Kenya: Visit of Prime Minister Raila Odinga to UK
23 Jul 2008
PM Odinga visited the UK 22-24 July. He met the Prime Minister, Foreign Secretary, and other UK Ministers as well as attending the Kenya Business Forum where Lord Malloch Brown gave a speech.| Speaker: | Lord Malloch Brown |
| Event: | Kenya Business Forum |
| Location: | Foreign Commonwealth Office |
The Prime Minister of Kenya Raila Odinga visited the UK on 22-24 July to take part in the Kenya Business Forum. He was joined by other high level Kenyan Government Ministers including the Minister for Foreign Affairs Moses Wetangula and Deputy Prime Minister and Minister for Trade Uhuru Kenyatta.
During the visit Raila Odinga met his opposite number, Prime Minister Gordon Brown, as well as Foreign Secretary David Miliband, Lord Malloch Brown and Secretary for International Development Douglas Alexander. For an overview of the issues discussed between Raila Odinga and Gordon Brown visit the No 10 website. Read the transcript of the Prime Minister's speech.
Lord Malloch Brown Speech to the Kenya Business Forum
'It is a great opportunity to have the business communities from Kenya and the UK gathered together here today. Let me say how pleased I am that Prime Minister Odinga, both on his own and on behalf of and representing President Kibaki, was able to accept the invitation to visit the UK with his Cabinet colleagues.
The violence had a sometimes devastating impact on Kenya's economy
Let me begin by casting our minds back to the violence in Kenya earlier this year. And in particular to the sometimes devastating effect that the violence had on Kenya's business community.
There was a dramatic slump in GDP growth: the World Bank estimates that the GDP growth rate will be at best half of what it was in 2007 (from 6.3% in 2007 to an anticipated 3% in 2008). The communications and transport sector were particularly adversely affected: transport to the western regions of the country was paralysed, as roadblocks were erected at regular intervals, parts of the Nairobi-Kampala railway were destroyed, and lorries, commuter buses and private vehicles were burned. And there was a rapid decline in business activity: a temporary loss of an estimated 400,000 jobs as shops and small businesses were looted, damaged or altogether destroyed in the violence. The World Bank estimates that the violence pushed a further one million Kenyans in to severe poverty, meaning that the gains made in poverty reduction over the past 5 years have been reversed.
The slump in economic activity and decline in economic growth occurred as Kenya's economy temporarily detached from the rest of the world. Tourists stayed away: in January 2008 there were only nine charter flights to Mombasa, compared to 42 charters per week (some 34,000 tourists) in January 2007. 120,000 people lost their jobs in the tourism sector and hotels were forced to close as occupancy rates, previously as high as 70- 90%, dropped to 10- 30%. And the ports were closed down: exports of beans, maize, coffee, tea and cut flowers (though now recovered) fell substantially. The world's biggest tea auction, held weekly in the port city of Mombasa, had to be suspended - and the big buyers such as Egypt and Pakistan were forced to look elsewhere for their tea supplies.
But Kenya is now open for business
But let me take us to the present, to the real reason for Raila Odinga's visit to the UK and for today's meeting. I would like to congratulate Prime Minister Raila Odinga and President Mwai Kibaki for the good start that they have made to Kenya's political and economic recovery. In six months, a lot has changed - and in the right direction. We are already seeing some progress on improving legal and property protection, on sound macroeconomic policies, on stability, on security. We are seeing the introduction of policies specifically designed to boost Kenya's economy, such as the provision of free education in primary schools and the plan to extend to secondary schools: an acknowledgement of the fact that a well educated workforce will give Kenya comparative advantage.
And in the light of these emerging reforms, now is the time to make it absolutely clear that Kenya is now open for business. This is why we are gathered here today. Kenya is, as Raila Odinga said yesterday, "back on its feet... Kenya is up and kicking". The tourists can come back. The investors can come back. And what is more, the success of Kenya's political and economic recovery will depend upon it.
Government needs business; business needs government
For what the violence taught us above all is that government needs business - and that business needs government. And both need peace in order to prosper.
Ongoing political reform will be fundamentally important if Kenya is to build an inclusive democracy founded on good governance. In particular, there is an urgent need to address the underlying inequality that pervades Kenyan society: Kenya is the 10th most unequal country in the world in terms of wealth disparities. The richest earn 56 times more than the poorest: the top 10% of the population controls 42% of the country's wealth, while the bottom 10% own 0.76% (UNDP figures). And it was the most disadvantaged regions that were associated with the violence: Nyanza, Rift Valley and Western provinces. An inclusive democracy will not run deep until underlying inequalities begin to be addressed. And an inclusive democracy is key to stability and therefore key to creating an environment which is conducive to doing business.
But the reverse is also true: economic growth and the employment opportunities that business brings are key to good governance and to political success too. Kenya's thriving economy in past years has been driven by the private sector: there are more than 40,000 medium and large enterprises and over 1.7 million small and micro enterprises. In total, this vast and hugely diverse private sector accounts for more than 80% of Kenya's GDP and provides more than half of wage employment.
And that is why, as President Kibaki and Prime Minister Odinga embark on a course of political reform, it will be necessary to pay particular attention to business reform. The latest World Bank Investment Climate Assessment for Kenya found several top challenges identified by Kenyan businesses, including: i) high tax rates and tax administration, ii) difficult access to credit for small enterprises, iii) corruption, iv) insecurity, v) poor infrastructure (notably energy and transport - something like 150bn shillings in wasted time is lost through traffic jams each year in Nairobi alone), and vi) burdensome business licensing. All these areas will require close attention.
But there are challenges ahead on the road to recovery
Kenya is heading in the right direction. Our High Commission does a lot of valuable work assisting the UK business community to expand its links with Kenya. A delegation from the Birmingham Chamber of Commerce is scheduled to visit Kenya, Uganda and Ethiopia in September. There is a Horticultural mission planned for November and an Environmental Conference later in the year. DFID's development programme has stepped up its activities to help Kenyans acquire the basic needs and skills they will need to push Kenya on.
But the business community doesn't need the UK government to tell it what to do: you already know the importance of investment. This is proven by the fact that there are now over 60 UK companies operating in Kenya, some with their regional headquarters in Nairobi such as Diageo, Unilever, Finlays, GSK, Vodafone, Barclays and Standard Chartered Bank. And you know that investment works not just for yourselves but for Kenya too: following the PM's Business Call to Action, ASDA has increased local sourcing of produce, Vodafone has launched mobile banking systems from which over one million people now benefit, and Cisco - in association with BT and OneWorld - offer agricultural productivity advice to farmers.
But in all of these areas, in investment, and in Kenya's political and business reform, there remains significant progress to be made. The UK Government will continue to use its influence to encourage the international community to support Kenya. But we ask in return that the Government of Kenya unites in setting a clear path to reform that allows Kenyans and the wider international business community to join you on the road to recovery.'
