Thursday, 4 September 2008

UK firms losing business in Kenya to China, India


Posted Saturday, August 30 2008 at 15:53

When Kenya purchased Toyota vehicles for its military forces, instead of the all-pervasive Land Rover, it signalled a seismic change — in effect ending the most favoured status enjoyed by imports sourced from its erstwhile colonial master the UK.

Another example is De la Rue, a UK-based printing and security firm that has uninterruptedly printed Kenyan currency since independence. It is fighting to retain its contract.

The administration of Mwai Kibaki broke with tradition, inviting other internationally recognised firms to bid for the job.

The London-based firm J&S Franklin Ltd served as a single-source supplier of uniforms and combat kits for the armed forces since Kenya “unshackled” itself from British colonial rule in 1963.

It has recently been blackballed by Kenya’s Department of Defence when its contract was terminated to the benefit of a Chinese firm.

Similarly, Brooke Marine and Vosper Thornycroft, two British companies that have exclusively supplied ships to Kenya’s navy since independence, have had to contend with the phenomenon of open tendering.

This change of fortune for British firms is captured in the official annual economic survey cobbled together by the country’s Ministry of Finance. In 2007, imports from the UK were worth Ksh29,414 million ($4.9 million) — compared to China’s Ksh45,668 million ($7.6 million) or India’s Ksh56,815 million ($9.5 million).

Compare this with 2001 during the peremptory reign of Daniel arap Moi. UK imports then totalled Ksh21,989 million ($3.7 million) while China was at a much lower Ksh6,792 million ($1.1 million) and Indian imports amounted to a relatively puny Ksh12,830 million ($2.1 million).

Since the replacement of Moi’s government in 2003, it has taken China and India three years only for their imports to Kenya to overtake those from the UK, formerly a premier source of imports.

“It is as a result of prudent decision-making that the Kenyan government opened up the country to the Far East, including Asian countries. As a result, Kenya has been able to access countries that provide better deals,” says Dr Gerrishon Ikiara, a former permanent secretary in the Kibaki administration and currently a senior lecturer at the Institute of Development Studies at the University of Nairobi. “In the past, procurement of government goods was shrouded in mystery. Then political considerations mattered more than economic sense,” he said.

According to the economist, Asian countries offer competitively priced goods and services compared with the UK.

“Right now most of Kenya’s roads are either being refurbished or built anew by Chinese firms. And all our international airports are also being upgraded by Chinese owned firms. This is after going through the process of open tendering,” Dr Ikiara said.

Kwame Otieno, a senior researcher with the local think-tank, the Institute of Economic Affairs (IEA), blames “the rigidity of the British system” as the fillip triggering the dip in British imports. The IEA is a non-governmental organisation that promotes debate on policy issues.

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“If a Kenyan, for example, wants to visit the UK, they face a lot of stringent requirements that act as a hindrance. But if they wish to travel to the Far East, China or India, the process is enabling and travel-friendly.”

Sources said the change in bilateral trade relations between the UK and Kenya is as a result of poor relations between the political leaders of the two countries in the recent past.

It is argued that Moi had very cordial relationships with occupants of 10 Downing Street in London. Successive British governments deliberately turned a blind eye to the excesses of his government.

As a result, firms with British ties continued to receive lucrative contracts at the expense of other countries.

The Kibaki regime has been upbraided harshly, particularly by local British envoys, for failing to tame corruption in high places.

Confirming the bad blood between the two countries, Sir Edward Clay, British envoy from 2001 to 2005, was in early 2008 officially declared persona non grata by the Kenyan government.

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