destination for manufacturers looking for trained or trainable manpower. In fact, educated manpower and high unemployment is a plus. Investors will not have to worry about labour productivity!
So should Uhuru stop marketing (and borrowing for) Kenya? Well,that is part of his job as President.