President William Ruto shakes hands with Chinese President Xi Jinping during bilateral talks at the Great Hall of the People in Beijing on September 3, 2024.
President William Ruto is back on the global stage, leading a large delegation to China to attend the latest version of the Forum on China-Africa Cooperation (Focac).
China is very important to us. In the month of July this year alone, we had to cough out a whopping Sh56.1 billion to repay Chinese loans.
The impact on our cash flows is such that when repayments of Chinese debts come up in the months of July and January, the government literally freezes development spending. If you think I am exaggerating, just download the latest monthly budget outturn, which is published regularly by the National Treasury. Repayment of Chinese loans is also almost crowding out exchequer releases to pensions and to constitutional bodies.
But as President Ruto returns to the global stage, the big question remains: Where do we, as a country, stand in today’s version of the cold war — the information and economic war between China and Russia on the one hand and the US and its allies?
Since that famous statement by Ambassador Martin Kimani at the United Nations Security Council, can we still claim to be among the strongest voices in Africa against the Russian illegal aggression against Ukraine?
We have to take clear and strong positions because we are in the middle of increasing competition for geopolitical and geo-economics global dominance.
Today, the US company Starlink, has emerged ahead after launching the first Low Earth Orbit Satellite (LEO) that has capability to provide direct to device communication, thereby posing a big threat to incumbent mobile network operators. I read somewhere how China is also prepping its own expansive and major LEO constellation as an alternative to initiatives from US, Europe and Japan.
Prevailing geopolitical tensions
The predictions right now are that China and Russia want to leverage on their diplomatic influence and relationships in Africa to favour the entry of Chinese LEO operators, especially when it comes to regulatory market access. The competition is expected to be stiff because Africa is the place expected to produce anticipated future revenues for most LEO operators. Stakes are even higher because of the growing two-fold civilian military use of LEO.
Kenya, and indeed Africa as a whole, must take a firm stand and speak more vociferously on the prevailing geopolitical tensions. The negative impact of the illegal Russian invasion of Ukraine on the economies of the continent is not getting adequate articulation in international fora.
Yet many countries on the continent, including Kenya, depend heavily on the two countries for critical food imports, particularly wheat, fertiliser and steel.
According to the Africa Development Bank, the continent spends over $75 billion on imports or more than 100 million tonnes of food annually.
Indeed, the war continues to cause disruption the world over due to the fact that grain exports from Ukraine are vital to global food security and grain markets. I read somewhere that before Russia’s invasion, Ukrainian wheat and barley exports accounted for 8-10 and 10-12 per cent, respectively, of global supplies.
The disruption in the exports has only been mitigated by the fact that Ukrainian efforts in the Black Sea have secured a maritime corridor to export its goods from the Black Sea ports.
This war in Ukraine is happening in a context where economies in the continent are experiencing de-industrialisation and registering low manufacturing to GDP ratios.
Complex international relations
The conflict is also bound to delay a decision on Africa’s debt problems. Currently, a very large number of economies on the continent are tottering on the debt cliff edge. Ethiopia has just gone through a painful and potentially destabilising debt default.
This was Africa’s third debt default in three years after those by Ghana in December 2022 and Zambia in 2020.
Countries have been forced to operate in a context of downgraded credit ratings and consequently, increased borrowing costs. African countries are borrowing at a much higher cost than the rest of the world.
As President Ruto returns to the global stage, navigating an increasingly complex international relations landscape is going to remain a big challenge.
Two years ago, Kenya was widely criticised for swapping Russian fertiliser for a free pass on the war in Ukraine after the arrival of 30 tonnes of fertiliser that Moscow sent to the country under an arrangement facilitated by the United Nations.
There was a point when it seemed that Kenya was taking a position on the side of the BRICS initiative that encourages settlement of international trade in currencies other than the dollar. We must carefully choose where we want to be. The Russian invasion of Ukraine is one of the biggest sources of imported inflation into our macroeconomy.
