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TRADE-AFRICA: Kenya and South Africa Growing Their Links

Stephanie Nieuwoudt

NAIROBI, Jun 29 2007 (IPS) - Strolling through the aisles of one of the shops of the biggest supermarket chain in Kenya, it is easy for a South African to spot familiar brands. There are boxes and bottles full of cereal, instant coffee, fruit, soup, toiletries and other products imported from South Africa. And then there are the well-known clothing retailers.

But these products do not come cheaply. Due to import and excise duties those who want to purchase these brands in Kenya pay up to three times more than they would in South Africa. It is painful for consumers in Kenya but there is still a ready market for South African goods in the east African country.

South African exporters have the upper hand to their Kenyan counterparts. Import and export figures for the month of March 2007 show a trade imbalance between the two countries. South Africa exported produce worth 57,6 million US dollars to Kenya while Kenya exported only a fraction of that amount (1,86 million US dollars) to South Africa.

Kenya exports, among other products, tea, coffee, flowers and vegetables to South Africa.

According to a media release issued by South Africa’s department of foreign affairs, there are more than 30 South African companies in Kenya, making South Africa the biggest foreign direct investor in the east African country.

Kenya is also South Africa’s biggest trading partner on the continent outside of the Southern African Development Community (SADC).

These facts are testament to a growing self-reliance in Africa, an interdependence that will make development and progress on the continent less contingent on ties with either the West or the East.

But it also touches a nerve that is becoming ever rawer as the economic giant that is South Africa strides more confidently across what is in many ways its own backyard. Its large trade imbalances with fellow African countries expose South Africa to accusations that it has, ironically, become imperialist.

‘‘Yes, trade imbalances exist,’’ South African Foreign Affairs Minister Nkosazana Dlamini Zuma told reporters in Nairobi during her visit to Kenya in November last year. ‘‘However, it is something that can only be corrected in the long run. Our economic relations are like a long distance run, not a 100 meter sprint.’’

This trade imbalance is supposed to be addressed by a pending joint commission for bilateral cooperation between the two countries, the South African high commissioner to Kenya, Tony ‘‘Gab’’ Msimanga, told a Kenyan radio station recently.

Among others, the agreement will address in an amicable manner trade problems that both countries experience. This will be provided for in the soon to be concluded legal framework, he said.

The idea of a joint commission was raised in 2003 when Kenya’s President Mwai Kibaki visited South Africa for Thabo Mbeki’s inauguration for his second term in office as president.

However, any possibility of the agreement bringing Kenya to the level of an equal partner with South Africa is far away. ‘‘I do not see this happening soon,’’ a South African businessperson, who asked to remain anonymous, told IPS.

‘‘We are dealing with supply and demand and at this stage South Africa wants less from Kenya while Kenya is much more dependent on the more diversified markets of South Africa,’’ he pointed out.

Stewart Henderson, chairperson of the South African Business Association of Kenya, told IPS that the value of the joint commission will lie in the easing up of red tape. There is also the potential of huge gains in the building of human capacity.

‘‘South African road engineers will for example share knowledge and skills with their Kenyan counterparts. It is absolutely essential that both the public and private sectors get involved in capacity building. The Kenyan private sector is incredibly dynamic and can for the most part measure up to international standards,’’ he said.

There is room for improvement regarding the time lapse between the application and the issuing of business licences and the maze of bureaucracy that businesspeople confront before they can establish a business in Kenya, according to Henderson.

However, he commended the performance contract that officials in public service have to sign as ‘‘a huge leap forward and businesses have grown across the board’’.

During her visit to Kenya last year to discuss the bilateral trade agreement, Dlamini Zuma said that Kenya and South Africa want to co-operate to the advantage of both countries.

Observers said at the time that the countries were eager to sign the Joint Commission for Bilateral Cooperation before the Kenyan general election in December this year. However, this has not happened yet, much to the frustration of business.

According to a businessperson, who wished to remain anonymous, ‘‘feet have been dragged on the Kenyan side. Dlamini Zuma was here more than six months ago. The agreement was drawn up in February. We were assured that the agreement would be signed soon thereafter. This has not happened.

‘‘There are at least ten other agreements on the table that will flow from this. While the two foreign ministers delay the process, all other co-operation projects are held up. There are many departments involved like education, housing, defence and so forth. One seems to have to accept that these things take time,’’ he said.

Henderson cautioned against reading something sinister in the fact that the agreement has not yet been signed. ‘‘I believe that there is commitment on both sides but it is simply a slow process.’’

Significantly, skills exchange will not be a one way street where the stronger economy of South Africa sets the rules. This is especially true for the tea industry where Kenya is well established as a global player.

According to Thulane Nyembe, political counsellor at the South African High Commission, the South African government is trying to revive the tea industry in Limpopo Province in the north of that country.

‘‘The estates in that area became defunct due to land issues. But the government has implemented projects to revive it,’’ he told IPS.

Kenya, one of the world’s largest producers of tea, certainly has a few things to teach South Africans. According to Nyembe, South Africa will draw on the skills of Kenyan players in this industry.

In the radio interview, Msimanga said it was important for Africa to address the issue of multiple memberships in trading blocs and accelerate the integration of the blocs under the coordination of the African Union.

Kenya is a member of the East African Union (EAU) and the Common Market for Eastern and Southern Africa (COMESA). South Africa is the leading member of SADC.