What Kenya stands to gain from UNCTAD Nairobi meeting


UNCTAD Secretary-General Mukhisa Kituyi


  • UNCTAD Secretary-General Mukhisa Kituyi on the opportunities for big investors, youth and women in the match-making and entrepreneurship forums.

The United Nations Conference on Trade and Development’s (UNCTAD) Fourteenth quadrennial ministerial conference opens in Nairobi Friday morning with high-level round tables on key issues, including World Investment Forum and a Commodities Forum.

The Business Daily sat down with UNCTAD Secretary-General Mukhisa Kituyi for a discussion on international trade and how the Nairobi conference plans to tackle many of its challenges. Here are the excerpts.

What is it that Kenyans will be able to take away from this week-long meeting in the short term? To use the Kenyan lingo, what should Wanjiku expect to come out of it?

That is an interesting question many Kenyans have been asking me. We are so used to picking the low hanging fruits that we risk actually destroying the trees. Hosting a United Nations multi-year conference is never designed for quick picks for the host country. 

Hosting 7,000 high-level guests is supposed to have a positive effect on the venue in terms of the multiplier effect on hotel and industry sectors as well as national promotion.

The number of activities that will run parallel to the main conference is huge and should produce multiple outcomes.

For instance, a major international non-governmental organisation, one of the biggest in the world, formed 74 years ago in England, plans to announce the relocation of its global headquarters to Nairobi in recognition of the Nairobi ecosystem as a centre for international activity.

Secondly, in the middle of the conference there will be a programme running as Empretec, which is a capacity building organisation for disadvantaged people in enterprise.

The organisation targets women and small-scale entrepreneurs with training and marketing. During this conference we are going to launch Empretec Kenya, which is a direct benefit for entrepreneurship development particularly among women and youth.

We also have the World Investment Forum, which is bringing together fund managers, investors, people looking for partnerships to start new enterprises, people looking for enterprises to buy, mergers and acquisitions and if the last conference we had was anything to go by it is evident that Kenya can derive phenomenal benefits from the investment tent, also known as the match-making venue.

You talk about sideline deals and matchmaking, have you set yourself a target of the number or value of deals that must be reached for the event to be deemed successful?

The last World Investment Forum which lasted three days, unlike this one which goes for four days, ended with transactions and deals worth $14 billion. There’s no reason we shouldn’t. I think there would substantially be larger number of governments and companies and interested investors participating in our match-making.

Are there Kenyan businessmen who have already made a pitch with you and if so who?

We have a national coordinating team that has been meeting representatives of the business community particularly the leadership and key membership of the Kenya Private Sector Alliance (Kepsa), the Kenya Association of Manufacturers and the Kenya National Chamber of Commerce.

They have not approached me directly but we have had a working breakfast with the chamber and visited Kepsa leadership at their headquarters.

UNCTAD has raised concerns over the declining commodities market and its possible impact on economies of the developing nations. What do you think can be done about it?

We are having a global commodities forum which is an important platform for discussing the vulnerability of commodity-dependent countries, issues in terms of transfer pricing, under invoicing activities. We are going to launch a number of serious investigative reports on commodity-dependent countries.

We are going to hold conversations about how countries should diversify to reduce vulnerability to the booms and bust of the commodity cycle. These should be important benefits for developing countries that are particularly dependent on commodities.

Is there a possible way to reverse the thinking given most of African growth plans are blueprints that reinforce the commodity economy, rail and road that lead to air and sea ports and that are basically avenues for shipping raw materials out and shipping back finished goods? 

On the contrary, good roads and railways are not there to transport imports only, but also facilitate exports. The infrastructure for imports is very good for exports except for those traditional rails that go from the ports to the minefields.

But a railway from Nairobi to Mombasa need not only be used to import cheap merchandise form China but also to export Kenyan goods to the rest of the world. Countries in South East Asia at a lower technical bench than Kenya are already making value-added products for exports as part of the global value chains and so a fatalistic attitude in Africa that we cannot export is a challenge the current generation must overcome. It was a weakness of my generation, this self-inadequacy.

But it is also true that extractive infrastructure has to be complemented with more integrating infrastructure that relates people to markets, digital inclusion, electricity and roads to decentralise production away from the national metropolis like Nairobi. That is the true challenge.

Can we come out of the Nairobi UNCTAD14 with a tangible framework?

The first resolutions were made at the General Assembly in September 2014. We agreed to not only to start working on a debt workout mechanism but also appointing UNCATD as the secretariat for the global effort within the UN system for this global framework.

It has been slow, a majority of members have come on board but some of the more developed countries have been hesitant.

We have been encouraging, we have been engaging them and we hope we can revisit the matter in a very constructive way in the course of UNCTAD14 in Nairobi. I hope that we can make some progress that we will be ready to announce to the world.

In the zero draft you talk about lenders having responsibility to lend in such a way as to avoid undermining sustainability. How are you going to convince them to do that, especially given the nature of the ‘vulture’ hedge funds and attraction to junk bonds for resale like they did in Puerto Rico?

Yes, hedge funds are casino capitalists, they are gamblers, but the responsibility for prudence belongs to governments. Governments should not act like juveniles that sit back and expect us to tell the lenders not lend to them because they will struggle with the money.

We don’t pretend any paternalism with the way we deal with countries. We only help countries and governments to understand that actions and decisions have consequences and that if you chase a certain route you should expect certain outcomes.

You cannot ask gamblers not to gamble with the lives of poor people. For instance, you are seeing the sports gambling in Kenya today but nobody tells the gambling firms not to accept money from poor gamblers.

It is the poor who must be told that they will live with the consequences of dreaming that gambling is an investment. It is those who make decisions to borrow that have to understand the consequences, not the ones who gamble by lending them money. 

In the draft you talk about agreements that favour investors over safeguarding the sovereign rights of states. Can UNCTAD get a consensus or help fight cases like the ones cigarette maker, Phillip Morris slapped on African countries trying to look out for the health of their citizens?

Investments dispute resolution is a major issue internationally. UNCTAD is the leading institution of dealing with issues of investment governance in the world.

I have just come out of the meeting with the ministers of trade of the richest countries in the world called G20 in Shanghai where our proposals to them about principles from Global Reforms and Governance on Investments will be discussed and adopted and I am hoping that those principles will be adopted by the larger UN community during the Nairobi conference.

Because there are major problems with the old kinds of investment agreements where the poor countries were competing in what is called the ‘race to the bottom’ where you try to make the investor happy at the expense of the local entrepreneur and taxpayers, you allow them tax compensations that they do not deserve and end up reducing your legitimate revenues.

All these things have to be replaced in a structured way with a framework that gives the investor rights but also obligations that gives the regulators certain rights in a way that does not expose the national interest too much in an attempt to please the investor.