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Trade, loans skewed towards China, we risk selling country

Friday November 2 2018

Chinese fish

A fish monger transports fish from China in Kisumu County on October 17, 2018. PHOTO | FILE | NATION MEDIA GROUP 

MUTUMA MATHIU
By MUTUMA MATHIU
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The incident on Tuesday during which the acting ambassador of China, Mr Li Xuhang, was very unhappy with Kenya, so unhappy that he threatened sanctions, for imposing a ban on imported fish, was my highlight of the week.

It provided Kenyans an opportunity to think about what they really feel about government policy towards China, Chinese attitudes towards Kenya, the state of our economy and Jubilee’s management of it in general.

The dispute has its genesis in comments by President Uhuru Kenyatta wondering why Kenya was importing fish from China by the container yet our own fishermen were taking their boats out every night.

I thought these were the sentiments of a leader who cares about the welfare of his people, not a declaration of trade war.

CHINESE FISH

A related question is the price of Chinese fish, on average Sh150 a kilo, including shipping it halfway around the world. Our tilapia is double that. How do they do that?

I’ll preamble my views by pointing out that I am not an expert, or an economist; the last time I read economics there was no global warming, the rains came on time. These, then, are the views of a newsman and freeborn African tribesman. They are, in a word, better than any economist’s.

Secondly, I like China, what the Chinese have achieved in the past 35 years.

They are simply the calmest, most industrious, disciplined and hardworking people. I admire their ingenuity and hardiness. But this is not about feelings.

As far as I am concerned, China is not one of Kenya’s major trading partners. We spend on average Sh30 billion on Chinese imports a month, or close to Sh400 billion a year.

POWER PLANTS

We export, shows the latest data I could find, in the neighbourhood of Sh10 billion worth of raw hides and skins, macadamia nuts, scrap copper, crustaceans and so on to China. A good part of imports from China are clothes and furniture, not jet engines or nuclear power plants.

We are mainly a market for Chinese good and loans. Some of us are not too excited about Chinese loans anymore and we will certainly make it an issue at the next election.

If China were to decide tomorrow that it would not lend Kenya any more money, some would raise a glass of Tusker to that.

Therefore, if China were to wage trade war on Kenya, the biggest losers, perhaps the only losers, would be the Chinese and those folk carrying on as if that would be the end of the world.

Countries have no feelings and no loyalties, only interests. My opinion is that our relations with China, as now constructed, present a high degree of sovereignty risk and are not in the interest of the independence and economic welfare of Kenyans.

I advocate strong and cordial trade and other relations with China — but only if China buys more from Kenya and Kenya borrows less from China.

RULE OF THUMB

And in circumstances where an envoy will not stand in front of a Kenyan audience and threaten us, in our country.

Now that we have dispensed with the neighbours, let us turn to housekeeping. No country has ever developed by importing everything; actually, the more developed, the more inaccessible it is to imports, as a rule of thumb.

In my youth, I used to believe that the concept of free trade was a ruse to get poor countries to open their markets to products from rich countries. Was I misguided?

I read a story in Politico on how heavily subsidised European Union farmers have drowned West Africa in dirt-cheap milk while all the time arguing that West Africa does not have the climate for industrial dairying and that they are there to help local farmers.

The export of powder milk from the EU to West Africa rose from 13 million kilos in 2006 to 38 in 2016. The only protection for Ecowas milk farmers is a five per cent tariff on imports.

BORROWING

According to the story, 65 per cent of the Ecowas population is rural — and owns livestock.

If Nigerians don’t even drink their own milk, how do they support their economy? If Kenyans don’t eat their own fish, how do they support local fishermen?

How do we build the beautiful cities of Kisumu and Mombasa? How do the fishermen take their children to school? Will the Chinese pay fees? Will they give jobs to our children?

Official statistics show we imported Sh149 billion goods in August but exported Sh50 billion. This is like being on a salary of Sh100,000 but spending Sh300,000.

Unless you are borrowing to invest in very good assets, this is how people get their legs broken by Shylocks.

TOURISM

The traditional earners — coffee, tea, horticulture and tourism — were mainly down. Sometimes there is no point in trying to be too clever; these are low-hanging fruits, to use an ugly phrase.

If I had an office in State House, I’d fix the traditional earners and take some draconian policy decisions: Zero-rate duty on imported timber, offer incentive for foreign manufacturers to set up locally and ban furniture imports; invest in cotton, incentivise EPZ firms to produce for the local market and impose 1,000 per cent duty on most clothes.

And I’d have a word with Mr Xuhang about the sovereignty of the African Republic of Kenya and why it is important to generally respect it.

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