Latest Post

Why Kenya should realign to changing global economic order

In the course of tracking global oil markets, I come across a world whose economic and political order is fast shifting. The systems and organs that have previously sustained globalised consensus on many issues like trade, peace and human values are certainly undergoing a shakeup. What is uncertain is whether this change is transient or if it will survive the times
The key change driver has been US President Trump with his “USA-first” policies. The USA (together with the EU) has historically been the principal sponsor and pillar of globalised free markets. The US unilateralism has caught the world unawares, unprepared and unsure how to respond, with Europe, China and Russia all reacting with varying pushback.
In quick successions Trump has rattled multilateral institutions that have previously held the world together. He has doubted and challenged the roles of the UN structures and the WTO while ridiculing the common-interest groupings like NATO and G7. I am not quite sure of Trump’s standing on World Bank and IMF, but I can guess he does not give them a high priority.
Whether the next president after Trump will uphold or reverse the ongoing “USA-first” positioning is a matter of guesswork. But whichever future route USA takes, it will hardly be the same world we have previously known. However in rearranging a disorganised condition, opportunities do usually arise to structure new and better global economic protocols and systems. It will all depend on leadership effectiveness.
With the traditional shared USA-EU global leadership now in a flux, China and Russia are likely to leverage the ongoing trade and political uncertainties to consolidate their global positioning. Specifically for China, it may just fit in well with what appears to be its long term plans for economic, political and military ascendancy. Already China ranks a strong second in global economy. China claims it can outlast USA in the ongoing trade wars.
I am singling out China because it has a significant stranglehold on Africa including Kenya. The US and EU economic footprints in Africa were diluted by China when the West was pre-occupied with fight against Islamic fundamentalism. It is only now that USA and Europe are playing a catch-up game as China embarks on phase-two plans for global ascendancy...
Whichever way China plays its global cards in the coming years; our continent has a vested stake with the Chinese. An overheated Chinese economy at the turn of this century brought China into Africa seeking oil, gas and minerals to support its industrialisation, while also seeking export markets.
When the Chinese arrived, they found countries severely handicapped in infrastructure development and funding. And China saw the opportunities. Today, China is not only a major participant in Africa’s natural resources, but also the most significant player in infrastructure construction and associated credit financing. Africa is also a major export market for the Chinese industries.
For Kenya, China remains both a big opportunity and a tricky challenge. We need to quickly learn how to deal with China, a country that is known to be an expert at maximising value and content for itself through self-determination. The Chinese mostly leverage to their advantage, African nations disadvantaged negotiating positions.
With China we need mutuality and balanced economic partnerships which have so far been hard to achieve. China should buy more from us. They should also seriously consider targeted developmental support for Kenya. These should be on the agenda for the forthcoming FOCAC meeting. Also in the agenda I am sure will be ultimately getting the SGR to Kampala and Kigali- a job that we must complete for maximum strategic value to Kenya.
Kenya should also be looking far and wide. Diplomatically and trade-wise we need to keep all options open with EU and USA while upping our trade engagements with any other nation that has value to add to Kenya. This way we shall gradually wean ourselves from China.
Finally, it is hoped that the ongoing Trump’s experimentation with global trade and economic protocols will soon come to pass. This is good for stability and predictability of global trade and financial markets.