Kenya’s President William Ruto sits on President Joe Biden's seat at the oval office in the White House, Washington DC, US on May 23, 2024. PHOTO | PCS
Kenya is earning a central role in helping push Washington’s rivals to the periphery of the East African region, reflecting Nairobi’s growing stature in the eyes of Americans.
After a three-day State visit to the US this week, President William Ruto witnessed several multimillion-dollar deals in infrastructure and security. But these are a reward for his staying closer to Washington in the past 20 months of his administration.
It means US rivals such as China and Russia may find a stronger competitor in a region where Beijing had enjoyed unassailable advantage, building roads, bridges and cultural influence through education.
The US won’t be providing all of that, or even matching it, but it offered an escape from some of the attendant burdens that have come from it.
At a joint press briefing in the White House, President Joe Biden said Washington is keen to help alleviate the debt burden, indirectly referring to China, which the US has frequently accused of loading expensive loans on African countries.
“Too many nations are forced to make a choice between development and debt, between investing in their people and paying back their creditors,” President Biden said.
Kenya is among countries in Africa where almost all the taxes go into repaying debt. Its peers Ethiopia, Ghana and Zambia have faced a similar problem.
But is not just China that they owe. Other countries such as Japan, France and multinational lenders like the International Monetary Fund have helped raise the country’s external debt to levels of default or distress. Credit rating agency Fitch recently said Kenya could pay up to 30 percent of annual revenues to settle interest on loans.
Looming over the pomp and circumstance is China’s expanding role in Africa, which has become a central testing ground for the world’s two largest economies as they jockey for economic and geopolitical influence.
Ruto was there to speak about Africa’s trade too, even though he was pursuing bilateral investments.
At the White House on Thursday, Biden and Ruto launched the Nairobi-Washington Vision, which they argued will campaign for lessening of debt burdens for African countries and enable them invest in critical sectors of the economy.
US President Joe Biden shakes hands with Kenyan President William Ruto in the Oval Office at the White House in Washington DC, US on May 23, 2024. PHOTO | PCS
It calls on international financial institutions to provide coordinated packages of support, and for creditor countries to provide forms of debt relief and/or new budget-support flows.
It also asks multilateral development banks and development finance institutions to facilitate private sector financing on better terms and crowd in private investment, and creditors to provide more transparent and sustainable lending.
“Together we call to the international community to come together around these elements to support high-ambition countries with high-ambition financial support,” the document says.
The White House announced $250 million in grants for the International Development Association, part of the World Bank. The money is to help poor countries facing crises.
It said it will provide, “in the coming weeks”, lending of up to $21 billion to the International Monetary Fund’s (IMF) Poverty Reduction and Growth Trust to support the poorest countries.
In the next budget, Biden has asked Congress for funding of $36 billion “in new lending at the World Bank that, together with contributions from international partners,” could provide an additional $100 billion boost to World Bank financing capacity.
A $1.2 trillion government funding Bill passed by Congress in March allows the US to lend up to $21 billion to an International Monetary Fund trust that provides zero-interest loans to support low-income countries.
“It is important for us to appreciate that many countries in Africa, including Kenya, are struggling with an overwhelming convergence of multiple shocks, including extreme climate events, debt distress and the disruptive upheavals in Europe and the Middle East, whose cumulative impact is to divert national resources from investment in people and economic growth,” Ruto said, adding that the US should lead the way in helping identify a solution to debt burden.
“Unless this is done immediately, the values of democracy, and the rule of law are jeopardised.”
The issue of debt had formed part of Ruto’s pre-election campaign messaging. But it also placed him in an awkward situation afterwards, especially as he targeted the Chinese lending habits in Kenya. Until recently, China had been the biggest bilateral lender to Kenya, amassing some $6 billion owed for infrastructure. Now, Japan and France have sent in more over the last year.
But Ruto’s dilemma of criticising the Chinese while also looking for funding is necessitated by the fact that he needs money to pursue his own policies under the famed Bottom-Up economic model.
When he went to China last October for the Belt and Road Forum — China’s platform to connect countries through infrastructure and trade — he got a cold shoulder. And even though he pitched an integrated vision of a railway line running from Mombasa all the way into the Democratic Republic of Congo, the Chinese were still cautious. In Beijing, Ruto avoided speaking directly on debt burden.
Now, the US agreed to build an expressway between Mombasa and Nairobi, running parallel to the first phase of the SGR. It will cost $3.6 billion and will involve some form of public-private partnership and investors will recoup the money through a toll system.
That project had been discussed for the past 10 years, with only those at the table changing. Yet the fact it will run alongside the SGR could make it immediate competition to the Chinese.
But it will not be easy to eclipse the Chinese in the region. China had, when it launched the BRI, listed Kenya among key anchor countries to enable the projects flow. The initiative also had a security component, tying economic development to adequate security for investments and the people.
Just last week, Beijing was back on the table, on the possibility of helping extend the SGR to Kampala, after Ruto hosted Ugandan counterpart Yoweri Museveni for a State visit. Museveni himself would this week meet Italians to discuss the same project.
Still, the Chinese are finding their way back into the region through Tanzania, where they are building SGR, dams and other infrastructure projects. President Samia Suluhu Hassan will visit China in September this year and is expected to sign new loan deals, according to a dispatch by the Ministry of Foreign Affairs.
The ministry said that the minister, January Makamba, had held talks with the director of China's International Development Cooperation Agency (CIDCA) Luo Zhaohui as part of his mission to lay the groundwork for Hassan’s visit.
It quoted Mr Luo as saying there was a “high probability” that President Hassan would ink several new strategic aid agreements while in Beijing for the Forum for China-Africa Cooperation.
“We will finance the next phase of our bilateral projects that are already underway in Tanzania, along with new strategic projects that you have requested,” the CIDCA chief said.
Overall, security, trade and diplomacy dominated President Ruto’s State visit to the US, the first for an African Head of State in 16 years.
Kenya earned a designation of a key Non-Nato ally, a label the Congress should approve. Once done, it will provide Kenya with some kind of privilege to enjoy defence cooperation with the US. It will not extend to a bilateral defence pact or the arrangement of a mutual defence cooperation in the same level as Nato members. But it makes Kenya the only sub-Saharan African country to get such a level.
Kenya has joined the coalition of countries that are fighting Houthi rebels in Yemen for disrupting shipping lanes. Guinea Bissau is the other African member of the coalition.
Haiti
Kenya has also opted to go on with deploying police officers to Haiti to help deal with gangs that have made the country ungovernable. It will be leading the multinational mission.
In return, Nairobi will be the focal point for supporting mediation in regional conflicts, and the US will enhance counter-terrorism measures, with a deal expected on the expansion of Manda Bay Airfield in Lamu by building a 10,000-foot runway to provide the “required infrastructure to increase operations against the terrorist group Al Shabaab,” a dispatch said.
The US Department of State’s Bureau of Conflict and Stabilisation Operations will also fund a year-long training to diplomats at Kenya’s Ministry of Foreign Affairs. This is besides the backing of ongoing mediations in South Sudan and Sudan.
United States Secretary of State Antony Blinken (L) holding a conversation with Kenya’s President William Ruto at Blair House in Washington DC, US on May 23, 2024. PHOTO | PCS
Washington had spent over $230 million in civilian security and defence sector since 2020. Kenya was due to receive eight Hueys refurbished helicopters for its military by September.
The US also committed $4.9 million in new funding for Kenya and other East African countries to improve cooperation and coordination in fighting international criminal networks and holding criminals accountable.
The Ruto visit also strengthened partnership between Washington and Nairobi in combating terrorist groups in East Africa, largely targeting Al Shabaab and ISIS elements in the region.
Biden promised to have the African Growth and Opportunity Act (Agoa) reviewed to accommodate trade with Kenya, a move that will also benefit other EAC partner states, a move that Ruto welcomed.
“Hopefully, we will be able to persuade the US to renew the Agoa that gives Africa the opportunity for access to the market so that we can create more jobs, create more wealth and we can spread prosperity across our continent,” said Ruto.
Markets
Agoa has been useful to Kenyan firms, but not so popular in neighbouring countries because they are also supposed to allow in second-hand clothes. Some like Rwanda banned second-hand clothes, and were removed from Agoa that had allowed privileged access to US markets.
This week, Vivo Fashion, a Kenyan women’s fashion brand in East Africa, announced the opening of its first retail storefront in the United States in Atlanta, Georgia.
But Kenya is banking on the urgent conclusion of the US-Kenya Strategic Trade and Investment Partnership (Stip) before the US plunges into uncertain elections later in November. The US Trade Representative Katharine Tai and Kenya’s Cabinet Secretary for Investment, Trade, and Industry Rebecca Miano are leading talks.
“We are hopeful we will conclude on our strategic trade and investment partnership that will give us the opportunity in Kenya to work with companies in the United States and to build greater synergy around our continent on matters to do with trade, investment, especially as we put together the Africa Continental Free Trade Area (AfCFTA),” said Ruto.
“With the AfCFTA poised to provide a perfect avenue for enhanced trade through elimination of tariffs and other trade barriers, it will be complimentary to have the Agoa alive and active for enhanced US-Africa trade,” said Rebecca Miano, Trade Cabinet Secretary.
“Kenya stands to greatly benefit especially in the area of apparel exports and Foreign Direct Investments which is one of the priority areas of my ministry.”
Since Agoa was enacted in 2000, Kenya’s apparel sector has forged market ties with US firms, raising the level of sales. It sold some $380 million last year.
Ongoing investments by USAid and the Kenyan private sector are expected to generate an additional $250 million in apparel exports to the United States and create over 20,000 new jobs, an official dispatch said.
