By Fredrick Ogola
The current economic situation in Kenya is in dire need of a turnaround. In 2021, the Kenyan economy staged a strong recovery, growing at 7.5 percent although some sectors, such as tourism, remained under pressure. GDP is projected to grow 5.6 percent in 2023 and six percent in 2024, driven by services and household consumption.
However, inflation is projected to rise to 8.6 percent in 2023. Of late anyone you talk to, there is only one conversation: ‘No money, the economy is bad’. After the government passed the Finance Act 2023, taxes are becoming more and more unsustainable.
To add salt to injury, the government is now working on Finance Act 2024 trying to find ways to increase their tax collections.
Prices of basic commodities are too high with the Kenyan debt situation likely to drive Kenyan economy into a halt. From where would our help come? Methinks, an alignment with BRICS is a strategic option.
For long, Kenya’s serious economic engagements have been with the West whose economic architecture, unfortunately, favours developed countries while keeping poor countries poorer.
But the contemporary global order has now presented significant changes among which are the relative decline of American power, and the emergence of new actors with greater agency power in their international relations.
One of these actors is BRICS, which brings together Brazil, Russia, India, China and South Africa. Together they represent a quarter of the world area, 40 percent of the world population, 20 percent of global GDP, and 16 percent of the world international trade.
BRICS members are connected by the disappointment of being permanently marginalised within the system of international relations and by their endeavour to transform it (especially the UN Security Council), and the world at large.
Unless the current global economic architecture is disrupted and a new world equilibrium created, Kenya, and indeed many other redeveloping countries will remain economically crippled.
This is where BRICS comes in. And Kenya stands the chance to gain from the BRICS in the following seven ways and more.
First, the shift will enable Kenya to enjoy an environment with fairer distribution of resources. Since the BRICS countries have become leaders in emerging economies and developing countries, they are the game-changer in the 21st century.
They can curb unilateral global power interventions in regional affairs, frame interventions for humanitarian causes and uphold the responsibility to protect each country’s national interests.
Second, the foundation of the Kenyan modern economy was developed under President Kibaki who was more of a darling of the East than the West. Any dalliance with BRICS by President William Ruto will, therefore, be easily welcomed. Moreover, the stalled Chinese projects will come back to life, with both Kenya and China profiting.
But if they are not resumed, Kenya will still be the loser since under the contract Kenya has to pay its more than Sh700 billion ($4.7 billion) debts to China.
Third, BRICS will help Kenya overcome the debt issue with the West, which is choking Kenya’s economy. These are majorly illegal debts both from local banks at crazy interest rates and from awards from the West meant to seduce Kenya to look West. Besides, transparency is at risk.
Though the official Kenyan public debt authorised by the Appropriation Act is Ksh. 2.0 trillion, the Treasury has published it at Sh6.1 trillion while State House put it at about Sh9.2 trillion.
Fourth, aligning with BRICS will address the cost of living which is currently a big challenge in Kenya. With the BRICS on the side of Kenya, it can import wheat from India through government-to-government deal avoiding intermediaries so as to keep the prices manageable.
Fifth, aligning with the BRICS will help Kenya’s tourism revenue grow both in numbers and value. Our BRICS counterparts spend more on holidays over a short period of time since their holidays are traditionally shorter as opposed to the West.
Moreover, the West can book everything from their home country but, for the BRICS, Kenyan tourism players have more chances of generating revenue.
Sixth, there are more chances for technological and knowledge transfer if Kenya aligns with the BRICS.
Finally, Kenya is culturally closer to the BRICS. Though China and Russia are not exemplary in the areas of democracy and human rights, it is still Solomonic that Kenya aligns herself with BRICS since Kenya is mature enough to handle its democracy and human rights issues.
Dr Fredrick Ogola is the CEO at the African Health and Economic Institute and Director of the Institute of Strategy and Competitiveness.
Business Daily Africa
