Happy Saba Saba Day–and how is Kenya?

Today is the final “Saba Saba Day” in Kenya under the “Government of National Unity.” The presidential campaigns are in full swing and new political parties, alliances and temporary coalitions are announced and denounced weekly.

So how is Kenya?

To be positive, there are lots of important things right in Kenya (as always).

For one thing, there is energy in politics and some real hope that votes will be counted and thus that Kenyans will chose their leaders going forward under the new Constitution.  Of course it must be remembered that Kenyans were more hopeful in 2007.  An improvement politically is a lack of complacency or naiveté.

The economy in the aggregate continues to grow and attract increased foreign investment.  Over the last couple of years taking note of Africa as the last great investment frontier has gotten so commonplace as to be, finally, cliché.

Kenya has tremendous advantages in reference to serving international investors over most other Sub-Saharan African countries at the inception.  Aside from Indian Ocean coastline which makes Kenya a natural gateway for Asian trade, Kenya speaks global English and is home to Nairobi which was already well-established during the era of what I have called “the aid bubble” as the favored location for internationals.  Whatever happens in South Sudan, Sudan and Somalia in the next few years, a lot of the international support/involvement will come through and be “back officed” in Nairobi.  Kenya has been the key regional military ally of the United States throughout its history, while separately serving as “Americans’ favorite African country” in the popular imagination, and attracting a lion’s share of private tourism and aid/mission activity.  And of course there are close ties to Great Britain and British companies of long-standing and plenty of interchange with the rest of Europe.  Nairobi has been an attractive draw for white African businessmen, especially since the mid-90s, and has become more Continue reading

State of U.S. economic interchange with Kenya

So where do things stand economically between the United States and Kenya at the start of the Administration’s “new policy” for Sub-Saharan Africa?

Faded Aid

From the East African’s coverage of the Gration resignation, Envoy’s exit underlines new US strategy in Africa:

Over the past five years, the US clout in the local economic scene has been declining as Kenya continues to look east, specifically to China, India and Japan for aid. Whereas the US continues to be a major source of development aid, disbursing an estimated $3 billion between 2008 and 2011, China, India and Japan have emerged as new sources of infrastructure funding.

China is currently carrying out improvements of roads in Nairobi, while Japan is actively supporting the country’s energy sector.

America’s support has largely focused on health and military funding, with the US government set to give Kenya $14 million in military help this year.

In trade, whereas imports from the US have stagnated at Ksh45 billion ($535 million) since 2007, Kenya’s imports from China and India have more than tripled, rising from Ksh46 billion ($547 million) and Ksh56 billion ($667 million) to Ksh144 billion ($1.7 billion) and Ksh148 billion ($1.8 billion) respectively.

Kenyans had been hoping that General Gration, who spent his childhood in Democratic Republic of the Congo and Kenya, and spoke fluent Kiswahili, would take US-Kenya relations to a new level given his knowledge of Kenya, its people, its language, and its culture.  .  .  .

Assistant Secretary of State Carson testified on June 28 before the Senate Foreign Relations Committee on “Economic Statecraft” emphasizing the importance of the renewal of the Third Country Fabric provisions under AGOA, and the harm caused by uncertainty:

. . . As you know, many African countries are not taking full advantage of the benefits of AGOA. However, some AGOA beneficiary countries take good advantage of the provisions for fabric and apparel product lines. The third country fabric provision component of AGOA was designed to provide an opportunity for AGOA-qualified countries to be more competitive in labor intensive textile processes such as sewing, stitching, and cutting fabric.

It was widely recognized that most African countries were not able to compete in the more capital intensive process of producing fabric from raw cotton. African manufacturers have successfully used the AGOA third country fabric provision to create jobs, not just in the manufacturing countries but have used this provision to create cross-border pan-African supply chains. These supply chains also encourage regional integration – one of our key goals for the continent. Fabric and apparel exports are the second largest AGOA export after extractive industry products. However, these imports still account for less than two percent of U.S. imports.

I’d like to say a few words about what is likely to happen if third country fabric is not renewed. In our globally linked world, American buyers place orders six to nine to twelve months ahead. 95 percent of AGOA apparel and textile exports enter under the third country provision. And the AGOA third country fabric provision is the only way that African textile and apparel companies can remain competitive with larger producers such as China, Vietnam, and Bangladesh.

Without our help, jobs will continue to disappear in some of Africa’s most vulnerable economies, affecting primarily women and the families they support. Eighty-five percent of these imports come from just four countries: Lesotho, Kenya, Mauritius, and Swaziland.I know that diplomats from these countries have come to see you to emphasize the disproportionate effect that lack of renewal of this provision will have on their economies.

The effects of the loss of orders are troubling. At the AGOA Forum, the Swazi Minister for Trade told AGOA delegates that the loss of the provision will “shut the country down”. The textile and apparel sector is the largest formal sector employer with over 15,000 jobs and employment is already 41 percent in this small, landlocked country. Loss of just one of these jobs means that ten people lose their livelihood, since Swazi officials calculate that each textile job directly supports ten people. Lack of orders have already led to plants closures in Namibia, robbing people of their legitimate livelihoods and governments of much needed tax revenues. The Mauritians report that their orders are down 30 percent since January due to the uncertainty whether this provision will be renewed in a timely fashion.

The Trade and Politics Blog indicates that passage of the new bi-partisan legislation to extend the third country fabric provision is finally expected by the end of July before the Congressional Augut recess.  I hope this get squared away as soon as possible.

See “Africa Bureau announces vision to revitalize AGOA” and comment by Dr. Richard Mutule Kilonzo, Chief Executive, Kenya Export Processing Zones Authority:

The potential impact of a delayed renewal of the third country fabric provision of AGOA is grave. Third country fabric is the most successful components of the AGOA legislation and can be credited with over 100,000 direct jobs in Sub-Saharan Africa. Apparel orders are drying up due to the uncertainty surrounding the provision. In Kenya alone, over 40,000 factory workers could very likely lose their jobs if third country fabric is not renewed in a timely manner. The apparel industry in SSA rely on the third country fabric provision; without it there is a very real possibility that the investors in the apparel factories will pack up and move production to some other part of the world as happened in Madagascar following its loss of AGOA eligibility in 2009. This would cause enormous economic strife in countries that are strong partners of the United States. On September 30, 2012, the third country fabric AGOA provision will expire. With barely six months to go, further delay threatens the lives of 1 Million people, mostly women who work in the apparel sector. We estimate that each factory worker supports ten additional people. If third country fabric is not renewed soon, these jobs will disappear and Africa’s poverty rate will sour by over 55%.

Africa Trade News: Bills to amend the AGOA to extend the “third country fabric” benefit introduced in Congress

Representative Camp (R-MI) and Senator Baucus (D-MT) have introduced bills in the House and Senate respectively to provide for this extension under the African Growth and Opportunity Act of great interest in East Africa.  With strong bipartisan support in Congress and from the Administration this would seem to be a timely step before the preference expires in August to show that we are serious about stepping up American trade with Africa to support private sector economic growth.   The bills would also add South Sudan as an eligible country.

AGOA, AFRICOM and the “Three Ds”

Just as the big annual African Growth and Opportunity Act (AGOA) Conference is kicking off in Washington, and USAIDs Frontiers in Development conference has ended, the Washington Post has run a large story, “U.S. expands secret intelligence in Africa” which will continue to draw attention, discussing military operations as opposed to anything involving the traditional intelligence agencies.

Briefly, my “macro” level observation is that this is an example of the choices confronting Americans in simply deciding who we want to be in Africa.

There is perhaps a certain irony that in 2012, all these years after the Cold War, the Chinese Communist Party government leads an expansive, rapidly growing commercial presence across Africa, while the U.S. does seem to be specializing more in the military/security area. “Comparative advantage”? Bureaucratic momentum and politics in Washington? Sound policy making reflecting that the U.S. sees itself as quite rich already and has a main priority of preventing future tragic “embassy bombings” and “9-11s”; whereas the Chinese government is relatively speaking “young and hungry”, and needs to build its economic power to hold power at home against any possible future “regime change” from democratization or other domestic pressures?

AFRICOM is an experiment of sorts and it is evolving. The Post story points out that AFRICOM is still doing “aid” projects–by which I assume they mean things like the traditional humanitarian and medical missions carried out by troops, and things like the fish farming program for the DRC military in Eastern Congo I noted some time back along with the military-focused democracy and governance and rule of law training, aside from the more usual military and security training assistance. At the same time, the budgetary pressure in Washington is hugely increased from anything that people would have had in mind back during the finance bubble when the decision to roll out AFRICOM as a “new kind” of combatant command was made. Spending on “development” and “diplomacy” are lowercase priorities when the budget axe swings, verses “the big D” on the traditional military side of a “three Ds” national security strategy.

On one hand, AFRICOM could provide a bureaucratic umbrella of sorts to help shelter some “development and diplomacy” efforts from the budget storm. On the other, it could suck up dollars to pay for programs that are neither efficient nor well coordinated, nor carried out by people who have development or diplomacy as their primary mission.   Regardless, I think it is fair and appropriate to say that at least some people on both the civilian and military side of the effort, who believe in the concept of a “new kind” of command, are concerned about the staying power of the model as conceived and approved against the bureaucratic pressure for military homogenization in the context of the global war on terrorism formerly known as “the Global War on Terrorism”.

Yesterday at the Frontiers in Development program Jim Kolbe, former Republican Congressman and longtime IRI board member, emphasized the importance of development for U.S. national security. I agree.  Having worked in the defense industry myself for 12.5 years, including the time of the USS Cole bombing (the ship was repaired at my workplace), 9-11 (I was in Washington), 7-7 (got the news of the London bombings as an election observer in Osh, Kyrgyzstan) I do not downplay terrorism or undervalue U.S. security–I just want very much for all of us as citizens to take responsibility for making good and deliberative decisions about our long term interests and ultimately the broader role we want to play in the world.

Watch USAID’s “Frontiers in Development” Monday – Wednesday from Washington

USAID’s “Frontiers in Development” Conference in Washington Live Video Feed

On Twitter:  #Frontiers #DevelopmentIs

Speakers relating to East Africa specifically include Rakesh Rajani of Twaweza:

Twaweza is an independent East African initiative that was established in 2009 by Rakesh Rajani, a Tanzanian civil society leader who founded HakiElimu and served as its first executive director until the end of 2007. Twaweza’s approach and theory of change is built on the lessons from the HakiElimu experience, as well as wide ranging conversations across East Africa conducted through 2008 and a review of the literature. Hivos provided the incubation space for Twaweza’s development, and currently houses the initiative before it becomes fully independent by 2013. Hivos is registered in Kenya, Tanzania and Uganda as a non-profit company (company limited by guarantee with no share capital).

Twaweza’s approach and its policies, systems and procedures reflect a set of values around effective and transparent governance. Five key values and principles guide our work: effectiveness and accountability; transparency and communication; ethical integrity; reflection and learning; and responsibility and initiative.

East Africa Event Thursday: President Kikwete discussing “A Country Transformed; A New Agenda for Tanzania” with MCC CEO Daniel Yahannes at CSIS

Update:  Here is the link to the audio from the event at CSIS and a handout.

[Also–for a very different view of Kikwete, see “Tanzania:  The Flip Side”  by Nkwazi Mhango in the current African Executive.]

Tanzania represents a success story for developing and emerging-market countries in a time of changing donor-recipient relations. Through a series of reforms to increase transparency, good governance, and country-led development, President Kikwete has helped Tanzania become a strong partner with the United States and the business community. Tanzania is the recipient of a $698 million Millennium Challenge Corporation compact, hosts a robust PEPFAR program, launched the Southern Agricultural Growth Corridor (SAGCOT) initiative, and was among the first countries selected for the Partnership for Growth—all of which have helped Tanzania make gains in enhancing food security, reducing poverty, and creating economic opportunities.


Tabasco in Zanzibar, Tanzania

A little Kenyan-American history: Kissinger, Waiyaki, Kibaki–getting the F-5s, safaris and slums

A priceless bit of diplomatic history, from October 1, 1975, U.S. Secretary of State Henry Kissinger meets with Kenyan Foreign Minister Waiyaki  at the U.S. United Nations Mission in New York.  You just have to read it:

The Secretary: It is good to see you here.

Foreign Minister Waiyaki: We are enjoying ourselves very much.

The Secretary: I was in Nairobi before your independence. I went to see the animals. I was there in June. It was very pleasant. How long are you staying here?

Foreign Minister Waiyaki: I hope to leave tomorrow. I have been here a long time.

The Secretary: You were here for the Special Session of the UN?

Foreign Minister Waiyaki: Yes.

The Secretary: How did you get into your present job? Were you a career officer in the Foreign Ministry?

Foreign Minister Waiyaki: No, I am a member of Parliament. I was formerly Deputy Speaker of the Assembly.

The Secretary: The only way I could get into the State Department was to be appointed Secretary of State. I was told that I don’t have the qualifications for entry into the Foreign Service.

The Secretary: What are the major problems in our relations?

Foreign Minister Waiyaki: Our relations are good.

The Secretary: I can’t understand Foreign Ministers saying that our relations are good. Normally everyone says they are lousy.

Foreign Minister Waiyaki: Relations are good.

The Secretary: I agree with you. Our relations are good. It is pleasant to hear this. Usually I am told that everything we are doing is wrong. You have a very constructive policy and our intention is to support you within the limits the Congress will go along with.

Foreign Minister Waiyaki: I hope Congress will understand the requests which we make.

The Secretary: Congress does not go along with the requests I make, but we are going to get them under control soon.

Foreign Minister Waiyaki: I am in the strange position where I am a congressman myself, but I still get pushed around by other congressmen.

The Secretary: You have a parliamentary system?

Foreign Minister Waiyaki: Yes.

The Secretary: You have only one party?

Foreign Minister Waiyaki: Yes, but I am questioned by backbenchers and also by assistant ministers sometimes.

The Secretary: We have had some talks on arms. We are trying to put together a military assistance package for Kenya.

Foreign Minister Waiyaki: I hope you can move quickly.

The Secretary: What is holding things up?

Mr. Coote: We thought we had some F5A aircraft lined up for Kenya. They would have been available immediately at a low cost. This was the big advantage of that package. However, it did not work out.

The Secretary: Why didn’t it work out?

Continue reading

Four out of the Five Members of the East African Community are among the 20 USAID “‘Feed the Future’ Focus Countries

From a USAID press release, “USAID Administrator Rajiv Shah Announces 20 Feed the Future Initiative Focus Countries“:

In 2008, the Lancet identified just 36 countries that are home to 90 percent of all children whose growth was stunted for lack of adequate food. Based on this global burden of undernutrition and other criteria that examined the prevalence and dynamics of poverty, country commitment, and opportunities for agriculture-led growth, the 20 Feed the Future focus countries are: Ethiopia, Ghana, Kenya, Liberia, Mali, Malawi, Mozambique, Rwanda, Senegal, Tanzania, Uganda, and Zambia in Africa; Bangladesh, Cambodia, Nepal, Tajikistan in Asia; and Guatemala, Haiti, Honduras, and, Nicaragua in Latin America.

These countries experience chronic hunger and poverty in rural areas and are particularly vulnerable to food price shocks. At the same time, they demonstrate potential for rapid and sustainable agriculture-led growth, good governance, and opportunities for regional coordination through trade and other mechanisms. USAID will work with strategic partners Brazil, India, Nigeria, and South Africa to harness the power of regional coordination and influence in these focus countries.

Certainly it is encouraging that USAID finds Kenya, Uganda, Tanzania and Rwanda to present potential for rapid improvement–and perhaps the potential of the EAC itself is significant to this.   The listing is also a good reminder for Kenya that in spite of its significantly higher level of aggregate and per capita GDP, and overall growth, rural hunger remains all too common.  While this seems a constructive approach for USAID, I am skeptical that donors will  change the situation dramatically in Kenya until Kenya’s leaders share the priority to a greater extent than they have seemed to in recent years.

Fuel Distribution Crisis Hits Kenya, and Other Economic News

“Kenya oil industry in chaos as fuel shortage bites”, reports the Daily Nation:

Motorists stood in long queues on Wednesday as one of the most severe and bizarre fuel shortages hit many parts of the country.

Many people ran out of fuel on the road while others were forced to leave their vehicles at home and take public transport. (IN PICTURES: Nairobi fuel crisis)

Petrol stations were forced to close after running out of fuel due to panic purchases.

The absence of petrol at the pump, particularly after the government confirmed that there was 19 million litres in storage tanks in Nairobi, is a commentary on the chaos in fuel distribution.

On Wednesday, the government passed the buck to the oil companies, accusing them of creating a shortage by refusing to order adequate stocks over the Labour Day holiday.

Today’s Star also reports that Prime Minister Odinga, speaking at Great Lakes University in Kisumu, said that the private sector is the only source for vital job growth:

He said the country must create a conducive environment for the private sector to thrive as a solution to the unemployment crisis. He said the private sector is the engine of economic growth thus the need for both local and foreign investors to increase investments that can create jobs for the youth.
Raila said the 750,000 graduates who join the labour market every year from schools, colleges and universities cannot find employment in the public service with about 50,000 job opportunities only every year.
He assured Kenyans that available positions in the public service will be distributed fairly among all the communities in the country in accordance with the constitution.
On education, the PM decried low levels of research in the country saying privave sector has refused to fund research unlike in other countries.
He said, the country needs to invest more on research work to provide more job opportunities.

The Star also reports additional international funding, from Germany, for geothermal power development:

THE 280 MW Olkaria geothermal power project by KenGen yesterday got a Sh7.4 billion boost from Germany’s Development Bank KFW to fund consultancy services and part of the steam field drilling works.

The money will fund extension of Olkaria one and Olkaria IV power station project targeted for completion by end of 2013. The overall cost of the project is Sh83 billion and is being co-funded by KenGen, World Bank, European Investment Bank, Japan International Corporation Agency and French Development Agency, AFD. “Development of renewable energy is excellent for development of Kenya and for the environment,” remarked KFW Director General for Middle East and Africa Doris Koehn during the loan agreement signing ceremony held yesterday at KenGen offices in Nairobi.

Investing in Southern Africa–MCC Webchat

Register for a webchat about Millennium Challenge Corporation programs, AGOA and investment opportunities in Southern Africa.

Event is Thursday, April 21, 11:30am Washington/EDT; 1530 GMT.