No walk in the park for UK in race for new Kenya deal

Days before it divorces the European Union, the UK on Monday hosted a high-profile investment summit in London that brought together 20 African presidents, business leaders and top diplomats with the aim of generating new opportunities in the African continent for businesses across the UK.

In a direct pitch for business, British Prime Minister Boris Johnson told the African leaders attending the first UK-Africa Investment Summit, including Kenyan President Uhuru Kenyatta, that he wants to make Britain Africa’s "trade and investment partner of choice" .

The London Summit saw British firms announce commercial deals worth £1.3 billion (about Sh170 billion) for Kenya, cutting across housing, finance, renewables, and entrepreneurship.

According to the UK High Commission in Nairobi, the investments “will create a new lasting partnership that will deliver more investment, jobs and growth to Kenya.”

The decision to hold the summit, the first of its kind in the UK, is however seen as proof that the UK is keen to recast its relations with African countries like Kenya, formerly under its colonial rule, as it prepares for the post-Brexit era, according to international relations experts.

Britain is set to leave the EU on January 31, although ties will remain the same for 11 months while the two sides thrash out a new trading relationship.

Once it transitions from the EU, the UK has said it will be at liberty to sign bilateral deals with other countries. British firms in Kenya have had to navigate headwinds arising from increased competition from Chinese rivals.

There are more than 300 British companies in Kenya and trade between London and Nairobi is currently valued at £1.3 billion (Sh130 billion), according to data from the British Chamber of Commerce Kenya.

They include multinationals Barclays, Land Rover, Standard Chartered Bank, British American Tobacco and Unilever.

Arguably some of the oldest investors in Kenya — thanks to the British colonial empire heritage — the fortunes of the British firms have been dwindling in recent years as they try to fend off a stiff competition from the more aggressive and flexible Chinese rivals.

Though the many battles British corporations are fighting in Kenya may look purely commercial, keen watchers of Kenya’s diplomatic positioning say it partly reflects the decline in London’s political influence in Nairobi that began in earnest under former President Mwai Kibaki.

Kenya’s preference for countries in the Far East for business and development financing has also dislodged European powers, including the UK, from long-held positions as the leading sources of foreign direct investment (FDI).

Britain has particularly been losing out to China, India, and Japan, whose share of business with Kenya has been on the rise.

The three Asian countries target Kenya with clothing, vehicles, electronics and pharmaceuticals — which also top the UK’s dealings with East Africa.

China has become Kenya’s leading source of FDI through investment in infrastructure, consolidating its new-found economic clout in the country.

In his speech, Johnson acknowledged the odds the UK faces even as it scrambles for a piece of the action. But he remained optimistic.

“I must mention the competition, I better, I mean why not, China, Russia, Germany. I’m told there will be a conference in France fairly soon. But in the words of an old Akan proverb that I picked up while I was in Ghana, all fingers are not the same and all countries are not the same, and the UK boasts a breadth and depth of expertise that simply cannot be matched by any other nation," he told the Summit.

"This is a competitive world. You have many suitors. But look today at what we have to offer, look around the world today and you will swiftly see that the UK is not only the obvious partner of choice. We also are very much the partner of today, of tomorrow and decades to come.”

Turning the tide against competitors like China in Kenya, which are heavily involved not just in trade but also in mega infrastructure projects, will, however, not be a walk in the park for the UK.

Kenya National Bureau of Statistics (KNBS) data show that China has dwarfed UK imports to Kenya over the last three decades.

Exports to the UK from Kenya have grown from approximately Sh3.7 billion in 1988 to Sh38.5 billion in 2017. On the other hand, imports from UK have grown from approximately Sh6.67 billion in 1988 to Sh30 billion in 2017.

Comparatively, imports from China which in 1988 stood at Sh394 million surged to Sh390 billion as at 2017. Exports to China from Kenya in 1988 stood at 52.6 million and stood at Sh9.9 billion 2017.

One of the key sectors that Johnson mentioned as holding great potential is agriculture.

However, statistics indicate that a majority of Kenya's flowers, the main foreign exchange earner, presently get into the EU market through Amsterdam. According to the Kenya Flower Council direct delivery to the UK is hampered by lack of facilities.

As it stands experts say the UK is in a catch up race with countries such as China, Japan, Germany and Russia. The latter recently held a similar summit to bolster partnerships with African countries like Kenya. France is also poised to hold its own soon.

“The question for African policy makers now is how to play it cleverly from a position of relative strength and leverage,” Aruuke Uran Kyzy, a researcher at the TRT World Research Centre, a global policy institute, said earlier.

Critics also say that it will take possibly years for new deals signed by the UK with countries like Kenya to become a reality given the intricacies involved.