• President William Ruto is seen to be leaning more towards the West as opposed to his predecessor and former boss Uhuru Kenyatta, who had built a strong relationship with Asian countries.
• During Mr Kenyatta’s 10-years rule, China became a major financier and developer of key projects among them the $3.6 billion Standard Gauge Railway (SGR).
• China and India have also been dominating the country’s trade as the Asian market accounts for 65.7 per cent of Kenya’s total import bill.

Since coming into office in September last year, Kenya’s fifth President William Ruto has been keen on building and expanding alliances with countries that can help foster trade that remains in favour of foreign nations.

An interesting facet, however, has been his renewed interest in the United States and Europe, in what is seen as a slow but sure move to attract more investments while growing market for Kenya’s exports, manly agricultural produce.

President Ruto is seen to be leaning more towards the West as opposed to his predecessor and former boss, Uhuru Kenyatta, who had built a strong relationship with Asia, mainly China.

During his 10-years rule, China became a major financier and developer of key projects among them the $3.6 billion Standard Gauge Railway (SGR) which to date remains one Kenya’s most expensive infrastructure projects.

China is also behind the construction of the first three berths at the country’s second major sea port of Lamu, the $653 million 27.1 Kilometer Nairobi Expressway among other major road projects in the country.

The Chinese were also behind major real estate projects in Kenya, thanks to the strong ties built during Uhuru’s tenure that equally saw ballooning of debt that is now straining the purse of East Africa’s largest economy.

Japan has also cemented its position in the East African economic power house with key projects including the expansion of the Port of Mombasa, where Japanese firm, Toyo Construction, has constructed the new second container terminal. Developed in two phases, the second container terminal has brought the port’s annual capacity to 2.1 million containers.

Meanwhile, China and India have been dominating the country’s trade as the Asian market account for 65.7 per cent of the country’s total import bill.

Turnaround

President Ruto is, however, seen to give the ball a different spin that could see it land more in the US’ and Europe’s half of the pitch as Kenya pushes for stronger ties marked by increased investments by American firms as well as more uptake of made in Kenya goods in the US market.

Dr Ruto has already made key visits to the US and European capitals among them the UK, Belgium, France and Germany with an equally notable visits by Heads of States and delegations of policymakers to Nairobi.

One of the outstanding ones was the recent visit by Italy’s President Sergio Mattarella where a deal was struck to revive the construction of two multi-billion dams; Arror and Kimwarer, which were turned into a political hot potato during Mr Kenyatta’s tenure following allegations of corruption touching on perceived allies of Dr Ruto.

Further, US President Joe Biden started by sending Trade Representative Katherine Tai to lead America’s delegation to the inauguration of Dr Ruto on September 13, last year.

The President has also hosted a number of delegations from the US at State House Nairobi led by Ambassador Meg Whitman. A fortnight ago, Nairobi also hosted the third American Chamber of Commerce (AMCHAM)  Regional Business Summit, which attracted more than 700 delegates and 300 companies from the US.

With their focus cast wide across the region, the US government and private sector delegations also met with counterparts from neighbouring Rwanda, Tanzania, Uganda, and Ethiopia.

Read: Tanzania-Burundi electric railway to boost trade ties

Dr Ruto said Kenya was open for business, with a major deal between the government and US biotech company Moderna announced. In Nairobi, vaccine maker Moderna is set to establish its first mRNA manufacturing hub in Africa where it projects to be producing roughly 500 million vaccine doses every year.

Kenya is also pushing for a Strategic Trade and Investment Partnership (STIP), with a deal expected by end of this year. A team from the US is currently in Nairobi for a week-long negotiations, following up on a visit by a Kenyan delegation to Washington in February.

Focus areas include economic engagement, peace, security and good governance, democracy and human rights, regional and global health security (including post Covid recovery and pandemic preparedness), food security, climate change, and education and youth leadership.

Kenya, is also keen to secure a preferential trade agreement before the expiry of the African Growth and Opportunity Act (AGOA) in 2025. The AGOA program gives Kenya and 40 other sub-Saharan African countries duty-free access to the US market for over 6,000 products. More than 70 percent of Kenya’s exports to the US are duty-free under AGOA.

With a bilateral deal, Kenya is set to increase its exports to the US taping at least five percent more of the US market, which has the potential to earn the country more than $14.8 billion in export revenues annually.

According to statistics, the US is the largest export destination of Kenya’s apparel, accounting for over 90 percent of garment shipments every year. The apparel manufacturing sector stands out as the biggest beneficiary in an improved trade environment under the FTA.

The warm relationship between Kenya and the US is also expected to attract more American investments into the country, which remains a strategic operational base for the US’s anti-terrorism operations in the Horn of Africa.

Focus on Europe

Kenya has also in recent months sealed a number of lucrative deals with European countries, even as it inches closer to a major breakthrough with the European Union, which will drive trade and investments in the post-Brexit era.

Kenya and the European Commission have agreed to review the EU Economic Partnership Agreement, with an agreement expected to be signed later in June this year.

On March 30, Dr Ruto held talks with the leadership of the European Union and European Commission at EU Headquarters in Brussels, Belgium.

During a meeting with Charles Michel, President of the European Council, the two leaders committed to strengthening the Kenya-EU strategic partnership.

Michel offered to support Kenya in leading the reset of EU-Africa relations and shaping new geo-strategic relations. The President also reaffirmed the bloc’s support for an African Union seat at the G20.

He committed to working towards the finalisation and signing of the Organisation of African, Caribbean and Pacific States (OACPs) agreement; the Post Cotonou agreement.

At the Commission, Dr Ruto held discussions with Ursula von der Leyen, President of European Commission, Valdis Dombrovskis, Executive Vice President and Commissioner for Trade of the EU and Jutta Urpilainen, Commissioner for International Partnerships. An agreement was reached to finalise the Economic Partnership Agreement within two months.

They also undertook to work towards the establishment of financing instruments to avert the effects of the climate crisis and respond to the stress experienced by African countries, including the debt, food and energy.

The leaders committed to mobilise investment targeting Small and Medium Enterprises and youth innovators across various sectors including agriculture, industry, transport, renewable energy and women empowerment.

Kenya and the European Commission also explored the intent to pursue a financing agreement for the construction of a Green Mobility-Nairobi core bus rapid transit line 3 (BRT 3).

“I thank the European Commission for its cooperation in trade and investment partnership,” Ruto said.

The project will put in place the first dedicated electric bus rapid lane in East Africa.

President Ruto reiterated Kenya’s commitment to green transition in line with the climate change mitigation plan. Belgium will support Kenya’s development agenda through partnerships in trade and investment, health and renewable energy. It will also back peace and security plans in the region and climate adaptation.

President William Ruto and Prime Minister of Belgium Alexander De Croo signed a Memorandum of Understanding on Political Consultations that will provide a framework for engagement on partnerships.

Speaking at FPS Chancery of the Prime Minister in Brussels, Belgium, Prime Minister Croo committed to supporting Kenya’s food security agenda.

During Italy’s President visit to Nairobi, the two Heads of States discussed modalities of enhancing trade and investment between Kenya and Italy. They witnessed the signing of  two MoUs and a joint declaration, to provide a framework for advancement of bilateral cooperation in different fields.

This included an MoU on Health and bilateral consultations that will establish and set guidelines for the conduct of political consultations at the respective ministries of foreign affairs.

They further committed, in good faith, to re-establish cooperation on the construction of Arror, Kimwarer and Itare dams and other water and sanitation projects, which are critical to the country’s  agenda on food security and climate action.

The Government of Italy also offered to advance 100 million euros ($109.3 million) in grants and soft loans covering investments in agriculture, development of MSMEs, housing and urban settlement, health, the digital super highway and creative economy.

This will be done through the Kenya-Italy Multi-Annual Five-Year Cooperation Strategy on sustainable development.

“We further agreed to cooperate in enhancing our informal settlement redevelopment program,” State House Nairobi said in a statement.

Kenya and Italy have also, at political and technical levels, agreed to remove Non-Tariff Barriers and promote greater trade and increased investment, including negotiating avoidance of a double-taxation agreement, which will usher in significantly higher levels of foreign direct investments in various sectors, by Italian companies.

Meanwhile, Germany has committed to support Kenya in its attempt to better penetrate the European Union market with Chancellor Olaf Scholz saying Kenya is a true friend and stable country in Africa whose economy must be helped to thrive.

“The better access to Europe will help Kenyan firms to produce and sell more. This will accelerate employment creation and support more lives,” he said during Dr Ruto’s visit to Berlin.

Mr Scholz noted that Kenya continues to make indispensable contribution in peace and security in the Horn of Africa. “We will support Kenya more on this cause as well as in its push to tackling climate change crisis,” he added.

While appreciating Germany’s support in capacity building to facilitate Kenya’s products into the European markets, President Ruto invited more German companies to invest in value addition of raw materials in Kenya.

While ties with Asian economic giants remain strong, the latest development could tilt relations in favour of the West which is keen to regain its grip on the continent seen to be lost in recent years.

China has been riding on the Belt and Road initiative to forge economic, political, and security ties with Africa, advancing Beijing’s geopolitical interests by advancing loans and debt financing of mega infrastructure projects.

Launched in 2014, the Belt and Road initiative is China’s signature vision for reshaping its global engagements, a drive it is not ready to let go as it pushes for its share of the world’s GDP and retain its seat at the big boy’s table.