Trade diplomacy key to unlocking regional growth

President Uhuru Kenyatta when he signed the agreement that established African Continental Free Trade in 2018. [File, Standard]

Despite having the fastest growing population in the world, more than 95 per cent of world trade takes place outside Africa. Doing business here is very costly and African exports to global markets face challenges that are yet to be addressed. Just recently, the UK Foreign Secretary Dominic Raab went to Thailand to meet with the ten nations of the ASEAN trading bloc in an effort to establish good trading relationships outside of Europe, ahead of Brexit.

We need to be thinking in the same way - not to avoid trade with Europe, of course, but to really consider how trade relations will make or break Kenya’s prosperity.

The main challenges facing smooth and mutually beneficial trade transactions in Africa are globalisation, supply chains, block chains, and the flow of data. These are new concepts to the entire world, but in Africa, we must jump through an extra level to overcome them. We are still dealing with a lot of corruption and lack of coordination between African states, as well as poverty and unskilled labour markets.

However, these shortcomings of the market can be addressed through economic diplomacy. The idea is that economic diplomacy - linking trade with foreign relations - can be used by developing nations as a means to push fast economic development. Foreign policy is bolstered by financial relations.

This brings to mind the recent conference on ‘the Future of Economic Diplomacy held in Victoria Falls in Zambia. Notably, President Uhuru Kenyatta, at the invitation of the President Edgar Chagwa Lungu, was at the conference, also attended by former Tanzanian President Jakaya Mrisho Kikwete.

In his address, Kenyatta called for economic diplomacy to be used as a key tool in the eradication of poverty and unemployment across our continent, and to promote growth and transformation opportunities.

The time is ripe, especially with the rollout of the new African Continental Free Trade Agreement (AfCTA). Economic diplomacy can be realised with the signing of more preferential free trade agreements (especially within Africa), cross border investments, the cessation of double taxation amongst African neighbours, as well as taking into account World Trade Organisation issues and collaboration between state and private sector agencies.

Apart from discussing how we can progress economic diplomacy together, Kenyatta used the conference as an opportunity to discuss with President Lungu the ways in which our countries can strengthen bilateral ties. We already enjoy good relations, characterised by commercial ties and cooperation in the agriculture, tourism, education, ICT, transport and security sectors. He extended an invitation to Zambia Airways to begin direct flights to Nairobi, emphasising the idea that competition leads to growth, and that African countries who block access to their markets do a disservice to themselves as well as to the rest of the continent.

As Kenyatta noted, ‘the rate of economic growth in the global south far exceeds the one in the global north.’ Most of that growth is happening on the continent of Africa. GDP growth in developing markets with booming economies, such as China and Kenya, typically occurs at about twice the rate of high income countries. This means that potential here in Africa is far greater and more exciting than markets that are already highly developed.

One of the greatest potential growth markets in Africa is in agriculture. Kenyatta pointed out that over 65 per cent of arable land on the continent is uncultivated. We have a great opportunity to feed our own continent, as well as export to the rest of the world.

Traditional farmers cannot carry all of the burden on their own. Kenyan agtech start-ups can find ways to cultivate the land in the most productive and environmentally friendly way, while the government plays its role in increasing cross-border trade.

Kenyatta also called on leaders in position of power to do work towards a regional growth agenda. This is a call not only to elected officials in government, but to business leaders across all sectors to work towards achieving our development goals, together. In particular, if Kenya is to reach middle income status by 2030, we must all play our part.

- The writer is a Strategic Marketing professional