Britain at last quits the EU, but what is at stake for Kenya?

The United Kingdom on Friday made history as the first country to ever leave the European Union.

But as in 2016, when 52 per cent of British voters chose to leave one of the world’s most integrated blocs, the move on Friday leaves partners like Kenya uncertain on how they will trade or relate with a new UK, analysts observed.

Within the UK, two Prime Ministers lost their jobs in the past three years – Mr David Cameron for losing the referendum and Ms Theresa May for failing to get support for her Brexit deal with the EU.

Outside the UK, experts told the Sunday Nation there could be low hanging fruits for countries like Kenya; but it was still uncertain when they will be ready as negotiations with the EU continue until the end of the year.

Kenya’s High Commissioner to the UK Manoah Esipisu has an optimistic view of Brexit

“The critical matter here is continued market access and increase of UK investments in Africa with Kenya as the anchor country. Given that the UK is the 5th largest economy globally and one of our largest trading partners, guaranteeing market access is a strategic move on the part of Kenya,” Mr Esipisu said.

POTENTIAL

On Friday night, British Prime Minister Boris Johnson, emboldened by last December’s emphatic election victory made the Brexit announcement on signalling that his country will now be able to “unleash potential” to the world.

“We want this to be the beginning of a new era of friendly co-operation between the EU and an energetic Britain, a Britain that is simultaneously a great European power and truly global in our range and ambitions,” he said in a televised address.

But even he admitted there could be bumps ahead as he leads a divided country through delicate negotiations with EU member states

“When I look at the potential of this country waiting to be unleashed, I know that we can turn this opportunity into a stunning success.”

The UK chose to leave the EU partly to have the freedom to negotiate trade deals directly rather than as a bloc. Mr Johnson said much of those agreements could be specific to countries.

NAIROBI HOPEFUL

So what is in it for Kenya? Nairobi was on Friday hopeful the new era will not affect its existing partnership with the UK.

“As President Uhuru Kenyatta mentioned at the Africa summit in January, Kenya may not have been very keen on a Brexit situation,” Mr Esipisu told the Sunday Nation, referring to a recent investment summit in London, where Kenya took part.

“But now that it has happened, we congratulate the United Kingdom. We have noted the manner in which the UK is prepared to aggressively pursue opportunities outside of the EU, and therefore we see Brexit as a blessing in disguise.”

There is great potential, he argued, for more partnerships and that Kenya will be pitching to British corporate chiefs to look for new opportunities and investment “that were once a driving force between UK and Kenya relations, which could substantially improve our trade balance” as well as diversify in other areas like green energy.

INVESTMENTS

The UK, Africa’s fourth largest investor, has traditionally been Kenya’s fifth biggest export market, reaching Sh40.2 billion in 2018 or 6.6 per cent of Kenya’s total exports, according to Trade and Industrialisation Ministry.

Kenya has established a market niche in the United Kingdom for some of its leading products such as tea, coffee, flowers, fruits, and vegetables. It imported goods worth Sh31.6 billion.

And according to the British High Commission in Nairobi, some 220 companies operating in Kenya have invested some £3 billion (Sh397.56 billion) and employ a tenth of the formal workforce in Kenya.

So, what could change? Experts think Kenya’s existing stronger ties with the UK will compensate for Brexit uncertainties. Dr Patrick Maluki, a lecturer of diplomacy at the University of Nairobi, said Kenya could in fact gain more in a new trade deal to be negotiated within the next one year.

“Trade relations with European countries have been more bilateral than multilateral, so there will be less impact of Brexit,” he told the Sunday Nation.

DIFFERENT TERMS

Under the EU, Kenya had benefited duty-free, quota-free access to markets of member states.

The UK will now have to renegotiate those terms and may amend or discard them if deemed inappropriate, which may create some sort of uncertainty, analysts argued.

“Our relationship with the UK was and is besides the EU. However, with Brexit, UK will be seeking allies outside of the EU and Africa is one such place to shop. And they will start from known allies like Kenya, then others,” explained George Mucee, the Practice Leader at migration consultancy firm Frogomen-Kenya in Nairobi.

“At this point, we don’t have a complete picture as to the extent of the impact, but I don’t expect a negative impact on Kenya from FDI and immigration perspectives. Our relations, as a country, with the EU remains intact, in my view.”

The actual content of trade or aid deals, however, could be subject to UK’s domestic politics as much as the power of what Africa and Kenya in particular can squeeze out of negotiations. Mr Clement Onyango, Director of trade policy think-tank CUTS-Africa told the Sunday Nation Brexit will mean a dwindled UK economy, which may cut down its development assistance programmes.

“Aid will thus reduce; this can be quite substantial especially for anglophone countries like those in the East African Community. UK Aid as you might also know constitutes a good amount of some countries' GDP,” he said referring to the estimated annual £130 million development aid to Kenya.

EXPORTS

In the short-term, he explained, Kenya’s exports to the UK could be affected during the transition period thought to last until January 1 next year as there could be fewer buyers.

But the transition will also depend on the political ideals of PM Johnson: Will he support a multilateral view of blocs or an individual view of ‘me-first’ policies?

“Theresa May was quite enthusiastic in his pronouncements about trade with Africa some two years ago, Boris as you all know was not as enthusiastic on a global Britain, hence politically a Britain trading with Africa might not really be a priority more, like Trump's America first,” Mr Onyango said.

He added that despite pledges during the Africa investment summit where some $8.5 billion worth of deals were announced, Johnson wants closer ties with Washington first.

Not all is gloomy though. “As you know Kenya has wanted to export other produce to friendly countries like UK but due to EU stringent barriers like standards, it was impossible for non-EU countries to export. Brexit might bring new opportunities for other fresh produce like peas, bananas hitherto not possible.”