RUSSIAN INVASION OF UKRAINE: WHAT DOES THAT MEAN FOR THE KENYAN ECONOMY?
Russia President Vladimir Putin with President Uhuru Kenyatta on the sidelines of the Russia-Africa Summit in this undated picture. [Courtesy]
By Odhiambo Jerameel Kevins Owuor
Worth Noting:
- The main articles of exports from Ukraine to Kenya in 2020 were: cereals – 56.31 million USD (81.3%), oilseeds and seeds – USD 5.6 million USD (8.1%), animal or vegetable fats and oils – USD 3.72 million USD (5.4%). The main articles of imports from Kenya to Ukraine in 2020 were: coffee and tea – 4.7 million USD (50.2%), edible fruits and nuts – 2.27 million USD (24.2%), tobacco and industrial tobacco substitutes – 1.38 million USD (14.8%), live trees and other plants – 0.72 million USD (7.7%). This has been increase compared to the past years.
- The current crisis between Ukraine and Russia will definitely impact the farmers who export their produce to Ukraine. The produce definitely have high chances of getting stale for majorly they are perishable.
It has been observed that only the dead have seen the end of war. The conflict between Russia and Ukraine opens a new page onto another set of war that will involve top nations of the world. Let me summon the wisdom of Wahenga, in their own volition they noted that: ‘Ndovu mbili zikipambana, liumiao ni gugu.’ This Kiswahili proverb has the same meaning as these other Swahili Proverbs: ‘Apiganapo tembo, nyasi huumia; Wapiganapo fahali wawili ziumiazo ni nyasi; Tembo zikipigana huumia nyasi; Tembo mbili wakipigana huumia nyasi.’ All these Proverbs have the same translation in English that is when elephants fight grass suffers or when two bulls fight, it is the grass that suffers. It is of uttermost importance to know why I have summoned this wisdom. What is the import of the Proverb? The Proverb may be construed to mean that the weak get hurt in conflicts between the powerful. In this context Kenya definitely is the grass among two bulls. I will endeavour to explain.
It seems that Kenya as a nation finds itself in such precarious position. What was the genesis of the war between the two countries? While there had been tensions between Russia and Ukraine, a former Soviet republic, for a long time, the situation began getting out of control in early 2021. In January last year, Ukrainian President Volodymyr Zelenskyy urged US President Joe Biden to let Ukraine join North Atlantic Treaty Organization (NATO). It is integral to note the reason North Atlantic Treaty Organization was formed. The North Atlantic Treaty Organization was created in 1949 by the United States, Canada, and several Western European nations to provide collective security against the Soviet Union.
NATO was the first peacetime military alliance the United States entered into outside of the Western Hemisphere. After the destruction of the Second World War, the nations of Europe struggled to rebuild their economies and ensure their security. The former required a massive influx of aid to help the war-torn landscapes re-establish industries and produce food, and the latter required assurances against a resurgent Germany or incursions from the Soviet Union. The United States viewed an economically strong, rearmed, and integrated Europe as vital to the prevention of communist expansion across the continent.
The move by Ukraine angered Russia, which started sending troops near its Ukraine border for “training exercises” in spring last year and increased it during autumn. By December, the US began hyping up the deployment of the Russian troops and President Biden warned of severe sanctions if Russia invaded Ukraine. This week Russian President Vladimir Putin announced a “special military operation” in the country’s Donbas region in Ukraine. Explosions have been so far reported in Ukraine with United States among other nations castigating Russian government and warning of dire consequences.
When Russia invaded Ukraine in 2014, rebels backed by President Putin seized big swathes of the east and they have fought Ukraine’s army ever since. There was an international Minsk peace accord but the conflict continues and so Russia’s leader says he is sending in troops into two rebel-held areas. The UN Secretary-General has categorically rejected Russia’s use of the word peacekeepers. The West believes Moscow is planning an imminent, new invasion of Ukraine, a country of 44 million people bordering both Russia and the European Union. It will be interesting to see what will be happening in the next few days. For after all Russia has a high tech military gadgets compared to Ukraine this is just a perfect manifestation of military imbalance. But will the backing of the nations from the west it might Ukraine an upper hand. Of importance to this article are the ramification of the conflict on Kenyans and the economy of Kenya in general.
Kenya is the undisputed leader in trade and economic cooperation between Ukraine and the countries of East Africa. Of the more than fifty countries in the African continent, Kenya ranks among the most significant consumers of Ukrainian goods, among the top ten. The key features that make Kenya an important and promising partner for Ukraine are that Ukrainian products meet Kenyan needs and standards, prices remain acceptable, and Kenya itself is increasingly taking on the role of the East African Economic Hub.
The main articles of exports from Ukraine to Kenya in 2020 were: cereals – 56.31 million USD (81.3%), oilseeds and seeds – USD 5.6 million USD (8.1%), animal or vegetable fats and oils – USD 3.72 million USD (5.4%). The main articles of imports from Kenya to Ukraine in 2020 were: coffee and tea – 4.7 million USD (50.2%), edible fruits and nuts – 2.27 million USD (24.2%), tobacco and industrial tobacco substitutes – 1.38 million USD (14.8%), live trees and other plants – 0.72 million USD (7.7%). This has been increase compared to the past years.
The current crisis between Ukraine and Russia will definitely impact the farmers who export their produce to Ukraine. The produce definitely have high chances of getting stale for majorly they are perishable. The farmers will decry the losses and perhaps getting an alternative market for their produce will take years. Courtesy of the same those who work in processing plants will as well be laid off for the companies will not be getting cash flow to manage operations of the company. This will be a rather long term effect in case the war is prolonged without intervention from the top nations and United Nations not forgetting European Union. This will also lead to loss of income for the Kenya as taxes that are to be imposed on the exports and imports will be lost. Kenya finds itself in a tight position. In turn this will make the government forfeit some of its projects which the taxes could have aided in achieving. With the debts the country as of now has it will be interesting to see how the government will address the issue.
On the, other hand one might be tempted to ask what products do Kenya import from Russia. Interesting the products include wheat, chemical fertilizers, iron, copper, raw aluminium, iron pipes, refined petroleum, vehicle, Paper and paperboard, articles of pulp, paper and board, beverages, spirits, nuclear reactors, plastics, electrical and electronic department among other products . Kenya Imports from Russia was US$356.89 Million during 2020, according to the United Nations COMTRADE database on international trade.
Kenya Exports to Russia was US$75.25 Million during 2020, according to the United Nations COMTRADE database on international trade. The exports include: Coffee, tea, mate and spices, tobacco and manufactures tobacco substitutes, edible fruits, live trees, distillation products name it. The bulk of the exports to Russia are agricultural products which don’t have a longer shelf life compared to manufactured goods.
What are the implications? There are high chances that the price of wheat products will definitely increase. The Economic law of supply and demand will apply and it seems that not many will be able to afford the wheat products. That is the first limb, the second limb is that the companies heavily depending wheat to come up with finished products will experience rise of cost of production and this will have negative consequence.
The same consequence will apply to the other products. The price of oil will sky rocket in Kenya and globally as well. That is why United Nations is involved in the whole saga to make sure that the war will be mitigated. Kenya as a country had already castigated Russia of its move to encroach Ukraine it will be interesting to see the international relations between Russia and Kenya post Russian-Ukrainian war.
In the whole conflict Kenya is going to be affected economically and if the government isn’t prepared for the same then we are headed for doom as a nation. For greater good of the globe Russian should down its move to attack Ukraine. The ramifications of war are dire and might take long to recover from the same. The United Nations among other World Powers should come and mitigate the war; if that doesn’t take place definitely the whole world will suffer from all angles.
Odhiambo Jerameel Kevins Owuor is a law student at University of Nairobi, Parklands Campus. He regularly comments on contemporary, political, social and legal matters.
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