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Economy

Russia courts Kenya for new business, trade deals

President Uhuru Kenyatta with Russia’s Senate Speaker, Valentina Matviyenko
President Uhuru Kenyatta with Russia’s Senate Speaker, Valentina Matviyenko, when she paid him a visit at State House, Nairobi last year. FILE PHOTO | NMG 

President Uhuru Kenyatta with Russia’s Senate Speaker, Valentina Matviyenko, when she paid him a visit at State House, Nairobi last year. --FILE

Russian President Vladimir Putin is set to meet again with President Uhuru Kenyatta this October as Moscow woos Kenya, which it deems a strategically important bilateral partner in the East African trading bloc.

Mr Kenyatta has been invited for the Russia-Africa political summit and the accompanying Russia-Africa Economic Forum on October 23-24 2019 in Sochi, Russia.

Top ranking foreign affairs officials in Nairobi confirmed the attendance following Mr Putin’s invitation.

“Yes Kenya will be going,” Foreign Affairs Principal Secretary Macharia Kamau told the Business Daily.

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Mr Kamau said Kenya will be eyeing deals across various sectors, including medicine, blue economy, aeronautical and space engineering.

Mr Putin is expected to engage Mr Kenyatta and other African leaders to beef up trade and investment deals with Kenya and African states during the meeting.

International relations experts say that Moscow is keen to re-establish its old Soviet ties with African states and buy influence in the continent as it presents itself as the alternative to perceived “self-interested” colonial powers such as the United Kingdom and the United States.

“Russian President Vladmir Putin seems to have new aspirations in Africa to restore his country to strong power status, spurred by concerns that China, India, Brazil and especially the United States are intensifying their involvement in Africa,” says Aruuke Uran Kyzy, a researcher at the TRT World Research Centre, a global policy institute.

Russian arms

Oil-rich Russia’s banks and firms have invested billions of dollars abroad since the fall of the Iron Curtain. Kenya purchases a significant amount of Russian arms and has been exploring its market for its bulk tea.

Moscow says it wants to scale up the level of trade with Nairobi. It is, however, contending with huge gaps in data on Africa and near entrenched influence from new players like China as well as its traditional rival, the US.

Igor Ivanovich Shuvalov, the chairman of Russian State Development Corporation (VEB.RF), says Kenya could tap Russia’s demand for horticulture and its tourism market.

“This is a big opportunity Kenya can take advantage of,” Mr Shuvalov says. Total exports from Russia to Kenya jumped 8.16 per cent to Sh22.37 billion in 2018, up from Sh20.68 billion in 2017, according to the Russian Export Centre.

Conversely, Kenya’s exports to Russia stood at Sh12.85 billion last year.
The director of the Russian Export Centre, Andrey Slepnev, says the centre will support expanding trade between Nairobi and Moscow.

He says Kenya can benefit from Russian expertise in drilling equipment, medicine, food, as well as infrastructure projects.

The centre says it supported the import into Kenya of Russian goods valued at Sh14.2 billion.

Mr Kenyatta has in the past said Kenya wants to strengthen ties with and “to grow new markets that focus on the East.”

Early this year, Mikhail Bogdanov, Putin’s special envoy for the Middle East and Africa, delivered a special message from Mr Putin to the Kenyan president.

Mr Kenyatta’s choice of Moscow and Beijing as the first places outside Africa to pay an official state visit following his inauguration for the first term in office in 2013 also spoke volumes about his view of Russia and China.

Kenyan officials led by Foreign Affairs Cabinet Secretary Monica Juma also recently attended the St Petersburg International Economic Forum where Russian officials tipped Kenya and other African nations to solidify their position as the new centres of global economic growth in recent years.

Some of the Russian firms that are expected to be angling for possible deals with Kenya at the upcoming Sochi meeting include Gazprom, Rosneft and Lukoil (hydrocarbons), Rosatom (nuclear), Uralkali and Uralchem (fertiliser) and Rosoboronexport (arms).

10th largest bank

In 2017, one of Russia’s largest privately owned banks, Promsvyazbank, said it was mulling over expanding operations into Kenya as it seeks to tap new regional deals.

Alexander Meshcheryakov, head of transaction, documentary and international businesses at Promsvyazbank — Russia’s 10th largest bank by assets — told news agency Reuters the lender was studying Kenya and other African countries ahead of a possible decision to venture into the country.

Kenya’s quest to diversify its energy sources by tapping a nuclear power plant has also attracted the attention of Russia's Rosatom State Atomic Energy Corporation.

“Nuclear energy is extremely competitive in the long run when compared to other sources of energy, taking into consideration that new generation nuclear power plants can generate affordable and uninterrupted electricity for eight decades,” Viktor Polikarpov, regional vice-president of Rosatom Central and Southern Africa, said earlier on the Kenya prospects.

African trade leaders agree that the continent should take the advantage of the overtures by Moscow.

“Russian businesses are looking not only to trade but also invest in Africa,” says African Export Import Bank (Afreximbank) president Benedict Oramah while urging Kenya to grab the trade and investment opportunities.

“There is the political will and the business will,” Dr Oramah says.

Afreximbank projects that in three to four years, Russia-Africa trade will hit Sh4.1 trillion. Current exports into Africa have mainly been food, forestry products, automotive and mixed fertiliser.

“Russia could be a source of investment goods that Africa needs to develop its infrastructure and could transfer critical technology in digitisation and in mining and processing of raw materials.

"It could also be a source of non-debt creating investments in key areas, such as rail, aviation, healthcare, and petrochemicals,” Dr Oramah says.

Russian Prime Minister Dmitry Medvedev challenged African leaders gathered for the annual meeting of the Afreximbank to take advantage of opportunities for trade with his country.

Russia became a shareholder of Afreximbank two years ago.

“The Government of the Russian Federation will do everything in our power to make our partnership a success,” said Mr Medvedev.

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