Global equity markets continue to fluctuate wildly during the trade chaos between the world’s two largest economies.
Following years of undelivered Chinese promises on trade fairness, the United States put its foot down demanding equality. Chinese exports and firms had near-unfettered access to the American market but on the flipside American, Kenyan, Japanese, European and other nations’ companies faced severe restrictions or even outright bans on accessing China.
Chinese telecoms firm Huawei is crying foul about the new American ban. But the company was caught spying — but it has denied — on global users and ironically the Chinese government has enforced bans not allowing big American technology companies like Facebook, Google, and Twitter from operating in their country for years. China expects a double standard: you must play by our rules, but we will not play by those same rules.
So free trade advocates now debate whether punishing free trade violations by creating more barriers proves appropriate. The American response includes bans, new bureaucracy for Chinese companies and significant tariffs charged on Chinese products entering the United States.
But the American approach to resolving the trade impasse also revolves around the US President’s self-imposed chaos. The global economy operates based on reasonable expectations of predicting the future. But when the leader of the largest nation in terms of gross domestic product shuts trade negotiations, reopens them, says tariffs rises are fixed, then randomly imposes new tariffs all in the same week, no matter how justified the trade actions are to combat the Chinese government’s double standards, the uncertainty and unreliability in President Trump’s actions causes unnecessary global chaos.
When chaos thrives, then business leaders do not know where to put their next manufacturing plant, investors fail to know which industry to put their money, stockholders do not know which country to buy equities, and workers fail to predict which type of sectors to work in.
Similarly here in Kenya, when a particular government ministry wakes up and seemingly thrusts a major new rule change on the population out of nowhere, it sends the business community into unnecessary chaos. It reduces investor-induced expansions, lowers wage increases and shrinks our economy.
Businesses need predictability in the regulatory landscape.
But Kenya could take advantage of uncertainty and chaos in other countries and between countries.
Our high import bureaucracy, fees, taxes and high electricity costs makes our manufacturing sector severely unattractive for foreign investment. Otherwise, we could argue for massive increases in investment into the manufacturing sector into Kenya. But there exists a sector that we could more easily capture: outsourced customer support call centres.
One of the largest outsourced customer support destinations in the world is the Philippines.
When American, British, Australian, Canadian, or New Zealand customers try to call companies from banks to technology firms to insurance companies to travel agencies, much of the time they are transferred to customer service agents in the Philippines. Filipinos speak the best English, on average, of any nation in Asia.
However, the Philippines is also a nation with uncertain global relations.
President Duterte’s erratic behaviour against trade partners and recent tightening grip on power make investors in overseas call centers nervous. The Philippines President even makes occasional threats against foreigners and their businesses. Kenya could swoop in and capture the market.
Kenyan English thrives at higher fluency rates than in the Philippines. Nairobians often natively speak English in their homes. Further, foreigners can often understand Kenyan English better than most other nations’ English. The Kenyan Government could likely bring tens of thousands of jobs to Kenya by targeting this sector with trade delegations and commensurate barrier reductions.
Our telecoms calling rates are some of the highest in the world due to our low level of competition in the market. If we could regulate more competition or lower rates in the telecoms sector then provide Government of Kenya trade support for the call centre sector, a massive new industry with billions in foreign direct investment could likely sprout up in Kenya.
Global chaos is sad, but let us capitalise on being a calm reliable liberal nation and create high levels of new jobs for our citizens.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]