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Economy

Kenyatta faces tough diplomatic assignment as Kenya’s leader

President-Elect Uhuru Muigai Kenyatta. FILE
President-Elect Uhuru Muigai Kenyatta. FILE 

Even before the petition against his election as President was determined, Uhuru Kenyatta had received two significant delegations at his State House Road home — one led by the Chinese Ambassador Liu Guang Yuan and another by the Indian High Commissioner, Sibabrata Tripathi.

The import of who came in first mattered — both as a political statement and to safeguard trade interests.

But rather than send in their envoys, Western nations chose to fax congratulatory messages “to the people of Kenya” and hardly mentioned Mr Kenyatta by name.

In diplomatic parlance, they were giving Mr Kenyatta a cold shoulder as they awaited the outcome of the petition filed in the Supreme Court of Kenya by Raila Odinga, the leader of the Coalition of Reforms and Democracy who finished second in the presidential race.

Upon his inauguration as Kenya’s fourth president, Mr Kenyatta faces a tricky diplomatic assignment balancing the interests of Western countries with deep economic ties to Nairobi and those of emerging economies such as China and India - the country’s top sources of imports.

By the end of 2012 India had emerged as the leading source of Kenya’s imports having shipped in goods worth Sh148.7 billion. China came in second with imports worth Sh144 billion compared to the US’s Sh43.2 billion and the UK’s 44.5 billion.

Since he was declared the winner of the presidential election, some of Mr Kenyatta’s supporters have continued to restate his campaign rhetoric that Kenya could walk away from the West and look East for crucial economic ties -- but the numbers tell a completely different story.

Kenya’s economy is deeply tied to the West – its second largest export market that took in goods worth Sh152 billion or 23 per cent of total exports in 2011. During the same year, the country sold to China goods worth a paltry Sh3.8 billion or 0.7 per cent total exports and Sh9.4 billion worth of goods to India or 1.5 per cent of total exports. 

The differences are even bigger when assistance to key sectors of Kenya’s economy such as health and education by Western agencies is factored in. The hard figures are not available but estimates indicate development agencies such as USAid, DFID and private foundations such as the Bill and Melinda Gates Foundation invest up to Sh300 billion in Kenya annually. China accounts for less than Sh3 billion in this area.

The likelihood of this economic structure changing in the near future is slim and economists like London-based Razia Khan of Standard Bank maintain that how Mr Kenyatta relates to the West – that is nervous about his ICC burden – will not only affect the critical trade relations but other key areas of cooperation such as budget support and aid with far reaching ramifications on the economy.

The worst that Kenya should plan for is a scenario where President Kenyatta refuses to cooperate with the ICC, further souring Kenya’s relations with the West.

In that event, the reality of Kenya coming under targeted sanctions from Western governments would be real and devastating to the economy.

For Mr Kenyatta, relations with donors are particularly worth paying attention to because official government statistics show that in the first half of the current financial year ended December 2012, donors released a paltry Sh26 billion or 11 per cent of the Sh226 billion they promised the Treasury in budget support citing concerns over the March 4 elections and its outcome.

That position is unlikely to have changed in the first three months of this year and with Mr Kenyatta installed as president, it remains to be seen whether the remaining portion of promised funds will be released and more importantly whether his government will get a similar level of budget support for the next financial year.

As a former Minister of Finance, Mr Kenyatta walks into the presidency knowing that Japan, France, Germany, Belgium and US remain Kenya’s main bilateral lenders and it is the numbers that will determine how he relates with the world.

At the multi-lateral level, Mr Kenyatta still has to engage with institutions such as the World Bank, the IMF and the AfDB, the largest lenders to the Kenyan economy. A thawed relationship with the West, which holds sway in these institutions, would have a negative impact on Mr Kenyatta’s leadership and complicate his management of the economy.

In the past few years, the Chinese ambassador to Kenya Mr Liu has had a busy schedule occupying a patronising position in East Africa’s largest economy as China’s Exim Bank entrenched itself as a rising financier of megaprojects during the Kibaki presidency.

Occasionally, he accompanied government officials in the opening of such projects - the envy of many a Western diplomat. While Western nations the US and the EU funded education and health projects, the not-so-rosy relationship with State House meant that they hardly got the front seat in the Kibaki presidency.

But as a strategic political partner, Mr Kenyatta will, like his father, Kenya's founding president, Moi and Kibaki, take advantage of the US and UK’s security interests in Eastern Africa to smoothen his relations with them. Kenya hosts the largest CIA station in the region and has been a strategic partner with the US on the war against terror.

It is these interests that have seen Western nations soften their stand on Kenya in recent weeks, especially after the courts confirmed Mr Kenyatta’s victory in the March 4 elections.

Britain trains more than 10,000 troops in Kenya every year for deployment in Falkland Islands and in Afghanistan. The US has over the years increased its military aid to Kenya and was instrumental in the launch of war against the Al-Qaeda-backed Al-Shabaab militia in Somalia.

Thus, when on April 5 the US ambassador to Kenya Robert Godec drove to the Kenyatta International Conference Centre with a message from Mr Obama to Mr Kenyatta, part of Washington’s intention was to retain Kenya’s position as a friendly ally.

“Now that your election has been confirmed, you have the opportunity to build on the promise of Kenya’s Constitution and solidify its place as a vibrant and prosperous democracy centered on the rule of law,” Mr Obama had said.

The British and American ambassadors were to attend his inauguration at Kasarani even though they still have a policy of ‘no non-essential contact’ with ICC indictees.

It was perhaps in the interest of war on terror that Obama quipped to Mr Kenyatta that: “Together we have faced many problems and solved many challenges and our cooperation has benefited both of our peoples.” Kenya’s US embassy was in 1998 brought down by Osama bin Laden - a move that saw the US upgrade its surveillance from Nairobi.

In the run up to the March 4 general election, Western diplomats had warned of “consequences” and said they would only maintain “essential contacts” with a Kenyatta and William Ruto government if they are elected into office but it appears that the presence of China and India on the scene as suitors waiting on the wings to occupy any vacuum left by a begrudged western government appear to have forced them to abandon the hardline stance.

In Washington, former United States Assistant Secretary of State for African Affairs Jendayi Frazer, warned her country’s diplomats against disengaging with Kenya, arguing that the geo-strategic environment has changed “entirely and particularly in favour of China.”

“The Chinese have changed the playing field (and) if the US, the UK and Europeans don’t want to deal with Uhuru Kenyatta, he has another option,” Ms Frazer told a US TV station.

 

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