38 LOCAL THE STAR Monday, August 4, 2014

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BY JAMES WAITHAKA

UNITED States has leapfrogged into Kenya’s third-largest export destina-tion in the rst half of the year from fth last year, adding its uptake by nearly a third.

Monthly data released Friday show the US took up goods worth a cumu-lative Sh18.38 billion in the period compared to Sh14.12 billion as at June 2013, a 30.2 per cent increase.

The increase in exports to US is seen as a direct result of the Africa Growth Opportunity Act, a preferential trade agreement focused on textiles and ap-parels that was rst signed in 2000. It has since been renewed and expires on September 30, 2015.AGOA allows for duty-free and

quota-free treatment for apparel ar-ticles made in eligible sub-Saharan African countries including Kenya.

“The poor conditions for workers in places such Bangladesh’s textile sector has prompted the US to shift eyes to countries like Kenya, just as Kenya was giving up and this was a huge relief,” Pradeep Paunrana, chairman of the Kenya Association of Manufacturers, told the Star yes-terday.

“KAM is working with the Indus-trialisation ministry to revive the sec-tor fully and this will create about 50,000 jobs over the next one year because it’s a labour-intensive indus-try.”

The US has displaced the UK and Tanzania, which are now placed fourth and fth with Sh18.24 billion and Sh17.37 billion respectively.

“Kenya should look at opening more trade routes to the US and cre-ate favourable conditions for manu-facturing. Direct ights to cities such as Atlanta could help boost ower and horticultural exports to the US,” said Paunrana, who is also chief ex-ecutive of Athi River Mining Com-pany.

He said the Kenyan delegation at-tending the three-day US-Africa sum-mit in Washington DC that starts today should seek a longer term re-newal of AGOA to create certainty

for businesses.“A 10-year horizon for AGOA ex-

tension would be preferable. Other-wise a short-term renewal would not guarantee more investments towards the sector.

“To full utilise our AGOA status, we need government input to help in value addition and speed up intro-duction of cotton in counties such as Lamu, Kitui and Garissa where it can do well,” Paunrana said.

Moses Ikiara, managing director of Kenya Investment Authority, said from the US: “For the immediate, we need to continue exporting more ap-parels/clothing under AGOA, and also tea, coffee and horticulture.”Ikiara said Kenya also needs to dis-

cuss the travel advisories, plus support to enable it export value added prod-ucts in the medium to long term.

The UK has been displaced from the second largest destination of Ken-ya’s exports (worth Sh19.42 billion) following a ban on imports of miraa (khat), a mild stimulant.Uganda remains the biggest buyer

of Kenyan goods despite exports to the neighbouring country declining by 17.3 per cent to Sh22.31 billion compared to Sh26.98 billion in a cor-responding period in 2013.

Netherlands is now second place

with Sh21.67 billion from fourth mid-last year with Sh17.03 billion.

Tanzania has moved down from third with Sh17.38 billion as at June 2013, signalling the dwindling trade between Kenya and its East African neighbours.

The country’s trade de cit wid-ened further in the six months de-spite a slight increase in total value of exports which was offset by faster growth in imports.Kenya National Bureau of Statis-

tics data showed trade de cit in the period rose to Sh473.07 billion com-pared to Sh428.62 billion as at June 30, 2013, a 10.4 per cent increase.

Trade de cit is the negative differ-ence between the monetary value of a country’s exports and imports.

“One of the main hindrances to more exports is not market access but our inadequate domestic supply ca-pacity.... What the country is already doing in infrastructure, energy, water, seeds and fertiliser will improve our capacity, but for quicker progress we need support,” Ikiara said.Latest trade data show total ex-

ports in the period, including re-ex-ports, were worth Sh275.56 billion compared to Sh256.81 billion in the rst half of last year, a 7.3 per cent rise.

BY MERCY GAKII

INSURERS have urged healthcare service providers to embrace tech-nology to reduce costs by improving transparency as the industry reels in underwriting losses.

The Association of Kenya Insur-ers chairman Justus Mutiga said medical insurers continue to incur losses owing to high costs of health-care and rampant fraud in claims.AKI says last year medical

insurers’ losses decreased slightly

in 2013 compared to the previous year.

“We urge more transparency in processing of healthcare-related claims as medical insurance has been performing poorly over the last ve years and it is becoming unsustainable for many compa-nies,” Mutiga said.

He said challenges remain in pricing, quality of covers, client services and marketing of health-care policies.

On Friday, AKI handed over a

donation of Sh1.2 million to Min-istry of Health’s diabetes manage-ment information department for a free medical camp in Ndeiya, Kiambu county.

The medical camp will be for free check-ups and treatment of common ailments such as diabetes, hypertension, wounds, eye and cataracts surgery and cervical can-cer screening.

Nineteen insurance companies are sponsoring the free medical camp slated for August 9.

AKI seeks transparency in healthcare insurance

US now Kenya’s third largest export market

Can YOU outsmart the expert?

ALY KHAN’S STAR

PORTFOLIO

THE White House has invited 50 African heads of state to Wash-ington next week for the first summit between the US and Africa.

As many as 200 prominent US chief executives will be on the sidelines of the Washington summit, including the bosses of Walmart and General Electric. Comments as long ago as last month from Ben Rhodes, deputy national security advisor for strategic communications and speech-writing, confirm that the US corporate sector is looking to hard charge into Africa.

President Obama spent less than a day in Africa during his entire first term and is evidently playing catch-up. Being the first African-American president of the US at a time when the country was seeking to emerge from a brutal recession, at that time it would have played poorly back home if he was seen to be cavort-ing on the African continent. Therefore, President Obama was in a political trap – not of his own making – with respect to Africa.

Of course, the US engagement with Africa is being continu-ously compared with China’s. In 1996, the Chinese committed to a policy known simply as ‘Going Out’ and selected Africa as a priority zone for expansion.

China overtook the US as Africa’s largest trading partner in 2009. Trade rose from $10 billion in 2000 to $210 billion last year. US trade with Africa in 2013 totalled $85 billion in goods, while services amounted to about $11 billion. European trade with Africa reached $137 billion in 2013.

China speaks to $400 billion worth of deals in African construction projects which have already yielded almost 2,254 kilometres of railroad track and nearly 3,542km of highways. In the space of a decade, as Howard French points out, one million or more Chinese have emigrated to Africa; buying land, establish-ing businesses and plying about every conceivable trade from medicine to prostitution.

During a trip to Asia earlier this year, President Obama said: “Our goal is not to counter China; our goal is not to contain China.”

The Fund for Peace’s Patricia Taft says: “On certain levels, we can’t or won’t compete with China. China will continue to eclipse us in terms of economic interests in Africa.”

However, the US is still pre-eminent in the political sphere and that influence, Taft says, will continue to trump anything China can currently offer.

French in his book about Sino-Africa says the Chinese see Afri-ca as an El Dorado, a land of opportunity for one million migrants. For America, it’s a collection of “ungoverned spaces”, “austere locations” and failing states increasingly dominated by local terror groups poised to become global threats, a danger-zone to be militarily managed through special operators and proxy armies.

“In Africa, terrorists, criminal organisations, militias, corrupt officials and pirates continue to exploit ungoverned and under-governed territory on the continent and its surrounding waters,” reads the Pentagon’s 2014 Quadrennial Defense Review (QDR).

“The potential for rapidly developing threats, particularly in fragile states, including violent public protests and terrorist at-tacks, could pose acute challenges to US interests.”

I appreciate that Africa is in a much better place in this new more multilateral world, which hands it an advantage. It has injected some competition into the demand side of our equation. However, we need to be cognisant of USA’s hard power disequi-librium because it’s intact and set to stay so for quite a while. With respect to ourselves, I sincerely wish we reset our relations.

The rhetoric has veiled the reality that North America bought 66 per cent of our Eurobond issues and more than 50 per cent of our inward remittances come from there. On the other hand, our exports to China are less than $50 million.

This is a reality that needs to better inform our foreign policy, and urgently.

This column represents Satchu’s personal opinions.

REALITY SHOULD INFORM KENYA’S FOREIGN POLICY

CAPACITY: Workers at the Ricardo EPZ textile factory in Athi River.

Photo/FILE