NAIROBI, Kenya, Aug 2 – Increased bilateral and multilateral relations between Kenya and several Asian and South American countries have been informed by indications that these nations are on the way to establishing a new world economic order, it emerged on Monday.
Central Bank of Kenya (CBK) Governor Prof Njuguna Ndung’u said that by increasingly turning to Brazil, Russia, India and China, Kenya was positioning herself to take advantage of the benefits that can be accrued from the economies that have been touted as the next world’s super powers.
Commonly known as BRICs, these countries – currently categorised as emerging markets – are projected to be the world’s largest economies and a force to reckon with.
“The global growth is going to be led by the BRICs and when we realised this, we asked ourselves what our relationship with them is,” said the governor.
He singled out Kenya’s trade with India and China saying they have grown significantly over the years.
Government figures showed that in 2008, Kenya’s exports to China stood at Sh2 billion compared to imports worth Sh63 billion while Sino-Africa trade is expected to exceed Sh8 trillion this year.
In January this year, China surpassed Germany as the world\’s leading exporter hence Kenya’s interest in engaging more with the Asian tiger as it seeks to grow its Gross Domestic Product’s prospects. The euro crisis and the ongoing global financial crisis have seen Kenya reduce its focus from the traditional super powers such as the USA whose economies are still struggling.
Although he admitted that the stimulus packages provided by Europe and USA have helped pull their economies out of recession, Prof Ndung’u said this had not been enough to boost investments and employment opportunities thus the interest in the fast developing economies.
“The risk in terms of global recession is not there but the growth indicators are coming from the BRICs and the question is, can we take advantage of that as Kenya?” he posed.
This, coupled with significant opportunities presented by the East African Common Market Protocol, have helped boost market confidence in the recovery of the Kenyan economy. This has largely been supported by the positive growth that continues to be recorded in sectors such as agriculture and manufacturing.
During the briefing on the deliberations of the Monetary Policy Committee, Prof Ndung’u however said this growth prospects need to be supported by increasing lending to the private sector.
He therefore urged commercial banks to advance affordable credit to meet the growing demand which is expected to rise by 41 percent for the remainder of the year.
Doing so, he said, would also be in line with Central Bank’s signals that it has continued to give the market.
Last week, the MPC cut the Central Bank Rate (CBR) by 75 basis points to six percent in a move meant to encourage banks to lend more to the private sector.